Capacity Planning OM

Capacity PlanningCapacity Planning

Atanu ChaudhuriAtanu Chaudhuri

Agenda• Criticality of capacity decisionsCriticality of capacity decisions• Capacity decisions over different time horizonsCapacity decisions over different time horizons• Factors influencing capacity decisions• Different approaches to capacity expansion • Concept of break-even volumes• Decision Trees and Capacity Decisions• Estimating required and available capacity• A capacity planning problem• Why companies fail to meet demand despite having

capacity?

Capacity decisions are tricky! --- One of the toughest decisions which business leaders have to take Holcim-owned cement major ACC expects the cement industry to add 70 million tonnes (mt) of fresh capacity this year, putting pressure on prices.With the new additions, the cumulative installed cement production capacity of the country may cross the 300 million tonne-mark.“In 2010, we expect an additional capacity of about 70 mt to materialise, more than half of which is coming up in south-west India. Despite a growing demand for cement, these capacity additions may create surpluses in some parts of the country,” said Mr N.S. Sekhsaria, Chairman, ACC

What started out as stock outs on the iPod touch at Amazon.com started spreading to other retailers and iPod models. Amazon.com, one of Apple's highest volume iPod resellers, has just recently pushed lead times on the 8 GB second-generation iPod touch to three to five weeks from 11 days while the 16 GB model remains at three to five weeks.

iPod touch, iPod nano, and even iPod shuffle are seeing shortages on different colors and capacities this week across several retailers including Best Buy, Target, Wal-Mart, and Crutchfield.com.

"Frankly, we find these sell-outs on iPods surprising given how difficult the macroeconomic environment is, putting a crimp on consumer spending," he told clients in a new report Wednesday. "

Source: http://www.thehindubusinessline.com/2010/03/27/stories/2010032752410200.htm

http://www.appleinsider.com/articles/08/12/03/apples_unexpected_ipod_shortage_spreading.html

Capacity decisions have long term implications…. An illustration from global chemical industry

Annual ethylene capacity additions by region (as a % of 2008 total capacity)

Significant capacity investments in East……Changing roles

China and Middle East contribute to 78% of new

capacity during 2009-2013

Source: CMAI, Deutsche Bank and DTT Chemical Group analysis.

National governments are increasingly playing a role in capacity buildup

Expected behaviors

China Net importer - due to significant demand. However some balance between local production and imports will be set.

India Net importer and merchant buyer - driven by free market needs. Has potential to influence based on demand.

Middle East Net exporter - with access to advantaged feedstock. Significant government play in the market.

Developed markets

Marginal production - driven by significant excess and older capacity.

4

Declining capacity investments in chemical industry in the developed world

1 34

Developing Developed

BASF (1)

BASF (7)

Huntsman (4)

LyondellBassell (15)

Dow (8)

Significant asset reductions… …Lower capacityAn evaluation of 35 major announced capacity

closures by leading playersCapacity reduction in developed markets 2008-2012

Ethylene and Derivatives1

Kt p

er a

nnum

Source: Company Websites, Press releases and news, CMAI, Deutsche Bank, and DTT Chemical Group analysis.(1) Ethylene derivatives include HDPE, LDPE, LLDPE, PVC and Ethylene Glycol.

5

Indian Auto Component Sector- Some firms are building capacities ahead, some are pegging investment growth to sales growth and some are cutting down investments

Mfg Sales, Capital Employed and Asset Turnover-Bharat Forge

0200400600800

100012001400160018002000

2002 2003 2004 2005 2006

0

0.2

0.4

0.6

0.8

1

1.2

1.4

1.6

Mfg SalesCapital EmployedAsset Turnover

Mfg Sales, Capital Employed and Asset turnover-Yuken India

0

10

20

30

40

50

60

70

80

90

2002 2003 2004 2005 2006

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1

2

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7

Mfg Sales

Capital Employed

Asset Turnover

Mfg sales, capital employed and asset turnover-Talbros Automotive Component

0

20

40

60

80

100

120

140

160

2002 2003 2004 2005 2006

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1

2

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Mfg Sales

Capital Employed

Asset Turnover

Mfg sales, capital employed and asset turnover-Munjal Auto

0

50

100

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200

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300

350

2002 2003 2004 2005 2006

0

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2

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4

5

6

7

8

Mfg Sales

Capital Employed

Asset Turover

Firms in Electronics and Chemicals industries in India also show different patterns in

capital investments

Mfg Sales, Capital Employed and Asset Turnover-Jubilant Organosys

0

200

400

600

800

1000

1200

1400

1600

2003 2004 2005 2006

1.700

1.750

1.800

1.850

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Mfg Sales

Capital Employed

Asset Turnover

Mfg sales, capital employed and asset turnover-TVS Electronics

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Mfg sales, capital employed and asset turnover-Kavveri Telecom

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Mfg Sales, Capital Employed and Asset Turnover-Zicom Electronic Security

Systems

0102030405060708090

100

2002 2003 2004 2005 2006

0.0000.2000.4000.6000.8001.0001.2001.4001.6001.8002.000

SalesManf

CapEmp

Asset Turnover

How do firms ta

ke these

capaci

ty

decisio

ns? W

e will

learn th

e basi

cs in

today’s

class

Bajaj Auto has a waiting list of three weeks for their top- selling product Pulsar, pushing demand for these bikes up to 80,000 units per month from 55,000 units. Honda Motorcycle & Scooter India (HMSI) has a waiting period of four weeks for their scooters Activa and Deo. Two-wheeler majors clearly did not expect this surge in demand. “Since January, demand has surged by 20%.

Long waiting times for products usually indicate Long waiting times for products usually indicate long term capacity planning or aggregate planning long term capacity planning or aggregate planning problems problems

Source: http://economictimes.indiatimes.com/news/news-by-industry/auto/two-wheelers/Rising-consumer-optimism-to-drive-bike-demand/articleshow/5895736.cms

With competition hotting up, this might result in lost sales

Significance of capacity decisionsSignificance of capacity decisions

The throughput (quantity to be sold), or The throughput (quantity to be sold), or the number of units a facility can hold, the number of units a facility can hold, receive, store, or produce in a period of receive, store, or produce in a period of timetime

Determines Determines fixed costsfixed costs

Determines whetherDetermines whetherdemand will demand will be satisfied or notbe satisfied or not

Planning over three time horizonsPlanning over three time horizons

Capacity decisions over different time horizons

• Long term decisions include: – When, how much, and in what form to alter capacity

• Medium term decisions include:– How much inventory to hold– Level of manpower required– Whether to sub-contract or not?– To buy new equipment or not

• Short term decisions include: – Scheduling specific jobs, orders, allocating resources

(manpower, equipment)

Considerations for capacity decisionsConsiderations for capacity decisions

Forecast demand with reasonable accuracy Understand the technology and capacity

increments Find the optimum operating level

(volume)

Capacity decisions are influenced by Capacity decisions are influenced by economies and diseconomies of scaleeconomies and diseconomies of scale

Economies of Economies of scalescale

Diseconomies of Diseconomies of scalescale

25 - room roadside 25 - room roadside motelmotel 50 - room 50 - room

roadside motelroadside motel

75 - room 75 - room roadside motelroadside motel

Number of RoomsNumber of Rooms2525 5050 7575

Ave

rage

uni

t cos

tA

vera

ge u

nit c

ost

(Rup

ees

per

room

per

nig

ht)

(Rup

ees

per

room

per

nig

ht)

Companies also need to understand learning effects while planning capacity

Cumulative Units Produced0 100 200 300 400 500

Pro

cess

ing

tim

e p

er

un

it in

hou

rs

0

0.3

0.25

0.20

Standard time

Capacity should be calculated considering the standard time

Companies can use flexible facilities to Companies can use flexible facilities to address demand variability across productsaddress demand variability across products

100% 100% –

80% 80% –

60% 60% –

40% 40% –

20% 20% –

0 0 –

Nis

san

Chr

ysle

r

Hon

da

GM Toy

ota

Ford

Percent of North American Vehicles Made Percent of North American Vehicles Made on Flexible Assembly Lineson Flexible Assembly Lines

How can companies manage demand?How can companies manage demand? Demand exceeds capacityDemand exceeds capacity

Curtail demand by raising prices, scheduling longer Curtail demand by raising prices, scheduling longer lead timelead time

Catering to only specific segmentCatering to only specific segment

Long term solution is to increase capacityLong term solution is to increase capacity

Capacity exceeds demandCapacity exceeds demand Stimulate market through product launches, advertising Stimulate market through product launches, advertising

etcetc

Product changes and upgradesProduct changes and upgrades

Adjusting to seasonal demandsAdjusting to seasonal demands Produce products with complementary demand Produce products with complementary demand

patterns, if possiblepatterns, if possible

How can companies match capacity with How can companies match capacity with demand?demand?1.1. Making staffing changesMaking staffing changes

2.2. Adjusting equipmentAdjusting equipment Purchasing additional machineryPurchasing additional machinery

Selling or leasing out existing equipmentSelling or leasing out existing equipment

3.3. Closing facilitiesClosing facilities

4.4. Improving processes to increase throughputImproving processes to increase throughput

5.5. Redesigning products to facilitate more throughputRedesigning products to facilitate more throughput

6.6. Adding process flexibility to meet changing product Adding process flexibility to meet changing product preferencespreferences

May not always be necessary, instead balance flow of product/services through the facility

Different approaches to capacity Different approaches to capacity expansionexpansion

(a)(a) Leading demand with Leading demand with incremental expansionincremental expansion

Dem

and

Dem

and

Expected Expected demanddemand

New New capacitycapacity

(b)(b) Leading demand with Leading demand with one-step expansionone-step expansion

Dem

and

Dem

and



(c)(c) Capacity lags demand with Capacity lags demand with incremental expansionincremental expansion

Dem

and

Dem

and



Where will this capacity expansion Where will this capacity expansion approach be suitable?approach be suitable?

(a)(a) Leading demand with incremental Leading demand with incremental expansionexpansion



Dem

and

Dem

and

Time (years)Time (years)11 22 33


(b)(b) Leading demand with one-step expansionLeading demand with one-step expansion



Dem

and

Dem

and



(c)(c) Capacity lags demand with incremental Capacity lags demand with incremental expansionexpansion


Dem

and

Dem

and



Companies should also account for lifecycle stages while evaluating capacity alternatives

Should be careful in making large, irreversible investments, need more flexibility

Systematically build capacity without overshooting by large extent

Focus on efficient utilization of existing capacity

Need of flexibility of equipment and manpower increases

Break even volumes many times become the focal point of a business plan

• When we were planning facilities for the car and working out a business plan, the business plan shown to me was looking at a figure of 200,000. I said 200,000 cars is crazy. If we can do this we should be looking at a million cars a year, and if we can't do a million then we shouldn't be doing this kind of car at all. But such a figure (a million cars) has never been achieved in the country before.

• If it had to be done the conventional way, it would have meant investing many billions of dollars. So we looked at a new kind of distributed manufacturing, creating a low-cost, low break-even point manufacturing ….

Ratan Tata on Nano

Source: http://tatanano.inservices.tatamotors.com/tatamotors/index.php?option=com_content&task=view&id=96&Itemid=169

Break-Even AnalysisBreak-Even Analysis

Technique for evaluating process and Technique for evaluating process and equipment alternativesequipment alternatives

Objective is to find the point in rupees and Objective is to find the point in rupees and units at which cost equals revenueunits at which cost equals revenue

Requires estimation of fixed costs, variable Requires estimation of fixed costs, variable costs, and revenuecosts, and revenue


Fixed costs are costs that continue even if Fixed costs are costs that continue even if no units are producedno units are produced Depreciation, taxes, debt, mortgage paymentsDepreciation, taxes, debt, mortgage payments

Variable costs are costs that vary with the Variable costs are costs that vary with the volume of units producedvolume of units produced Labor, materials, portion of utilitiesLabor, materials, portion of utilities

Contribution is the difference between selling Contribution is the difference between selling price and variable costprice and variable cost


Costs and revenue are linear functionsCosts and revenue are linear functions

We actually know these costsWe actually know these costs

Time value of money not consideredTime value of money not considered

AssumptionsAssumptions

Profit corrid

or

Loss

corri

dor

Break-Even AnalysisBreak-Even AnalysisTotal revenue lineTotal revenue line

Total cost lineTotal cost line

Variable costVariable cost

Fixed costFixed cost

Break-even pointBreak-even pointTotal cost = Total revenueTotal cost = Total revenue

–

900 900 –

800 800 –

700 700 –

600 600 –

500 500 –

400 400 –

300 300 –

200 200 –

100 100 –

–| | | | | | | | | | | |

00 100100 200200 300300 400400 500500 600600 700700 800800 900900 10001000 11001100

Cos

t in

rupe

esC

ost i

n ru

pees

Volume (units per period)Volume (units per period)


BEPBEPxx == break-even break-even point in unitspoint in unitsBEPBEP == break-even break-even point in rupeespoint in rupeesPP == price per unit price per unit (after all discounts)(after all discounts)

xx == number of units number of units producedproducedTRTR== total revenue = Pxtotal revenue = PxFF == fixed costsfixed costsVV == variable cost per unitvariable cost per unitTCTC== total costs = F + Vxtotal costs = F + Vx

TR = TCTR = TCoror

Px = F + VxPx = F + Vx

Break-even point Break-even point occurs whenoccurs when

BEPBEPxx = =FF

P - VP - V


BEPBEPxx == break-even break-even point in unitspoint in unitsBEPBEP == break-even break-even point in rupeespoint in rupeesPP == price per unit price per unit (after all discounts)(after all discounts)

xx == number of units number of units producedproducedTRTR== total revenue = Pxtotal revenue = PxFF == fixed costsfixed costsVV == variable cost per unitvariable cost per unitTCTC== total costs = F + Vxtotal costs = F + Vx

BEPBEP = BEP= BEPx x PP

= P= P

==

= =

FF(P - V)/P(P - V)/P

FFP - VP - V

FF1 - V/P1 - V/P

ProfitProfit = TR - TC= TR - TC

= Px - (F + Vx)= Px - (F + Vx)

= Px - F - Vx= Px - F - Vx

= (P - V)x - F= (P - V)x - F

Break-Even ExampleBreak-Even Example

Fixed costs = Rs. 10,000Fixed costs = Rs. 10,000 Material = Rs.75/unit Material = Rs.75/unitDirect labor = Rs.1.50/unitDirect labor = Rs.1.50/unit Selling price = Rs.4.00 per unit Selling price = Rs.4.00 per unit

BEP = =BEP = =FF

1 - (V/P)1 - (V/P)Rs.10,000Rs.10,000

1 - [(1.50 + .75)/(4.00)]1 - [(1.50 + .75)/(4.00)]


Fixed costs = Rs.10,000Fixed costs = Rs.10,000 Material = Rs.75/unit Material = Rs.75/unitDirect labor = Rs1.50/unitDirect labor = Rs1.50/unit Selling price = Rs. 4.00 per unit Selling price = Rs. 4.00 per unit

BEP = =BEP = =FF

1 - (V/P)1 - (V/P)$10,000$10,000

1 - [(1.50 + .75)/(4.00)]1 - [(1.50 + .75)/(4.00)]

= = $22,857.14= = $22,857.14$10,000$10,000

.4375.4375

BEPBEPxx = = = 5,714 = = = 5,714FF

P - VP - V$10,000$10,000

4.00 - (1.50 + .75)4.00 - (1.50 + .75)


50,000 50,000 –

40,000 40,000 –

30,000 30,000 –

20,000 20,000 –

10,000 10,000 –

–| | | | | |

00 2,0002,000 4,0004,000 6,0006,000 8,0008,000 10,00010,000

Dol

lars

Dol

lars

UnitsUnits

Fixed costsFixed costs

Total Total costscosts

RevenueRevenue

Break-even Break-even pointpoint


BEP =BEP =FF

∑∑ 1 - x (W1 - x (Wii))VVii

PPii

Multiproduct CaseMultiproduct Case

wherewhere VV = variable cost per unit= variable cost per unitPP = price per unit= price per unitFF = fixed costs= fixed costs

WW = percent each product is of total dollar sales= percent each product is of total dollar salesii = each product= each product

Restaurant with multiple productsRestaurant with multiple products

Annual ForecastedAnnual ForecastedItemItem PricePrice CostCost Sales UnitsSales Units

SandwichSandwich $. 2.95$. 2.95 $.1.25$.1.25 7,0007,000Soft drinkSoft drink .80.80 .30.30 7,0007,000Baked potatoBaked potato 1.551.55 .47.47 5,0005,000TeaTea .75.75 .25.25 5,0005,000Salad barSalad bar 2.852.85 1.001.00 3,0003,000

Fixed costs = $. 3,500 per monthFixed costs = $. 3,500 per month



SandwichSandwich $. 2.95$. 2.95 $. 1.25$. 1.25 7,0007,000Soft drinkSoft drink .80.80 .30.30 7,0007,000Baked potatoBaked potato 1.551.55 .47.47 5,0005,000TeaTea .75.75 .25.25 5,0005,000Salad barSalad bar 2.852.85 1.001.00 3,0003,000

Sandwich $. 2.95 $. 1.25 .42 .58 $. 20,650 .446 .259Soft drink .80 .30 .38 .62 5,600 .121 .075Baked 1.55 .47 .30 .70 7,750 .167 .117 potatoTea .75 .25 .33 .67 3,750 .081 .054Salad bar 2.85 1.00 .35 .65 8,550 .185 .120

$. 46,300 1.000 .625

Annual WeightedSelling Variable Forecasted % of Contribution

Item (i) Price (P) Cost (V) (V/P) 1 - (V/P) Sales $ Sales (col 5 x col 7)

Fixed costs = $. 3,500 per monthFixed costs = $. 3,500 per month



SandwichSandwich $2.95$2.95 $1.25$1.25 7,0007,000Soft drinkSoft drink .80.80 .30.30 7,0007,000Baked potatoBaked potato 1.551.55 .47.47 5,0005,000TeaTea .75.75 .25.25 5,0005,000Salad barSalad bar 2.852.85 1.001.00 3,0003,000

Fixed costs = $3,500 per monthFixed costs = $3,500 per month

BEP$ =F

∑ 1 - x (Wi)Vi

Pi

= = $67,200$3,500 x 12

.625

Daily sales = = $215.38

$67,200312 days

.446 x $215.38$2.95 = 32.6 33

sandwichesper day

Decision Trees and Decision Trees and Capacity DecisionCapacity Decision

-$90,000-$90,000Market unfavorable (.6)Market unfavorable (.6)

Market favorable (.4)Market favorable (.4)$100,000$100,000

Large plant

Large plant

Market favorable (.4)Market favorable (.4)

Market unfavorable (.6)Market unfavorable (.6)

$60,000$60,000

-$10,000-$10,000

Medium plantMedium plant



$40,000$40,000

-$5,000-$5,000

Small plant

Small plant

$0$0

Do nothing

Do nothing




Large plant

Large plant



$60,000$60,000

-$10,000-$10,000




$40,000$40,000

-$5,000-$5,000

Small plant

Small plant

$0$0

Do nothing

Do nothing

EMV = (.4)($100,000) + (.6)(-$90,000)

Large Plant

EMV = -$14,000


-$14,000

$13,000

$18,000



Large plant

Large plant



$60,000$60,000

-$10,000-$10,000




$40,000$40,000

-$5,000-$5,000

Small plant

Small plant

$0$0

Do nothing

Do nothing

Estimating Required Capacity• Projected demand = D

• Standard labour hours required per unit =SL

• Efficiency of labour =EL

• Labor required = D*SL/EL

• Similarly required capacity can be calculated for machine

A contract manufacturer makes products for large food companies It got orders to make 800 bottles of 500 gm tomato ketchup and 1200 bottles of 500 gm jam every day.In a year there are 300 working daysThe ketchup and jam can be bottled using similar machines.It takes 2 minutes to bottle 12 ketchup bottles and 3 minutes to bottle 10 jam bottles. Efficiency of bottling machine is 95% Find out the required number of bottling machine hours per annum for the contract manufacturer

Solution to the problem

• Number of ketchup bottles in a year = 800*300

• Number of jam bottles in a year = 1200*300

• Bottling machine hours for ketchup in a year =

800*300*(2/12)/(0.95*60) = 701.75

• Bottling machine hours for jam in a year =

= 1200*300*(3/10)/(0.95*60) = 1894.74

Total bottling machine hours required per annum= 701.75+1894.74 = 2596.49

Comparing required and available capacity• Currently one bottling machine is available with the manufacturer

which runs 2 shifts of 8 hours each.

• Historical data shows that machine is under breakdown and maintenance 10% of the available hours in a year and other 10 % of the time is spent in setting up the machine while changing from ketchup to jam and vice versa

• What is the available capacity?

• What will be the machine utilization in a year? Can it take further orders from the same or different manufacturer to fill up the bottling machine capacity?

Available capacity = 300*2*8*(1-0.2) = 3840 hoursUtilization = 2596.49/3840 =0.67 or 67%Apparently yes, 33 % of bottling machine capacity is available to take further ordersWill depend on capacity of other processes and bottleneck capacity (nothing to do with bottles!!!)

Ketchup manufacturing process

Pulping Filtering Cooking

FinishingBottlingLabeling and

Packing

3 hours 45 minutes 2.5 hours

2 hours 2 hours 15 minutes 2 hours

Time mentioned are for 400 kg of tomato ketchup i.e. 800 bottles of 500 gm each

For ketchup manufacturing, process with bottleneck capacity is pulping as it takes maximum time to process 400 kg of tomato ketchup

Jam manufacturing process

Crushing and chopping

Pasteurizing Cooking

BottlingLabeling and

Packing

3.0 hours 1.5 hours 4.5 hours

6 hours 3 .5 hours

Time mentioned are for 600 kg of mixed fruit jam i.e. 1200 bottles of 500 gm each

For jam manufacturing, process with bottleneck capacity is bottling as it takes maximum time to process 600 kg of mixed fruit jam

Further calculations• Remember, there is only 1 bottling machine

which is being used for both ketchup and jam manufacturing

• When are the ketchup and jam arriving at the bottling machine?

• Ketchup will arrive at bottling machine 8 hrs 15 minutes after start of process while jam will arrive at bottling machine 9 hours after start of process

Pulping Filtering Cooking

FinishingBottlingLabeling and

Packing

3 hours 45 minutes 2.5 hours

2 hours 2 hours 15 minutes 2 hours

Crushing and chopping

Pasteurizing Cooking

3.0 hours 1.5 hours 4.5 hours

Labeling and Packing

3 .5 hours

You can play this game of maximizing throughput

• How much quantity of jam and ketchup can the manufacturer produce in a day?

• You have to take decisions about scheduling jam and ketchup manufacturing, batch size of jam and ketchup manufacturing

• Objective will be to maximize total profit• This will also depend on profit made from jam and

ketchup• So, will the manufacturer produce more jam or more

ketchup?

Capacity issues in service industry

• Need of responsiveness- customers may not wait for long

• Managing demand volatility- no option of inventory• Manage both peak hour and non-peak hour demand • Trade off between utilization and performance

measures like waiting time

Demand and Capacity Management in the Service Sector

Demand management Appointment, reservations, FCFS rule

Capacity management Full time,

temporary, part-time staff

Capacity planning alternatives for service firms

Issues for consideration Peak Hour/High Demand Period

Non Peak Hour/Lean Period

Operations Strategy Standard offering Customized offerings

Service Portfolio Narrow offering Wide offering

Demand Management Reservations Special tariffs, offers

Resources Management Multi-skilled workforceAdding temporary workforceIncreasing working time

Dedicated tasksTraining and developmentReduced work hours

A bank teller example• Arrival rate of customers at the teller counter = 15 per hour = ra

• Service rate at the teller = 20 per hour =re

• Utilization of the teller facility = 15/20 =0.75 =u• What is the probability that there are atmost 2 persons in front of the

teller counter? • Pn = long run probability of having the system with ‘n’ jobs/customers

in process sequence • For the system to be stable, P n-1*ra = Pn *re

• Thus, Pn = u* P n-1

• P0 = 1-u , P1 = u*P0 = u(1-u)• probability that there are atmost 2 persons in front of the teller counter

= P0+P1+P2 = 0.25 + 0.25*0.75+ 0.75^2*0.25 =0.578

Service growth stages and capacity addition

EntrepreneurialMultisite

rationalizationGrowth Maturity

Limited service at a single location

Based on some novel idea

Or filling the gaps based on customer needs

Multi-skilled personnel

Tries adding additional services to the current location

After exhausting local market, ventures to grow beyond original location

Complexity of managing multiple sites increase

With multi-site operations, operating costs increase

Volume increases significantly

At some point, operational complexity outstrips growth related benefits

Need fresh ideas

Existing facilities need remodeling

Operational efficiency takes precedence

May be necessary to modify the service concept

Capacity planning must address the issue of duplicating changes across the entire business

Wrap-up

• Significance of capacity decisions• Capacity planning over different time horizons• Considerations for capacity planning• Capacity expansion strategies and applicability• Break-even analysis and decision tree• Estimating required and available capacity• Why companies fail to meet demand despite having

capacity• Capacity planning in services

Capacity Planning OM

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