OMIS 430 John Woosley Exam 2

Capacity

the upper limit or ceiling that an operating unit can handle

goal of strategic capacity planning

to achieve a match between long-term supply capabilities of an organization and the predicted level of long-term demand

Overcapacity

the situation in which an industry or factory cannot sell as much as it can produce; operating costs are too high

Under capacity

a situation in which businesses are unable to provide all the products or services that customers are will to buy; strained resources and possible loss of customers

types of capacity

design, effective, actual

design capacity

maximum output rate or service capacity an operation, process, or facility is designed for

effective capacity

design capacity minus allowances such as personal time, maintenance, and scrap

actual capacity

rate of output actually achieved (cannot exceed effective capacity-only less than or equal to)

What do we use to measure system effectiveness?

Efficiency (how well) and utilization (how much)

determinants of capacity

Facilities

Product and service factors

Process factors

Human factors

Policy factors

Operational factors

Supply chain factors

External factors

Strategies are typically based on...

assumptions and predictions about long-term demand patterns, technological change, and competitor behavior

capacity cushion

extra capacity used to offset demand uncertainty;

= 100% - utilization

Greater demand uncertainty

_______________ has greater capacity cushion.

overall level

Long-term considerations relate to ______________ of capacity requirement

probable variations

Short-term considerations relate to ______________ in capacity requirements.

Service capacity planning can present a number of challenges related to:

-the need to be near customers (convenience)

-the inability to store services (can't store for later consumption)

-the degree of demand volatility (volume and timing of demand, time required to service an individual)

Demand management strategies

strategies used to offset limitations and that are intended to achieve a closer match between supply and demand

types of capacity strategies

leading, following, and tracking

leading capacity strategy

build capacity in anticipation of future demand increases

following capacity strategy

build capacity once the demand increases (wait and see, reactive)

tracking capacity strategy

adds capacity in small increments to keep up with increasing demand

outsource

Once capacity requirements are determined, the organization must decide whether to produce a good/service itself or ______________.

bottleneck operations

an operation in a sequence of operations whose capacity is lower than that of the other operations

economies of scale

if output rate is less than the optimal level, increasing the output rate results in decreasing average per unit

diseconomies of scale

if the output is more than the optimal level, increasing the output rate results in increasing average per unit costs

optimal operating level

optimal rate of output where the cost is the lowest

constraint

something that limits the performance of a process or system in achieving its goals

evaluating alternatives

based off of economic and non-economic reasons

cost volume analysis technique for evaluating alternatives

focuses on the relationship between cost, revenue, and volume of output using the break even point

decision theory technique for evaluating alternatives

using a mathematical approach to make decisions today based on things that may happen in the future and making a decision tree

break-even point

the volume of output at which total cost and total revenue are equal

step costs

Capacity alternatives may involve ________________, which are costs that increase stepwise as potential volume increases

sensitivity analysis

determining a range of probability for which an alternative has the best expected payoff

decision tree

schematic representation of available alternatives and their possible consequences; useful for analyzing situations that involve sequential decisions

project

unique, one-time operations designed to accomplish a specific set of objectives in a limited time frame

project manager

ultimately responsible for the success or failure of the project

project champion

a person who promotes and supports a project

work breakdown structure (WBS)

a hierarchical listing of what must be done during a project; establishes a logical framework for identifying the required activities for the project

PERT

program evaluation and review technique

CPM

critical path method

PERT, CPM

_____________ and _____________ are two techniques used to manage large-scale projects

Network diagram

Diagram of project activities that shows sequential relationships by use of arrows and nodes

deterministic time estimates

fairly certain (how long does it take to get to school?)

Probabilistic time estimates

allow for variation

early start

the earliest time an activity can finish

early finish

the earliest time an activity can finish

= ES + t

late start

the latest time the activity can start and not delay the project

= LF - t

late finish

the latest time the activity can finish and not delay the project

slack

extra time an activity can completed before the project is delayed

can be computed by (LS - ES) or (LF - EF)

critical path

The ______________ cannot have slack

Nodes cannot be drawn vertically because...

time is shown horizontally.

larger

When two arrows enter a node, the ______________ EF value becomes the ES time. Both predecessors must be finished before the next can begin.

slack time

knowledge of this provides managers with information for planning allocation or scarce resources

Time-Cost Trade-Offs

Activity time estimates are made for some given level of resources; it may be possible to reduce the durations of a project by injecting additional resources

Crashing

shortening activity durations (by adding funds/resources)

critical path

Crashing candidates are only activities within the ______________.

If you crash on non critical activities...

...you get more slack.

General Crashing Procedure

1. Crash the project one period at a time

2. Crash the least expensive activity that's on the critical path

3. When there are multiple critical paths, find the sum of crashing the least expensive activity on each critical path

Risks

are an inherent part of project management (every project has them)

process selection

refers to deciding on the way production of goods or services will be organized

major implications: capacity planning, layouts of facilities, equipment, design of work systems

capital intensity and process flexibility

the key aspects of process strategy

capital intensity

mix of equipment and labor that will be used

process flexibility

how much the system can be adjusted to changes

Factors that influence process selection

variety (how much?), equipment flexibility (to what degree?), and volume (expected output?)

demand

Process choice is ________________ driven.

types of processing

1. Job shops

2. Batch

3. Repetitive/Assembly

4. Continuous

job shop

customized goods or services (like an ER doctor being prepared for anything that comes through the door)

batch

semi-standardized goods or services

repetitive/assembly

standardized goods or services

continuous

highly standardized goods or services

Process selection involves...

substantial investment in equipment and has a very specific influence on layout

Product or service profiling

linking key requirements to process capabilities

Technological Innovation

The discovery and development of new or improved products, services, or processes for producing or providing them

technology

The application of scientific discoveries to the development and improvement of products and services and/or processes that produce or provide them

automation

Machinery that has sensing and control devices that enable it to operate automatically

types of automation

fixed, programmable, and flexible

programmable automation

Involves the use of high-cost, general-purpose equipment controlled by a computer program that provides both the sequence of operations and specific details about each operation

flexible automation

Evolved from programmable automation. It uses equipment that is more customized than that of programmable automation. A key difference between the two is that flexible automation requires significantly less change over time.

flexible manufacturing system

FMS (acronym)

computer integrated manufacturing

CIM (acronym)

facilities layout

The configuration of departments, work centers, and equipment, with particular emphasis on movement of work (customers or materials) through the system

basic layout design objective

Facilitate a smooth flow of work, material, and information through the system

basic layout types

product, process and fixed position

product layout

Layout that uses standardized processing operations to achieve smooth, rapid, high-volume flow

process layout

Layouts that can handle varied processing requirements

fixed position layout

Layout in which the product or project remains stationary, and workers, materials, and equipment are moved as needed

combination layout

Some operational environments use a combination of the three basic layout types

cellular production

layout in which workstations are grouped into a cell that can process items that have similar processing requirements

group technology

the grouping into part families as items with similar design or manufacturing characteristics

(assembly) line balancing

the process of assigning tasks to workstations to minimize downtime and improve efficiency

cycle time

the maximum time allowed at each workstation to complete its set of tasks on a unit, establishes the output rate of a line

*must be at least the same as the longest task time

precedence diagram

shows elemental tasks and their precedence requirements