TOPIC 6: ACTIVITY

1. Identify examples of short- and long-term capacity decisions.

Short term Capacity Decisions

 Amount of overtime scheduled for the next week.
 Number of pizza delivery workers to hire on Super Bowl Sunday
 Number of ER nurses on call during a downtown festival weekend
 Amount of warehouse space to rent for new promotional items
 Number of call center workers to staff during the holiday season

Long Term Capacity Decision

 Construction of new manufacturing plant

 Expanding the size and number of beds in the hospital
 Number of branch banks to establish in a new market territory
 Closing down a distribution center
 Changing the cooking technology in a chain of fast-food restaurants
 Adding a 20-ton of stamping machine

2. How do you compute the capacity of a manufacturing or service resource?

Capacity Required (Ci)= Setup Time (Si) + Processing Time (Pi) x Order Size (Qi)
= Si + Pi * Qi

3. How do you compute safety capacity?

Average Safety Capacity %= 100% - Average Resource Utilization %

4. Four Basic Strategies

5. What is the Theory of Constraints?

Theory of Constraints is a set of principles that focuses on increasing total process throughput
by maximizing the utilization of all bottleneck work activities and workstations.

Throughput: amount of money generated per time period through actual sales.
Constraint: anything that limits an organization from moving toward or achieving its goal.
TOPIC 7

1. Strategic importance of location decisions

One of the most important decisions a firm makes
Increasingly global in nature
Significant impact on fixed and variable cost
Decisions made relatively infrequently
Long term decisions
Once committed to a location, many resource and cost issues are difficult to change

2. Objectives of location decisions

The objective of location strategy is to maximize the benefit of location to the firm.

Options include:
1. Expanding existing facilities
2. Maintaining existing and add sites
3. Closing existing and relocating

3. The four major layout patterns

a. Product/Service Layout
Layout that uses standardized processing operations to achieve smooth, rapid, high-volume
flow
b. Process Layout
Layout that can handle varied processing requirements
c. Fixed Position Layout
Layout in which the product or project remains stationary, and workers, materials and
equipment are moved as needed
d. Hybrid/Combination
Layout that makes use of the combination of the 3

4. Facility layout in service organization

 Volume of Demand
 Variability in the service provided
 Degree of personalization
 Skills, attributes of employees
 Nature of consumer interaction (self-service)
 Cost of providing the service
 Implicit and explicit cost to the customer
 Flexibility
 Consistency (reproducibility)
5. Designing product layout
 Limited variety of services to a large number of customers
  Operations ae arranged in the sequence of their performance
 Series and parallel arrangements

6. Designing process layout

 Similar ops grouped together
-Employee skills or equipment
-Type of service
-Attitude/Expectations of customers
 Intermittent Flow
-Variability in type of service
-Variability in sequence of service delivery
 Point of control: scheduling
 Flexibility through
-Employees with broad skills
-General purpose equipment
 Labor intensive
 Capacity to provide wide variety of services
 Cater for individual needs
7. Workplace Design
8. The Human Side of Work-Job Design