How do capacity decisions influence productivity

DISCUSSION AND REVIEW QUESTIONS

TAKING STOCK Q wr,.tarethemajortrade-offsincapacityplanning? Q) Wt o needs to be involved in capacity planning?

@ln what ways does technology have an impact on capacity planning?

CRITICAL THINKING EXERCISES

1. A computer repair service has a design capacity of80 repairs per day. Its effective capacity, how- eveq is 64 repairs per day, and its actual output is 62 repairs per day. The manager would like to increase the number of repairs per day. Which of the following factors would you recommend that the manager investigate: quality problems, absenteeism, or scheduling and balancing? Explain your reasoning.

2. Compared to manufacturing, service requirements tend to be more time dependent, location depen- dent, and volatile. In addition, service quality is often directly observable by customers. Find a recent article in a business magazine that describes how a service organization is struggling with one or more of these issues and make recommendations on what an organization needs to do to overcome these difficulties.

3. Identifi, four potential unethical actions or inactions related to capacity planning, and the ethical principle each violates (see Chapter 1).

1. Determine the utilization and the efficiency for each of these situations:

a. A loan processing operation that processes an average of 7 loans per day. The operation has a design capacity of 10 loans per day and an effective capacity of 8 loans per day.

b. A furnace repair team that services an average of four furnaces a day if the design capacity is six furnaces a day and the effective capacity is five furnaces a day.

c. Would you say that systems that have higher efficiency ratios than other systems will always have higher utilization ratios than those other systems? Explain.

PROBLEMS

Ghapter Five Strategic Capacity Planning for Products and Services

1. Contrast design capacity and effective capacity.

2. List and briefly explain three factors that may inhibit capacity utilization.

3. How do long-term and short-term capacity considerations differ?

4. Give an example of a good and a service that exhibit these seasonal demand patterns:

a. Annual b. Monthly c. Weekly d. Daily

5. Give some examples of building flexibility into system design.

6. Why is it important to adopt a big-picture approach to capacity planning?

7. What is meant by "capacity in chunks," and why is that a factor in capacity planning?

8. What kinds of capacity problems do many elementary and secondary schools periodically experi- ence? What are some alternatives to deal with those problems?

9. How can a systems approach to capacity planning be useful?

1 0. How do capacity decisions influence productivity?

11. Why is it important to match process capabilities with product requirements?

12. Briefly discuss how uncertainty affects capacity decisions.

13. Discuss the importance of capacity planning in deciding on the number of police officers or fire trucks to have on duty at a given time.

14. Why is capacity planning one of the most critical decisions a manager has to make?

15. Why is capacity planning for services more challenging than it is for goods production?

16. What are some capacity measures for each of the following?

a. University b. Hospital c. Computer repair shop d. Farm

17. What is the benefit to a business organization of having capacity measures?