Operations Management

Presentation on Case Study Fitness Plus

Presented To: Prof. M.K. Sesashayee

Presented By:- Group-4 Ashish Chouksey (1004) Vishal Dhangar (1010) Narayan Tripathi (1015) Soumik Bhattacharjee (1025) Vasundhara Keshav (1028)

What is Capacity ?
Capacity is the maximum rate of output of a process or system . There are two types of capacity planning 1. Long-term capacity planning 2. Short term capacity planning
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Short term capacity planning

It is related to matters of scheduling, labor shifts and balancing resource capacities. The goal is to handle unforeseen changes in demand in a resourceful and economic way. The time frame is often only about a few days but might run as long as 6 months.

Long term capacity planning

It is concerned mainly about strategic problems involving the firms key production facilities .Also long term capacity issues are interconnected with deciding the locations .

Objectives of capacity planning

To Satisfy the future demand of products devoid of shortage. To find the optimal capacity of the company so that the sum of cost of under capacity and over capacity is kept minimum. To make sure that the initial capital investment is kept low to attain a much lower break even value.

 Investment in capacity of the facility are long standing and can not be overturned without facing difficulties.

Introduction
Fitness Plus is a full-service fitness club that has sustained tremendous growth since its opening. Recently, management became aware of overcrowding and unavailability of equipment in certain areas and is now trying to determine how to properly evaluate the situation and decide if there is enough room at the current building to properly service existing members or to open a larger facility in another location.

 The areas where most bottlenecks occur during peak hours are aerobics, cardiovascular, and Nautilus areas. Of course, people often do a mixture of both cardio and weight training exercises, but by constructing a utilization pie chart of Fitness Plus, we realize visually that a huge part of membership (68% in fact) uses aerobic, cardiovascular, and Nautilus areas of the club, and only a small part of the membership (18%) uses the racquetball and tennis courts

Case Facts
Fitness Plus opened its doors in 1995 in a large suburban office park in Greensboro, North Carolina. It offers fullservice in health and sports club providing range of facilities and services to support 3 basic activities fitness, recreation and relaxation. At initial stage fitness plus membership was small later it has grown gradually. The ever increasing growth rate in peak hours brought complaints from members due to the unavailability of equipment. Even the owners were wondered whether they could use the information to estimate how well existing capacity was being utilized.

 As the area was growing in terms of population and geography management faced great difficulty as many new offices and business were moving back to it causing resurgence in activity. Due to growth potential competition increased, YMCA was offering full range of services at a low cost. With this initiative two new health and fitness facilities are opened, OASIS and Golds GYM. Owners had lot of queries in their mind regarding expansion as facilities were constraint. Lack of financial resources was a point of concern and the current site land capacity expansion of service might need the reduction of capacity.

What method would you use to measure the capacity of Fitness Plus
The suitable method to measure capacity of Fitness Plus is by using the input measures because the club is a flexible flow process and members can choose their own work outs. At current time with current flow of members, Fitness Plus has large periods of operating near peak capacity in multiple areas. This caused flow issues including bottleneck in more popular workout areas. We can assume that members are using more than one area of fitness centre during each visit. Currently, approximately 80 members per hour enter the club during peak hours but we cannot identify which areas the member specifically.

Has Fitness Plus reached its capacity?

From the calculation of capacity cushion in year 2000 and 2005, it shows that Fitness Plus has reached its capacity by increasing of demand Weekly Operation Hours 101 hours Peak Demand 3 hours daily from 4.00 pm to 7.00 pm Aerobics : 35 members per hour

 Cardiovascular : 29 pieces of equipment ( we assume equipment will be limited to 30 minutes per member) Nautilus : 24 pieces of equipment ( we assume equipment will be limited to 30 minutes per member)

 Current capacity measured as inputs for nautilus, cardiovascular, and aerobics fitness Current demand is 88 members per hour (35+ 29 +24 = 88) Projected demand is 141 members per hour (35+58+48 = 141) Capacity cushion is the amount reserve capacity a process uses to handle sudden increases in demand or temporary losses of production capacity. It measures the amount by which the average utilization falls below 100%. Large cushions appropriate when demand varies and uncertain where in this case, demand on some days of the week is predictable higher than on other days.

 In 2000 Average is 15 members per hour Utilization = Average Output Rate/ Maximum Capacity x 100 15/88 x 100 = 17% Capacity cushion in 2000 = 100% - 17% = 83% In 2005 Average is 25 members per hour Utilization = 25/88 x 100 = 28% Capacity cushion in 2005 = 100%-28% = 72%

 To get an 83% capacity cushion like in 2000, with an average flow of 25 members per hour of year 2005, the capacity would have to be increased to 141 members per hour. Special consideration should focus on the cardiovascular area where demand is over capacity at peak times. Because of the limited amount of land at the current facility, expansion from 88 to 141 members per hour is probably not feasible.

Which capacity strategy would be appropriate for fitness plus ?

Short run capacity because the problem is mainly of overcrowding of people with Nautilus , cardiovascular and aerobics equipments Add or share equipment Adjust the schedule of members by concerning gym trainer Utilising other facilities
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How would you link the capacity decision being made by fitness plus to other types of operating decisions ?
By using short term capacity planning fitness plus will solve the problem of overcrowding and unavailability of equipment but they may face problem in peak month January regarding to there capacity so they should also follow long term capacity planning
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