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Production Capacity.

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Production Capacity.

PRODUCTION CAPACITY

The maximum rate of output of a

process or a system.

Volume of products that can be

generated by a production plant orenterprise in a given period by using

current resources.

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Production Capacity.

Capacity

The maximum level ofoutput.

The amount ofresource inputsavailable

relative to outputrequirementsat a

particular time.

Capacity is the upper limit orceilingon

the load that an operating unit can handle.

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Examples ofCapacity Measures

Type of Measures of Capacity

Organization Inputs Outputs

Manufacturer Machine hours

per shift

Number of units

per shiftHospital Number of beds Number of

patients treated

Airline Number of planes

or seats

Number of

seat-miles flown

Restaurant Number of seats Customers/time

Retailer Area of store Sales dollars

Theater Number of seats Customers/time4

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Production Capacity.

CAPACITY PLANNING.

Design of the production system involves planning for

the inputs, conversion process and outputs of

production operation.

Theeffectivemanagement of capacity is themost

important responsibility of production management.

The objective of capacity management (i.e., planning

and control of capacity) is to match the level of

operations to the level of demand.

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Production Capacity

Capacity planning is to be carried out keeping in mind

future growth and expansion plans,market trends,

sales forecasting,etc.

It is a simple task to plan the capacity in case of

stable demand. But in practice the demand will beseldomstable.

The fluctuation of demand creates problems

regarding the procurement of resources to meet

the customer demand.

Capacity decisions - arestrategic in nature.

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Production Capacity.

Capacity is the rate of productive capability of a facility.

Capacity is usually expressed as volume of output per

period of time Productionmanagers aremore concerned about the

capacity for the following reasons:

Sufficient capacity is required to meet the

customers demand in time.

Capacity affects the cost efficiency of operations.

Capacity affects thescheduling system.

Capacity creation requires an investment. Capacity planning is the first step when an organization

decides to producemore or new products.

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Production Capacity.

Capacity Planning

The basic questions in capacity planning are:

What type of capacity is needed?

How much is needed?

When is it needed?

How does productivity relate to capacity?

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Production Capacity.

Measurement of Capacity Planning

Design capacity

maximum obtainable output

System capacity Maximum capacity given product mix,scheduling

difficulties, and other doses of reality.

Actual output

rate of output actually achieved--cannot exceed effective

capacity.

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Production Capacity.

Capacity and output relationship.

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Production Capacity.

Measurement of Capacity Planning

The capacity of themanufacturing unit can be

expressed in number of units of output per

period.In somesituationsmeasuring capacity ismore

complicated when they manufacturemultiple

products.

In such situations, the capacity isexpressed as

man-hours or machine hours.11

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Production Capacity.

1.Design capacity: Designed capacity of a facility is the planned or

engineered rate of output of goods or services

under normal or full scale operating conditions. For example, the designed capacity of the cement

plant is 100 TPD (Tonnes per day). Capacity of the

sugar factory is 150 tonnes ofsugarcane crushing

per day.

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Production Capacity.

2. System capacity:

System capacity is themaximum output of thespecificproduct or product mix thesystem of workers and

machines is capable of producing as an integrated

whole.

System capacity is less than design capacity or at the

most equal, because of the limitation of product mix,

quality specification, breakdowns.

The actual iseven less because ofmany factors affecting

the output such as actual demand, downtime due to

machine/equipment failure, unauthorized absenteeism.

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Production Capacity.

Thesystem capacity is less than design capacity

because of long range uncontrollable factors. The actual output isstill reduced because ofshort-

termeffectssuch as, breakdown ofequipment,

inefficiency of labor.

Thesystemefficiency isexpressed as ratio of actual

measured output to thesystem capacity.

System Efficiency (SE) = Actual output / Systemcapacity

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Production Capacity.

3 Licensed capacity:

Capacity licensed by the various regulatory agencies orgovernment authorities. This is the limitation on the

output exercised by the government.

4. Installed capacity:

The capacity provided at the time of installation of the

plant is called installed capacity.

5. Rated capacity:

Capacity based on the highest production rate

established by actual trials is referred to as rated

capacity

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Production Capacity.

Thank You.

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