Production system capacity, general concepts

1. Concept of capacity

In general it can be interpreted as the volume of production in a period.

Capacity is important because:

It is desired to have sufficient capacity to supply the production time and quantity necessary to satisfy current and future customer demand, because the available capacity affects the efficiency of operations, including the ease of scheduling production and maintenance costs. The achievement of a capacity is an investment for the organization. What is sought is a good return on investment, the costs and the income derived from a decision on capacity must be carefully evaluated.

When a company makes the decision to "make" more than one product (or service) or decides to "make" a new product (or service), capacity planning is the first operations management activity that takes place. Once capacity has been assessed and a need for new or expanding facilities determined, then localization and process technology activities take place. If there is too much capacity, it is necessary to explore alternatives to decrease capacity such as temporary closure or even the sale of facilities. In such a case, a consolidation may take place involving activities such as relocation, combining technologies, and rearranging equipment and processes (physical distribution).

2. Strategic and tactical capabilities

Often the capacity decision is inseparable from the facility location decision. This condition is given by the fact that the demand for many services depends on the location of the system and, of course, the desired capacity depends on the demand; therefore there is a circular relationship.

Capacity requirements can be evaluated from two extreme points of view: short and long term.

Short-term requirements. Managers often use product demand forecasts to estimate the short-term workload to be handled at the facility. These estimates are obtained from forecasting techniques. By looking 12 months into the future it is possible to anticipate the production requirements for different products and services. The requirements can then be compared to existing capacity and detected when adjustments to capacities are required. Long-term requirements. Long-term capacity requirements are more difficult to determine due to uncertainty in understanding future market demand and technologies. Making five or ten year forecasts for the future is a risky and difficult task.These requirements depend on the marketing plans, the development of the products and their life cycles.

3. Models for planning system capacity

This indicates the volume of production in a period, where we know that capacity planning is very important in the systems because it is desired to have sufficient capacity to provide the time and quantity of production necessary to satisfy current and future demand. of the customer so a good return on investment, costs and income derived from a capacity decision is sought.

If a company makes the decision to make more than one product or service, or makes the decision to make a new product or service, capacity planning is the first activity that should be carried out. Subsequently, a need for new or expanding facilities is determined and finally the location and technology activities are carried out.

If capacity is too large, a decision is made to decrease capacity such as temporary closure or sale of facilities.

Capacity planning models

Present value analysis is useful where the time value of investments and cash flows must be considered. Aggregate planning models are useful in examining how best to use existing capacity in the short term. break-even analysis where it provides the minimum break-even volumes required when various expansion alternatives are being costed against projected revenue.

4. System capacity and demand

Capacity must support the strategy to improve the company's competitive position in the market, trying to avoid overcapacity in the industrial sector. Capacity planning consists of the following stages:

Analysis of the capacity of the sector. Analysis of internal capacity. Possible alternatives. Evaluation of alternatives and execution. Forecast of demand.

The ultimate goal is to answer the questions: How much additional industrial capacity must be provided ?, and when?

The demand forecast must be as accurate and well-founded as possible, therefore it must be emphasized that:

Have a duration of at least five years, since capacity is an irreversible decision in the short term, expressed in physical units and not in money. Include potential new products that will be introduced during the considered planning period, and those that will be abandoned. Reflect the change in competitive strategy that may, for example, accentuate novel product lines to the detriment of more conventional and standardized products. take into account technological changes. Future technology may render the current addition of capacity obsolete.

5. Human Behavior and Operations Capacity Planning

It is the maximum ratio of productive or conversion capacity for the existing product combination in the operations of an organization.

Capacity incorporates the concept of conversion rate within an operations scenario. A change in the product mix can change the capacity of the production units. We can measure capacity based on production or based on the inputs used.

Conclusions

In conclusion to the research topic related to capacity planning in the conversion system we find different aspects that have to be evaluated according to production.

The conversion system also known as the transformation or production system, and as for the one that refers to system capacity, it is the one that considers the maximum number of units to be produced in a given time making use of each and every one of the resources available to meet that objective.

Regarding production capacity, it is considered in proportion to the facilities, machinery, labor, equipment, furniture, and it has results in terms of production units considered in a workday, which in reality is what shows what the scope that the company itself has before a market and as such before the competition.

As is known, planning in general is to outline the path of action.

In planning, some stages should be considered, such as: Premises, forecasts, policies, norms and programs in order to 100% comply with the plan.

Specifically in production, the provision of materials and raw materials must be considered.

Constant training, scheduled maintenance; preventive and corrective, and the information necessary to propose better techniques that optimize, both in terms of resources and time, for planning to be successful, must be carried out based on statistical and historical information, experiences and knowledge of the processes and production operation.

Human resources are of utmost importance to encompass a successful and satisfactory production, so we conclude that there are different aspects that we must analyze and develop in order to carry out the entire production process.