POM - J. Galván 1 PRODUCTION AND OPERATIONS MANAGEMENT Ch. 8: Capacity Planning SUMMARY

BASIC POINTS WILL WE BE CAPABLE OF SUPPLYING PRODUCTS/SERVICES AS DEMANDED? Meaning of capacity and utilizationMeaning of capacity and utilization The planning process – AlternativesThe planning process – Alternatives Capacity planning strategiesCapacity planning strategies Capacity decisionsCapacity decisions Matching capacity to demandMatching capacity to demand POM - J. Galván 2

QUESTIONS What is capacity? How is it measured? Discuss the process of capacity planning. What is capacity? How is it measured? Discuss the process of capacity planning. Explain the steps involved in capacity planning. How is capacity changed in long run Explain the steps involved in capacity planning. How is capacity changed in long run? Management may choose to build up capacity in anticipation of demand or in response to developing demand. Cite the advantages and disadvantages of both approaches. Management may choose to build up capacity in anticipation of demand or in response to developing demand. Cite the advantages and disadvantages of both approaches. Which of the following is NOT a characteristic during the introductory phase of the product life cycle? Research Process modification Supplier develo pment Capacity utilization The maximum output of a system in a given period is called the Break-even point Design capacity Effective capacity Efficiency POM - J. Galván 3

QUESTIONS (II) What would be the utilization of a car manufacturing plant, if 40 cars are produced in a day with a design capacity of 60 cars per day? 67% 20% 100% 150%

POM - J. Galván 5 LOW CAPACITY IS ALWAYS A PROBLEM

POM - J. Galván 6 …and be careful