Scribd Logo
Upload

Welcome to Scribd!

  • 28 views

    Session5 P

    Uploaded by

    Aniket Borse
    The document discusses capacity planning and decisions around asset sizing and timing. It presents models for lead and lag capacity policies and notes that commodity products benefit from lead policies while brands with strong equity can afford lag policies. The document outlines a capacity planning hierarchy from executional to tactical to strategic time horizons. It provides an example manufacturing line and calculates throughput, cycle time, and work-in-process inventory levels.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd

    Session5 P

    Uploaded by

    Aniket Borse
    28 views22 pages
    The document discusses capacity planning and decisions around asset sizing and timing. It presents models for lead and lag capacity policies and notes that commodity products benefit from lead policies while brands with strong equity can afford lag policies. The document outlines a capacity planning hierarchy from executional to tactical to strategic time horizons. It provides an example manufacturing line and calculates throughput, cycle time, and work-in-process inventory levels.

    Original Description:

    Session1 p

    Copyright

    © © All Rights Reserved

    Available Formats

    PDF, TXT or read online from Scribd

    Did you find this document useful?

    Is this content inappropriate?

    The document discusses capacity planning and decisions around asset sizing and timing. It presents models for lead and lag capacity policies and notes that commodity products benefit from lead policies while brands with strong equity can afford lag policies. The document outlines a capacity planning hierarchy from executional to tactical to strategic time horizons. It provides an example manufacturing line and calculates throughput, cycle time, and work-in-process inventory levels.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    28 views22 pages

    Session5 P

    Uploaded by

    Aniket Borse
    The document discusses capacity planning and decisions around asset sizing and timing. It presents models for lead and lag capacity policies and notes that commodity products benefit from lead policies while brands with strong equity can afford lag policies. The document outlines a capacity planning hierarchy from executional to tactical to strategic time horizons. It provides an example manufacturing line and calculates throughput, cycle time, and work-in-process inventory levels.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    of 22

    Session 5:

    Capacity Decisions
    Asset Sizing & Timing: Tesla
    Asset
    Location:
    Tesla
    GM reducing capacity is a good
    pre-emptive decision
    Capacity Strategy models
    Lead Policy

    Predicted demand
    Volume

    Lag Policy

    Time
    When to Lead?
    • Commodity products with little differentiation
    • Pricing competitive
    • Service levels are critical
    • No loyalty, lack of capacity leads to lost sale
    • Huge after market sales (ex razors, printers)
    When can afford to lag?
    • Compete on IPRs

    • Strong brand equity

    • Early in the life cycle

    • High degree of market uncertainty


    Capacity Planning Hierarchy
    Our Focus

    Executional Tactical Strategic


    Capacity Planning Capacity Planning Capacity Planning

    Time
    0-30 days 1-18 months 1-5+ years
    Horizon

    Planning
    Hours or days Weeks or months Quarters or years
    Buckets

    Capacity expansion
    Optimal allocation
    (contraction) of hard-
    of existing capacity
    to-flex resources
    Schedule for
    Decisions
    existing resources Capacity levels of
    Capacity technology
    easy-to-flex
    resources
    Capacity location
    An Example

    3 min 4 min 6 min

    RM I I II III Inspect ship

    reject
    2 min IV

    RM II
    Question

    The Shop is in steady state. How long will it


    take to complete an order of 500 units?
    What is the cycle time?
    A: Bottleneck rate = 10 units /hour = Throughput
    Time taken to complete the order = 500 units/10 units per hour = 50
    hours

    Cycle time = Bottleneck rate

    Bottleneck drives the capacity

    3 min 4 min 6 min


    RM I
    I II III Inspect ship

    RM II reject
    IV 2 min
    Performance Measures
    • Cycle time
    – time between 2 successive units on the line
    – Same as the time of the slowest workstation (bottleneck)
    – Bottleneck controls the speed of the process

    • Production rate or flow rate or Throughput


    – 1/cycle time
    Question

    How often should we release RM1 and RM2 in


    the line?
    A: 1 unit every 6 minutes of RM1 at t = 0
    1 unit every 6 minute of RM2 at t = 1

    3 min 4 min 6 min


    RM I
    I II III Inspect ship

    RM II reject
    IV 2 min
    Question

    What is the size of work-in-process (WIP)


    inventory before each of the four stations
    (i.e., I, II, II, IV) by the end of an 8 hour shift
    if we release 100 units each of RM1 & RM2
    at the beginning of each hour?
    A: WIP
    before I: 80 units/hour * 8hours = 640 units
    before II: (5*8) + (15*8) = 160 units
    before III: 5*8 = 40 units
    before IV: 70*8 = 560 units

    3 min (20units/hr)
    4 min (15units/hr) 6 min (10units/hr)
    RM I
    I II III Inspect ship

    RM II reject
    IV 2 min (30units/hr)

    You might also like