Pom capacity planning

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  • 1. Faculty Guid :- Prof. Niyati Patel Submitted By :- Disha Patel 27 Kalpan Patel 28 Section : - C TOPIC :- CAPACITY PLANNING SUB. :- Production & Operation Management
  • 2. MEANING & DEFINITION • The capacity of a facility is defined as the maximum load that can be handled by it during a given period. • The load can be expressed in terms of the amount of inputs or output. • Example :- Sugar Mill . • The suitable measure here is in terms of input. KALPAN PATEL
  • 3. CAPACITY • Design capacity – maximum output rate or service capacity an operation, process, or facility is designed for • Effective capacity – Design capacity minus allowances such as personal time, maintenance, and scrap • Actual output – rate of output actually achieved--cannot exceed effective capacity. KALPAN PATEL
  • 4. • Capacity Planning is a long-term strategic decision that establishes a firm’s overall level of resources. • The decisions are strategic, because they often commit the resources of the organization for long periods. • Capacity Planning is the study of the level of capacity the organization provides at each stage of the production or service delivery system to meet its objectives. KALPAN PATEL
  • 5. Need for the capacity Planning To find the optimal capacity of the facility so that the sum of costs of under and over capacity is the minimum. To keep the initial investment in the facility as low as possible to achieve lower break even volume. Investments in facility capacity are long-term and cannot be reversed easily. To satisfy the future demand of the products without any shortages.
  • 6. Types of Capacity  Design capacity: represents the maximum rate of output that can be achieved under ideal conditions.  Effective capacity: is the maximum rate of output which can be practically achieved under the constraints of time consumed in set-ups, oiling & cleaning, defective items, etc. Effective capacity is always lesser than the design capacity.  Actual capacity: is the maximum output rate which is actually achieved under the constraints of machine breakdowns, labor inefficiencies & absenteeism, defective products, late deliveries of materials by the supplier, and so on. Actual capacity can be equal to or less than the effective capacity. KALPAN PATEL
  • 7. Efficiency and Utilization Actual output Efficiency = Effective capacity Actual output Utilization = Design capacity Both measures expressed as percentages KALPAN PATEL
  • 8. 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 Design capacity = 50 trucks/day Effective capacity = 40 trucks/day Actual output = 36 units/day KALPAN PATEL
  • 9. 9 Ways of Increasing Effective Capacity Proper facility location, layout, and internal working conditions By making products & services as uniform as possible in design so that number of set-ups required are less (batch sizes will be large) Proper process quality control so that there are less defective items requiring rework Good training, high motivation, less absenteeism & high turnover on part of workers Good coordination with suppliers for timely & defect- free supplies and proper scheduling of products on machines By properly following the environmental and pollution norms, which results in lesser inspections by government enforcement agencies and, thus, lesser disruption of production activities Ways of Increasing Effective Capacity
  • 10. 10 Time Time Time Time Demand forecast Demand forecast Demand forecast Demand forecast Growth trend Decline trend Cyclical trend Stable trend Time Demand forecast Product A Product B Products A & B Role of Forecasting in Capacity Planning : Trends in Demand Forecasts
  • 11. 11 Output rate Average cost per unit of the product Optimal output rate0 Output rate0 Average cost per unit of the product Small-sized Plant Medium- sized Plant Large-sized Plant Part a Part b Optimal Capacity Determination
  • 12. 1. Process design 2. Product design 3. Product variety 4. Product quality 5. Product scheduling 6. Material management 7. Maintenance 8. Job design and personnel management KALPAN PATEL
  • 13. KALPAN PATEL