CAPACITY PLANNING

- Hitesh Raviya

Strategies for Matching Capacity and Demand

Shifting Demand to Match Capacity

Adjusting Capacity to Meet Demand

- Dwayne D. Gremler

Strategies for Shifting Demand to Match Capacity

Demand Too High
Shift Demand

Demand Too Low

Use signage to communicate busy days and times Offer incentives to customers for usage during non-peak times Take care of loyal or regular customers first Advertise peak usage times and benefits of non-peak use Charge full price for the service-no discounts

Use sales and advertising to increase business from current market segments Modify the service offering to appeal to new market segments Offer discounts or price reductions Modify hours of operation Bring the service to the customer

- Dwayne D. Gremler

Strategies for Adjusting Capacity to Match Demand

Demand Too High
Adjust Capacity

Demand Too Low

Perform maintenance renovations Schedule vacations Schedule employee training Lay off employees

Stretch time, labor, facilities and equipment Cross-train employees Hire part-time employees Request overtime work from employees Rent or share facilities Rent or share equipment Subcontract or outsource activities

- Dwayne D. Gremler

Steps for Capacity Planning

Estimate future capacity requirements Evaluate existing capacity Identify alternatives Conduct financial analysis Assess key qualitative issues Select one alternative Implement alternative chosen Monitor results

Developing Capacity Alternatives

Design flexibility into systems Take stage of life cycle into account Take a big picture approach to capacity changes Prepare to deal with capacity chunks(large amount) Attempt to smooth out capacity requirements Identify the optimal operating level

STEPS
Determine the demand Determine the aggregate demand Transform the aggregate demand for each time period Identify company policies Determine unit costs Develop alternative resource plans Select the resource plan

MATERIAL REQUIREMENTS PLANNING

COMPUTER BASED INFORMATION SYYSTEM FOR ORDERING AND SCHEDULING OF DEPENDENT DEMAND INVENTORIES.

OBJECTIVES
TO IMPROVE CUSTOMER SERVICE TO REDUCE INVENTORY COSTS REDUCING INVENTORY LEVELS BY

TO IMPROVE PLANT OPERATING EFFICIENCY BY BETTER USE OF PRODUCTIVE RESOURCES

PURPOSE
CONTROL INVENTORY LEVELS ASSIGN OPERATING PRIORITIES ASSIGN CAPACITY TO LOAD PRODUCTION SYSTEM.

ADVANTAGES
REDUCED INVENTORY REDUCED IDLE TIME REDUCED SET UP TIME ABILITY TO CHANGE THE MASTER PRODUCTION SCHEDULE BETTER CUSTOMER SERVICE

DISADVANTAGES:
LACK OF TOP MANAGEMENT COMMITMENT PROBLEMS EVALUATING MRP SOFTWARE IT DOESNT AUTOMATICALLY CHECK STATUS OF ORDERS AND EXPEDITE THEM.

BILLS OF MATERIAL
LISTS ALL OF THE SUBASSEMBLIES PARTS, AND RAW MATERIALS THAT GO INTO A PARENT ASSEMBLY SHOWING THE QUANTITIES REQUIRED. TYPES: SINGLE LEVEL BOM : that displays the assembly or sub-assembly with only one level of children. Thus it displays the components directly needed to make the assembly or sub-assembly

 MULTI-LEVEL BOM : that displays the highest-level item closest to the left margin and the components used in that item indented more to the right
MULTI-LEVEL INDENTED BOM : It can also be visually represented by a product structure tree, although they are rarely used in the workplace