Hana Demi Dee
Technology, Production, & Operations Management Quiz no. 5 Answers
1. Contrast design capacity and effective capacity.
Design capacity is the theoretical maximum output of a system in a given period under
ideal conditions. Effective capacity is the maximum possible output given a product mix,
scheduling difficulties, machine maintenance, quality factors, and so on. It is often lower
than design capacity because the facility may have been designed for an earlier version of
the product or a different product mix than is currently being produced.
2. List and briefly explain 3 factors that may inhibit capacity utilization.
a. Product and Service Factors. Product or service design can have a tremendous influence
on capacity. For example, when items are similar, the ability of the system to produce those
items is generally much greater than when successive items differ. Generally speaking, the
more uniform the output, the more opportunities there are for standardization of methods
and materials, which leads to greater capacity.
b. Human Factors. The tasks that make up a job, the variety of activities involved, and the
training, skill, and experience required to perform a job all have an impact on the potential
and actual output. In addition, employee motivation has a very basic relationship to
capacity, as do absenteeism and labor turnover.
c. Operational Factors. Scheduling problems may occur when an organization has
differences in equipment capabilities among alternative pieces of equipment or differences
in job requirements. Inventory stocking decisions, late deliveries, purchasing requirements,
acceptability of purchased materials and parts, and quality inspection and control
procedures also can have an impact on effective capacity.
3. How do long-term and short-term capacity considerations differ?
Capacity planning decisions involve both long-term and short-term considerations. Long-
term considerations relate to the overall level of capacity, such as facility size; short-term
considerations relate to probable variations in capacity requirements are created by such
things as seasonal, random, and irregular fluctuations in demand. Because the time
intervals covered by each of these categories can vary significantly from industry to
industry, it would be misleading to put times on the intervals. However, the distinction will
serve as a framework within which to discuss capacity planning.
4. Give some examples of building flexibility into system design.
The long-term nature of many capacity decisions and the risks inherent in long-term
forecasts suggest potential benefits from designing flexible systems. For example,
provision for future expansion in the original design of a structure frequently can be
obtained at a small price compared to what it would cost to remodel an existing structure
that did not have such a provision. Hence, if the future expansion of a restaurant seems
likely, water lines, power hookups, and waste disposal lines can be put in place initially so
that if expansion becomes a reality, modification to the existing structure can be minimized.
Similarly, a new golf course may start as a nine-hole operation, but if provision is made for
future expansion by obtaining options on adjacent land, it may progress to a larger (18-
hole) course.
5. Why is it important to adopt a big-picture approach to capacity planning?
When developing capacity alternatives, it is important to consider how parts of the system
interrelate. For example, when deciding to increase the number of rooms in a hotel, one
should also take into account the probable increased demands for parking, entertainment
and food, and housekeeping. The big picture approach helps eradicate such situations by
analyzing all uncertainties in several possible aspects in order to provide the right capacity
planning. The main advantage of big picture approach is brainstorm (new ideas) which
helps in considering all uncertainties.
6. What is meant by “capacity in chunks,” and why is that a factor in capacity planning?
Capacity in chunks refers to the large increases that are frequently encountered in capacity
decisions. Capacity increases are often acquired in fairly large chunks rather than smooth
increments, making it difficult to achieve a match between desired capacity and feasible
capacity. An example would be adding a new machine. It is important because it means
that small capacity increases may not be feasible, or that other alternatives (e.g., working
overtime instead of buying another machine) may be worthy of consideration.
7. What kinds of capacity problems do many elementary schools periodically experience?
What are some alternatives to deal with those problems?
When there are too many students and the number of books and chairs and tables are not
enough to accommodate each student and also the availability of teachers for each class.
The school must increase capacity by acquiring more books, school equipment such as
tables and chairs and also hire additional teachers. The equipment such as books, tables,
and chairs, and teachers have the capacity to do a fixed amount of work and add efficiency,
which steps up the company's capacity.
8. What is the benefit to a business organization of having capacity measures?
Having capacity measures enables the organization to manage demand according to
business priorities, so they can make sure that certain critical processes always have enough
capacity to run effectively. It also shows what scope they have to take on new projects.
Having capacity measures let them identify the least expensive way of meeting upcoming
resource needs. Most simply, capacity planning improves the organization's performance
and enhances its ability to function and continue to stay relevant within a rapidly changing
environment. Failing to do capacity planning can lead to overused equipment or
overworked staff. Staff who put in extra hours to complete a project will need a break
before turning to the next project, one which will hopefully not drive them to exhaustion.
