In the last unit, we looked at manufacturing and service processes that help companies deliver what a customer wants when they want it. Before the firm can successfully institute these processes, it must understand the requirements that determine its production capacity. We also considered how a pizza shop delivers its product. Is it likely that their 30-minute delivery would cover an order for 100 pizzas? Probably not, because they have planned their production capacity based on the demand of individual or family-sized consumers. When planning production capacity, the firm has to consider not only demand but also the physical aspects of its facility. How close does the operation need to be to consumers? Is the facility within easy reach of the resources needed for production?
In this unit, we will discuss how to use forecasting models to understand capacity requirements. We will also evaluate factors that help managers identify the optimal location for a new facility. Finally, we will conclude with a review of basic facility layout designs that maximize production efficiency.
Completing this unit should take you approximately 4 hours.
Read this section for a general overview of forecasting and the various methods organizations use. Pay attention to the approaches used to improve the accuracy of a forecast, and consider the different methods that could be applied to various industries. Take the time to answer the questions at the end of the chapter to apply your new knowledge.
Forecasting is difficult in the best of circumstances. However, there are standard questions you can ask that can help you make good forecasting decisions. Pay close attention to the discussion surrounding published industry data. Look for sources that provide industry data specific to your current workplace. Complete the exercise at the end of the section.
Read this summary. Pay attention to the inputs to capacity planning and the determinants and steps in the capacity planning process. This is important for understanding how to use this information to increase the quality of your forecasts. In addition, this helps you understand your organization's capability to meet the forecast needs.
Many factors can determine where an organization will locate its facilities. Why is choosing a location to match an organization's requirements important?
Managers can choose from three workflow layouts, each of which approaches office and factory facilities differently. What are the criteria for creating an effective and efficient workflow and building a high standard of production?
Review this brief overview, which should help you to understand the financial aspects of choosing a location. Consider the factors that influence the location of a new facility. This is important because a poor choice can make it difficult to meet demand effectively and manage costs.
Review this study about line balancing and how to minimize workstations and cycle time while maximizing a smooth operation. Pay attention to the sections about the different types of assembly lines and the benefits of assembly line balancing.
After you've spent some time reviewing what you have learned so far in this unit, post about this topic on the discussion forum. Respond to your classmates' posts, as well.
Choose a business that you would be interested in opening in your community. How would you decide where to locate that business? What would you be most concerned about in making this choice?
Click on the Unit 6 Discussion and then on 'reply' to post your response.
In this activity, you will continue working on your operations management plan. In this section of your business plan, you will discuss facility design and layout.
Take this assessment to see how well you understood this unit.