Facility Planning Capacity Capacity Planning Interrelated facility planning

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Facility Planning: Capacity

Facility Planning: Capacity

Capacity Planning • Interrelated facility planning decisions: 1. 2. 3. 4. Number of facilities

Capacity Planning • Interrelated facility planning decisions: 1. 2. 3. 4. Number of facilities and general type Capacity Locations Layout • Facility design process dependent upon objective(s)

Strategic Importance 1. Capital investment (machinery, technology, land, buildings, etc. ) 2. Long-term commitment

Strategic Importance 1. Capital investment (machinery, technology, land, buildings, etc. ) 2. Long-term commitment 3. Relationship between capacity and costs (operating efficiency) 4. Constrains the short and long-term rate of output

Capacity Planning Decision Elements 1. Forecasting future capacity needs (amount and timing) 2. Estimating

Capacity Planning Decision Elements 1. Forecasting future capacity needs (amount and timing) 2. Estimating capacities of present facilities: Design, Effective (standard), Maximum practical capacity 3. Identifying and evaluating alternative sources 4. Selecting from among competing alternatives

Measurements of Capacity 1. 2. 3. 4. 5. Aggregate unit Utilization = actual output/design

Measurements of Capacity 1. 2. 3. 4. 5. Aggregate unit Utilization = actual output/design capacity Efficiency = actual output/effective capacity Throughput time Process Velocity: similar to throughput time, but takes into account waste (wait, storage, transfer, inspect times); measured as throughput time/valueadded time 6. Productivity: how well a firms uses its resources; measured as output/input

Estimating Capacity • Difficult, Why? long time horizon, changing economy, consumer preferences, technology, demographics,

Estimating Capacity • Difficult, Why? long time horizon, changing economy, consumer preferences, technology, demographics, political events, new products, product obsolescence, competitor actions • Short-term, intermediate-term, long-term

Capacity Planning Strategies • Demand leading, Lagging, Matching • Demand Management • Simultaneous capacity

Capacity Planning Strategies • Demand leading, Lagging, Matching • Demand Management • Simultaneous capacity planning choices 1. Layout structure 2. Focus of facility 3. “Chunks” 4. Diseconomies of scale

Analyzing Capacity Planning Decisions: Various Techniques 1. Cost-Volume-Profit (Breakeven Analysis) 2. Financial Analysis a.

Analyzing Capacity Planning Decisions: Various Techniques 1. Cost-Volume-Profit (Breakeven Analysis) 2. Financial Analysis a. Payback b. Present Value c. Internal Rate of Return 3. Computer Simulation and Waiting Line Analysis 4. Linear Programming 5. Decision Tree Analysis