Capacity Planning
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This document discusses capacity control and planning. It defines capacity planning as determining the optimal level of resources like facilities, equipment, and labor to efficiently meet production needs. Capacity planning is necessary because companies have limited resources and must plan appropriately. The document discusses measuring and utilizing capacity, factors that affect capacity requirements, strategic capacity planning processes, and concepts like economies and diseconomies of scale. It provides an example calculation of capacity utilization rate and outlines the typical capacity planning process of forecasting demand, determining required capacity levels, evaluating options, and implementing the best program.
Capacity Planning
- 1. TOPIC- CAPACITY CONTROL AND PLANNING NAME- Kumar Ujjwal SEMINAR-PPE11S01 DEPARTMENT OF PRODUCTION ENGINEERING
- 2. WHY CAPACITY PLANNING ? There is no company/ organization which has unlimited resources Always there is scarcity of resources. That’s where capacity planning comes in. So, we need to do the planning activity so that overall process is done in the most cost efficient manner. We need to know the exact no. of people, component, material etc. to smoothly carry out a process.
- 3. Productive Capacity Generally measured in physical unit, refers either to the maximum output rate for products or services or to the amounts of key resources available in each operating period.
- 4. Strategic Capacity Planning Capacity: That is the ability to hold, receive, store or accommodate raw materials, finished products, customers, etc. Strategic Capacity Planning: is an approach for determining the overall capacity level of capital intensive resources including facilities, equipment and overall labor force size. Capacity used is the rate of output actually achieved. Best Operating Level is nominally the capacity, for which the process was designed, so nominally this is designed for the process.
- 5. Capacity Utilization Rate = capacity used / Best operating level Question: During one week of production, a plant produced 83 units of a product, it’s historic best utilization was 120 units per week, what is the plant’s capacity utilization rate ? Soln. Capacity Utilization Rate = 83/120 =0.69 or 69% Capacity Utilization
- 6. Capacity Decisions Capacity: Max capability to produce Rated Capacity is theoretical Effective capacity includes efficiency and utilization. Capacity Efficiency is given by how well a machine or worker performs compared to a standard output level. Capacity Load is standard hours of work assigned to a facility.
- 7. Dimension of Demand Effect on capacity requirements Quantity How much capacity is needed? Timing When should capacity be available? Quality What kind of capacity is needed? Location Where should capacity be installed?
- 8. How to measure capacity ? There is no best way to measure capacity. Output measures like cars per day are easier to understand. With multiple products, input measures work better. Type of business Input measures of capacity Output measures of capacity Car manufacturer Labor hour Cars per shift Hospital Available beds Patients per month Pizza Parlor Labor hour Pizza per day
- 9. 0 0.5 1 1.5 2 2.5 3 3.5 0 100 200 300 400 500 600 Averageunitcostofoutput Volume Economies of scale Diseconomies of scale Best operating level
- 10. How much capacity is best? The best operating level is the output that results in the lowest or the minimum average unit cost. Economies of scale: where the cost per unit of output drops as the volume of output increases. It spreads the fixed cost.
- 11. Diseconomies of scale where the cost per unit rises as volume increase. often caused by congestion, overwhelming the process with too much work in process and scheduling complexity.
- 12. Demand Forecast Calculate the Rated Capacity Calculate the Required capacity Determine alternative applications. Evaluation of capacity program. Choosing the best program. Quantitative factors (cost,… etc.) Quality Factor (skill, ..etc.) Implementation of best program. Capacity Planning Process
- 13. Reference: -NPTEL - International Journal of Scientific & Engineering Research, Volume 5, Issue 8, August-2014 ISSN 2229-5518
- 14. Thank You.
Editor's Notes
- #4: For eg – we are producing a certain no of components, so the no. of component will dictate the productive capacity .
- #5: w.r.t man , machine and material
- #7: Eg:
- #8: if we are able to find out, optimal answers for all these four questions, our capacity problem capacity planning problem is 99 percent solved.