This presentation is on capacity planning. it covers the details about following points- 1. Capacity - Capacity is the upper limit on the load that an operating unit can handle. 2.Capacity Planning -Capacity planning is the process of determining the production capacity needed by an organization to meet changing demands for its products. 3. Mc Donald - introduction 4. Factors affecting capacity planning 5. Economies of scale 6. Dis-economies of scale 7. Capacity strategies 8. Mc Donald's’ capacity strategy 9.Designed and actual capacity 10. Capacity planning framework 11. Learning

2. Hi, friends I am
Ronald’s
Yes, I am here to
tell you about my
story
Story of McDonald

3. Content :-
• Capacity
• Capacity Planning
• Mc Donald
• Factors affecting capacity planning
• Economies of scale
• Diseconomies of scale
• Capacity strategies
• McDonalds’ capacity strategy
• Designed and actual capacity
• Capacity planning framework
• Learning

4. CAPACITY
Capacity is the upper limit on the load
that an operating unit can handle.
• The basic questions in capacity handling
are:
• What kind of capacity is needed?
• How much is needed?
• When is it needed?

5. CAPACITY PLANNING
• Capacity planning is the process of
determining the production capacity
needed by an organization to meet
changing demands for its products.
• In the context of capacity planning,
“capacity" is the maximum amount of
work that an organization is capable of
completing in a given period of time.

6. Continue….
• A discrepancy between the capacity of an
organization and the demands of its customers
results in an inefficiency, either in under-
utilized resources or unfulfilled customers.
• The goal of capacity planning is to minimize this
discrepancy.
• Capacity can be increased through introducing
new techniques, equipment and materials,
increasing the number of workers or machines,
increasing the number of shifts, or acquiring
additional production facilities.

7. Mc Donalds
• McDonald'sis the world's leading food service retailer with
more than 33,000 restaurantsin 118 countries serving more
than 67 million customers each day.
• In India, it operates under two parent franchisees
Hardcastle RestaurantsPvt. Ltd – West and South
VikramBakshi's Connaught Plaza Restaurants Private Limited
– Northand East
• McDonald's India is a leaderin the food retail space, witha
presence of more than 250 restaurants serving more than6.5
lakh customers dailyin India.

8. McDonalds (Sonipat)
• Located at Ansal Plaza Mall, Kundli,
Sonipat 131001
• Operation Hours – (8a.m-11p.m)
• 115 covers
• 1 Restaurant Manager , 2 Astt. Manager
• 1 Relationship Executive ,1 Crew Trainer
• 25 crews

9. Factors Affecting Capacity
Planning
• Product Design
Every product has its own unique recipe
• Process Design
Process of a making of product should
be time effective but quality cannot be
reduced
• Product Variety
Product having less variation can be
processed together to reduce overall time

10. Continue…..
• Product Quality
Test & Inspection are made in order to keep
a check on quality of product.
• Product Scheduling
Scheduling that keeps the product flow well
balanced and synchronized

11. Economies Of Scale
Economies of scale results in lowers the average cost per
unit through increased production since fixed costs are
shared over an increased number of goods.

12. Diseconomies Of Scale
Diseconomies of scale result in rising long run average costs
which are experienced
1) When a firm expands
2) When govt. policies changes

13. Capacity strategies
• Lead strategy-the company increases its
production capacity in advance of
anticipated increases in demand.
• Lag strategy-the company responds to
actual increases in demand by boosting
capacity after the operation is running at
full steam.
• Match strategy-the company matches the
demand and supply.

14. McDonald’s capacity strategy
• The company uses lead strategy
• Bun inventory- 2 days advance
• FCD(Fried chilled dried) inventory- 3 days
advance
• Coke inventory- 15 days advance

15. Designed And Actual
Capacity
 Design capacity is the maximum
theoretical output of a system
 Actual capacity is the rate of output
actually achieved.

16. Design Capacity
• Mc Aloo tikki
• Preparation time = 42 sec.
• Preparation time (hrs.)=
42/3600=0.0116667hrs
• Operating Hours =15
• Total Mc Aloo tikki in a day=15/0.0116667
=1286(approx.)

17. Utilization
• Utilization is the percent of design
capacity achieved
• Actual Output = 352
• Utilization =
Actual Output/ Design Capacity
352/1286 =27 %

18. Capacity Planning Framework
• Estimating Total Requirements
• Estimating Labor and Machine
Requirements
• Computing Capacity Availability
• Comparison of Availability and
Requirements
• Process Mapping and Capacity Analysis

19. Computing Total Requirements
• No. of working days in the outlet(Nd) = 7
• No. of working hours per day (h) = 15
hrs.
• System Availability (weekly) = 7x15=
105 hrs.

20. Estimating Labour Requirements
• Labor requirements fully depends on
sales
• Requirements will vary in the following
ways
• Peak Time (1pm- 4pm)&(7pm-10pm)
Expected Guest Count- 400
• Weekends
Expected Guest Count- 600
• Holidays
• Fridays

21. Resource Availability
• No. of Workers Available (NL) = 25
• Absenteeism (a) = 2%
• Workers Capacity = Nd X h X NL X (1-a/100)
(weekly) = 7 X 15 X 25 X (98/100)
= 2572 hrs.

22. Estimating Machine
Requirements
Machine requirements are totally
depend on Product Variants
Burgers
French Fries
Coke
Ice-cream
Cold Coffee & Ice Tea
McPuff Pizza

23. Resource Availability
• No. of Machines Available (Nm) = 17
• Machine Capacity = Nd X h X Nm
(weekly) =7 X 15 X 17 = 1785 hrs.

24. Process Mapping

25. Veg-line for making burgers

26. Hypothetical Problem
• The outlet is small and it is not able to handle the
crowd.
• The plant has two options- to expand the outlet, to
open a new outlet in the locality.
• The marketing research says the probability of
success if we expands the outlet is 80%, with a
cost of 50 lakhs, the revenue generated would be 1
crore. In case of failure the loss would be 30
lakhs.
• The probability of success if we open a new outlet
in the locality would be 60%, with a cost of 90
lakhs, the revenue generated would be1.4 crores.
In case of failure the loss would be 40 lakhs.

27. Learning
It helped us to ensure that current &
future capacity and performance aspects
of the business requirements are provided
in cost effective manners.
It helped us in understanding the
importance of decision –tree in order to
select the most effective & efficient
method of capacity expansion.

29. Presented by :-