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Once capacity requirements are determined, the organization must decide whether to produce a good or service itself or outsource
Basic questions asked when planning capacity
- Key Questions:
- - What kind of capacity is needed?
- - How much is needed to match demand?
- - When is it needed?
- - How much will it cost?
- - What are the potential benefits and risks?
- - Are there sustainability issues?
- - Should capacity be changed all at once, or through several smaller changes
- - Can the supply chain handle the necessary changes?
Maximum output rate or service capacity an operation, process, or facility is designed for
Alt: The maximum designed service capacity or output rate.
Design capacity minus allowances such as personal time, maintenance, and scrap
Alt: design capacity minus personal and other allowances
- util = actual output / design capacity * 100%
- ** measured as percentages
An operation in a sequence of operations whose capacity is lower than that of the other operations.
- I need 40/parts per hour but only 30 can be made. How to increase capacity?
1. Add another machine at the bottleneck to increase capacity so it can take 40/hr.
- scenario solutions:
2. Add overtime shift. So excess parts can be converted to whatever product.
3. Outsource so no waste or standby material waiting to be converted to final product.
Maximum capacity of the production unit
Maximum output rate limited by bottleneck
- ie. [36(actual) / 40(eff.)]*100 = 90%
- Looks good, but when compared to Utilization = actual/design*100 = 72% becomes less impressive. The key to improving Utilization is understanding constraints on Efficiency, which may lead to correcting quality problems like improving employee training, good operating equipment, and fully utilizing bottleneck equipment.
Extra capacity used to offset demand uncertainty. Capacity cushion = capacity − expected demand.
Typically, the greater the degree of demand uncertainty, the greater the amount of cushion used.
Organizations that have standard products and services generally have greater capacity cushion
Look at your competition and what’s in the market. All these things factor in to determine how much money you want to spend.
Cyclical vs Time – snowboards sell a lot in winter vs summer
Stable – food and necessities; where demand is not unlimited
Optimal rate of output.
Production units have an optimal rate of output for minimal cost.
Break-Even point (BEP)
- The volume of output at which total cost and total revenue are equal.
- Profit = Total Rev - Total Cost
Diseconomies of scale (refer to optimal rate of output pic)
If the output rate is more than the optimal level, increasing the output rate results in increasing average per unit costs.
Alt: if output is increased beyond the optimal level, average unit costs would become increasingly larger
- Reasons for diseconomies of scale include the following:
- a. Distribution costs increase due to traffic congestion and shipping from one large centralized facility instead of several smaller, decentralized facilities.
- b. Complexity increases costs; control and communication become more problematic.
- c. Inflexibility can be an issue.
- d. Additional levels of bureaucracy exist, slowing decision making and approvals for changes.
Economies of scale (refer to optimal rate of output pic)
If output rate is less than the optimal level, increasing the output rate results in decreasing average per unit costs.
- Reasons for economies of scale include the following:
- a. Fixed costs are spread over more units, reducing the fixed cost per unit.
- b. Construction costs increase at a decreasing rate with respect to the size of the facility to be built.
- c. Processing costs decrease as output rates increase because operations become more standardized, which reduces unit costs.
Continuous production system.
These systems have almost no variety in output and, hence, no need for equipment flexibility. Workers' skill requirements can range from low to high, depending on the complexity of the system and the expertise workers need. Generally, if equipment is highly specialized, worker skills can be lower. Examples of nondiscrete products made in continuous systems include petroleum products, steel, sugar, flour, and salt. Continuous services include air monitoring, supplying electricity to homes and businesses, and the Internet.
- i.e. Morton Salt production in NY
Part families (from Cellular Production)
Groupings are determined by the operations needed to perform the work for a set of similar items, part families, that require similar processing.
This strategy for product and process design is known as group technology (The grouping into part families of items with similar design or manufacturing characteristics) and involves identifying items with similarities in either design characteristics or manufacturing characteristics, and grouping them into part families.
What is automation?
Machinery that has sensing and control devices that enable it to operate automatically
- - Fixed automation
- - Programmable automation
- - Flexible automation
Also, there are Automated Services
i.e. Web services like email, ATM machines, online banking
Repetitive production. (Also called product layout, or assembly line)
Product layout - Layout that uses standardized processing operations to achieve smooth, rapid, high-volume flow
paced (e.g., automatic car wash, automobile assembly), worker
paced (e.g., fast-food restaurants such as McDonald's, Burger King), or even customer
paced (e.g., cafeteria line)
The process of assigning tasks to workstations in such a way that the workstations have approximately equal time requirements.
Obtain task grouping that represent approximately equal time requirements since this minimizes idle time along the line and results in a high utilization of equipment and labor
Why is line balancing important?
1.It allows us to use labor and equipment more efficiently.
- 2.To avoid fairness issues that arise when one workstation must work harder than
Advantages of automation.
Automation offers a number of advantages over human labor:
It has low variability, whereas it is difficult for a human to perform a task in exactly the same way, in the same amount of time, and on a repetitive basis.
In a production setting, variability is detrimental to quality and to meeting schedules. Moreover, machines do not get bored or distracted, nor do they go out on strike, ask for higher wages, or file labor grievances.
Still another advantage of automation is reduction of variable costs. In order for automated processing to be an option, job-processing requirements must be standardized (i.e., have very little or no variety).
Process layouts (functional layouts)
Non-repetitive Processing: Process Layouts: Layouts that can handle varied processing requirements
i.e. mfg example of process layout- machine shop: which has separate departments for milling, grinding, drilling, and so on
- The advantages of process layouts include the following:
- 1. The systems can handle a variety of processing requirements.
- 2. The systems are not particularly vulnerable to equipment failures.
- 3. General-purpose equipment is often less costly than the specialized equipment used in product layouts and is easier and less costly to maintain.
- 4. It is possible to use individual incentive systems.
- Equipment utilization is usually 50% on a typical day in a job shop (esp. any metal works or molding). You never know what tools you might need so you have everything ready.
- Ie. Mechanic is job shop and must be prepared to have various tools.
- A service example is vet's office, able to provide services to animals.
Fixed position layout.
Layout in which the product or project remains stationary, and workers, materials, and equipment are moved as needed
i.e. building ship, or bridge
Cellular manufacturing layout.
Layout in which workstations are grouped into a cell that can process items that have similar processing requirements.
Cellular manufacturing enables companies to produce a variety of products with as little waste as possible.
A cell layout provides a smooth flow of work through the process with minimal transport or delay.
Benefits frequently associated with cellular manufacturing include minimal work in process, reduced space requirements and lead times, productivity and quality improvement, and increased flexibility.
- Process selection involves:
- - Substantial investment in equipment
- - Has a very specific influence on layout
- Product or service profiling:
- - Linking key product or service requirements to process capabilities
- Key dimensions relate to:
- - Range of products or services that will be processed
- - Expected order sizes
- - Pricing strategies
- - Expected frequency of schedule changes
- - Order-winning requirements
Cycle time in a product layout.
- - The maximum time allowed at each workstation to complete its set of tasks on a unit
- - Cycle time also establishes the output rate of a line
Cycle time – ie. Unscrew a cap, then re-screw cap back on. From start to finish measured by time is the cycle time.
Output rate – ie. Switching shifts to cover machine that needs to keep pumping out products.
Advantages of the “U” shaped production line.
A U-shaped line is more compact; it often requires approximately half the length of a straight production line.
In addition, a U-shaped line permits increased communication among workers on the line because workers are clustered, thus facilitating teamwork.
Flexibility in work assignments is increased because workers can handle not only adjacent stations but also stations on opposite sides of the line.
Moreover, if materials enter the plant at the same point that finished products leave it, a U-shaped line minimizes material handling.
Behavioral approach to job design.
Behavioral School - Emphasizes satisfaction of needs and wants of employees
Job Enlargement - Giving a worker a larger portion of the total task by horizontal loading
Job Rotation - Workers periodically exchange jobs
Job Enrichment - Increasing responsibility for planning and coordination tasks, by vertical loading
sometimes referred to as self-managed teams, are designed to achieve a higher level of teamwork and employee involvement. Although such teams are not given absolute authority to make all decisions, they are typically empowered to make changes in the work processes under their control.
The underlying concept is that the workers, who are close to the process and have the best knowledge of it, are better suited than management to make the most effective changes to improve the process. Moreover, because they have a vested interest and personal involvement in the changes, they tend to work harder to ensure that the desired results are achieved than they would if management had implemented the changes.
Flow process chart
Chart used to examine the overall sequence of an operation by focusing on movements of the operator or flow of materials
The uses for flow process charts include studying the flow of material through a department, studying the sequence that documents or forms take, analyzing movement and care of surgical patients, studying layout of department and grocery stores, and handling mail.
basic elemental motions into which a job can be broken down
The term therblig is Gilbreth spelled backward (except for the th). The approach is to break jobs down into basic elements and base improvements on an analysis of these basic elements by eliminating, combining, or rearranging them.
Stopwatch time study
Stopwatch time study was formally introduced by Frederick Winslow Taylor in the late 19th century. Today it is the most widely used method of work measurement. It is especially appropriate for short, repetitive tasks.
Used to develop a time standard based on observations of one worker taken over a number of cycles.
- 1. Define the task to be studied, and inform the worker who will be studied.
- 2. Determine the number of cycles to observe.
- 3. Time the job, and rate the worker's performance.
- 4. Compute the standard time.
Requirements for effective teams.
- 1. Clearly stated and commonly held vision and goals.
- 2. Talent and skills required to meet goals.
- 3. Clear understanding of team members' roles and functions.
- 4. Efficient and shared understanding of procedures and norms.
- 5. Effective and skilled interpersonal relations.
- 6. A system of reinforcement and celebration.
- 7. Clear understanding of the team's relationship to the greater organization.
- Short-term team
- - Formed to collaborate on a topic or solve a problem
- Long-term teams
- Self-directed teams - Groups empowered to make certain changes
- in their work processes