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Capacity Planning and Bottlenecks
Jul 14, 2024
Capacity Planning and Bottlenecks
Key Concepts
Capacity Planning
: Process of determining the production capacity needed by an organization to meet changing demands for its products.
Bottleneck
: The activity in the production process that takes the longest time, limiting the overall capacity.
Steps in Capacity Planning
Forecast Demand
: Look at medium or long-term horizons to predict future demand.
Calculate Capacity Requirements
: Based on forecasted demand.
Measure Current Capacity
: Assess the present level of production capacity.
Compare and Identify Gaps
: Identify differences between current capacity and required capacity.
Address Gaps
: Decide on changes or improvements needed.
Example: Subway Franchise
Processes Involved
: Cutting meat, cutting vegetables, baking bread, assembling sandwiches.
Assessment of Capacity
:
Meat Cutting
: 200 ounces/hour (50 sandwiches/hour based on 4 ounces per sandwich).
Vegetable Cutting
: 25 sandwiches/hour.
Bread Baking
: 6 loaves/hour (1 loaf = 1 sandwich).
Assembly
: 5 minutes per sandwich (12 sandwiches/hour).
Identified Bottleneck
: Bread Baking at 6 sandwiches/hour.
Addressing Bottlenecks
Focus improvements on the bottleneck to effectively increase capacity.
Hypothetical Improvements
Bread Making Improvement
: Increase by 30%
New capacity = 6 * 1.3 = 7.8 sandwiches/hour.
Assembly Improvement
: Increase by 20%
New capacity = 12 * 1.2 = 14.4 sandwiches/hour.
Meat Cutting Improvement
: Increase by 15%
New capacity = 50 * 1.15 = 57.5 sandwiches/hour.
Conclusion
Only improvements in the bottleneck (bread making) will increase overall production capacity.
Enhancements in processes that aren't the bottleneck won't affect the total capacity.
Focus Areas for Capacity Planning
Always identify and target the bottleneck for improvements.
Evaluate the impact of potential changes on overall capacity.
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