Management Case

Throughout our teaching-based project, we will cover the topic of capacity management. Capacity management is important because impact of capacity management is felt throughout the organization, within every element of the supply chain. We will present concept of process capacity, capacity utilization, economies and diseconomies of scale, capacity balance. More specifically, we will describe the process of capacity planning for a newly developed manufacturing facility. We will derive the optimum amount of capacity necessary for maximum efficiency of the facility and when it should be added. With the use and examples of capacity related equations, we will effectively provide a model for determining basic capacity planning problems such as unit cost, minimum cost capacity feasible and cycle time. This information will be presented in the form of a PowerPoint, student handouts, homework problems/solutions, conceptual questions and a quiz.

Introduction

We created roadmaps of the topics that could help our class understand the characteristics of capacity management. Our learning goal in presenting this topic is to identify the purpose of Capacity Management and when it is appropriate to use it. An additional goal was to ascertain how to evaluate our work in terms of Capacity Management. After few weeks of reading and researching, we began to identify to our outline. As capacity management is an extremely large topic, we are only going to discuss the areas covered in the teaching slides. We are going to give brief idea about capacity management and how could we apply these teaching methods into our organization.

Project Description

Capacity management is basically the maximum rate of output of a process or a system. As mangers, we always need to ensure that our capacity meets our demand. In the other words, we can evaluate our capacity management based on how far we are from the demand. For that, the closer you can get to the demand the better profit you can gain. We cannot isolate capacity decision within organization from the supply chain, because the capacity of the process will always have an impact on other processes in the chain. Capacity management could be divided into two segments;

Capacity Planning (Long-term): It includes economies and diseconomies of scale, Capacity timing and sizing strategies, and a systematic approach to capacity decisions.

Constraint Management (Short-term): It includes the theory of constraints, identification and management of bottlenecks, product mix decisions using bottlenecks, and managing constraints in line processes. Our teaching slides describe these ideas in much more detail.

Capacity planning for any firm is difficult due to varying nature of demand. The existence