Capacity (2)
Maximum output rate for a process, level of production per unit of time
Capacity Utilization
degree to which capacity is being used to generate products or services
Utilization Rate
output rate/effective capacity
Effective Capacity
maximum output that can be reasonably be sustained under normal conditions
Peak Capacity
Maximum Output that can be sustained under ideal conditions
Measuring Process Performance (3)
Throughput Time
Work In Process Inventory
Little’s Law (output rate)
Throughput Time
Total time it takes unit to move through entire process
Little’s Law
Work In Process
Throughput Output Rate
Work In Process Inventory
Units in system not including finished goods
Bottlenecks
Determines output rate for entire system, not necessarily longest process
Internal Bottleneck
satisfies demand, lowers capacity of other processes
External Bottleneck
Impacts companies ability to satisfy demand
System Variability
individual operations build varaiability
Dependent Operations
Joining processes that feed into each other
Blocked Operations
operation that cannot pass processed units to the next operation
Starved Operations
operations with unused capacity because they have run out of work to process
Managing Variability (2)
- Increase staff/machinery
- Decouple - avoid starved downstream
Process Management Triangle: Increase Variability
Increase capacity cushion or Inventory
Process Management Triangle: Decrease Inventory
Decrease variability or Increase Capacity cushion
Process Management Triangle: Decrease Capacity Cushion
Decrease Variability or increase inventory
Theory of constraints (3)
Dum, Rope, Buffer
Drum
Bottleneck sets rhythm for entire process
Rope
Inputs into the bottleneck are pulled in at pace set by bottleneck
Buffer
Buffer inventory stored around bottleneck so it is never starved
