Capacity planning quiz:

Difference between effective capacity and actual output:

Effective capacity is the maximum amount of work that an organization is capable of completing
in a given period due to constraints such as machine setups and changeovers, repairs and
maintenance, material handling, etc. It can be calculated by subtracting design capacity from the
lost output during a period of time which is mainly because of the planned resource
unavailability such as changes in product mix, scheduled breaks or preventive maintenance etc.

Contrary to effective capacity, actual output is the amount of a product that a production facility
actually produces in a given period of time keeping in view all the current operating constraints
and non operating constraints i.e. output which is lost due to the planned resource unavailability
and the unplanned resource idleness.

Unplanned resource idleness basically includes machine breakdowns, absenteeism, unavailable

parts and quality problems. Actual output can be calculated by subtracting effective capacity
value from the lost output which is mainly due to the unplanned resource idleness as described
earlier.

So, effective capacity value will be greater than the actual output of any production firm.

Difference between the bottleneck time and throughput time:

Bottleneck is an operation that is a limiting factor or a constraint in a production system and

bottleneck time is the process time of the longest(slowest) process i.e. the bottleneck which
actually limits the system's output and is the maximum time of the whole processing of a product
whereas the throughput time is the time it takes for a product to go through the production
process with no waiting i.e. from raw materials to a finished product in the storage department of
the firm.

Illustration by example of the bottleneck time and throughput time:

Consider a simple assembly line in which individual stations A, B and C process times are 2, 4
and 3 minutes per unit respectively. The bottleneck time is 4 minutes because it is the process
time of the slowest workstation in a production system and station B is the slowest station here in
this example i.e. the one that takes the longest time for processing the product unit whereas the
throughput time to produce a new completed unit is 9 minutes here in this example which is the
sum of the processing times of all the workstations (2 minutes at A + 4 minutes at B + 3 minutes
at C = 9 minutes per unit) to produce one completed unit of a product.