Unit 6: Capacity Planning and Facility Layout
In the last unit, we looked at manufacturing and service processes that help companies deliver what a customer wants when they want it. Before the firm can successfully institute these processes, it must understand the requirements that determine its production capacity. We also considered how a pizza shop delivers its product. Is it likely that their 30-minute delivery would cover an order for 100 pizzas? Probably not, because they have planned their production capacity based on the demand of individual or family-sized consumers. When planning production capacity, the firm has to consider not only demand, but also the physical aspects of their facility. How close does the operation need to be to consumers? Is the facility within easy reach of the resources needed for production?
In this unit, you will learn how to use forecasting models to understand capacity requirements. We will also evaluate factors that help managers identify the optimal location for a new facility. Finally, we will conclude with a review of basic facility layout designs that maximize production efficiency.
Completing this unit should take you approximately 4 hours.
Upon successful completion of this unit, you will be able to:
- describe the determinants of effective capacity;
- describe the factors an organization must consider in selecting a facility location;
- identify the benefits of four basic layout designs in the physical placement of resources; and
- apply the Line Balancing steps to the design of an appropriate product layout.
- describe the determinants of effective capacity;
6.1: Capacity Planning
Read this section for a general overview of forecasting and the various methods used by organizations. Pay attention to the approaches used to improve the accuracy of a forecast, and consider the different methods that could be applied to various industries. Take the time to answer the questions at the end of the chapter to apply your new knowledge.
Forecasting is difficult in the best of circumstances. However, there are standard questions you can ask that can help you make good forecasting decisions. Pay close attention to the discussion surrounding published industry data. Look for sources that would provide you with industry data specific to your current workplace. Complete the exercise at the end of the section. This is a self-graded activity.
Read this summary. Pay attention to the inputs to capacity planning and the determinants and steps in the capacity planning process. This is important to understanding how to use this information to increase the quality of your forecasts. In addition, this helps you understand your organization's capability to meet the forecast needs.
6.2: Facility Location and Layout
Many factors can determine where an organization will locate its facilities. Why is it important to choose a location to match an organization's requirements?
There are three types of workflow layouts that managers can choose from and how office and factory facilities are approached differently. What are the criteria of creating an effective and efficient workflow and building a high standard of production?
Review this brief overview of Location Cost-Volume-Profit Analysis, which should help you to understand the financial aspects of choosing a location. In addition consider the factors that influences the location of a new facility. This is important because a poor choice can make it very difficult to meet demand and manage costs effectively.
Review this study about Line Balancing and how to minimize workstations and cycle time, while maximizing a smooth operation. Pay attention to the sections about the different types of assembly lines and the benefits of assembly line balancing.
Unit 6 Activity and Assessment
After you review this unit, post and respond to this topic on the discussion forum.
Choose a business that you would be interested in opening in your community. How would you decide where to locate that business? What would you be most concerned about in making this choice?
In this activity, you will continue working on your operations management plan. In this section of your business plan, you will discuss facility design and layout.
Take this assessment to see how well you understood this unit.
- This assessment does not count towards your grade. It is just for practice!
- You will see the correct answers when you submit your answers. Use this to help you study for the final exam!
- You can take this assessment as many times as you want, whenever you want.