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Lesson 4: Capacity Planning (Bottlenecks (Limitations/Constraints, Release…
Lesson 4: Capacity Planning
Capacity Planning Intro
making decisions on how much & what type of capacity is required
Long range (usually more than one year)
Short range (usually one month or less)
Intermediate range (usually 6 to 18 months)
Measure of Capacity
Output Measures
e.g. number of patients seen per day
Input Measures
e.g. Number of consulatations hours per week
Capacity Utilization
Degree to which a resource of an organization (asset/labour) is currently being used
Capacity Utilization - Capacity Used/Capacity Available
Desired Capacity Utilization
Flexible processes/service capacity should have a lower level of utilization to handle the inherent demand variability
Capacity Requirement
Definition
The number of input units required for a resource type
Calculation
Capacity Requirement = Processing Hours Required Per Year/ Hours Available Per Year
Processing hours = demand forecast for the year x processing time/year
Hours available= hours available from a single capacity unit after factoring the desired utilization level
3 Factors of Capacity Planning in Service Industries
The inability to store services
The degree of volatility of demand
The need to be near customers
Bottlenecks
Limitations/Constraints
Release work orders to the system at the pace set by the bottleneck's capacity
Lost time at the bottleneck represents lost capacity for the whole system
Increasing the capacity if a non-bottleneck station is a mirage
Increasing the capacity of the bottleneck increases capacity for the whole system