CAPACITY PLANNING

Capacity is defined as the limiting capability of a productive

unit to produce
within a stated time period, normally expressed in terms of
output units per units
of time.

HUSH PUPPIES shoes can be categorized as a mature

product with stable demand growth. Thus facilitating the job
of the production managers in estimating the capacity.

At present HUSH PUPPIES is manufacturing 8000 pairs of

shoes of various types every week. This is done in three
shifts. The way the firm plans their production is that the
buying firm, HUSH PUPPIES Sales Corporation, estimates
the market demand according to the stocks in hand at various
retail outlets. HUSH PUPPIES Sales then estimates the
future demand and projects the quantities to be ordered for
production. These quantities are ordered to the HUSH
PUPPIES factory. Thus HUSH PUPPIES plan their
production capacity in accordance with the orders placed by
HUSH PUPPIES Sales Corporation.

Since the capacity of HUSH PUPPIES determined by the

buying firm i.e. HUSH PUPPIES SALES CORPORATION as
stated earlier, the capacity given above is the average
capacity and if the demand increases the shoes are imported
from other international sales corporations therefore the
plant working at KASUR is working at its maximum capacity

The factory has a capacity to handle fluctuations in the

demand. While planning production management also takes
into consideration the fact that there is a certain loss of units
due to defective products and thefts. Therefore, the firm
always maintains a margin to cater for these discrepancies.

MANAGING DEMAND BY CAPACITY PLANNING

  When demand exceeds capacity the firm curtails demand
by raising prices , scheduling long lead times and
importing shoes from international sales corporations

 When capacity exceeds demand this is coped through

price reductions and aggressive marketing

Design Capacity 1300 shoes manufactured per

day
Effective Capacity 1150 shoes manufactured per
day
Actual Capacity 950 shoes manufactured per
day
Efficiency 950/1150 = 82.61 %
Utilization 950/1300 = 73.17 %

PLANT LAYOUT

There are various types of plant layouts. The three basic

types of plant layouts
are:

1. Functional Layout
2. Line Layout
3. Fixed-Position Layout

The layout at HUSH PUPPIES is functional. This is so

because the products being manufactured are produced in
mass quantities. This type of layout means that the work is
organized according to the function performed. The item
being processed normally goes through a processing
sequence. The specification of what is to be accomplished
determines the details of processing and the time required.
The functional layout as a whole can be visualized as a
network of queues with variable paths or routes through the
system.
DEVELOPING WORK STATIONS AT HUSH PUPPIES:

Lead time:

=1.50+0.75+1.00+0.50+2.00+2.75+2.00+1.00+2.00+2.50+
2.00 +1.75+0.50+2.00+1.50+1.00+1.00+1.50
=27.25

Cycle time:

= 2.75 minutes
Theoretical number of work
stations = 27.25/2.75
= 9.9 or 10