TUM School of Management

Production and Supply Chain Management

Prof Martin Grunow Technische Universität München

Capacity Analysis - Example

Prof. Holly Ott

Production and Supply Chain Management
Chair: Prof. Martin Grunow
TUM School of Management

Holly Ott 1
 TUM School of Management
Production and Supply Chain Management
Prof Martin Grunow Technische Universität München

Process Analysis – Flow Unit

The process flow diagram for an office chair is shown below. There are
three steps in our process flow, and no inventory is stored between the
steps. The processing times are:
• Base: 6 minutes/unit
• Upholstery: 10 minutes/unit
• Assembly: 8 minutes/unit
We assume there is sufficient raw material and high demand so that
everything we make can be sold.
Raw Finished
material 6 min/unit 10 min/unit 8 min/unit units

Base Upholstery Assembly

Holly Ott 2
 TUM School of Management
Production and Supply Chain Management
Prof Martin Grunow Technische Universität München

Process Analysis – Flow Unit

The process flow diagram for an office chair is shown below. There are
three steps in our process flow, and no inventory is stored between the
steps. The processing times are:
• Base: 6 minutes/unit
• Upholstery: 10 minutes/unit
• Assembly: 8 minutes/unit
We assume there is sufficient raw material and high demand so that
everything we make can be sold.
Raw Finished
What is the flow unit? material 6 min/unit 10 min/unit 8 min/unit units
a) The base Base Upholstery Assembly
b) The upholstery
c) 1 office chair
d) 6 office chairs

Holly Ott 3
 TUM School of Management
Production and Supply Chain Management
Prof Martin Grunow Technische Universität München

Process Analysis – Resource Capacity

The process flow diagram for an office chair is shown below. There are
three steps in our process flow, and no inventory is stored between the
steps. The processing times are:
• Base: 6 minutes/unit
• Upholstery: 10 minutes/unit
• Assembly: 8 minutes/unit
We assume there is sufficient raw material and high demand so that
everything we make can be sold.

What is the capacity of the base process in units/hour?

a) 10
b) 6 Raw Finished
material 6 min/unit 10 min/unit 8 min/unit units
c) 8
d) 0.167 Base Upholstery Assembly

Holly Ott 4
 TUM School of Management
Production and Supply Chain Management
Prof Martin Grunow Technische Universität München

Process Analysis – Bottleneck

The process flow diagram for an office chair is shown below. There are
three steps in our process flow, and no inventory is stored between the
steps. The processing times are:
• Base: 6 minutes/unit
• Upholstery: 10 minutes/unit
• Assembly: 8 minutes/unit
We assume there is sufficient raw material and high demand so that
everything we make can be sold.
Raw Finished
material 6 min/unit 10 min/unit 8 min/unit units
Where is the bottleneck? Base Upholstery Assembly
a) Base
b) Upholstery
c) Assembly
d) Both Upholstery and Assembly

Holly Ott 5
 TUM School of Management
Production and Supply Chain Management
Prof Martin Grunow Technische Universität München

Process Analysis – Bottleneck

The process flow diagram for an office chair is shown below. There are
three steps in our process flow, and no inventory is stored between the
steps. The processing times are:
• Base: 6 minutes/unit
• Upholstery: 10 minutes/unit
• Assembly: 8 minutes/unit
We assume there is sufficient raw material and high demand so that
everything we make can be sold.
Raw Finished
material 6 min/unit 10 min/unit 8 min/unit units

Base Upholstery Assembly

Resource capacity: 10 units/hr 6 units/hr 7.5 units/hr

Holly Ott 6
 TUM School of Management
Production and Supply Chain Management
Prof Martin Grunow Technische Universität München

Process Analysis – Bottleneck

The process flow diagram for an office chair is shown below. There are
three steps in our process flow, and no inventory is stored between the
steps. The processing times are:
• Base: 6 minutes/unit
• Upholstery: 10 minutes/unit
• Assembly: 8 minutes/unit
We assume there is sufficient raw material and high demand so that
everything we make can be sold.
Raw Finished
material 6 min/unit 10 min/unit 8 min/unit units

Base Upholstery Assembly

Process Capacity = capacity of the Flow Rate = Process Capacity, where we are
bottleneck (minimum resource assuming that we have enough raw materials
capacity in the process). and we can sell every office chair we make.

Holly Ott 7
 TUM School of Management
Production and Supply Chain Management
Prof Martin Grunow Technische Universität München

Process Analysis – Flow Rate

The process flow diagram for an office chair is shown below. There are
three steps in our process flow, and no inventory is stored between the
steps. The processing times are:
• Base: 6 minutes/unit
• Upholstery: 10 minutes/unit
• Assembly: 8 minutes/unit
We assume there is sufficient raw material and high demand so that
everything we make can be sold.
Raw Finished
material 6 min/unit 10 min/unit 8 min/unit units
What is the resource
Base Upholstery Assembly
utilization at each unit?
10 units/hr 6 units/hr 7.5 units/hr
Resource Utilization =
Flow Rate
Resource Capacity

Holly Ott 8
 TUM School of Management
Production and Supply Chain Management
Prof Martin Grunow Technische Universität München

Process Analysis – Flow Rate

The process flow diagram for an office chair is shown below. There are
three steps in our process flow, and no inventory is stored between the
steps. The processing times are:
• Base: 6 minutes/unit
• Upholstery: 10 minutes/unit
• Assembly: 8 minutes/unit
We assume there is sufficient raw material and high demand so that
everything we make can be sold.

Raw Finished
material 6 min/unit 10 min/unit 8 min/unit units

Base Upholstery Assembly

Resource capacity: 10 units/hr 6 units/hr 7.5 units/hr

Resource utilization: 60% 100% 80%

Holly Ott 9
 TUM School of Management
Production and Supply Chain Management
Prof Martin Grunow Technische Universität München

Process Analysis – Flow Rate

Raw Finished
material 6 min/unit 10 min/unit 8 min/unit units

Base Upholstery Assembly

Resource capacity: 10 units/hr 6 units/hr 7.5 units/hr

Resource utilization: 60% 100% 80%

Time (min):
Base
Upholstery
Assembly

Holly Ott 10
 TUM School of Management
Production and Supply Chain Management
Prof Martin Grunow Technische Universität München

Capacity Analysis - Example

Prof. Holly Ott

Production and Supply Chain Management
Chair: Prof. Martin Grunow
TUM School of Management

Holly Ott 11