Operations Management

Capacity Analysis
 Capacity
Defined
ä Capacity: the ability to hold, receive, store,
or accommodate
· In business, viewed as the amount of output that a
system is capable of achieving over a specific period of
time
· Capacity management needs to consider both inputs
and outputs
· Many industries measure and report capacity in terms
of output
· Industries whose product mix is very uncertain, like
hospitals, often express capacity in terms of inputs
Capacity Analysis
A Simple Example

A 1
Unit processing time = 3 minutes 1 machines
100% machine available 100% yield
Setup time = 0 minutes Batch size = 25 units
 Capacity Analysis
Single Product - Single Stage

A 1 1
3 × 25 + 15
× 25 × 60 = 16.67 / hr

Unit processing time = 3 minutes 1 machines

100% machine available 100% yield
Setup time = 15 minutes Batch size = 25 units

What is the capacity of this station, when batch size is…units?

1 units 10 units 100 units
1 1 1
×1× 60 = 3.33 / hr ×10 × 60 = 13.33 / hr ×100 × 60 = 19.05 / hr
3 + 15 3 ×10 + 15 3 ×100 + 15
Batch Size and Capacity
Capacity
(Units / hr)

20 units/hr

Batch Size
 Capacity Analysis
Multiple Products - Single Stage
1 minute/unit
100% process yield

A
B
1
2 minutes/unit
1 machine
100% process yield
100% available

ä What’s the capacity of this system?

· Assume 80% A and 20% B product Mix
processing time of a " mixed" product : 0.8 + 0.2 × 2 = 1.2 min
1
capacity : × 60 = 50 / hr (A : 40/hr , B :10 /hr )
1.2
 Production Possibility Set
Want to show how capacity changes with product mix

X units of A 60
(per hour)

40
X+2Y=60

Y units of B
10 (per hour)
30
 Capacity Analysis
Multiple Products - Single Stage
1 minute/unit
100% process yield

A
B
1
2 minutes/unit
1 machine
100% process yield
100% available

ä Demand rates:
· A – 24 per hour 80% A, 20% B
· B – 6 per hour
ä Capacity = 1
× 60 = 50 / hr (A : 40/hr , B :10 /hr )
.8 + .2 × 2
ä Load Factor =
30 / 50 = 60%
 Capacity Analysis
Multiple Products - Single Stage

Demand rates:
X units of A 60 · A – 24 per hour
(per hour)
· B – 6 per hour
48

40
X+2Y=60

24

Y units of B
6 10 18 (per hour)
30
 Capacity Analysis
Multiple Products - Single Stage

1 minute/unit
100% process yield 1
A A: × 60 × 50 = 17.65 / hr

B
1 B:
20 + 50 + 50 × 2
1
× 60 × 50 = 17.65 / hr
2 minutes/unit
20 + 50 + 50 × 2
1 machine
100% process yield
10 minute set-up
Batch size of 50
100% available
 Capacity Analysis
Multiple Products - Single Stage

1 minute/unit
100% process yield
1
A A: × 60 × 80 = 34.29 / hr

B
1 B:
20 + 80 + 2 × 20
1
× 60 × 20 = 8.57 / hr
2 minutes/unit
20 + 80 + 2 × 20
1 machine
100% process yield
10 minute set-up
Batch size is 80 for
A, and 20 for B
100% available

ä Product mix
ä Setup times
ä Lot size
 Exercise
ä A small toy manufacturer produces toy castles. At final assembly,
each castle is made by fitting 2 “bottom” pieces together and then
topping that with 3 “top” pieces. Each Step consists of a single
machine. Average production rates are included. The machine at Step
A can make 500 “top” pieces per hour or 350 “bottom” pieces per
hour, and incur no setup time when switched between making the
“bottom” and “top” pieces. (Machine at Step A produces “top” and
“bottom” pieces according to a product mix of 3:2.)

B
Top 3

250 parts/hr
A D

Bottom 2
Top: 500 parts/hr C Final Assembly: 150 per hour
Bottom: 350 parts/hr

200 parts/hr
Product Cycling Example

Kodak Film Production

‘100’ setu ‘200’ setu ‘400’ setu ‘100’ setu ‘200’

Film p Film p Film p Film p Film
 Batch Sizing
Product Cycling

ä Single facility, makes multiple products

· Makes each product in a batch
· Cycles among the products (makes one,
then another, then another...then comes
back to the first one)
· Demand rate for each product
· Setup times for each product
Product Cycling

Example: Production of m&m’s candy

five colors
demand: 16 tons/week for each color
production rate after set-up: 96 tons/week
eight hour set-ups between batches of each color
(set-up is 0.2 weeks in a 40-hour week, i.e., 8hr).
Questions:
How small can batches be and still meet demand?
How long between the time we produce ‘red’ until the next time
we produce ‘red’ ? ‘blue’? ….
 Product Cycling Example

ä Total Demand (D)

= 5*16 tons/wk = 80 tons/wk

red yellow green blue brown

ä Production rate (C) = 96 tons/wk

ä Changeover (setup) time (S) between colors
= 8 hrs. (0.2 wks in a 40-hour week)
 Cycle Time

red yll grn blue brn red yll grn

w w

0.2 wks End of cycle

T weeks

Cycle length (T) = time scheduled for a production cycle

through all colors.
We want to find...
Tmin = the shortest possible cycle length with a sufficient
proportion of production time to meet demand.
 Product Cycling

ä If we want to meet demand, then how much

time is available for us to spend in setting
up?

ä Want to solve an equation so that we exactly

fill up the available capacity
Tmin =
 Product Cycling

ä General formula, n products

· Demand for each product: Di
· Capacity for each product: Ci
ä Sum utilizations of product lines: D1 + D2 + ... +
Dn
ä C1 fill
Scale total setup time S in a cycle to C2 Cn

remaining resource availability

S
Tmin ≥
⎛ D1 D2 Dn ⎞
1− ⎜ + + ... + ⎟
C
⎝ 1 C 2 C n ⎠
Finish the M&M’s Example
Insights for Product Cycling
Insight 1: What is Tmin?

If the cycle length = Tmin, the process is able to meet

demand but is constantly busy either setting up or
producing.

When we try a cycle length less than Tmin ...

When we try a cycle length greater than Tmin...

Insights for Product Cycling

Insight 2: set-up time reduction enables reductions in cycle

length and inventory, increases flexibility and reduces
lead times.

Insight 3: Cycle length (and average inventory) explode as

the ratio of demand to production rate (D/C) approaches
1.
Corollary: Increasing demand in one product can
dramatically increase lead time and inventory for
another.
 Process Layout of a Medical Center

Departments
Patient
Waiting X-Ray Orthopedic Type Department
area care
(1) (2) (3) A 1,2,3
B 1,4,6
(1,000 ppw) (400 ppw) (250 ppw) C 1,2,5
D 1,2,6

Patient
Cardiology Neurology Intensive Mix
care
(4) (5) (6) A 0.4
B 0.3
(500 ppw) (300 ppw) (600 ppw) C 0.2
D 0.1
Process Layout of a Medical Center
Capacity Analysis

Patient Patient Department

Type Mix Wait Area X-ray Orthopedic Cardinology Neurology Intensive care
A 0.4 1 1 1
B 0.3 1 1 1
C 0.2 1 1 1
D 0.1 1 1 1
Total 1 0.7 0.4 0.3 0.2 0.4

Dept. capacity 1000 400 250 500 300 600

Max. # of total 1000 571 625 1667 1500 1500

patients arrived
before reaching cap.
 Summary
ä Capacity
· Product mix
· Setup times
· Lot size
ä Product cycling
S
Tmin ≥
⎛D D D ⎞
1 − ⎜ 1 + 2 + ... + n ⎟
ä Industries⎝ Cwhose
1 C2 product mix is very uncertain
Cn ⎠
often express capacity in terms of inputs