Page 72 - DMGT501_OPERATIONS_MANAGEMENT

Operations Management

Notes 2. Input measures are generally used for low-volume, flexible processes.

Example: In a machine shop, capacity can be measured in machine hours or number of
machines.
Demand, which invariably is expressed as an output rate, must be converted to an input
measure. This conversion is required to compare demand requirements and capacity on
an equivalent basis. Capacity, then, may be measured in terms of the inputs or the outputs
of the conversion process.
However, converting demand into input measures may be quite difficult. In a general business
sense, capacity is most frequently viewed as the amount of output that a system is capable of
achieving over a specific period of time.

3.3 Determinants of Effective Capacity

Most of the capacity plans are based on the following:
1. Set time and resource allocation to meet demand;
2. Set strategies for meeting new requirements (new demand, competition, time changes for
projects, etc.); and
3. Determine the cost of non-conformance to the plan (waste, time slippage, costs, variance
in quality, etc.).
Determinants of effective capacity are:
1. Facilities

2. Product and service factors
3. Process factors
4. Human factors
5. Operational factors
6. Supply chain factors
7. External factors

Table 3.1: Determinants of Effective Capacity

Factors Issues
Facilities Design Layout
Location
Product/Service Design Product or service mix
Process Quantity capabilities Quality capabilities
Human Factors Job content Compensation
Job design Learning rates
Training and experience Absenteeism and labour turnover
Motivation Knowledge
Operational Scheduling Quality Assurance
Materials Management Equipment breakdowns
External Factors Product standards Pollution and environmental standards
Safety regulations Stability of society/ government
Unions

Source: Stevenson

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