Unit V Om

OPERATIONS MANAGEMENT - I
UNIT - V
UNIT – V
CAPACITY PLANNING
• CAPACITY: Amount of output a system is capable of
achieving over a specific period of time.
• Capacity Planning: Central to the long-term success of
an organisation.
– A long-term strategic decision that establishes a firm’s
overall level of resources.
• Two Levels
i. Long-term capacity plans
Deal with investments in new facilities and
equipments covering the requirements for at least
two years into the future
ii. Short-term capacity plans
Focus on work-force size, overtime budgets,
inventories, etc.
CAPACITY PLANNING
• Capacity decisions includes
– How much capacity to be installed?
– When to increase capacity
– How much to increase?
• Activities of Capacity Planning decisions
i. Estimating the capacities of the current facilities
ii.Forecasting the long-range future capacity needs
iii.Identifying and analyzing sources of capacity to meet
future capacity needs
iv.Developing capacity alternatives
v. Selecting from among the alternative sources of
capacity
Types of Capacity
i. Production capacity
- Maximum rate of production
ii. Design capacity
- the maximum possible output that can possibly be attained
iii. Effective capacity
- the maximum output given a product mix, machine
maintenance, quality factors, etc.
iv. Maximum capacity
- Peak capacity – the maximum output that facility can
achieve
v. Measures of capacity
- Different measures of capacity are applicable in different
situations.
Determinants of Effective Capacity
• Facilities Factors
– Locational factors – Eg. Cost of Transportation, Distance to market, energy
sources, etc.
– Utilities – Heating, lighting, ventilation, etc.
• Product/Service Factor
– Standardization of methods and materials
• Process Factor
– Quantity and quality capability of a process
• Human Resource Factor
– Job design, Training, employee motivation, absenteeism
• Operational Factor
– Capabilities of equipments, inventory decisions, quality control, etc.
• External Factor
– Product Standards, Safety regulations, labour activities, pollution control
standards, etc.
Steps in forecasting production capacity
i. Estimate the total demand for a particular product from
all producers
ii. Estimate the market share for the company for which
capacity has to be forecasted
iii. Estimate the demand for the company by multiplying
the total demand by its market share
iv. Translate the product and service demand for the
company into capacity needs
Economies of Scale
• “The average unit cost of a good or service can
be reduced by increasing the rate of output”
• The level of output is called the “best operating
level” of the facility
• Four principal reasons why economies of scale
can drive down when output increases are:
i. Fixed cost can be spread over a large number of units
produced
ii. Production or operating costs do not increase linearly
with output levels
iii. Quantity discounts are available for material
purchases
iv. Operating efficiency increases as workers gain
experience
Diseconomies of Scale
• Above certain level of output, additional volume of output
results in ever-increasing average unit costs.
• Includes overloading of machines, increased congestion of
materials and handling equipments, slower service times,
poor quality requiring more network, etc.,
Plant Layout
• A Plant layout refers to the arrangement of machinery,

equipment and other industrial facilities – such as
receiving and shipping departments, tool rooms,
maintenance rooms and employee amenities – for the
purpose achieving the quickest and smoothest
production at the least cost.
Objectives of Good Layout
• Provide enough production capacity

• Reduce material handling costs
• Reduce congestion that impedes the movement of
people or material
• Reduce hazards to personnel
• Utilize labour efficiently
• Increase employee morale
• Reduce accidents
• Utilize available space efficiently and effectively
• Provide for volume and product flexibility
• Provide ease of supervision
Objectives of Good Layout
•Facilitate co-ordination and face-to-face communication

where appropriate
•Provide for employee safety and health
•Allow ease of maintenance
•Allow high machine/equipment utilization
•Improve productivity
Factors influencing Facility Layout
• Type and size of Materials
• Machinery
• Worker – Type, position and requirements of employees
• Type of Industry
• Location
• Managerial policies
Principles of Layout
1. The principle of Minimum Travel
2. Principle of Sequence
3. Principle of Usage
4. Principle of Compactness
5. Principle of Safety and Satisfaction
6. Principle of Flexibility
7. Principle of Minimum Investment
Types of Layout
• Process Layout or functional layout or job shop layout
• Product layout of line processing layout of flow-line layout
• Fixed position layout or static layout
• Cellular manufacturing (CM) layout or Group Technology
Layout
• Combination layout or Hybrid layout
Layout Planning
• Designing and installing a layout for the first time
and its subsequent revision may be looked after
by the Engineering or Planning Department
• Layout procedure starts with an analysis of the
product to be manufactured and its expected
volume of production
• Analyzing Layouts with Computers
– Automated Layout Design Programs (ALDEP)
– Computerized Relative Allocation of Facilities
Technique (CRAFT)
Criteria for Selection and Design of Layouts
1. Material handling cost

2. Worker effectiveness
Methods used for selecting the best layout
i. Travel Chart Method
ii. Load Distance Analysis Method
iii. Systematic Layout Planning
Layout Design Procedure
1. Statement of specific objectives, scope and factors to be
considered
2. Collection of basic data on sales forecasts, production
volume, production schedule, etc.,
3. Preparation of various kinds of charts
4. Designing the production process
5. Planning the material flow pattern and developing the overall
materials handling plan
6. Calculation of requirement of work centers and equipments
7. Planning individual work centres
8. Selection of materials handling equipments
9. Determining storage requirements
10. Planning of auxiliary and service facilities
11. Determination of routing, space requirements, etc.,
Layout Design Procedure
12. Draw building specifications to fit the requirements of the

layout
13. Preparation of floor plan indicating location of doors, windows,
stair case, lifts, etc.,
14. Preparation of tentative or drafts layout plans
15. Preparation of detailed layout drawing and get approval of the
top management
16. Preparation of work schedule for the installation of layout.

Unit V Om

Uploaded by

Copyright:

Available Formats

Unit V Om

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Unit V Om

Uploaded by

Copyright:

Available Formats

OPERATIONS MANAGEMENT - I

• A Plant layout refers to the arrangement of machinery,

• Provide enough production capacity

•Facilitate co-ordination and face-to-face communication

1. Material handling cost

12. Draw building specifications to fit the requirements of the

You might also like