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Process Capacity

Process Capacity. Chapter 6. Define scope 2. Document process 3. Redesign Process (Capacity change) 5. Implement changes 6. Evaluate performance 4. Redesigning a Process Through Capacity Change. Identify opportunity 1. Figure 6.1. To customers. Inputs. 1. 2. 3. 200/hr.

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Process Capacity

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  1. Process Capacity Chapter 6

  2. Define scope 2 Document process 3 Redesign Process (Capacity change) 5 Implement changes 6 Evaluate performance 4 Redesigning a Process Through Capacity Change Identify opportunity 1 Figure 6.1

  3. To customers Inputs 1 2 3 200/hr 200/hr 50/hr Capacity Bottlenecks (a) Operation 2 a bottleneck Figure 6.2

  4. To customers Inputs 1 2 3 200/hr 200/hr 200/hr Capacity Bottlenecks (b) All operations bottlenecks Figure 6.2

  5. 250-bed hospital 750-bed hospital 500-bed hospital Average unit cost (dollars per patient) Economies of scale Diseconomies of scale Output rate (patients per week) Economies and Diseconomies of Scale Figure 6.3

  6. Capacity Cushions Capacity Cushion = 100% - Utilization Rate (%)

  7. Forecast of capacity required Planned unused capacity Capacity increment Capacity Time between increments Time Capacity Strategies (a) Expansionist strategy Figure 6.4

  8. Forecast of capacity required Planned use of short-term options Capacity increment Capacity Time between increments Time Capacity Strategies (b) Wait-and-see strategy Figure 6.4

  9. Linking Process Capacity and Other Decisions • Competitive Priorities • Quality • Process Design • Aggregate Planning

  10. 50 50[1.0 – .20)] M = = 62.5 customers per day Estimating Capacity Requirements A process serves 50 customers per day, utilization is about 90%, and demand is expected to double in five years. Management wants to increase the capacity cushion to 20%. In 5 years if demand doubles, M = 2 x 62.5 or 125 customers per day Example 6.1

  11. Capacity requirement = Processing hours required for year’s demand Hours available from a single capacity unit per year, after deducting desired cushion Dp N[1 – (C/100)] M = Estimating Capacity Requirements D = demand forecast for the year p = processing time N = total number of hours per year during which the process operates C = desired capacity cushion

  12. Item Client X Client Y Annual demand forecast (copies) 2000.00 6000.00 Standard processing time (hour/copy) 0.50 0.70 Average lot size (copies per report) 20.00 30.00 Standard setup time (hours) 0.25 0.40 Estimate Capacity Requirements Capacity Decisions Example 6.2

  13. Item Client X Client Y Annual demand forecast (copies) 2000.00 6000.00 Standard processing time (hour/copy) 0.50 0.70 Average lot size (copies per report) 20.00 30.00 Standard setup time (hours) 0.25 0.40 5305 1700 M = = 3.12  4 machines Estimate Capacity Requirements Capacity Decisions Example 6.2

  14. Low demand Don’t expand High demand Small expansion 2 Expand 1 Low demand Large expansion High demand Decision Trees Capacity Decisions Figure 6.7

  15. Low demand [0.40] $70 Don’t expand $90 High demand [0.60] Small expansion 2 Expand 1 $135 Low demand [0.40] Large expansion $40 High demand [0.60] $220 Decision Trees Capacity Decisions Figure 6.7

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