Pgbm03 MBA OPERATION MANAGEMENT session 06 planning and managing capacity
-
Upload
aquamarine-emerald -
Category
Business
-
view
290 -
download
0
Transcript of Pgbm03 MBA OPERATION MANAGEMENT session 06 planning and managing capacity
PGBM03 Operations Management
Session 06Operations Planning and
Managing Capacity
Module Leader: Peter Coleman
Capacity planning and control
Operations
strategy
Improvement
Planning and
control
Operations management
Capacity planning and
control
The operation supplies ...the capacity to deliver products and services
The market requires …the availability of products
and servicesDesign
In Chapter 10 – The nature of planning and control – Slack et al. identify the following key questions:
• What is planning and control?
• How do supply demand affect planning and control?
• What are the activities of planning and control?
Planning and Control
• Planning is a formalization of what is intended to happen at some time in the future.
• A plan does not guarantee that an event will actually happen, it is a statement of intention.
• Although plans are based on expectations, during their implementation things do not always happen as expected.
• Control is the process of coping with any changes that affect the plan. It may also mean that an ‘intervention’ will need to be made in the operation to bring it back ‘on track’.
Planning is deciding
Control is
what activities should take place in the operation
when they should take place
what resources should be allocated to them
understanding what is actually happening in the operation
deciding whether there is a significant deviation from what should be happening
(if there is deviation) changing resources in order to affect the operation’s activities.
PLANNING
CONTROL
Tim
e h
ori
zon
Ho
urs
/day
sD
ays/
wee
ks/m
on
ths
Mo
nth
s/ye
ars
Long-term planning and controlUses aggregated demand forecasts
Determines resources in aggregated form
Objectives set in largely financial terms
Medium-term planning and controlUses partially disaggregated demand forecasts
Determines resources and contingencies
Objectives set in both financial and operations terms
Short-term planning and controlUses totally disaggregated forecasts or actual demand
Makes interventions to resources to correct deviations from plans
Ad hoc consideration of operations objectives.
Scheduling Loading
SequencingMonitoring and control
When to do things?
In what order to do
things?
How much to do?
Are activities going to plan?
Activities
The ability to meet requirements
•The number of units produced in a specified time
•Cars per hour•Barrels per day
•Bed-nights per week•Student contact hours per year
Capacity
Capacity =
Total productive time available
Time for one unit
= Total time x output per unit of time
Capacity
Capacity
• A plant operates 250 days per year for 8 hours per day
• The time to produce one unit is 15 minutes
• What is the plant’s capacity?
• Total time available = 250 * 8 = 2000 hours per year
• Time for one unit = 0.25 hours
• Capacity = 2000/ 0.25 = 8000 units per year
CAPACITY
Design Capacity = Maximum rate
Design capacity
CAPACITYDesign Capacity = Maximum rate
Effective Capacity = Achievable rate
Design capacity
Effective capacity
CAPACITY
Design capacity
Effective capacity Actual
performance
• Efficiency = Actual output x 100
CAPACITY
• Utilisation = Actual output x 100
Design capacity
Effective Capacity
Designcapacity
168 hoursper week
Capacity Efficiency and Utilisation
Designcapacity
168 hoursper week
Effective capacity
109 hours per week
Capacity Efficiency and Utilisation
Planned lossof 59 hours per week
Designcapacity
168 hoursper week
Effective capacity
109 hours per week
Actual output51 hours per week
Capacity Efficiency and Utilisation
Planned lossof 59 hours per week
Avoidable loss58 hours
Planned lossof 59 hours
per week
Capacity Example
• A section of a call centre employs 5 people who work 8 hrs. a day for 5 days a week.
• Each person can handle 20 enquiries per hour.
• They are 90% effective
• One week, the office handles 3000 enquiries.
• What is the efficiency of the call centre staff?
• What is their utilisation ?
Capacity Example
• Total time per week = 5 days x 8 hrs= 40 hrs
• Applications processed/ hr. = 100
• Design capacity = 4000 per week• 90% effective
• Actual = 3000 in a week
• Effective capacity = 4000x 0.9 = 3600 enquiries
• Efficiency = 3000 x 100 = 83.3 %3600
•Utilisation = 3000 x 100 = 75 % 4000
Ways of reconciling capacity and demand
Level capacity
Demand
Capacity
Chase demandDemand
management
CapacityCapacity
Demand Demand
How do you cope with
fluctuations in demand?
Absorb
demand
Change
demandAdjust output
to match
demandLevel capacity
Chase demand
Demand
management
Ways of reconciling capacity and demand
Absorb
demand
Part finished
Finished goods, or
Customer inventory
Queues
Backlogs
Have
excess
capacity
Make to
stock
Keep output
level
Make
customer
wait
Source: Madam Tussaud’s
Adjust output to
match demand
Hire Fire
Temporary labour Lay-off
Overtime
Subcontract
Short time
Third-party work
Source: Corbis/Photocuisine
Change
demand
Change pattern of demand
Develop alternative products
and/or services
Thank you