2. Facility Capacity Planning
In capacity planning, a facility refers to the physical location where the production or service
delivery takes place. It could be a manufacturing plant, a warehouse, a data center, or a hospital,
among others.
Facilities play a crucial role in capacity planning because they are the primary determinants of how
much output a business can produce or how many customers it can serve at a given time.
A well-designed facility can maximize the use of resources, reduce bottlenecks, and increase
efficiency, while a poorly designed facility can hinder productivity and limit growth.
3. Needs of facility capacity planning
Facility capacity planning is an essential process for any organization that wants to ensure that it has the
resources to meet customer demand while maintaining efficiency and profitability. Here are some reasons
why facility capacity planning is important:
1. Optimize resource utilization: -Capacity planning helps organizations to determine the optimal
amount of resources needed to meet customer demand. By understanding their resource requirements,
organizations can ensure that they are using their resources effectively and efficiently.
2. Anticipate future demand: -Capacity planning allows organizations to forecast future demand and
adjust their production or service delivery accordingly. This helps organizations avoid overproduction or
underproduction, which can lead to waste or lost business opportunities.
3. Improve customer satisfaction: -When organizations have the capacity to meet customer demand
promptly, they are better able to provide high-quality customer service, which can lead to increased
customer satisfaction.
4. 4. Increase efficiency: By optimizing their facility capacity, organizations can reduce the risk of
bottlenecks and other inefficiencies in their production or service delivery processes. This can result
in increased productivity, reduced costs, and improved profitability.
5. Plan for growth: Capacity planning can help organizations plan for future growth by
identifying when and how much additional capacity will be needed. This can help organizations
make informed decisions about investments in new facilities, equipment, or resources.
5. Types of capacity
A)Design Capacity represents maximum rate of output that can be achieved under ideal conditions.
b) Effective Capacity is maximum rate of output which can be practically achieved under constraints
of time consumed in set-up, oiling & cleaning, defective items, etc. Effective capacity is always
lesser than design capacity.
c) Actual Capacity is the maximum output rate which is actually achieved under constraints of
machine breakdowns, labor in efficiencies & absenteeism, defective products, late deliveries of
materials by supplier, and so on. Actual capacity can be equal to or less than the effective capacity.
6. Measures of Performance
Efficiency = Actual Output / Effective Capacity
Capacity Utilization = Actual Output / Design Capacity
Design capacity is constant.
7. There are several measures of performance that can
be used to evaluate the success of facility capacity
planning.
1. Capacity utilization: Capacity utilization measures the degree to which a facility's resources are being used.
It is calculated by dividing actual output by maximum output capacity. Higher capacity utilization indicates
that the facility is being used efficiently and effectively.
2. Throughput time: Throughput time measures the time it takes to complete a process, from start to finish.
Lower throughput times indicate that processes are being completed more quickly, which can improve
efficiency and productivity.
3. Resource availability: Resource availability measures the availability of resources, such as labor and
equipment, to support production or service delivery. Higher resource availability indicates that the facility
is well-equipped to meet customer demand.
8. 4. Quality metrics: Quality metrics, such as defect rates or customer satisfaction scores, can be used to
evaluate the quality of the products or services being produced. Higher quality indicates that the facility is
meeting customer needs and expectations.
5. Cost metrics: Cost metrics, such as cost per unit or cost per customer, can be used to evaluate the cost-
effectiveness of the facility's operations. Lower costs indicate that the facility is operating efficiently and cost-
effectively
9. Ways of Increasing Effective Capacity
1. Automate processes: Automation can increase the speed and efficiency of production processes,
allowing for increased output with fewer resources. Automation can also improve quality by
reducing human error.
2. Improve equipment utilization: By optimizing the use of equipment, organizations can increase their
output without adding new equipment or facilities. This can be done by scheduling maintenance
and downtime more efficiently, reducing setup times, and increasing the speed of equipment.
3. Streamline processes: By analyzing processes and identifying areas of waste and inefficiency,
organizations can streamline their operations to reduce the time and resources required to produce
goods or services. This can be done by eliminating unnecessary steps, improving communication
between departments, and simplifying workflows.
10. 4. Train and develop employees: Investing in employee training and development can improve their
skills and knowledge, which can lead to increased efficiency and productivity. By empowering
employees to take ownership of their work and providing them with the tools and resources they need,
organizations can increase their output without adding new resources.
5. Improve supply chain management: By optimizing their supply chain, organizations can reduce lead
times and increase the reliability of their suppliers, allowing for more efficient production and
delivery of goods or services.
11. Example
Each kit contains meat, cheese, bread, and juice, so a complex BOM is needed to make each one easier to
produce. This would include the various food varieties as well as the arrangement and wrapping of trays.
Additionally, it's possible that these facilities would produce some kit components internally while sourcing
others through subcontracting.
Due to the complexity of the finished product and the ever-changing nature of the foods offered, accurate
BOMs, precise calculations of the labor and machine capacity, and quick and frequent changeovers are
necessary. Capacity Requirements Planning (CRP), which uses MRP inputs and inventory to produce a
capacity plan, is an option for businesses with MRP systems in place.
This kind of operation could also use the rough-cut planning method known as Capacity Planning Using Overall
Factors, which creates a capacity plan by using production standards and the master schedule. To create
precise and useful capacity plans, MTS production facilities would need to fully utilize all the steps that are
necessary.
12. A factory that manufactures opulent limousines would serve as an illustration of this kind of
manufacturing. The factors for each finished unit would need to be added up in order to create a
capacity plan because each finished unit is a unique iteration (repetition of a process).
The definition of a workload and the documentation of equipment capabilities would be crucial
factors for an ETO.
Although standards cannot be established for generic products because each limousine is unique,
an accurate understanding of welder capacity, paint booth dwell time, and other crucial processes
along the line may be more crucial to an ETO than other steps in calculating capacity.
