6.1 Why study Operations and Supply Chain Management?
capacity: the capability of a worker / machine / work centre / plant / organization to produce
output per time period; many different forms of capacity
Measures of Capacity
- constant evaluation whether an organizations' resources are adequate to meet current / future
demands g measures of capacity1
- in general: companies measure capacity in terms of inputs / outputs / a combination of these two
- organizations that provide standard products / services: capacity is likely to be expressed in terms of
outputs
- organizations that provide customized products / services: capacity is likely to be expressed in terms of
inputs
- theoretical capacity: maximum output capability (0% failure rate, no unplanned downtimes,...)
- rated capacity: long-term, expected output capability of a resource / system
Fa c t o r s t h a t a f f e c t C a p a c i t y a n d S u p p l y C h a i n C o n s i d e r a t i o n s
- many factors affect capacity, many assumptions must be made (e.g. number of shifts / active lines in an
assembly plant; product variations; conformance quality; quality improvement; ...)
- in many cases: firms must consider the capacities of key suppliers / distributors
6.2 Three common Capacity Strategies
- oftentimes, capacity decision are made to accommodate expected growth in demand / product lines
- core question: how quick can capacity
be increased?
- three common strategies (g Figure 1):
Lead
1) lead strategy: capacity is added in Match
Demand
anticipation of demand
2) match strategy: avoids periods of
under- / overutilization Lag
3) lag strategy: organizations add
capacity only after demand has
materialized
Time
- virtual supply chain: a fourth, relatively
new concept, characterized by a
collection of firms (that typically exists for only a short period); more flexible but less efficient
1 measures of capacity vary widely
- 57 - Jannis Mertens
capacity: the capability of a worker / machine / work centre / plant / organization to produce
output per time period; many different forms of capacity
Measures of Capacity
- constant evaluation whether an organizations' resources are adequate to meet current / future
demands g measures of capacity1
- in general: companies measure capacity in terms of inputs / outputs / a combination of these two
- organizations that provide standard products / services: capacity is likely to be expressed in terms of
outputs
- organizations that provide customized products / services: capacity is likely to be expressed in terms of
inputs
- theoretical capacity: maximum output capability (0% failure rate, no unplanned downtimes,...)
- rated capacity: long-term, expected output capability of a resource / system
Fa c t o r s t h a t a f f e c t C a p a c i t y a n d S u p p l y C h a i n C o n s i d e r a t i o n s
- many factors affect capacity, many assumptions must be made (e.g. number of shifts / active lines in an
assembly plant; product variations; conformance quality; quality improvement; ...)
- in many cases: firms must consider the capacities of key suppliers / distributors
6.2 Three common Capacity Strategies
- oftentimes, capacity decision are made to accommodate expected growth in demand / product lines
- core question: how quick can capacity
be increased?
- three common strategies (g Figure 1):
Lead
1) lead strategy: capacity is added in Match
Demand
anticipation of demand
2) match strategy: avoids periods of
under- / overutilization Lag
3) lag strategy: organizations add
capacity only after demand has
materialized
Time
- virtual supply chain: a fourth, relatively
new concept, characterized by a
collection of firms (that typically exists for only a short period); more flexible but less efficient
1 measures of capacity vary widely
- 57 - Jannis Mertens
