Stanley Pharmaceuticals is a Pakistani pharmaceutical company established in 1995. It has state-of-the-art production facilities located in Peshawar. The company produces tablets, syrups, and other pharmaceutical products. It has a quality policy of using high-quality inputs to produce high-quality outputs. Stanley measures its production capacity based on output measures like number of tablets produced per day. It also considers demand fluctuations and adjusts its short and medium-term capacity using strategies like increasing production hours. The document discusses key concepts for capacity planning and management including measuring demand, design capacity vs effective capacity, and overall equipment effectiveness.

2. Group Members
– Mahnoor
– Samina Iqbal Bangash
– Alina Zeb Durrani
– Ruqqia Nisar
– Madeeha Gul
Imstudies, University of Peshawar !

3. Capacity
planning and
control
1. What is capacity management?
2. Measuring demand and
capacity.
3. The alternative capacity plans.
4. Choosing a capacity planning
and control approach.
5. Capacity planning as a queuing
problem.
l

4. What is planning and control?
– Planning and control reconciles supply and demand
– Planning concerns what should happen in the future
– Control copes with changes

7. What is capacity
management?
– Capacity:
– Physical sense of the fixed volume of a container, or the space in a
building
– Capacity of an operation is the maximum level of value-added
activity over a period of time that the process can achieve under
normal operating conditions.

8. Capacity Constraint
– It is the parts of the operation that are operating at their
capacity ‘ceiling’ which are the capacity constraint for
the whole operation

9. Planning and controlling capacity
– Capacity planning and control is the task of setting the
effective capacity of the operation so that it can respond
to the demands placed upon it.
– This usually means deciding how the operation should
react to fluctuations in demand.

10. – Long term capacity strategy
– Strategies that are concerned with introducing (or deleting) major
increments of physical capacity.
Medium term capacity planning and control
– This usually involves an assessment of the demand forecasts over a period
of 2–18 months ahead, during which time planned output can be varied.
For example, by changing the number of hours the equipment is used.
– Hotels and restaurants have unexpected and apparently random changes in
demand from night to night.
– Short-term capacity planning and control :
– Most operations also need to respond to changes in demand which occur
over a shorter timescale

11. Aggregate Demand and Capacity
– The important characteristic of capacity planning and control
– It is making overall, broad capacity decisions, but is not concerned with
all of the detail of the individual products and services offered.
– This is what ‘aggregated’ means – different products and services are
bundled together in order to get a broad view of demand and capacity.
– This may mean some degree of approximation, especially if the mix of
products or services being produced varies.
– Remember that most operations have sufficient experience of dealing
with aggregated data to find it useful.

12. The objectives of capacity
planning and control
– The decisions taken by operations managers in devising their capacity plans will
affect several different aspects of performance:
– ● Costs
– ● Revenues
– ● Working capital
– ● Quality of goods or
– ● Speed of response to customer demand.
– ● Dependability of supply

13. The steps in
capacity
planning and
control

14. Stanley Pharmaceuticals–
– Stanley Pharmaceuticals was incorporated in 1995 as a private limited company
with the Government of Pakistan.
– The head office and production facilities are located at 84-B industrial estate
Hayat Abad Peshawar..
– Stanley has state of the art machinery for manufacturing of pharmaceutical
products.
– The quality control laboratory is fully equipped with all the required equipment's
for testing of Raw Material, in process and finish products.
– The production and Quality Control Staff is highly qualified having 20-30 years of
experiences in Multinational and National Companies.
– Stanley has highly qualified Marketing team who are marketing the product
through out Pakistan and some parts of Afghanistan.
– The company have established its self in a very short span of time and is very well
known for the production of quality products.

15. Stanley's quality policy statement
Stanley's quality policy is based on a simple principal.
– Q . I -----------------------> Q . O
– Quality Inputs Results in Quality Outputs.
– At Stanley the quality policy is to follow the equation by putting
together best available inputs of Raw Materials, Quality Control,
Professionals, Formulation, Manufacturing Practices, Packing
Materials, Marketing and Working Environment to get quality
outputs and offer at affordable prices.

16. – Production per day
– Syrups : 2 lac per day
– Tablets : 20 lac per day
– Rejection rate : 2-3 % Allowed : 5%
– Raw materials :
– They purchase Raw Material from the world best
sources, from the countries like USA, Germany, Italy,
Spain, Switzerland, Japan, UK and France are
imported to manufacture quality products.

17. Stanley Pharmaceuticals
– Machinery : from Malaysia , China,
Taiwan , India
– Bottles : Ghani Glass Standard

18. Then these cartons are loaded to their trucks and these
trucks are the means of distributing through the country
and Stanley also export their products to different countries(
i-e UK,USA)
– From production section, these finished
products are send to finished goods
warehouse by workers.

19. – Stanley Retail store – Return medical store
– Discard or physical check

20. – Q : Area and vessels capacity?
– Ans :The company is spreads over an area of 3 Acres, having manufacturing facilities for Syrups, Drops, Tablets,
Dry Syrups and Capsules.
– Q : How many standard products you are producing?
– Ans :Stanley has 65 registered products ( includes tablets, capsules and syrups)
– Q : How you are operating your activities?
– Ans : Capacity Ceiling
– Q : How your operations react to fluctuations in demand?
– Ans : Demand is easily attained
– Q : What are your long term capacity strategies?
– Ans : Buying new machines from China and Malaysia and construction of new departments.
– Q : How you make your short and medium term capacity adjustments?
– Ans : Increase the number of hours equipment's are used
– Overtime, nightshifts, weekend.

21. Measuring
demand and
capacity
By Samina Iqbal Bangash

22. Forecasting demand fluctuations
Forecasting is a key input to capacity planning and control.
As far as capacity planning and control is concerned, there are three requirements from
a demand forecast.
 It is expressed in terms which are useful for capacity planning and control.
 It is as accurate as possible.
 It gives an indication of relative uncertainty.

23. – Seasonality of demand
In many organizations, capacity planning and control is
concerned largely with coping with seasonal demand
fluctuations
– demand seasonality and supply seasonality
– The fluctuations in demand or supply may be reasonably
forecastable, but some are usually also affected by
unexpected variations in the weather and by changing
economic conditions
– Weekly and daily demand fluctuations

24. Measuring capacity
– Output capacity measure
The most appropriate measure because the output from the
operation does not vary in its nature
– Input capacity measures
When a much wider range of outputs places varying demands
on the process, then input capacity measures are frequently
used to define capacity.
Almost every type of operation could use a mixture of both
input and output measures, but in practice, most choose to use
one or the other.

25. – Capacity depends on activity mix
Output depends on the mix of activities in which the firm is
engaged and, because stanely pharmaceuticals perform
many different types of activities, output is difficult to
predict. Certainly it is difficult to compare directly the
capacity of it which have very different activities.

26. Worked example from Stanely pharmaceuticals
perspective
Suppose Stanely Pharmaceuticals manufacture 3 different types of medicine i.e Pedrol
tablet , Riam, & Kemic forte. Pedrol is manufactured in 3hrs, Riam in 5hrs & kamic
forte in 2.5hrs .the total staff hours for making all these are 14000. if the demand for
Pedrol, Riam & kamic forte is 6:5:5. the time taken to manufacture 6+5+5=16 units is
(6x3) +(5x5) + (5x2.5) =55.5hrs
So the number of the tablet manufacture per week
=staff hours/total time taken x 7
14000/55.5 x7 = 1765.7
Suppose demand for pedrol, riam & kamic forte change to 3:2:1 so then time taken is
(3x3) + (5x2) + (2.5x1) = 21.5hrs
Now the number of tablet manufacture per week
= staff hours/total time taken x 7
14000/21.5 x 7 = 4558.1

27. Design capacity and effective capacity
– Design capacity; The theoretical capacity of an operation
– Effective capacity; The actual capacity which remains, after
unavoidable losses
– Actual output; the actual capacity which remains, after both
avoidable and unavoidable losses
– Utilization; The ratio of the output actually achieved by an
operation to its design capacity
– Efficiency; the ratio of output to effective capacity

28. Suppose Stanely Pharmaceuticals manufacture Riam tablet with a design capacity of
60,000 tablet per day & they carry the process for 7 days ( 70hrs per week) so design
capacity for a week is 60,000 x 7 = 420, 000. the actual out put of this week is 350,000.
Some of the production time lost during the process because of the following
unavoidable losses and avoidable losses that are ; change over, breakdown failure,
maintenance, shift time, labor shortage etc.
Time lost due to unavoidable losses is 13.5hrs per week and time lost due to avoidable
losses is 11hrs per week. Measured in hours of production.
Design Capacity = 70 hrs
Effective Capacity = 70 – 13.5 = 56.5hr
Actual output = 70 – 13.5 – 11 = 45.5hrs
Now Utilization = actual output / design capacity
= 45.5/ 70 = 65%
& Efficiency = actual output / effective capacity
= 45.5 / 56.5 = 80.5%.

29. Overall equipment effectiveness ( OEE )
 The time that equipment is available to operate;
 The quality of the product or It is based on three aspects of performanceservice it
produces;
 The speed, or throughput rate, of the equipment.
Overall equipment effectiveness is calculated by multiplying an availability
rate by a performance (or speed) rate multiplied by a quality rate.

30. In a typical 7-days period, the planning department of stanely pharmaceuticles programs that
Automatic blister packing machine will work for 64hrs- its loading time. Change over & setup takes
an average of 4hrs & breakdown failures average 1.5hrs per week. The time when the blister packing
machine cannot work becouse it is waiting for material to be delivered from double cone mixer is
2hrs on average & during the period when blister packing machine is running, it average 90% of the
rated speed. 3% of the parts processed by machine are found defective.
Maximum available time = 7 x 10 = 70hrs
Loading time = 64hrs
Availability losses = 4hrs(setup) + 1.5hrs ( breakdown)
= 5.5hrs
So, Total operating time = Loading time - Availability losses
= 64 – 5.5 = 58.5hrs
Speed losses = 2hrs +( 58.5 – 2) x .1 ( remaining speed rate)
= 7.65hrs
So, Net operating time = Total operating time – Speed losses
= 58.5 – 7.65 = 50.85hrs

31. Quality losses = 50.85 (net operating time) x 0.03 (error)
= 1.52hrs
So, Valuable operating time = net operating time – speed losses
= 50.85 – 1.5255 = 49.32hrs
Therefore, Availability rate = a = total operating time = 58.5 = 0.91 = 91%
loading time 64
Performance rate = p = Net operating time = 50.85 = 0.869 = 86.9%
Total operating time 58.5
&, Quality rate = q = Valuable operating time = 49.32 = 0.9699 = 97%
Net operating time 50.85
OEE = a x p x q = 0.91 x 0.869 x 0.9699 = 0.767 = 76.7%

32. The alternative
capacity plans
BY
ALINA ZEB DURRANI

33. – There are three pure options available for coping with demand
fluctuations:
1. Level capacity plan.
2. Chase demand plan.
3. Demand management.

34. Level capacity plan
– In a level capacity plan the processing capacity is set at a uniform level
throughout the planning period regardless of fluctuations in forecast demand.
In level capacity plan:
 Same number of staff
 Operate the same processes
 Producing the same aggregate output
 Non perishable materials are processed.

36. – Problems:
The decision what to produce for inventory rather than for immediate sale.
Not suitable for perishable products.
Low utilization makes level capacity plans expensive but may be appropriate
where the opportunity cost of individual lost sales are very high.

37. Level capacity plans in stanley
pharmaceutical
 They use the level capacity plan for most of the
products like flagyl, pedrol etc. They produce the
same amount throughout the year.

38. Chase demand plan
– Opposite of level capacity plan, which match capacity closely to the varying
levels of forecast demand.
– Much more difficult than level capacity plan because
 Different numbers of staff
 Different working hours
 Different amounts of equipment.

39. – Unlikely to appeal to:
– Manufacture standard non perishable products.
– Where manufacturing operations are capital intensive.

40. – Chase demand capacity would require
 Employing part time and temporary staff
 Requiring permanent employees to work for longer hours
 Bringing in contact labor.
– Difficult task is to ensure that quality standards and safety procedures are still adhered and that
customer service levels are maintained.

41. Methods of adjusting capacity
– Over time and idle time
– Varying the size of the workforce
– Using part time staff
– Subcontracting

42. Adjusting capacity in stanley
pharmaceuticals
– They don't bring in new staff or do sub contracting however they increase the
working hours , work on weekends and bring in more machinery and equipment
when the demand is high.

43. Manage demand plan
– Demand management is to change demand through price.
– It is less common for products as compared to services.

44. Manage demand plan in stanley
pharmaceuticals
– They don't change the price at all.

45. Mixed plans
– A mixture of all the three pure approaches are called the mixed plans.
– Mixed plans are used to:
 Reduce costs and inventory
 Minimize capital investment
 Provide a responsive and customer oriented approach.

46. Mixed plans in stanley
pharmaceuticals
– They use a mixture of both the level capacity plans and the chase demand
plans.

47. Yield management
– It is a collection of methods which can be used to ensure that an operation
minimizes its potential to generate profit.
– Yield management is useful where:
 Capacity is relatively fixed
 The market can be fairly clearly segmented
 The service cannot be stored in any way
 The services are sold in advance
 The marginal cost of making a sale is relatively low.

48. – The methods include the following:
1. Over booking capacity
2. Price discounting
3. Varying service types

49. Choosing a
capacity
planning and
control
approach
By Ruqqia Nisar

50. Choosing a capacity planning and
control approach
– We have two capacity plans and now the task is to choose
the one that suits your organization. Before adopting any
plan an organization must be aware of the consequences. So
the organization must decide what changes must be brought
into the output rate and facilities.
– ● Cumulative representations of demand and capacity;
– ● Queuing theory.

51. ● Cumulative representations of
demand and capacity;
– Cumulative representation is a graphical
presentation method used in capacity planning.
In this method demand and capacity are clearly
indicated, where operational managers can easily
find out high demand season and low, and make
necessary operation changes.

52. Cumulative representations of
demand and capacity of chocolate
factory

54. Cumulative representation of demand and
capacity for Stanley pharmaceutical
– Pedral 40000-45000 per month
1800 packs per day
– Riam 25000-30000 per month
3000 packs per day
– Kamic 30000-35000 per month
3000 packs per day

55. Cumulative representation of demand and
capacity for Stanley pharmaceutical
– Demand increases in June July due to increase in diseases.
– For that they on Saturday , Sunday, night shifts and increase working hours of
machine.

56. Capacity
planning
as a
queuing
problem
By Madiha Gul

57. Queuing theory
– For operations which, by their nature,
cannot store their output, such as most
service operations, capacity planning and
control is best considered using waiting or
queuing theory.

58. Queuing or waiting line
management

59. Some terms or elements related
with queuing theory
Calling population
The source of customers – sometimes called the calling population
– is the source of supply of customers.
Arrival rate
The rate at which customers needing to be served arrive at the server
or servers.
Queue
Customers waiting to be served form the queue or waiting line itself.

60. • Rejecting
• If the number of customers in a queue is already at the maximum number allowed ,then the
customer could be rejected by the system.
• Baulking
• When a customer is a human being with free will (and the ability to get annoyed)he or she may
refuse to join the queue and wait for service if it is judged to be too long. In queuing terms this
is called baulking.
• Reneging
• This is similar to baulking but here the customer has queued for a certain length of time and
then (perhaps being dissatisfied with the rate of progress) leaves the queue and therefore the
chance of being served.

61. • Queue discipline
• This is the set of rules that determine the order in which customers waiting in the queue
are served.
 Customer priority
 Operations will sometimes use customer priority sequencing, which allows an
important or aggrieved customer, or item, to be ‘processed’ prior to others, irrespective
of the order of arrival of the customer or item.
 Due date(DD)
 Prioritizing by due date means that work is sequenced according to when it is ‘due’ for
delivery, irrespective of the size of each job or the importance of each customer.

62.  Last-in-first-out(LIFO)
Last customer is served first. This is called last-in-first-out sequencing.
 First-in-first-out(FIFO)
Some operations serve customers in exactly the sequence they arrive in. This is called first-
in-first-out sequencing (FIFO), or sometimes ‘first come, first served’ (FCFS).
 Longest operation time(LOT)
Operations may feel obliged to sequence their longest jobs first in the system called longest
operation time sequencing.

63.  Shortest operation time(SOT)
The sequencing rules may be adjusted to tackle short jobs first in
the system, called shortest operation time sequencing.
• Servers
A server is the facility that processes the customers in the queue.

65. Balancing capacity and demand
– The dilemma in managing the capacity of a
queuing system is how many servers to have
available at any point in time in order to avoid
unacceptably long queuing times or unacceptably
low utilization of the servers.

66. Variability in demand or supply

67. Customer perceptions of queuing
– ● Time spent idle is perceived as longer than time spent occupied.
– ● The wait before a service starts is perceived as more tedious than
a wait within the service process.
– ● Anxiety and/or uncertainty heightens the perception that time
spent waiting is long.

68. –● A wait of unknown duration is perceived as more tedious than a wait whose
duration is known.
–● An unexplained wait is perceived as more tedious than a wait that is explained.
–● The higher the value of the service for the customer, the longer the wait that will
be tolerated.
–● Waiting on one’s own is more tedious than waiting in a group (unless you really
don’t like the others in the group).