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Capacity Planning

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  • For automobile example give nissan motors.
  • Example of job shop: photo copy shop
  • Outsourcing firm
  • Biocon till date has 6 blocks of building ( S1 to S6). They are acquiring a new project called as BMS and so they are constructing 3 new blocks namely s11,s12,s13. This BMS project is totally based on Drug Discovery . They have an Intital reqirement of 120 HPLC and they have also placed an order for it from Agilent technologies.
  • Transcript

    • 1. LONG RANGE CAPACITY PLANNING
    • 2. NUCLEAR POWER CORPORATION-INCREASING CAPACITY
      • India's nuclear power programme is poised to expand rapidly
      • Efforts need to be made for the multiplication of manufacturing capacity
      • NPCIL will embrace a variety of reactor technologies
      • Boiling Water Reactor (BWR)
      • Pressurised Heavy Water Reactor (under operation now),
      • Pressurised Water Reactor (PWR) and Fast Breeder Reactor (FBR) (UNDER CAPACITY PLANNING)
    • 3. DEFINITIONS OF CAPACITY
      • In general, production capacity is the maximum production rate of an organization.
      • The Federal Reserve Board defines sustainable practical capacity as the greatest level of output that a plant can maintain …
        • within the framework of a realistic work schedule
        • taking account of normal downtime
        • assuming sufficient availability of inputs to operate the machinery and equipment in place
    • 4. MEASUREMENTS OF CAPACITY
      • Output Rate Capacity
      • Choice for high volume processes
      • For a facility having a single product or a few homogeneous products
        • For a facility having a diverse mix of products, an aggregate unit of capacity must be established
      ORGANIZATION MEASURE Automobile manufacturer Number of autos Brewery Barrels of beer Steel Power Tons of steel Power company Megawatts of electrcity
    • 5. CONTD….
      • Input Rate Capacity
      • Choice of low volume
      • Flexible processes
        • Commonly used for service operations
        • Output measures are difficult
      ORGANIZATION MEASURE Merchandising Square feet of display Job shop Labor or machine hours Hospitals Number of beds Tax office Number of accountants
    • 6.
        • UTILIZATION
        • Degree to which equipment, space, or labour
        • Is currently being used
        • UTILIZATION = AVERAGE OUTPUT RATE *100
        • MAXIMUM CAPACITY
      CONTD….
    • 7.
      • Pg 354
      CONTD….
    • 8.
      • PEAK CAPACITY: Maximum output that a process or facility that can achieve under ideal conditions
      • EFFECTIVE CAPACITY: Maximum output that a process or firm can economically sustain under normal conditions
      CONTD….
    • 9.
      • Capacity Cushion
        • An additional amount of capacity added onto the expected demand to allow for:
          • greater than expected demand
          • demand during peak demand seasons
          • lower production costs
          • product and volume flexibility
          • improved quality of products and services
          • Capacity Cushion = 100% - Utilization rate(%)
      CONTD….
    • 10. ECONOMIES OF SCALE
      • Economies of scale : Average cost per unit decreases as the volume increases toward the best operating level
      • Why economies of scale can drive cost down when output increases????
      • Fixed costs are spread over more units
      • Construction costs are reduced
      • Costs of purchase materials are cut
      • Process advantages are found
    • 11. DISECONOMIES OF SCALE
      • Diseconomies of scale - Average cost per unit increases as the volume increases beyond the best operating level
      • Reasons
      • Excessive size can bring complexity
      • Loss of focus
      • Inefficiencies that raise the average unit cost of a product or service
    • 12. ECONOMIES AND DISECONOMIES OF SCALE Average Unit Cost of Output ($) Annual Volume (units) Best Operating Level Economies of Scale Diseconomies of Scale
    • 13. STEPS IN THE CAPACITY PLANNING PROCESS
      • E stimate the capacity of the present facilities.
      • F orecast the long-range future capacity needs.
      • I dentify and analyze sources of capacity to meet these needs.
      • S elect from among the alternative sources of capacity.
    • 14. TOOLS FOR CAPACITY PLANNING
        • Break-Even Analysis
        • Present-Value Analysis
        • Computer Simulation
        • Waiting Line Analysis
        • Linear Programming
        • Decision Tree Analysis
    • 15. EXPANSION OF LONG-TERM CAPACITY
      • Subcontract with other companies
      • Acquire other companies, facilities, or resources
      • Develop sites, construct buildings, buy equipment
      • Expand, update, or modify existing facilities
      • Reactivate standby facilities
    • 16.
      • Pg 372
    • 17.  
    • 18. PRESENTED BY :-
      • Niyati vats.

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