04 Capacity Planning

Category: Education

Presentation Description

No description available.


Presentation Transcript

Chapter 5 : 

Chapter 5 Capacity Planning

Capacity Planning : 

Capacity Planning Capacity is the upper limit or ceiling on the load that an operating unit can handle. The basic questions in capacity handling are: What kind of capacity is needed? How much is needed? When is it needed?

Importance of Capacity Decisions : 

Impacts ability to meet future demands Affects operating costs Major determinant of initial costs Involves long-term commitment Affects competitiveness Affects ease of management Importance of Capacity Decisions

Capacity : 

Capacity Design capacity maximum obtainable output Effective capacity Maximum capacity given product mix, scheduling difficulties, and other doses of reality. Actual output rate of output actually achieved--cannot exceed effective capacity.

Efficiency and Utilization : 

Efficiency and Utilization

Efficiency/Utilization Example : 

Design capacity = 50 trucks/day Effective capacity = 40 trucks/day Actual output = 36 units/day Actual output = 36 units/day Efficiency = = 90% Effective capacity 40 units/ day Utilization = Actual output = 36 units/day = 72% Design capacity 50 units/day Efficiency/Utilization Example

Determinants of Effective Capacity : 

Determinants of Effective Capacity Facilities Products or services Processes Human considerations Operations External forces

Some Possible Growth Patterns : 

Some Possible Growth Patterns Figure 5-1

Developing Capacity Alternatives : 

Developing Capacity Alternatives Design flexibility into systems Take a “big picture” approach to capacity changes Prepare to deal with capacity “chunks” Attempt to smooth out capacity requirements Identify the optimal operating level

Evaluating Alternatives : 

Evaluating Alternatives Production units have an optimal rate of output for minimal cost. Figure 5-3

Evaluating Alternatives : 

Evaluating Alternatives Minimum cost & optimal operating rate are functions of size of production unit. Figure 5-4

Planning Service Capacity : 

Need to be near customers Capacity and location are closely tied Inability to store services Capacity must me matched with timing of demand Degree of volatility of demand Peak demand periods Planning Service Capacity

Calculating Processing Requirements : 

Calculating Processing Requirements

Cost-Volume Relationships : 

Cost-Volume Relationships Figure 5-5a

Cost-Volume Relationships : 

Cost-Volume Relationships Figure 5-5b

Cost-Volume Relationships : 

Cost-Volume Relationships Figure 5-5c

Break-Even Problem with Step Fixed Costs : 

Break-Even Problem with Step Fixed Costs Figure 5-6a

Break-Even Problem with Step Fixed Costs : 

Break-Even Problem with Step Fixed Costs Figure 5-6b

Assumptions of Cost-Volume Analysis : 

One product is involved Everything produced can be sold Variable cost per unit is the same regardless of volume Fixed costs do not change with volume Revenue per unit constant with volume Revenue per unit exceeds variable cost per unit Assumptions of Cost-Volume Analysis

Financial Analysis : 

Financial Analysis Cash Flow - the difference between cash received from sales and other sources, and cash outflow for labor, material, overhead, and taxes. Present Value - the sum, in current value, of all future cash flows of an investment proposal.

authorStream Live Help