Mata kuliah : J0444 - Manajemen Operasional
Tahun
: 2010
Capacity Planning
Pertemuan 04
Learning Objectives
•
•
•
•
•
Explain the importance of capacity planning.
Discuss ways of defining and measuring capacity.
Describe the determinants of effective capacity.
Discuss the major considerations related to developing
capacity alternatives.
Briefly describe approaches that are useful for
evaluating capacity alternatives
Capacity Planning
• Capacity is the upper limit or ceiling on the load that an
operating unit can handle.
• Capacity also includes
–
–
–
Equipment
Space
Employee skills
• The basic questions in capacity handling are:
–
–
–
What kind of capacity is needed?
How much is needed?
When is it needed?
Capacity Planning Process
Forecast
Demand
Develop
Alternative
Plans
Quantitative
Factors
(e.g., Cost)
Compute
Rated
Capacity
Evaluate
Capacity
Plans
Qualitative
Factors
(e.g., Skills)
Compute
Needed
Capacity
Select Best
Capacity
Plan
Implement
Best Plan
Types of Planning Over a Time Horizon
Long Range Planning
Intermediate Range Planning
Add Facilities
*
Add long lead time equipment
Sub-Contract
Add Equipment
Add Shifts
*
Short Range Planning
*Limited options exist
Add Personnel
Build or Use Inventory
Modify Capacity
Schedule Jobs
Schedule Personnel
Allocate Machinery
Use Capacity
Importance of Capacity Decisions
1.
2.
3.
4.
5.
6.
7.
8.
Impacts ability to meet future demands
Affects operating costs
Major determinant of initial costs
Involves long-term commitment
Affects competitiveness
Affects ease of management
Globalization adds complexity
Impacts long range planning
Definition and Measures of Capacity
Capacity:
The “throughput,” or number of units a
facility can hold, receive, store, or
produce in a period of time.
Effective
capacity:
Capacity a firm can expect to receive given its
product mix, methods of scheduling,
maintenance, and standards of quality.
Utilization:
Actual output as a percent of design
capacity.
Efficiency:
Actual output as a percent of effective capacity.
Utilization
Measure of planned or actual capacity usage of a
facility, work center, or machine
Utilization
=
Actual Output
Design Capacity
=
Planned hours to be used
Total hours available
Efficiency
Measure of how well a facility or machine is performing
when used
Efficiency
=
=
=
Actual output
Effective Capacity
Actual output in units
Standard output in units
Average actual time
Standard time
Example
Design capacity = 50 trucks/day
Effective capacity = 40 trucks/day
Actual output = 36 units/day
Actual output
=
36 units/day
Efficiency =
= 90%
Effective capacity
Utilization =
Actual output
Design capacity
40 units/ day
=
36 units/day
50 units/day
= 72%
Determinants of Effective Capacity
•
•
•
•
•
•
•
•
Facilities
Product and service factors
Process factors
Human factors
Policy factors
Operational factors
Supply chain factors
External factors
Strategy Formulation
•
•
•
•
Capacity strategy for long-term demand
Demand patterns
Growth rate and variability
Facilities
– Cost of building and operating
• Technological changes
– Rate and direction of technology changes
• Behavior of competitors
• Availability of capital and other inputs
Key Decisions of Capacity Planning
1. Amount of capacity needed
•
Capacity cushion (100% - Utilization)
2. Timing of changes
3. Need to maintain balance
4. Extent of flexibility of facilities
Capacity cushion – extra demand intended to offset uncertainty
Steps for Capacity Planning
1.
2.
3.
4.
5.
6.
7.
8.
Estimate future capacity requirements
Evaluate existing capacity
Identify alternatives
Conduct financial analysis
Assess key qualitative issues
Select one alternative
Implement alternative chosen
Monitor results
Forecasting Capacity Requirements
• Long-term vs. short-term capacity needs
• Long-term relates to overall level of capacity such as
facility size, trends, and cycles
• Short-term relates to variations from seasonal, random,
and irregular fluctuations in demand
Calculating Processing Requirements
Standard
processing time
per unit (hr.)
Product
Annual
Demand
#1
400
5.0
2,000
#2
300
8.0
2,400
#3
700
2.0
1,400
5,800
If annual capacity is 2000 hours, then we need three machines to handle the
required volume: 5,800 hours/2,000 hours = 2.90 machines
Processing time
needed (hr.)
Planning Service Capacity
• Need to be near customers
– Capacity and location are closely tied
• Inability to store services
– Capacity must be matched with timing of demand
• Degree of volatility of demand
– Peak demand periods
In-House or Outsourcing
Outsource: obtain a good or service
from an external provider
1.
2.
3.
4.
5.
6.
Available capacity
Expertise
Quality considerations
Nature of demand
Cost
Risk
Implications of Capacity Changes
Changes in:
•
Sales
•
Cash flow
•
Quality
•
Supply chain
•
Human resources
•
Maintenance
Special Requirements for Making Good
Capacity Decisions
•
•
•
•
Forecast demand accurately
Understanding the technology and capacity increments
Finding the optimal operating level (volume)
Build for change
Approaches to Capacity Expansion
Expected Demand
New Capacity
Time in Years
Capacity leads demand with an incremental expansion
Demand
Demand
Expected Demand
Time in Years
Capacity leads demand with a one-step expansion
Expected Demand
Time in Years
Capacity lags demand with an incremental expansion
Demand
Demand
Expected Demand
New Capacity
New Capacity
New Capacity
Time in Years
Attempts to have an average
capacity, with an incremental
expansion
Approaches to Capacity Expansion
Expected Demand
Demand
New Capacity
Time in Years
Capacity leads demand with an incremental expansion
Approaches to Capacity Expansion
Expected Demand
Demand
New Capacity
Time in Years
Capacity leads demand with a one-step expansion
Approaches to Capacity Expansion
Expected Demand
Demand
New Capacity
Time in Years
Capacity lags demand with an incremental expansion
Approaches to Capacity Expansion
Expected Demand
Demand
New Capacity
Time in Years
Attempts to have an average capacity, with an
incremental expansion
Evaluating Alternatives
• Cost-volume analysis
– Break-even point
• Financial analysis
– Cash flow
– Present value
• Decision theory
• Waiting-line analysis
Break-Even Analysis
• Fixed costs: costs that continue even if no units are
produced: depreciation, taxes, debt, mortgage
payments
• Variable costs: costs that vary with the volume of units
produced: labor, materials, portion of utilities
Breakeven Chart
Cost in Dollars
Total revenue line
Profit
Breakeven point
Total cost = Total revenue
Total cost line
Variable cost
Loss
Fixed cost
Volume (units/period)
Crossover Chart
Process A: low volume, high variety
Process B: Repetitive
Process C: High volume, low variety
Fixed cost - Process C
Fixed cost - Process B
Fixed cost - Process A
Process A
Process B
Process C
Lowest cost process
Assumptions of Cost-Volume Analysis
1. One product is involved
2. Everything produced can be sold
3. Variable cost per unit is the same regardless of
volume
4. Fixed costs do not change with volume
5. Revenue per unit constant with volume
6. Revenue per unit exceeds variable cost per unit
Financial Analysis
• Cash Flow - the difference between cash received
from sales and other sources, and cash outflow for
labor, material, overhead, and taxes.
• Present Value - the sum, in current value, of all future
cash flows of an investment proposal.
Net Present Value
F = future value
P = present value
I = interest rate
N = number of years
P
F
(i  1)
N
NPV in a More Convenient Form
Present value of $1.00
Year
P
F
(i  1)
N
P  FX
1
where X 
(i  1 ) N
5%
6%
7%
8%
1
0.952
0.943
0.935
0.857
2
0.907
0.890
0.873
0.857
3
0.864
0.840
0.816
0.794
4
0.823
0.792
0.763
0.735
5
0.784
0.747
0.713
0.681
6
0.746
0.705
0.666
0.630
7
0.711
0.665
0.623
0.583
8
0.677
0.627
0.582
0.540
9
0.645
0.592
0.544
0.500
Present Value of an Annuity (S)
Year
• X = Factor from Table
• S = present value of a
series of uniform annual
receipts
• R = receipts that are
received every year for the
life of the investment
S  RX
5%
6%
7%
8%
1
0.952 0.943 0.935 0.926
2
1.859 1.833 1.808
1.783
3
2.723 2.673 2.624
2.577
4
3.546 3.465 3.387
3.312
5
4.329 4.212 4.100
3.993
6
5.076 4.917 4.766
4.623
7
5.786 5.582 5.389
5.206
8
6.843 6.210 5.971
5.747
9
7.108 6.802 7.024
6.247
Decision Theory
• Helpful tool for financial comparison of alternatives under
conditions of risk or uncertainty
• Suited to capacity decisions
• See Chapter 5 Supplement
Decision Tree and Capacity Decision
-$14,000
Market favorable (0.4)
$100,000
Market unfavorable (0.6) -$90,000
$18,000
Market favorable (0.4)
$60,000
Market unfavorable (0.6) -10,000
$13,000
Market favorable (0.4)
-5,000
Market unfavorable (0.6) $40,000
$0
Waiting-Line Analysis
• Useful for designing or modifying service systems
• Waiting-lines occur across a wide variety of service
systems
• Waiting-lines are caused by bottlenecks in the process
• Helps managers plan capacity level that will be costeffective by balancing the cost of having customers wait
in line with the cost of additional capacity
The End