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5 Operations Management UNIT 5

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51 views18 pages

5 Operations Management UNIT 5

Uploaded by

MOHAMMAD BORENE
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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UNIT 5

Healthcare
Operations
Management
PHHA 424
Health Care Operations Management
Department of Health Services Management
College of Public Health, University of Hail
Unit 5

CAPACITY PLANNING FOR


PRODUCTS AND SERVICES
LEARNING OBJECTIVES
• Upon completion of this unit, the student should be able to:

– 1) Define capacity in general terms.

– 2) Determine the key questions in capacity planning.

– 3) Recognize the importance of capacity decisions.

– 4) Define the terms design capacity, actual output, efficiency


and utilization .

– 5) Compute for efficiency and utilization.

– 6) List the determinants of effective capacity.


LEARNING OBJECTIVES
– 7) Describe the different capacity strategies.

– 8) Define capacity cushion.

– 9) Identify the steps in the capacity planning process.

– 10) Name the different factors in determining whether to make or buy.

– 11) List the ways of developing capacity alternatives.

– 12) Define economies and diseconomies of scale.

– 13) Define cash flow and current value.


CAPACITY PLANNING FOR
PRODUCTS AND SERVICES

 INTRODUCTION
1) General Definition of Capacity
2) Key Questions in Capacity Planning
GENERAL DEFINITION OF CAPACITY

• Capacity refers to an upper


limit or ceiling on the load
that an operating unit can
handle.

• The load might be in terms


of:
– (1) Number of patients seen
in the OPD per day;
– (2) Number of blood tests
done in the lab per month.
Goal of strategic capacity planning

The goal of strategic capacity planning is


to achieve a match between the long
term supply capabilities of an
organization and the predicted level of
long-term demand.
FUNCTIONAL DEFINTIONS OF CAPACITY:
DESIGN CAPACITY
• The maximum output
rate or service capacity
an operation, process
or facility is designed
for.
–Design capacity is the maximum output of a
structure,facility, process, machine, tool or
component based on its design
IMPORTANT TERMINOLOGY RELATED TO CAPACITY:
ACTUAL OUTPUT
• Actual Output

– This pertains to the rate


of output that is actually
achieved.
Effective capacity is

{Design capacity} – {Allowances such


as personal time and maintenance}
MEASURES OF SYSTEM EFFECTIVENESS:
(1) EFFICIENCY
• (1) Efficiency

– This is the ratio of actual output to effective capacity.

– Efficiency = Actual Output x 100%


Effective Capacity
MEASURES OF SYSTEM EFFECTIVENESS:
(2) UTILIZATION
• (2) Utilization

– This is the ratio of actual output to design capacity.

– Utilization = Actual Output x 100%


Design Capacity
SAMPLE COMPUTATION FOR
EFFICIENCY AND UTILIZATION
• Case 1: Given the following information, compute the efficiency and the
utilization of the medical lab:
– Design Capacity = 50 tests per day
– Effective Capacity= 40 tests per day
– Actual Output = 36 tests per day

• Efficiency = [(Actual Output) / (Effective Capacity)] x 100%


• = [(36 tests per day) / (40 tests per day)] x 100%
• = 90%

• Utilization = [(Actual Output) / (Design Capacity)] x 100%


• = [(36 tests per day) / (50 tests per day)] x 100%
• = 72%
ECONOMIES OF SCALE

• If the output rate is less


than the optimal level,
increasing the output rate
results in decreasing
average unit costs.
DISECONOMIES OF SCALE

• If the output rate is more


than the optimal level,
increasing the output rate
results in increasing average
unit costs.
SUMMARY

• (1) Capacity refers to an upper limit on the rate of output.

• (2) The different capacity strategies are: (a) leading capacity


strategy; (b) following capacity strategy; and (c) tracking
capacity strategy.

• (3) Capacity Cushion is an amount of capacity in excess of


expected demand when there is some uncertainty about
demand.

• (4) There are various ways of developing capacity alternatives.


SUMMARY

• (5) Economies of Scale occurs if the output rate is less than


the optimal level, increasing the output rate results in
decreasing average unit costs.

• (6) Diseconomies of Scale occurs if the output rate is more


than the optimal level, increasing the output rate results in
increasing average unit costs.
• Leading capacity, where capacity is increased to meet expected demand.
• Following capacity, where companies wait for demand increases before
expanding capabilities.
• Tracking capacity which adds incremental capacity over time to meet
demand.
Thank you

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