Chapter 5 Review Questions

1. Determine the utilisation and the efficiency for each of these situations:
a. A loan processing operation that processes on average of 7 loans per day. The operation
has a design capacity of 10 loans per day and an effective capacity of 8 loans per day.
b. A furnace repair team that services an average of 4 furnaces a day if the design capacity is
6 furnaces a day and the effective capacity is 5 furnaces a day.
2. In a job shop, effective capacity is only 50% of design, and actual output is 80% of effective
output. What design capacity would be needed to achieve and actual output of 8 jobs per
week?

Solving Capacity Planning Problems

Capacity planning problems can be classified in a number of different ways. One such classification
for intermediate and short-range problems is given below:
1.

Output capacity determination

2.

Input capacity determination

3.

Capacity-demand match (input or output)

The categories listed above can involve either manufacturing or service problems. The solution to
the following realistic examples will provide an easy and an intuitive way to comprehend and solve
capacity planning problems.

Problem 1 Manufacturing example

(Output capacity determination and capacity-demand match)
A battery manufacturing plant normally operates two eight-hour shifts per day and 6 days per week.
The manufacturer can produce 375 units per hour. Over the next four weeks, the aggregate demands
for the batteries are given in the following table.

Week

Demand

30,000

32,000

38,000

40,000

a.

Calculate the weekly capacity of the plant.

b.

If the firm attempts to produce the demanded quantity, at what percentage of the capacity
would it be operating each week?

c.

Determine the Level production schedule and the resulting average inventory for the 4week period. Assume that no shortages are allowed and the current inventory is zero and
desired ending inventory in week 4 is also zero.

d.

Determine the Chase production schedule and the resulting average inventory for the 4week period. Assume that no shortages are allowed and the current and desired ending

inventory in week 4 is zero.

e.

Based on your answers to part c and d, discuss the trade-off between Level and the
Chase production plans.
Note: Part a, of this problem can be classified as output capacity determination while parts b
through d deal with capacity-demand match.

Problem 2 Service example

(Output capacity determination)
A small grocery store has a total of four regular checkout lines and one express checkout line.
Recently on Sundays the store has been experiencing either excessive idle time for cashiers or
excessively long customer waiting lines. The results of a recent time study performed by a
management consulting company showed that the average service time for express and regular
checkout lines are 3 and 10 minutes respectively. As the next step in analyzing the problem, the
manager of the grocery store wants to determine the estimated capacity of the store on Sundays in
terms of total number of customers. Currently the store is open from 6 a.m. to midnight on Sundays.
The express checkout line is always open while there is only one regular line open from 6 a.m. to 9
a.m. and also one regular line open from 9 p.m. to midnight. There are two regular checkout lines
open from 9 a.m. to noon and also from 6 p.m. to 9 p.m. All four regular lines are open between
noon and 6 p.m.
a.

Determine the current capacity of the store in total number of customers for Sundays.

b.

Assume that the store manager decides to reduce the number of regular lines from 2 to 1
between 7 p.m. and 9 p.m. and closes the express line between 6 a.m. and 8 a.m. and 10 p.m.
and midnight. What is the revised capacity for Sundays?