Capacity and constraint management

Capacity

The throughput, or the number of units a facility can hold, receive, store, or produce in a period of time

Design Capacity

the maximum theoretical output of a system and is normally expressed as a rate

Effective Capacity

the capacity a firm expects to achieve given current operating constraints

Actual output

How many outputs you actually produce based on demand or needs, etc.

Utilization

the percent of design capacity actually achieved

Efficiency

the percent of effective capacity actually achieved

What happens if demand exceeds capacity?

(good problem) Curtail demand by raising prices, scheduling longer lead time

What happens if capacity exceeds demand?

(bad problem)Stimulate market and Product changes

Adjusting to seasonal demands

Produce products with complementary demand patterns

Capacity analysis

determines the throughput capacity of workstations in a system

bottleneck

a limiting factor or constraint

bottleneck time

the time of the slowest workstation (the one that takes the longest) in a production system

throughput time

the time it takes a unit to go through production from start to end

Break-Even Analysis

Technique for evaluating process and equipment alternatives. Objective is to find the point in dollars and units at which cost equals revenue

BEPx

break-even point in units

BEP$

break-even point in dollars