Prof.

Rath Session 4– Capacity (1) 1

 BUSI 403 - SESSION 4
CAPACITY (1)

Prof. Rath Session 4 – Capacity (1) 2

 Class Business
▪ Problem Set A Due Tonight 11:59 PM, please submit
on time
▪ Extra office hours for the PS A today at 12:30 PM,
link on canvas (combined session for both sections)
▪ Please fill in your group names by 2/2
▪ Problem Set B assigned today

Prof. Rath Session 4– Capacity (1) 3

 Operations Management
▪ Operations Management is about the management of
processes that transform input to output
– Demand forecasting 
– Capacity and Process Analysis (this week)

Prof. Rath Session 4– Capacity (1) 4

 Subaru's Got a Big Problem: It's Selling Too Many
Cars! - WSJ August 19, 2013
▪ What is Subaru’s situation at the time of the article (August
2013)?

▪ What is the risk faced by Subaru, and why is this risk more
significant for Subaru than for Ford?

▪ What does it mean to be a “niche player” ? What are the

advantages and disadvantages of being a niche player?

Prof. Rath Session 4– Capacity (1) 5

 Subaru’s need for capacity expansion

Subaru US Car Sales

700,000

600,000

500,000

400,000

300,000

200,000

100,000

0
1968 1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016
US Car Sales

Prof. Rath
source: http://carsalesbase.com/us-car-sales-data/subaru/
Session 4– Capacity (1) 6
 Chocolate Factory
https://www.youtube.com/watch?v=D6LUg-siJVs

Prof. Rath Session 4– Capacity (1) 7

 Why Capacity Planning Is Difficult
Two Important Concepts
Long Time to Install
• Building capacity (especially in
manufacturing businesses) can
take a long time
• Not unusual for big plants to
take years to plan and build
• Forecast of demand is often
quite uncertain at the time the
level of capacity is decided
• May end up with too much or
too little capacity
Prof. Rath Session 4– Capacity (1)
Lumpy Expansion
• Typically difficult to add
capacity in smooth increments
• E.g. might be able to build a
100, 120 or 140 unit/hr plant
but not a 101, 102 or 103
unit/hr plant.
• Cheaper to expand in lumps
• Don’t incur set up costs as
frequently
8
 Process Analysis
▪ What is a process?
– A process is a collection of tasks connected by a flow of
goods and information that transforms inputs to output
▪ What is Process Analysis ?
– Process analysis is to systematically examine all aspects of
a process to improve its operations
▪ Why study Process Analysis ?
– Improve understanding of the process
– Determine how well the process is doing in attaining
objectives of the organization, e.g., satisfying demand
– Improve processes to be more efficient

Prof. Rath Session 4– Capacity (1) 9

 Process Analysis Steps
1. Draw the process map
2. Calculate process metrics
– Task Cycle Time, Capacity, Bottleneck
– Throughput time
– Throughput Rate, Utilization
– Slack
3. Manage process based on process metrics

Process metrics are like the dashboard dials of a car, they

provide a measure on the performance of the process

Prof. Rath Session 4– Capacity (1) 10

 Process Example – Pizza Process

For our example, we will study a simplified pizza making

process
Prof. Rath Session 4– Capacity (1) 11
 Process Analysis Steps
1. Draw the process map
2. Calculate process metrics
– Task Cycle Time, Capacity, Bottleneck
– Throughput Time
– Throughput Rate, Utilization
– Slack
3. Manage process based on process metrics

Prof. Rath Session 4– Capacity (1) 12

 Simplified Pizza Process Map

Process

Place
Prep Bake Box
Order

Tasks

Prof. Rath Session 4– Capacity (1) 13

 Process Analysis Steps
1. Draw the process map 
2. Calculate process metrics
– Task Cycle Time, Capacity, Bottleneck
– Throughput Time
– Throughput Rate, Utilization
– Slack
3. Manage process based on process metrics

Prof. Rath Session 4– Capacity (1) 14

 Task Cycle Time
Task cycle time is the processing time for a
given task
Task cycle time is expressed in time / unit produced

Process

1 worker 1 worker 1 oven 1 worker

Place
Prep Bake Box
Order
Task
cycle
1 min / 2 6 1
time pizza min/pizza min/pizza min/pizz
a
Unless otherwise specified, we
usually assume that the cycle time
Task cycle time is independent of
preceding and succeeding tasks Tasks is inversely proportional to the
number of workers
Prof. Rath Session 4– Capacity (1) 15
 Capacity

Maximum units a task is capable of

Task Capacity producing per unit time

Process Maximum units a process is capable

Capacity of producing per unit time

Capacity is a rate and expressed in units produces/ unit

time

Process capacity is also called system capacity

Prof. Rath Session 4– Capacity (1) 16

 Bottleneck

Prof. Rath Session 4– Capacity (1) 17

 Steps in Identifying Process Bottleneck
1. Compute Task Capacity
– For each task in the process, compute the capacity, i.e., the maximum
number of units that can be performed by that task per unit time
2. The task with the lowest task capacity is called the
bottleneck of the process
3. The capacity of the bottleneck is the process capacity

The bottleneck is the slowest stage in the

process. The capacity of the process is
limited by the capacity of the bottleneck

Prof. Rath Session 4– Capacity (1) 18

 Bottleneck of Pizza Process
1. Compute Task Capacity
2. The task with the lowest task capacity is called the bottleneck
3. The capacity of the bottleneck is the process capacity
Bottleneck

Place
Prep Bake Box
Order
Task Cycle 1 min / pizza 1 min/pizza
2 min/pizza 6 min/pizza
Time
Task 60 pizzas / hr 10 pizzas / hr 60 pizzas / hr
30 pizzas / hr
Capacities

Process capacity is 10 pizzas / hr

This process can make pizzas at a maximum rate of 10 pizzas / hr
Baking step is the bottleneck
Prof. Rath Session 4– Capacity (1) 19
 Relationship between Task Cycle Time and Task
Capacity

1
𝑇𝑎𝑠𝑘 𝐶𝑦𝑐𝑙𝑒 𝑇𝑖𝑚𝑒 =
𝑇𝑎𝑠𝑘 𝐶𝑎𝑝𝑎𝑐𝑖𝑡𝑦

• The units of Task Cycle Time is time/ unit produces. For example,
at pizza prep, the unit is 2 min/ pizza

• The units of Task Capacity is units/ time. For example the

capacity of prep stage is 30 pizzas/ hr

Prof. Rath Session 4– Capacity (1) 20

 Process Analysis Steps
1. Draw the process map 
2. Calculate process metrics
– Task Cycle Time, Capacity, Bottleneck 
– Throughput Time
– Throughput Rate and Utilization
– Slack capacity
3. Manage process based on process metrics

Prof. Rath Session 4– Capacity (1) 21

 Throughput Time

1 worker 1 worker 1 oven 1 worker

Place
Prep Bake Box
Order
1 min / 2 6 1
pizza min/pizza min/pizza min/pizz
a

Throughput Time: From the time a customer places

an order, how long will it take for them to get an order.
Sometimes also called turnaround time

Prof. Rath Session 4– Capacity (1) 22

 Process Analysis Steps
1. Draw the process map 
2. Calculate process metrics
– Task Cycle Time, Capacity, Bottleneck 
– Throughput Time 
– Throughput Rate and Utilization
– Slack capacity
3. Manage process based on process metrics

Prof. Rath Session 4– Capacity (1) 23

 Throughput Rate

Process Maximum units the process is capable

Capacity of producing per unit time

Average number of units actually being

Throughput processed per unit time

Throughput Rate is Always Less Than or Equal to

Process Capacity

Note: Throughput Rate and capacity are both expressed in units per unit
time, these are rates of production
Prof. Rath Session 4– Capacity (1) 24
 Throughput rate in pizza example
▪ Assume the pizza shop is actually making 8 pizzas / hr
as opposed to its system capacity of 10 pizzas/ hr
▪ This means, throughput is 8 pizzas / hr

Prof. Rath Session 4– Capacity (1) 25

 Utilization

System Utilization of the entire process

𝑇ℎ𝑟𝑜𝑢𝑔ℎ𝑝𝑢𝑡 𝑅𝑎𝑡𝑒
Utilization 𝑆𝑦𝑠𝑡𝑒𝑚 𝑈𝑡𝑖𝑙𝑖𝑧𝑎𝑡𝑖𝑜𝑛 =
𝑃𝑟𝑜𝑐𝑒𝑠𝑠 𝐶𝑎𝑝𝑎𝑐𝑖𝑡𝑦

Task Utilization of individual task

𝑇ℎ𝑟𝑜𝑢𝑔ℎ𝑝𝑢𝑡 𝑅𝑎𝑡𝑒
Utilization 𝑇𝑎𝑠𝑘 𝑈𝑡𝑖𝑙𝑖𝑧𝑎𝑡𝑖𝑜𝑛 =
𝑇𝑎𝑠𝑘 𝐶𝑎𝑝𝑎𝑐𝑖𝑡𝑦

Note: Utilization is usually expressed as a percentage, it does not have any

units
Prof. Rath Session 4– Capacity (1) 26
 Task Utilization
Assume the throughput is 8 pizzas / hr

1 worker 1 worker 1 oven 1 worker

Place
Prep Bake Box
Order
Task Cycle 1 min / pizza 1 min/pizza
2 min/pizza 6 min/pizza
Time
60 pizzas / hr 30 pizzas / hr 10 pizzas / hr 60 pizzas / hr
Task
Capacity

Task 8/60 = 8/30 = 8/10 = 80% 8/60 =

utilization 13.33% 26.67% 13.33%

Bottleneck utilization will be the system utilization

Prof. Rath Session 4– Capacity (1) 27

 System Utilization
▪ Assume the throughput is 8 pizzas / hr
▪ System Utilization
– Proportion of capacity actually realized, usually expressed
as a percentage. It is a measure of intensity of operation.
𝑇ℎ𝑟𝑜𝑢𝑔ℎ𝑝𝑢𝑡
𝑆𝑦𝑠𝑡𝑒𝑚 𝑈𝑡𝑖𝑙𝑖𝑧𝑎𝑡𝑖𝑜𝑛 =
𝑆𝑦𝑠𝑡𝑒𝑚 𝐶𝑎𝑝𝑎𝑐𝑖𝑡𝑦
𝑇ℎ𝑟𝑜𝑢𝑔ℎ𝑝𝑢𝑡
𝑆𝑦𝑠𝑡𝑒𝑚 𝑢𝑡𝑖𝑙𝑖𝑧𝑎𝑡𝑖𝑜𝑛 =
𝑆𝑦𝑠𝑡𝑒𝑚 𝐶𝑎𝑝𝑎𝑐𝑖𝑡𝑦

8 𝑝𝑖𝑧𝑧𝑎𝑠 𝑝𝑒𝑟 ℎ𝑜𝑢𝑟

𝑆𝑦𝑠𝑡𝑒𝑚 𝑢𝑡𝑖𝑙𝑖𝑧𝑎𝑡𝑖𝑜𝑛 =
10 𝑝𝑖𝑧𝑧𝑎𝑠 𝑝𝑒𝑟 ℎ𝑜𝑢𝑟

𝑆𝑦𝑠𝑡𝑒𝑚 𝑢𝑡𝑖𝑙𝑖𝑧𝑎𝑡𝑖𝑜𝑛 = 0.8 = 80 %

Throughput is always less than or equal to capacity,

implies utilization is always less than or equal to 1.
Prof. Rath Session 4– Capacity (1) 28
 Process Analysis Steps
1. Draw the process map 
2. Calculate process metrics
– Task Capacity, Bottleneck and System Capacity 
– Throughput time 
– Throughput Rate and Utilization 
– Slack capacity
3. Manage process based on process metrics

Prof. Rath Session 4– Capacity (1) 29

 Slack
▪ Slack is the difference between the capacity and throughput for
a stage/resource, i.e., slack is the ‘”spare” capacity.
– In this class, unless otherwise stated, we will find the slacks
assuming that the throughput is equal to the system capacity.

Slack of a resource =

Capacity of the Resource – System Capacity

Prof. Rath Session 4– Capacity (1) 30

 Pizza Process : Task Slack capacity

𝑇𝑎𝑠𝑘 𝑠𝑙𝑎𝑐𝑘 𝑐𝑎𝑝𝑎𝑐𝑖𝑡𝑦 = 𝑇𝑎𝑠𝑘 𝑐𝑎𝑝𝑎𝑐𝑖𝑡𝑦 − 𝑆𝑦𝑠𝑡𝑒𝑚 𝑐𝑎𝑝𝑎𝑐𝑖𝑡𝑦

𝑆𝑦𝑠𝑡𝑒𝑚 𝑐𝑎𝑝𝑎𝑐𝑖𝑡𝑦 = 10 𝑝𝑖𝑧𝑧𝑎𝑠/ℎ𝑟

Place
Prep Bake Box
Order
Task cycle
time 1 min / 2 min / 6 min/ 1
pizza pizza pizza min/pizza
Task
capacity 60 pizzas / hr 30 pizzas / hr 10 pizzas / hr 60 pizzas / hr

Slack 60-10 = 50 30-10 = 10-10 = 0 60-10 =

capacity 20 pizzas
pizzas / hr 50 pizzas
/ hr / hr

Bottleneck task will have a slack capacity of 0

Prof. Rath Session 4– Capacity (1) 31
 Process Analysis Steps
1. Draw the process map 
2. Calculate process metrics
– Task Capacity, Bottleneck and System Capacity 
– Throughput and Utilization 
– Slack capacity 
3. Manage process based on process metrics

Prof. Rath Session 4– Capacity (1) 32

 Process Analysis Steps
1. Draw the process map 
2. Calculate process metrics
– Task Capacity, Bottleneck and System Capacity 
– Throughput Time
– Throughput Rate and Utilization 
– Slack capacity 
3. Manage process based on process metrics
– Where to add resources to increase process capacity ?

Prof. Rath Session 4– Capacity (1) 33

 Pizza Process : Increasing process capacity

𝑃𝑟𝑜𝑐𝑒𝑠𝑠 𝑐𝑎𝑝𝑎𝑐𝑖𝑡𝑦 = 10 𝑝𝑖𝑧𝑧𝑎𝑠/hr

1 worker 1 worker 1 oven 1 worker

Place
Prep Bake Box
Order

1 min / 2 min / 6 min/ 1

Task pizza pizza pizza min/pizza
capacity 60 pizzas / hr 30 pizzas / hr 10 pizzas / hr 60 pizzas / hr

If we want to increase process

capacity where should we add Bottleneck stage!
additional resources ?
Prof. Rath Session 4– Capacity (1) 34
 Adding Resources Increases Capacity Proportionately

𝑪𝒂𝒑𝒂𝒄𝒊𝒕𝒚 𝒐𝒇 𝒂 𝒈𝒊𝒗𝒆𝒏 𝒕𝒂𝒔𝒌 𝒘𝒊𝒕𝒉 𝒏 𝒊𝒅𝒆𝒏𝒕𝒊𝒄𝒂𝒍 𝒓𝒆𝒔𝒐𝒖𝒓𝒄𝒆𝒔

= 𝒏 × 𝒄𝒂𝒑𝒂𝒄𝒊𝒕𝒚 𝒐𝒇 𝒈𝒊𝒗𝒆𝒏 𝒕𝒂𝒔𝒌 𝒘𝒊𝒕𝒉 𝟏 𝒓𝒆𝒔𝒐𝒖𝒓𝒄𝒆

𝑪𝒂𝒑𝒂𝒄𝒊𝒕𝒚 𝒐𝒇 𝒃𝒂𝒌𝒊𝒏𝒈 𝒘𝒊𝒕𝒉 𝟐 𝒐𝒗𝒆𝒏𝒔 = 𝟐 × 𝒄𝒂𝒑𝒂𝒄𝒊𝒕𝒚 𝒐𝒇 𝒃𝒂𝒌𝒊𝒏𝒈 𝒘𝒊𝒕𝒉 𝟏 𝒐𝒗𝒆𝒏

𝑪𝒂𝒑𝒂𝒄𝒊𝒕𝒚 𝒐𝒇 𝒃𝒂𝒌𝒊𝒏𝒈 𝒘𝒊𝒕𝒉 𝟐 𝒐𝒗𝒆𝒏𝒔 = 𝟐𝟎 𝒑𝒊𝒛𝒛𝒂𝒔/𝒉𝒓

Prof. Rath Session 4– Capacity (1) 35

 Pizza Process : Increasing process capacity

𝑃𝑟𝑜𝑐𝑒𝑠𝑠 𝑐𝑎𝑝𝑎𝑐𝑖𝑡𝑦 = 20 𝑝𝑖𝑧𝑧𝑎𝑠/hr

1 worker 1 worker 2 ovens 1 worker

Place
Prep Bake Box
Order

Task 60 pizzas / hr 30 pizzas / hr 20 pizzas / hr 60 pizzas / hr

capacity

Add an extra oven, now on an average we

can make twice as much, 20 pizzas / hr

Prof. Rath Session 4– Capacity (1) 36

 Process Management: Increasing Process Capacity
1. Choose a system wide units to represent the capacity
2. Compute Task capacities of each task of the process
3. The task with the lowest capacity is the bottleneck task
4. The capacity of the bottleneck task is the process capacity
1. This is the maximum rate at which the process can perform at
5. To increase the process capacity add resources to the
bottleneck task
6. This may mean that a new task may become the bottleneck
7. Continue to add resources to the bottleneck task until the
process capacity is what you want it to be

Prof. Rath Session 4– Capacity (1) 37

 Recap
▪ Process analysis definitions
– Process map
– Task cycle time
– Throughput time
– Capacity
– Throughput rate
– Bottleneck
– Utilization
– Slack
▪ How to increase process capacity?
– Compute process metrics
– Identify bottleneck resource
– Add resources to bottleneck until process capacity is at desired value

Prof. Rath Session 4– Capacity (1) 38

 Real world processes have several wrinkles
▪ Resources (people doing the tasks) can be shared across workstations
▪ Items may be processed in batches at some steps (imagine baking cookies)
▪ Some tasks may have a “set-up” time that is independent of the number of units
being processed (for example preheating oven)
▪ Task cycle time may not be same for all items, and may show some natural
variation
▪ Items may come back into the process for repair or a re-do. Imagine flow of
patients within a hospital between ”inpatient beds-operating rooms-ICU-inpatient
beds”

▪ The broad principles of process analysis remains the same:

– Compute capacity of each step
– Identify bottleneck
– Add resources to bottleneck until you reach required capacity
▪ Only the way we compute capacity changes slightly
▪ We will look at some of these real world situations in the next few examples:

Prof. Rath Session 4– Capacity (1) 39

 Real world processes have several wrinkles
▪ Resources (people doing the tasks) can be shared across workstations
▪ Items may be processed in batches at some steps (imagine baking cookies)
▪ Some tasks may have a “set-up” time that is independent of the number of units
being processed (for example preheating oven)
▪ Task cycle time may not be same for all items, and may show some natural
variation
▪ Items may come back into the process for repair or a re-do. Imagine flow of
patients within a hospital between ”inpatient beds-operating rooms-ICU-inpatient
beds”

▪ The broad principles of process analysis remains the same:

– Compute capacity of each step
– Identify bottleneck
– Add resources to bottleneck until you reach required capacity
▪ Only the way we compute capacity changes slightly
▪ We will look at some of these real world situations in the next few examples:

Prof. Rath Session 4– Capacity (1) 40

 In-Class Exercise: Tarheel Cookies
Situation:
• Cookie company in on-campus apartment
• Two roommates running business
• Walk-in or E-mail orders
• Fresh-baked cookies by the dozen
• Your choice of mix-ins

Prof. Rath Session 4– Capacity (1) 41

 In-Class Exercise: Tarheel Cookies
What is Tarheel Cookies business concept?

• hot, fresh baked cookies by the dozen

• with any combination of desired ingredients
• baked while you wait
• on campus
• order options: 1, 2, or 3 dozen

➢ Determine capacity and other performance

metrics

https://www.youtube.com/watch?v=3vUtRRZG0xY

Prof. Rath Session 4– Capacity (1) 42

 Tarheel Cookies

Process Flow Diagram

Resources:
Roommate1 (R1), Roommate2 (R2), Oven (O)
Mix Spoon Load Bake Cool Pack Pay

6 min / 2 min / 1 min / 9 min / 4 min / 2 min / 1 min /

dozen order
order dozen dozen dozen dozen

(R1) (R1) none

(R2,O) (R2) (R2)
(O)

What do you notice about task cycle times (units)?

Prof. Rath Session 4– Capacity (1) 43

 Tarheel Cookies

1. Starting point is a process flow

diagram.

2. What are the resources?

3. What is an appropriate capacity

measure?

4. What is the system capacity?

5. What is the throughput time?

Prof. Rath Session 4– Capacity (1) 44
 Tarheel Cookies
❖ Because each resource performs multiple tasks, we need to
group tasks according to the resources.

❖ Since some task cycle times are per order (not per dozen),
cycle times (and hence, capacity) for those resources will vary
with order size!

Cycle Time (minutes / dozen)

(R1) (Oven) (R2)

Mix & Load & Load, Pack,
Order Size Spoon Bake Cool & Pay
1 dozen
2 dozen
3 dozen

Prof. Rath Session 4– Capacity (1) 45

 Tarheel Cookies
Cycle Time (minutes / dozen)
(R1) (Oven) (R2)
Mix & Load & Load, Pack,
Order Size Spoon Bake Cool & Pay
1 dozen 6+2=8
2 dozen (6+4)/2=5
3 dozen (6+6)/3=4
R1 (1 dozen): mix (6 min/1 doz) + spoon (2 min /1 doz) = _8_ min/doz
R1 (2 dozen): mix (6 min/2 doz) + spoon (4 min/2 doz) = _5_ min/doz
R1 (3 dozen): mix (6 min/3 doz) + spoon (6 min/3 doz) = _4_ min/doz

Prof. Rath Session 4– Capacity (1) 46

 Tarheel Cookies
Cycle Time (minutes / dozen)
(R1) (Oven) (R2)
Mix & Load & Load, Pack, System
Order Size Spoon Bake Cool & Pay System Capacity
1 dozen 6+2=8 (1+2+1)=4
2 dozen (6+4)/2=5 (2+4+1)/2=3.5
3 dozen (6+6)/3=4 (3+6+1)/3=3.33
R1 (1 dozen): mix (6 min/1 doz) + spoon (2 min /1 doz) = _8_ min/doz
R1 (2 dozen): mix (6 min/2 doz) + spoon (4 min/2 doz) = _5_ min/doz
R1 (3 dozen): mix (6 min/3 doz) + spoon (6 min/3 doz) = _4_ min/doz

R2 (1doz): load (1min/1doz) + pack (2min/1doz) + pay (1min/1doz) = _4_ min/doz

R2 (2doz): load (2min/2doz) + pack (4min/2doz) + pay (1min/2doz) = _3.5_ min/doz
R2 (3doz): load (3min/3doz) + pack (6min/3doz) + pay (1min/3doz) = _3.33_ min/doz

Prof. Rath Session 4– Capacity (1) 47

 Tarheel Cookies
Cycle Time (minutes / dozen)
(R1) (Oven) (R2)
Mix & Load & Load, Pack,
Order Size Spoon Bake Cool & Pay
1 dozen 6+2=8 10 4 (1+2+1)=4
2 dozen (6+4)/2=5 10 4 (2+4+1)/2=3.5
3 dozen (6+6)/3=4 10 4 (3+6+1)/3=3.33

R1 (1 dozen): mix (6 min/1 doz) + spoon (2 min /1 doz) = _8_ min/doz

R1 (2 dozen): mix (6 min/2 doz) + spoon (4 min/2 doz) = _5_ min/doz
R1 (3 dozen): mix (6 min/3 doz) + spoon (6 min/3 doz) = _4_ min/doz

R2 (1doz): load (1min/1doz) + pack (2min/1doz) + pay (1min/1doz) = _4_ min/doz

R2 (2doz): load (2min/2doz) + pack (4min/2doz) + pay (1min/2doz) = _3.5_ min/doz
R2 (3doz): load (3min/3doz) + pack (6min/3doz) + pay (1min/3doz) = _3.33_ min/doz

Prof. Rath Session 4– Capacity (1) 48

 Tarheel Cookies
Cycle Time (minutes / dozen)
(R1) (Oven) (R2)
Mix & Load & Load, Pack,
Order Size Spoon Bake Cool & Pay
1 dozen 6+2=8 10 4 (1+2+1)=4
2 dozen (6+4)/2=5 10 4 (2+4+1)/2=3.5
3 dozen (6+6)/3=4 10 4 (3+6+1)/3=3.33

Prof. Rath Session 4– Capacity (1) 49

 Tarheel Cookies
Cycle Time (minutes / dozen)
(R1) (Oven) (R2)
Mix & Load & Load, Pack,
Order Size Spoon Bake Cool & Pay
1 dozen 6+2=8 10 4 (1+2+1)=4
2 dozen (6+4)/2=5 10 4 (2+4+1)/2=3.5
3 dozen (6+6)/3=4 10 4 (3+6+1)/3=3.33

Capacity (dozens/hr)

(R1) Mix & (O)Load & (R2)Load, Pack,

Order Size Spoon Bake Cool & Pay
1 dozen =60/8=7.5 dozens/hr =60/10=6dz/hr =60/4=15dz/hr =60/4=15dz/hr
2 dozen =60/5=12dz/hr =60/10=6dz/hr =60/4=15dz/hr =60/3.5=17.14dz/hr
3 dozen =60/4=15dz/hr =60/10=6dz/hr =60/4=15dz/hr =60/3.33=18dz/hr

System Capacity = 6 dz/hr

Prof. Rath Session 4– Capacity (1) 50
 Real world processes have several wrinkles
▪ Resources (people doing the tasks) can be shared across workstations
– Group tasks by resource
– Compute cycle time of grouped tasks
– Intuitively, think of this cycle time as time spent per unit by each
resource (room mate spends x minutes per batch)

▪ Items may be processed in batches at some steps

– For each possible batch size, compute the individual capacity of each resource
– Compute the system capacity for each batch size (the system capacity will be
different by different batch size)
– Need to decide batch size and where to add resources

Prof. Rath Session 4– Capacity (1) 51

 Tarheel Cookies

What if 6 dozen cookies per hour isn’t meeting demand?

How can Tarheel Cookies increase the capacity of

their process to meet increasing demand?

Add capacity at bottleneck resource!!

Prof. Rath Session 4– Capacity (1) 52

 Tarheel Cookies - 2 Ovens
What if 6 dozen cookies per hour isn’t meeting demand?
Add capacity at bottleneck resource!!
New Process Flow Diagram with two ovens:

Mix Spoon Load Bake Cool Pack Pay

6 min / 2 min / 4 min / 2 min / 1 min /

Load Bake dozen order
order dozen dozen

Oven Resource Cycle

Time

5 minutes/dozen
What is the bottleneck resource in the new process?
System Cycle Time and System Capacity?
Prof. Rath Session 4– Capacity (1) 53
 Tarheel Cookies – 2 ovens
Capacity (dozens/hr)

Mix & Load & Load, Pack,

Order Size Spoon Bake Cool & Pay
1 dozen =60/8=7.5 dozens/hr=2*60/10=12dz/hr =60/4=15dz/hr =60/4=15dz/hr
2 dozen =60/5=12dz/hr =2*60/10=12dz/hr =60/4=15dz/hr =60/3.5=17.14dz/hr
3 dozen =60/4=15dz/hr =2*60/10=12dz/hr =60/4=15dz/hr =60/3.33=18dz/hr

• What is the bottleneck?

• What is the system capacity?

Prof. Rath Session 4– Capacity (1) 54

 Tarheel Cookies – 2 ovens
Capacity (dozens/hr)

Mix & Load & Load, Pack,

Order Size Spoon Bake Cool & Pay
1 dozen =60/8=7.5 dozens/hr=2*60/10=12dz/hr =60/4=15dz/hr =60/4=15dz/hr
2 dozen =60/5=12dz/hr =2*60/10=12dz/hr =60/4=15dz/hr =60/3.5=17.14dz/hr
3 dozen =60/4=15dz/hr =2*60/10=12dz/hr =60/4=15dz/hr =60/3.33=18dz/hr

• What is the bottleneck?

• Bottleneck depends on the batch size (1dz/2dz/3dz)
• When batch size is 1dz: bottleneck is: R1
• When batch size is 2dz bottleneck is R1 and O
• When batch size is 3 dz, bottleneck is O

• What is the system capacity?

Prof. Rath Session 4– Capacity (1) 55

Observations so far…
▪ Capacity for a stage or task:
# resources * capacity per resource

▪ The bottleneck determines system capacity.

▪ To increase system capacity, add capacity to

the bottleneck resource(s).

▪ Adding capacity to a non-bottleneck does

nothing to improve system capacity.

56
Prof. Rath Session 4– Capacity (1) 56
What Should You Know

▪ How to determine an appropriate measure of capacity

▪ How to draw a process flow diagram

▪ How to calculate throughput time, cycle time, and capacity

Prof. Rath Session 4– Capacity (1) 57

58

For Next Session...

▪ Process / Capacity Analysis (2)
– Chapter 10 pp. 201-205

▪ Continue with Process and Capacity Analysis

▪ Please keep the slides of this class handy, it
will be helpful reference in the next class

Prof. Rath Session 4– Capacity (1) 58