Principles of Management Revision/Review Articles - List
picture source: https://www.pexels.com/photo/car-brand-factory-tesla-776311/
Resource planning and resource acquisition are fundamental managerial functions according to Narayana Rao (2 March 2010).
Capacity Planning Concepts
Best operating level
The best operating level of a plant is the production volume at which average cost is the lowest. Companies try to operate close to this point. If demand is consistently higher than the best operating level, then they increase the capacity to lower the cost close to the best operating level cost.
Economies of scale
This concept signifies that as production volumes increase, the average cost per unit decreases. Higher capacity plants have a lower production cost compared to lesser capacity plants.
The experience curve
As plants produce more units, they gain experience in their production methods, which in turn, results in reducing the per unit costs of production in a predictable manner.
Capacity focus
The concept of focused factory states that it is more effective to have different plants for products with significant difference in specifications especially in terms of performance specifications.
Capacity flexibility
Capacity flexibility means having the ability to rapidly increase or decrease production levels or to shift production capacity quickly from one product or service to another. Such flexibility is achieved through flexible plants, processes, and workers, as well as through strategies that use the capacity of other operations.
Issues to be considered in adding capacity include maintaining system balance, frequency of capacity additions, and the use of external capacity. Capacity strategies can be proactive, neutral, and reactive. Reactive and neutral strategies are not responsive to anticipating future growth or building a facility for future demand.
Capacity planning decisions are based on forecasts for product demand, labor requirements, and equipment requirements.
Decisions include whether to add capacity, determining capacity requirements, and planning service capacity throughout the product life-cycle stages.
Toyota production system operates on the concept of flexibility by being ready to increase production whenever required by employing temporary workers and overtime. It works for only two shifts normally and when required uses overtime to operate for eight extra hours.
Chapter Outline of
Richard B. Chase, F. Robert Jacobs, Nicholas J. Aquilano, Operations Management for Competitive Advantage, 10/e, McGraw-Hill Higher Education, 2004
Capacity Management in Operations
Capacity Planning Concepts
Economies and Diseconomies of Scale
The Experience Curve
Where Economies of Scale Meet the Experience Curve
Capacity Focus
Capacity Flexibility
Capacity Planning
Considerations in Adding Capacity
Determining Capacity Requirements
Using Decision Trees to Evaluate Capacity Alternatives
Planning Service Capacity
Capacity Planning in Service Versus Manufacturing
Capacity Utilization and Service Quality
A Resource Plan identifies the physical resources required to complete a project. It lists each of the resource types (such as labor, equipment and materials) and how many of each you need.
Three steps.
Step 1: List the resource required
List the resources required to complete the project.
Labor. Identify all the roles involved in performing the project, including all full-time, part-time and contracting roles.
Equipment. Identify all of the equipment involved in performing the project. For instance, this may include office equipment (e.g. PCs, photocopiers, and mobile phones), telecommunications equipment (e.g. cabling, switches) and machinery (e.g. heavy and light machinery).
Materials. Identify all of the non-consumable materials to complete project activities such as materials required to build physical deliverables (e.g. wood, steel and concrete).
Hardware/software. Identify if applicable.
More resources as required
Step 2: Estimate the number of resources required
The next step is to estimate the number of each resource.
Labor, estimate how many hours you need per role
Equipment, estimate how many pieces of equipment needed
Materials, estimate how much material, in terms such as square meters, kilograms, number of units, etc.
As much as possible, also indicate the date the resources are needed and the consumption rate per day, week or month.
Step 3: Construct a resource schedule
Create a resource schedule which specifies the:
Resources required to complete the project
Timeframes for the consumption of each resource
Quantity of each resource required per week/month
Total quantity of resource consumed per week/month
Assumptions and constraints identified
https://tenstep.com/use-these-three-steps-to-create-a-resource-plan/
picture source: https://www.pexels.com/photo/car-brand-factory-tesla-776311/
Resource planning and resource acquisition are fundamental managerial functions according to Narayana Rao (2 March 2010).
Capacity is the ability to hold, receive, store, or accommodate. In a business sense, it is viewed as the amount of output that a system is capable of achieving over a specific period of time.
Strategic capacity planning has as its objective, to determine the overall capacity level of capital-intensive resources - facilities, equipment, and overall labor force size - that best supports the company's long-range competitive strategy. During capacity planning operations managers have to look at both resource planning (inputs) and output planning. The reason being for planning purposes, real (or effective capacity depends on what is to be be produced. The resource plan reflects the knowledge of operations managers regarding what their current technology and labor force inputs can produce and the product mix that is to be demanded from these resources. The operations management view resource planning or capacity planning also emphasizes the time dimension. Thus there are long-range, intermediate-range, and short-range capacity planning.
Capacity planning done at various levels of operations management differs with respect to scale. The vice president of manufacturing has to plan aggregate capacity of all factories within the firm. He has to determine the financial resources required to install the planned capacity. The incremental financial resources required have to come from the capital budget of the company and the COO (VP manufacturing) has to send the capital budget proposal to the CEO or head of the budgeting.
The manager of an individual plant with a given capacity has to plan the inventory levels in response to the sales plan. The inventory level is to be financed from the working capital outlay and the plant manager has to get this resources sanctioned as part of the annual budget.
The first level supervisor is connected to the monthly plan. The staff overtime and casual hiring are also a resource issue and if he anticipates the need in any month, he has to request and get approvals for the resource.
Thus although, in many firms, in operations management, there is no one person with the job title "capacity manager" there are several managerial persons charged with the planning and effective and efficient use of capacity (resources). Capacity is the amount of resources available or made available to operations management to produce output over a particular period of time.
Economies of scale, experience curve and capacity flexibility are important issues or concepts that are to be incorporated into capacity decision making. The capacity level selected determines a company's cost structure, competitive position and management and staff support requirements. If capacity is inadequate competitors can easily enter the business. If capacity is excessive, utilization becomes poor and costs will be higher than the expected costs.
Capacity Planning Concepts
Best operating level
The best operating level of a plant is the production volume at which average cost is the lowest. Companies try to operate close to this point. If demand is consistently higher than the best operating level, then they increase the capacity to lower the cost close to the best operating level cost.
Economies of scale
This concept signifies that as production volumes increase, the average cost per unit decreases. Higher capacity plants have a lower production cost compared to lesser capacity plants.
The experience curve
As plants produce more units, they gain experience in their production methods, which in turn, results in reducing the per unit costs of production in a predictable manner.
Capacity focus
The concept of focused factory states that it is more effective to have different plants for products with significant difference in specifications especially in terms of performance specifications.
Capacity flexibility
Capacity flexibility means having the ability to rapidly increase or decrease production levels or to shift production capacity quickly from one product or service to another. Such flexibility is achieved through flexible plants, processes, and workers, as well as through strategies that use the capacity of other operations.
Issues to be considered in adding capacity include maintaining system balance, frequency of capacity additions, and the use of external capacity. Capacity strategies can be proactive, neutral, and reactive. Reactive and neutral strategies are not responsive to anticipating future growth or building a facility for future demand.
Capacity planning decisions are based on forecasts for product demand, labor requirements, and equipment requirements.
Decisions include whether to add capacity, determining capacity requirements, and planning service capacity throughout the product life-cycle stages.
Toyota production system operates on the concept of flexibility by being ready to increase production whenever required by employing temporary workers and overtime. It works for only two shifts normally and when required uses overtime to operate for eight extra hours.
Chapter Outline of
Richard B. Chase, F. Robert Jacobs, Nicholas J. Aquilano, Operations Management for Competitive Advantage, 10/e, McGraw-Hill Higher Education, 2004
Capacity Management in Operations
Capacity Planning Concepts
Economies and Diseconomies of Scale
The Experience Curve
Where Economies of Scale Meet the Experience Curve
Capacity Focus
Capacity Flexibility
Capacity Planning
Considerations in Adding Capacity
Determining Capacity Requirements
Using Decision Trees to Evaluate Capacity Alternatives
Planning Service Capacity
Capacity Planning in Service Versus Manufacturing
Capacity Utilization and Service Quality
A Resource Plan identifies the physical resources required to complete a project. It lists each of the resource types (such as labor, equipment and materials) and how many of each you need.
Three steps.
Step 1: List the resource required
List the resources required to complete the project.
Labor. Identify all the roles involved in performing the project, including all full-time, part-time and contracting roles.
Equipment. Identify all of the equipment involved in performing the project. For instance, this may include office equipment (e.g. PCs, photocopiers, and mobile phones), telecommunications equipment (e.g. cabling, switches) and machinery (e.g. heavy and light machinery).
Materials. Identify all of the non-consumable materials to complete project activities such as materials required to build physical deliverables (e.g. wood, steel and concrete).
Hardware/software. Identify if applicable.
More resources as required
Step 2: Estimate the number of resources required
The next step is to estimate the number of each resource.
Labor, estimate how many hours you need per role
Equipment, estimate how many pieces of equipment needed
Materials, estimate how much material, in terms such as square meters, kilograms, number of units, etc.
As much as possible, also indicate the date the resources are needed and the consumption rate per day, week or month.
Step 3: Construct a resource schedule
Create a resource schedule which specifies the:
Resources required to complete the project
Timeframes for the consumption of each resource
Quantity of each resource required per week/month
Total quantity of resource consumed per week/month
Assumptions and constraints identified
https://tenstep.com/use-these-three-steps-to-create-a-resource-plan/
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