Capacity Management: Process of planning, managing and optimising resources for effective utilisation of demand.

Operation Performance Objectives: Cost, Speed, Quality, Flexibility, Dependability.

Operation Capacity: Design Cap (Highest achievable output under perfect conditions, it’s unrealistic), Effective Cap
(max output under realistic, normal working conditions accounting for product mix, maintenance, and operational
inefficiencies). Actual Cap (real output achieved considering current operating conditions, workforce efficiency and
practical constraints in production process).
Capacity utilisation: Utilisation rate: Actual Cap/Design Cap*100. Efficiency rate: Actual Cap/Effective Cap*100
Design Cap = Multiply all with original hours. Effective Cap: Multiply with reduced hours.
Managing Capacity (capacity management refers to the waste to cope with the mismatch between demand and
capacity. Three methods of coping: 1) Level Capacity management (Maintaining constant output rate despite
fluctuating demand often requiring inventory adjustment and workforce stability). 2) Chase Demand Capacity
(aligning output directly with demand, scaling production up or down as customer requirements fluctuate). 3)
Demand Management (Capacity is kept unchanged while the operations use different short-term strategies to
manipulate demand)
Vol Excess Demand
Level

Demand Cap Improving

T Reducing Demand
Deficit excess
Demand
Lean Manufacturing: Ideology of maximising productivity by minimising waste within a manufacturing operation.
Eliminating waste is certainly a key element of lean practice.
Five Lean Principles: a. Identify value from the customer's perspective. B. Map the value stream to understand the
flow of materials and information. c. Create flow by eliminating bottlenecks and interruptions in the process.
d. Establish pull systems to produce only what is needed when it is needed. e. Pursue perfection through continuous
improvement.
8 Ways of lean manufacturing: DOWNTIME (Defects: Products services or information are incomplete or
inaccurate; Overproduction: Making something earlier or faster than needed, making more than what is needed;
Waiting: Idle time while waiting for materials, equipment, parts. People, information. Non-utilised talent;
Transportation excess: Unnecessary movement of products equipment or materials. Inventory Excess: Over
accumulation of stock beyond what is necessary to serve the customers; Motion Excess: Any movement by the time
that will not provide value to the customer; Excess processing: Any additional steps in a process that do not add value
to the customers.
Advantages of LM: Saves time and money, environmentally friendly, Improved Customer Satisfaction
Disadvantages: Employee safety, Stops future development.
Economic Oder Quantity: Classic model developed to minimise total annual inventory costs.
Assumptions/Criticisms: Only one product is involved. Demand is known and constant, The Whole EOQ is received
in single delivery, Lead time is known and constant, Quantity discounts are not possible, No shortages or stock outs,
Set up or order costs is fixed, holding or carrying costs is fixed.
EOQ= TC = Inventory Holding Cost (H) + Set up cost
Annual Inv HC = Avg Inv * Annual Holding Cost per unit = (Q/2) *H
Annual Ordering Cost = No. of Orders per year * Set up costs per order = (D/Q) *S
Total Annual Costs (Tc) =(D/Q) *S + (Q/2) *H
Optimal Order Quantity (EOQ) = Q* = Sqrt (2DS/H)
No of Orders/year (N) = D/Q*
Expected Time between orders = Working days/N
Cycle time = time available/ no. to be processed
WIP= Length of the queue/ Spacing
TP efficiency= Work content/ Throughput time*100.
Throughput time = WIP X Cycle time
Process Improvement: To enhance efficiency, productivity, quality and
Overall performance. Aims for better outcomes, reduce waste etc.,
Identify goals and Objectives, Process Mapping, Data Collection and
Analysis, Root cause analysis, benchmarking, Generate Improvement
Ideas. Implement changes, continuous monitoring, Standardisation.
Managing constraints and balancing: It is crucial for optimising the efficiency and
Effectiveness of the process involved.
Identifying constraints, analysing impact, resource allocation, optimising the constraint, sequential improvement,
continuous monitoring,
Improvement Priority: Not all process may require immediate attention, and some may have more significant
impact on overall performance than others.
Impact Analysis, Cost benefit analysis, Alignment with the objectives, risk assessment, feasibility, stakeholder input,
Phased approach, Iterative process.
Process Improvement Methodologies: Six Sigma, Lean Manufacturing, Total Quality Management, Business Process
Re-engineering, Kaizen, Design Thinking, Agile and scrum, Theory of constraints, Benchmarking, continuous
improvement, and Process Redesign.
Six Sigma: DMAIC Methodology: Define, Measure, Analyse, Improve, and Control.
In addition to DAMIC, six sigma includes DMADV process: Define, Measure, Analyse, Design and Verify.
Process Design Analysis:
Analysis of process maps encourages process simplification, elimination of non-value adding activities – waste
identification of delays, fail-points, bottle-necks reduction of travelling distance; Review appropriateness and
frequency of points of inspection; design of controls and measurements.
We can identify and address the bottlenecks with process map.
Bottleneck: Resource bottlenecks, Flow bottleneck, Policy or design bottleneck.
Cycle Time: It is the duration to complete a process, crucially for efficiency, workflow optimisation and meeting of
customer demands.
Process Mapping and Analysis Steps:
Plot the different stages in the process
Identify the line of visibility (if applicable)
Recognise points and levels of discretion Add timings / cycle times...
Use different colours to indicate different depts/players
Isolate the failure points, customer waits
Improve the design
Introduce control and measurement systems
Develop a shared view of the process.
Long and Thin vs Short and Fat:
L&S describe the no. of stages, T & F describe the amount of work at each stage.
Comparing process design: (short Fat; Thin Long) Process balancing, Automation, Changing capacity, Motivation