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Thursday, May 20, 2010

Types of Facility Capacity - Tips to increasing effective capacity

Types of Facility Capacity - Tips to increasing effective capacity


a. Design capacity -It represents the maximum rate of output that can be achieved under ideal conditions.

b. Effective capacity - It is the maximum rate of output which can be practically achieved under the constraints of time consumed in set-ups, oiling & cleaning, defective items, etc. Effective capacity is always lesser than the design capacity.


c. Actual capacity- It is the maximum output rate which is actually achieved under the constraints of machine breakdowns, labor inefficiencies & absenteeism, defective products, late deliveries of materials by the supplier, and so on. Actual capacity can be equal to or less than the effective capacity.

  Measures of system performance

• Efficiency = actual output / effective capacity

• Capacity utilization = actual output / design capacity

Example of Capacity Utilization

• During one week of production, a plant produced 83 units of a product. Its historic highest or best utilization recorded was 120 units per week. What is this plant’s capacity utilization rate?

Answer:

Capacity utilization rate = actual output/ design capacity

= 83/120

=0.69 or 69%

Ways of increasing effective capacity

  1. Proper process quality control so that there are less defective items requiring rework
  2. Good training, high motivation, less absenteeism & high turnover on part of workers
  3. Good coordination with suppliers for timely & defect-free supplies and proper scheduling of products on machines
  4. By properly following the environmental and pollution norms, which results in lesser inspections by government enforcement agencies and, thus, lesser disruption of production activities
  5. By making products & services as uniform as possible in design so that number of set-ups required are less (batch sizes will be large)
  6. Proper facility location, layout, and internal working conditions

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