Transcript Chapter 11 Powerpoint slides

Chapter 11
Capacity
planning and
control
Source: Arup
Slack, Chambers and Johnston, Operations Management 5th Edition © Nigel Slack, Stuart Chambers, and Robert Johnston 2007
Objective
To provide an ‘appropriate’ amount of capacity
at any point in time
The ‘appropriateness’ of capacity planning in any part
of the operation can be judged by its effect on …
Costs
Revenue
Working capital
Service level
Source: British Airways London Eye
Slack, Chambers and Johnston, Operations Management 5th Edition © Nigel Slack, Stuart Chambers, and Robert Johnston 2007
Capacity Management
0
6
12
18
24
Months
Planning Horizon
Slack, Chambers and Johnston, Operations Management 5th Edition © Nigel Slack, Stuart Chambers, and Robert Johnston 2007
Facility Decision

How Much capacity is needed?

When is the capacity needed?

Where should the capacity be located?
Slack, Chambers and Johnston, Operations Management 5th Edition © Nigel Slack, Stuart Chambers, and Robert Johnston 2007
Objectives of capacity planning and control
Measure aggregate
capacity and demand
Aggregated output
Identify the alternative
capacity plans
Choose the most
appropriate capacity
plan
Forecast demand
Estimate of current capacity
Time
Slack, Chambers and Johnston, Operations Management 5th Edition © Nigel Slack, Stuart Chambers, and Robert Johnston 2007
The nature of aggregate capacity
Aggregate capacity of a hotel:
– rooms per night
– ignores the numbers of guests in each room
Aggregate capacity of an aluminium producer:
– tonnes per month
– ignores types of alloy, gauge and batch
variations
Slack, Chambers and Johnston, Operations Management 5th Edition © Nigel Slack, Stuart Chambers, and Robert Johnston 2007
Causes of seasonality
Source: Alamy/Medical-on-line
Construction materials
Travel services
Beverages (beer, cola)
Holidays
Foods (ice-cream, Christmas cake)
Tax processing
Clothing (swimwear, shoes)
Doctors (influenza epidemic)
Gardening items (seeds, fertilizer)
Sports services
Fireworks
Education services
Slack, Chambers and Johnston, Operations Management 5th Edition © Nigel Slack, Stuart Chambers, and Robert Johnston 2007
Demand fluctuations in four operations
Slack, Chambers and Johnston, Operations Management 5th Edition © Nigel Slack, Stuart Chambers, and Robert Johnston 2007
Ways of reconciling capacity and demand
Demand
Capacity
Demand
Capacity
Demand
Capacity
Slack, Chambers and Johnston, Operations Management 5th Edition © Nigel Slack, Stuart Chambers, and Robert Johnston 2007
Ways of reconciling capacity and demand
How do you cope with
fluctuations in demand?
Absorb
demand
Adjust output
to match
demand
Level capacity
Chase demand
Change
demand
Demand
management
Slack, Chambers and Johnston, Operations Management 5th Edition © Nigel Slack, Stuart Chambers, and Robert Johnston 2007
Absorb
demand
Have
excess
capacity
Keep output
level
Make to
stock
Part finished
Finished goods, or
Customer inventory
Source: Madam Tussaud’s
Make
customer
wait
Queues
Backlogs
Slack, Chambers and Johnston, Operations Management 5th Edition © Nigel Slack, Stuart Chambers, and Robert Johnston 2007
Adjust output to
match demand
Hire
Temporary labour
Overtime
Subcontract
Fire
Source: Corbis/Photocuisine
Lay-off
Short time
Third-party work
Slack, Chambers and Johnston, Operations Management 5th Edition © Nigel Slack, Stuart Chambers, and Robert Johnston 2007
Change
demand
Change pattern of demand
Develop alternative products
and/or services
Source: Empics
Slack, Chambers and Johnston, Operations Management 5th Edition © Nigel Slack, Stuart Chambers, and Robert Johnston 2007
Moving a peak in demand can make capacity planning easier
Slack, Chambers and Johnston, Operations Management 5th Edition © Nigel Slack, Stuart Chambers, and Robert Johnston 2007