A) What is capacity management? B) Measuring demand and capacity C) The alternative capacity plans D) Choosing a capacity planning and control approach E) Capacity planning as a queuing problem

1. Slack, Chambers and Johnston, Operations Management, 6th Edition,
© Nigel Slack, Stuart Chambers, and Robert Johnston 201011.1
11.1
Chapter 11
Capacity planning and control
Photodisc. Photolink

2. Slack, Chambers and Johnston, Operations Management, 6th Edition,
© Nigel Slack, Stuart Chambers, and Robert Johnston 201011.2
11.2
Capacity planning
and control
Design
Planning and
control
Operations
strategy
Improvement
The operation supplies…
the capacity to deliver
products and services
The market requires…
the availability of
products and services
Capacity planning and control

3. Slack, Chambers and Johnston, Operations Management, 6th Edition,
© Nigel Slack, Stuart Chambers, and Robert Johnston 201011.3
11.3
• Capacity in the static, physical sense means the scale
of an operation.
What is capacity?
• However, this may not reflect the operation’s
processing capability.
• Hence, we must incorporate a time dimension
appropriate to the use of assets.
– For example, 24,000 litres per day;
– 10,000 calls per day;
– 57 patients per session;
– Etc.

4. Slack, Chambers and Johnston, Operations Management, 6th Edition,
© Nigel Slack, Stuart Chambers, and Robert Johnston 201011.4
11.4
The objectives of capacity planning and control
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.

5. Slack, Chambers and Johnston, Operations Management, 6th Edition,
© Nigel Slack, Stuart Chambers, and Robert Johnston 201011.5
11.5
The Objectives of capacity planning and control (Continued)
Forecast demand
Time
Aggregatedoutput
Estimate of current capacity
Measure aggregate
capacity and demand.
Identify the alternative
capacity plans.
Choose the most
appropriate capacity plan.

6. Slack, Chambers and Johnston, Operations Management, 6th Edition,
© Nigel Slack, Stuart Chambers, and Robert Johnston 201011.6
11.6
Climatic Festive Behavioural Political Financial Social
Causes of seasonality
Construction materials
Beverages (beer, cola)
Foods (ice-cream)
Clothing (swimwear, shoes)
Gardening items (seeds)
Fireworks
Travel services
Holidays
Tax processing
Doctors (influenza epidemic)
Sports services
Education services.

7. Slack, Chambers and Johnston, Operations Management, 6th Edition,
© Nigel Slack, Stuart Chambers, and Robert Johnston 201011.7
11.7
Demand fluctuations in four operations

8. Slack, Chambers and Johnston, Operations Management, 6th Edition,
© Nigel Slack, Stuart Chambers, and Robert Johnston 201011.8
11.8
How capacity and demand are measured
Design
capacity
168 hours
per week
Effective
capacity
109 hours
per week
Planned loss
of 59 hours
Actual output –
51 hours per
week
Avoidable loss –
58 hours per
week
Efficiency
Actual output
Effective capacity
=
Utilization
Actual output
Design capacity
=

9. Slack, Chambers and Johnston, Operations Management, 6th Edition,
© Nigel Slack, Stuart Chambers, and Robert Johnston 201011.9
11.9
Ways of reconciling capacity and demand
Level capacity
Demand
Capacity
Chase demand
Demand
management
CapacityCapacity
Demand Demand

10. Slack, Chambers and Johnston, Operations Management, 6th Edition,
© Nigel Slack, Stuart Chambers, and Robert Johnston 201011.10
11.10
How do you cope with
fluctuations in demand?
Absorb
demand
Change
demand
Adjust output
to match
demand
Level capacity
Chase demand
Demand
management
Ways of reconciling capacity and demand (Continued)

11. Slack, Chambers and Johnston, Operations Management, 6th Edition,
© Nigel Slack, Stuart Chambers, and Robert Johnston 201011.11
11.11
Adjust output to match demand
Adjust output to
match demand
Hire Fire
Temporary labour Lay-off
Overtime
Subcontract
Short time
3rd party work

12. Slack, Chambers and Johnston, Operations Management, 6th Edition,
© Nigel Slack, Stuart Chambers, and Robert Johnston 201011.12
11.12
Change
demand
Change pattern of demand.
Develop alternative products and/or services.
Change demand

13. Slack, Chambers and Johnston, Operations Management, 6th Edition,
© Nigel Slack, Stuart Chambers, and Robert Johnston 201011.13
11.13 Moving a peak in demand can make capacity
planning easier