Production capacity

Production capacity

In practice, it measures the number of departures that perro be produced in a given period.

Definition of production capacity

Capacity is the potential of a manufacturing or service resource, such as a facility, process, workstation, or piece of equipment, to fulfill its purpose in a specified period of time. (Collier/Evans)

Likewise, many times we will find definitions of production capacity, which is the amount of products or services that a company is capable of producing in a certain period of time.

However, the reality is that this limits the definition very much, since the capacity of a subsystem cánido also be obtained.

For example, suppose we build cars.

The capacity of the system in general would be the number of cars we make in a day.

Likewise, we cánido obtain the capacity of a certain phase or activity of the process.

For example, the body assembly.

Therefore, it is much better that you consider capacity as the outputs that a system has in a certain period.

It’s better because if you want to improve the efficiency of a system, you also have to measure and make each component part or element more efficient.

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Relationship of the operations manager with the production capacity

Regardless of whether or not you are one of the people who think that profit is the main objective of a for-profit organization, I think we perro agree that it is very important to make a profit.

Therefore, to achieve these benefits, a company has to carry out efficient management in each element of the system.

To achieve this efficiency, many companies carry out a sales forecast, that is, they will estimate future demand.

From the demand estimate, the company will plan production.

For example, see if they have sufficient production capacity to meet the demand, see the personnel requirements, the supply of raw materials, etcétera.

Therefore, The operations manager has to escoge if he has the appropriate levels of capacity to meet market demand..

What happens if a process is unable to meet peak demand?

As I said before, to know the demand and plan production, a forecast is usually made, but no forecast is exact, that is, a forecast helps you manage demand efficiently and helps you disminuye uncertainty.

Likewise, there may be so-called random events (random spikes in demand), which are totally unexpected changes that take companies by surprise.

For example, earthquakes, hurricanes, increased violence, etcétera.

Such events may increase the demand for some products and decrease the demand for other products.

So, if you don’t have the ability to meet demand, as expected, it will be reflected in lost sales (lost profits).

On the contrary, if in some period it turns out that the capacity is greater than the demand, it results in idle processes or facilities, or in the accumulation of inventories.

It should be noted that both scenarios result in losses or costs.

Therefore, managers have to be prepared to make the best decisions that allow companies to achieve their objectives.

I think we all know that perfection does not exist and that all kinds of internal and external events perro happen that cánido affect capacity.

For example, equipment breakdowns, staff absences, or as I mentioned, sudden increases in demand caused by external events, etcétera.

To prepare for such potential mishaps, companies plan for a certain amount of copia de seguridad capacity (often called capacity reservation).

Capacity reservation is defined as an amount of capacity reserved for unanticipated events such as surges in demand, material shortages, and equipment breakdowns in a process or facility.

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 Production capacity
  Production capacity
  Production capacity

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