Capacity Management Through Simulation
Operations Management - Production Capacity Management
Capacity management is the practice of managing the limitations of business and technology services. Its goal is typically to meet service scalability levels defined by business strategy and service level agreements (SLAs) while managing costs. Capacity management functions include capacity forecasting, planning, monitoring and performance analysis. Capacity planning is the process of determining the production capacity needed by an organization to meet changing demands for its products. In the context of capacity planning, design capacity is the maximum amount of work that an organization is capable of completing in a given period. Capacity management can happen at three (3) levels: business, service or goods production, and component levels.
Capacity management involves the following functions:
A systematic and model-based approach to capacity management breaks down the barriers between functional units of design, planning, operations, and control. It does not replace production control systems, process planning systems, CAD/CAM systems,, or quality management systems; it builds on these existing systems and data. It advocates the integration of functions relating to capacity management and focused on the operational capabilities and the operations of manufacturing.
Production Capacity
Production capacity is defined as the maximum output that an organization can produce with the available resources in a given period. Production capacity can be calculated based on a single type of product or a mix of products.
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Businesses typically have a mix of products - goods and services - that collectively define the value proposition offered to customers. Decisions about the product-mix are usually supported by analytical methods such as Linear Programming (LP). These decisions are usually made so that the market demand is met and the firm profit is maximized. However, the complexity, and the dynamic stochastic nature of real-world production of products (tangible and intangible value offered to customers) often lead to goods and service production systems effective capacity levels that are different from those determined by analytical methods. Analytical methods also have problems coping with the dynamic changes in the product-mix which usually requires enhancing system parameters and/or reconfiguration of the operations systems.
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Manufacturing Operational Decisions
All manufacturers set out to perform the same basic function: to transform resources into finished goods. To perform this function in today’s business environment, manufacturers must continually strive to improve operational efficiency. They must fine-tune their production processes to focus on quality, to hold down the costs of materials and labor, and to eliminate all costs that add no value to the finished product.
Making the decisions involved in the effort to attain these goals is the job of the operations manager. That person’s responsibilities can be grouped as follows:
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Any firm which is into any kind of business is faced with myriad of decisions they have to take in a day. across the relevant functional areas related to operations.
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Manufacturing and service production operations should be driven by capacity considerations not raw material availability in the case of manufacturing. The goods or service production system capacity is defined in terms of the output of goods/parts, or customers serviced per some specified interval. The production system processes define a network of processing centers connected and coordinated by the product routing.
Capacity management seeks to balance these costs with the capacity of services to handle average and peak demand such as disaster recovery scenarios.
Production Capacity Analysis
Production of goods (manufacturing) or services are driven by capacity considerations. Companies must have proven techniques for managing capacity: total capacity management(TCM) including; capacity planning and design, finite capacity scheduling, capacity control, and continuous measurement of available capacity for use.
Capacity management is the practice of managing the limitations of business and technology services. Its goal is typically to meet service scalability levels defined by business strategy and service level agreements (SLAs) while managing costs. Capacity management functions include capacity forecasting, planning, monitoring and performance analysis. Capacity planning is the process of determining the production capacity needed by an organization to meet changing demands for its products. In the context of capacity planning, design capacity is the maximum amount of work that an organization is capable of completing in a given period. Capacity management can happen at three (3) levels: business, service or goods production, and component levels.
Capacity management involves the following functions:
- Design Assessment - Assessment of production system design where comparisons of different facility organizations (group of machines, work centers, assembly lines, prep stations and buffers) , and resource capabilities are evaluated.
- Capacity Requirements planning and analysis - This entails evaluating the ability of current resource levels to meet current orders/demand and projected demand. The current shop floor status and inventory levels are considered and process plans are used to calculate the loads at work centers. In the planning stage, the load at each work center is evaluated with regard to the actual capacity of the work center. Corrective actions are made as required by rescheduling order, hiring and layoff reassignments, overtime, outsourcing, alternate routing, etc. Capacity requirements analysis is concerned with controlling capacity during the execution of production plan
- Scheduling - Scheduling means establishing job start and completion times for the orders that have been released to the shop floor. Scheduling must account for all the the specific operational constraints of the production facility, including limited resources, breaks, shifts, machine availability, personnel availability, material availability, and material handling capabilities. Operational procedures such as just-in-time, kanban, scheduling by due dates, priority assessment are all included in the computations to produce the schedule. etc. Because of this complexity and the diverse nature of scheduling philosophy - backward scheduling, forward scheduling, scheduling the bottlenecks first, etc. - simulation is necessary in all but the simplest environments.
- Schedule Management - Schedule management entails assessing schedules and the ability to change or manage the, Schedule management can be used to evaluate the effect of expediting jobs or taking on new sales opportunities within the current status and schedule. This function is performed best in a graphical and interactive visual environment using displays based on Gantt charting techniques.
- Schedule execution and dispatching - The philosophy of total capacity management entails that a schedule must be executed as prescribed otherwise the function will suffer.
- Status presentation and statistics - Data obtained from manufacturing operations can be displayed graphically in a an interactive visual environment using various statistical charting techniques such as bar graphs for resource (human resource and equipment) load, utilization levels, in process inventory levels, process output rates as well as production system's output performance rates.
A systematic and model-based approach to capacity management breaks down the barriers between functional units of design, planning, operations, and control. It does not replace production control systems, process planning systems, CAD/CAM systems,, or quality management systems; it builds on these existing systems and data. It advocates the integration of functions relating to capacity management and focused on the operational capabilities and the operations of manufacturing.
Production Capacity
Production capacity is defined as the maximum output that an organization can produce with the available resources in a given period. Production capacity can be calculated based on a single type of product or a mix of products.
[TBD]
[TBD]
Businesses typically have a mix of products - goods and services - that collectively define the value proposition offered to customers. Decisions about the product-mix are usually supported by analytical methods such as Linear Programming (LP). These decisions are usually made so that the market demand is met and the firm profit is maximized. However, the complexity, and the dynamic stochastic nature of real-world production of products (tangible and intangible value offered to customers) often lead to goods and service production systems effective capacity levels that are different from those determined by analytical methods. Analytical methods also have problems coping with the dynamic changes in the product-mix which usually requires enhancing system parameters and/or reconfiguration of the operations systems.
[TBD]
Manufacturing Operational Decisions
All manufacturers set out to perform the same basic function: to transform resources into finished goods. To perform this function in today’s business environment, manufacturers must continually strive to improve operational efficiency. They must fine-tune their production processes to focus on quality, to hold down the costs of materials and labor, and to eliminate all costs that add no value to the finished product.
Making the decisions involved in the effort to attain these goals is the job of the operations manager. That person’s responsibilities can be grouped as follows:
- Production planning - During production planning, managers determine how goods will be produced, where production will take place, and how manufacturing facilities will be laid out.
- Production control - Once the production process is under way, managers must continually schedule and monitor the activities that make up that process. They must solicit and respond to feedback and make adjustments where needed. At this stage, they also oversee the purchasing of raw materials and the handling of inventories.
- Quality control - Finally, the operations manager is directly involved in efforts to ensure that goods are produced according to specifications and that quality standards are maintained.
[TBD]
Any firm which is into any kind of business is faced with myriad of decisions they have to take in a day. across the relevant functional areas related to operations.
[TBD]
[TBD]
Manufacturing and service production operations should be driven by capacity considerations not raw material availability in the case of manufacturing. The goods or service production system capacity is defined in terms of the output of goods/parts, or customers serviced per some specified interval. The production system processes define a network of processing centers connected and coordinated by the product routing.
- Goods production (Manufacturing) work centers are augmented with WIP inventory stores that act as buffers to bottleneck resources and work centers that constrain the flow of products through the system.
- Service capacity is usually associated with a cost such as the need to hire more people or buy more equipment.
Capacity management seeks to balance these costs with the capacity of services to handle average and peak demand such as disaster recovery scenarios.
Production Capacity Analysis
Production of goods (manufacturing) or services are driven by capacity considerations. Companies must have proven techniques for managing capacity: total capacity management(TCM) including; capacity planning and design, finite capacity scheduling, capacity control, and continuous measurement of available capacity for use.
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Goods Production System Capacity
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Service Production System Capacity
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Simulation Visualization
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Managing Manufacturing System Capacity
A Manufacturing production system is comprised of processes - structured, recurrent activities - that transform inputs into outputs (products). The capacity of these systems is defined in terms of the output of products/parts per some specified interval. The manufacturing and/or service delivery system processes define a network of manufacturing and/or service centers connected and coordinated by the processes. Manufacturing work centers are augmented with WIP inventory stores that act as buffers to bottleneck resources and work centers that constrain the flow of products through the system.
The manufacturing system capacity can be analyzed systematically as part of organization workflow analysis through production systems simulation methods, to identify potential bottlenecks and inefficiencies for improvements. Simulation enables users to explore maximizing organization output subject to minimizing delays through reducing/eliminating waiting times, improving labor and equipment utilization, etc.
[TBD]
These manufacturing and service delivery systems can be analyzed systematically as part of organization workflow analysis through production systems simulation methods, to identify potential bottlenecks and inefficiencies for improvements. Simulation enables users to explore maximizing organization output subject to minimizing delays through reducing/eliminating waiting times, improving labor and equipment utilization, etc.
Manufacturing processes create and deliver products and/or parts consumed in the production of goods delivered to customers. A process is a network of activities with specific precedence relationships among activities - the relationships that specify which activities must be finished before another activity can begin.
Goods Manufacturing Systems Simulation Model
These production and service delivery systems processes can be analyzed systematically as part of whole organization workflow through simulation methods, to identify potential bottlenecks and inefficiencies for improvements. Simulation enables users to explore maximizing organization output subject to minimizing delays through reducing/eliminating waiting times, improving labor and equipment utilization, etc.
Creating a simulation experiment to investigate production (product manufacturing) effective capacity, and capacity decisions related to creation and delivery of value to customers involves:
These production and service delivery systems processes can be analyzed systematically as part of whole organization workflow through simulation methods, to identify potential bottlenecks and inefficiencies for improvements. Simulation enables users to explore maximizing organization output subject to minimizing delays through reducing/eliminating waiting times, improving labor and equipment utilization, etc.
A Manufacturing production system is comprised of processes - structured, recurrent activities - that transform inputs into outputs (products). The capacity of these systems is defined in terms of the output of products/parts per some specified interval. The manufacturing and/or service delivery system processes define a network of manufacturing and/or service centers connected and coordinated by the processes. Manufacturing work centers are augmented with WIP inventory stores that act as buffers to bottleneck resources and work centers that constrain the flow of products through the system.
The manufacturing system capacity can be analyzed systematically as part of organization workflow analysis through production systems simulation methods, to identify potential bottlenecks and inefficiencies for improvements. Simulation enables users to explore maximizing organization output subject to minimizing delays through reducing/eliminating waiting times, improving labor and equipment utilization, etc.
[TBD]
These manufacturing and service delivery systems can be analyzed systematically as part of organization workflow analysis through production systems simulation methods, to identify potential bottlenecks and inefficiencies for improvements. Simulation enables users to explore maximizing organization output subject to minimizing delays through reducing/eliminating waiting times, improving labor and equipment utilization, etc.
Manufacturing processes create and deliver products and/or parts consumed in the production of goods delivered to customers. A process is a network of activities with specific precedence relationships among activities - the relationships that specify which activities must be finished before another activity can begin.
Goods Manufacturing Systems Simulation Model
These production and service delivery systems processes can be analyzed systematically as part of whole organization workflow through simulation methods, to identify potential bottlenecks and inefficiencies for improvements. Simulation enables users to explore maximizing organization output subject to minimizing delays through reducing/eliminating waiting times, improving labor and equipment utilization, etc.
Creating a simulation experiment to investigate production (product manufacturing) effective capacity, and capacity decisions related to creation and delivery of value to customers involves:
- Creating product demand forecast model for products and services - This includes information about the average rates at which customers request for products and/or services including the breakdown of customer order request types (e.g., for a coffee shop regular coffee vs. espresso, for a barbershop haircut vs. shaves, etc.) – at different times of the day, and the orders' sizes
- Creating configuration model for the production and/or service delivery functional unit including the configuration model of the people and equipment resources.
- Creating configuration model for the products and services mix offered by the organization
- Creating configuration model for the workforce (people) and their roles as well as their schedules
- Creating configuration model for the equipment including operations and maintenance schedules
- Creating schedules for the organization's operating calendar - workdays, times and holidays.
- Generate/Run operations process simulation models
These production and service delivery systems processes can be analyzed systematically as part of whole organization workflow through simulation methods, to identify potential bottlenecks and inefficiencies for improvements. Simulation enables users to explore maximizing organization output subject to minimizing delays through reducing/eliminating waiting times, improving labor and equipment utilization, etc.
Managing Service production System Capacity
A Service production system is comprised a set of interactions between service providers and consumers within a service production unit. of processes - structured, recurrent activities - that transform inputs into outputs (products).
A process is a network of activities with specific precedence relationships among activities - the relationships that specify which activities must be finished before another activity can begin. Manufacturing processes create and deliver products and/or parts that are delivered to customers.
The capacity of these systems is defined in terms of the output of products/parts per some specified interval. The manufacturing and/or service delivery system processes define a network of manufacturing and/or service centers connected and coordinated by the processes. Manufacturing work centers are augmented with WIP inventory stores that act as buffers to bottleneck resources and work centers that constrain the flow of products through the system.
These manufacturing and service delivery systems can be analyzed systematically as part of organization workflow analysis through production systems simulation methods, to identify potential bottlenecks and inefficiencies for improvements. Simulation enables users to explore maximizing organization output subject to minimizing delays through reducing/eliminating waiting times, improving labor and equipment utilization, etc.
[TBD]
Service Production Systems Simulation Model
These service production systems are operations systems whose processes can be analyzed systematically as part of whole organization workflow through simulation methods, to identify potential bottlenecks and inefficiencies for improvements. Simulation enables users to explore maximizing organization output subject to minimizing delays through reducing/eliminating waiting times, improving labor and equipment utilization, etc.
Creating a simulation experiment to investigate production (product manufacturing) effective capacity, and capacity decisions related to creation and delivery of value to customers involves:
These production and service delivery systems processes can be analyzed systematically as part of whole organization workflow through simulation methods, to identify potential bottlenecks and inefficiencies for improvements. Simulation enables users to explore maximizing organization output subject to minimizing delays through reducing/eliminating waiting times, improving labor and equipment utilization, etc.
[TBD]
A Service production system is comprised a set of interactions between service providers and consumers within a service production unit. of processes - structured, recurrent activities - that transform inputs into outputs (products).
A process is a network of activities with specific precedence relationships among activities - the relationships that specify which activities must be finished before another activity can begin. Manufacturing processes create and deliver products and/or parts that are delivered to customers.
The capacity of these systems is defined in terms of the output of products/parts per some specified interval. The manufacturing and/or service delivery system processes define a network of manufacturing and/or service centers connected and coordinated by the processes. Manufacturing work centers are augmented with WIP inventory stores that act as buffers to bottleneck resources and work centers that constrain the flow of products through the system.
These manufacturing and service delivery systems can be analyzed systematically as part of organization workflow analysis through production systems simulation methods, to identify potential bottlenecks and inefficiencies for improvements. Simulation enables users to explore maximizing organization output subject to minimizing delays through reducing/eliminating waiting times, improving labor and equipment utilization, etc.
[TBD]
Service Production Systems Simulation Model
These service production systems are operations systems whose processes can be analyzed systematically as part of whole organization workflow through simulation methods, to identify potential bottlenecks and inefficiencies for improvements. Simulation enables users to explore maximizing organization output subject to minimizing delays through reducing/eliminating waiting times, improving labor and equipment utilization, etc.
Creating a simulation experiment to investigate production (product manufacturing) effective capacity, and capacity decisions related to creation and delivery of value to customers involves:
- Creating product demand forecast model for products and services - This includes information about the average rates at which customers request for products and/or services including the breakdown of customer order request types (e.g., for a coffee shop regular coffee vs. espresso, for a barbershop haircut vs. shaves, etc.) – at different times of the day, and the orders' sizes
- Creating configuration model for the production and/or service delivery functional unit including the configuration model of the people and equipment resources.
- Creating configuration model for the products and services mix offered by the organization
- Creating configuration model for the workforce (people) and their roles as well as their schedules
- Creating configuration model for the equipment including operations and maintenance schedules
- Creating schedules for the organization's operating calendar - workdays, times and holidays.
- Generate/Run operations process simulation models
These production and service delivery systems processes can be analyzed systematically as part of whole organization workflow through simulation methods, to identify potential bottlenecks and inefficiencies for improvements. Simulation enables users to explore maximizing organization output subject to minimizing delays through reducing/eliminating waiting times, improving labor and equipment utilization, etc.
[TBD]
Status Analysis and Statistics
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Workforce Resource Analysis View
The resource view of an organization or any of its parts as a bundle of resources (real assets). Viewing operations as a bundle of real assets is most useful when the decision is on amounts human resources of particular role types that the operation needs. This investment or capital budgeting decision, along with the allocation of resources to activities, is one of the major tasks of management.
This view focuses on the assets used in operations to create and deliver value. The resource view of an organization or any of its parts as a bundle of resources (real assets). Viewing operations as a bundle of real assets is most useful when decision on amounts and types of resources the operation needs. The resources/assets can be categorized into tangible resources (i.e., people/human resources, capital assets – property, plant and equipment), and intangible resources (i.e., relationship with suppliers and customers, intellectual property, reputation and brands, knowledge and experience in processing, technologies and markets).
Facility and Equipment Resource View
The resource view of an organization or any of its parts as a bundle of resources (real assets). Viewing operations as a bundle of real assets is most useful when the decision is on amounts and types of equipment resources the operation needs. This investment or capital budgeting decision, along with the allocation of resources to activities, is one of the major tasks of management. This view focuses on the assets used in operations to create and deliver value. The resource view of an organization or any of its parts as a bundle of resources (real assets). Viewing operations as a bundle of real assets is most useful when decision on amounts and types of resources the operation needs. This investment or capital budgeting decision, along with the allocation of resources to activities, is one of the major tasks of management. The resources/assets can be categorized into tangible resources (i.e., people/human resources, capital assets – property, plant and equipment), and intangible resources (i.e., relationship with suppliers and customers, intellectual property, reputation and brands, knowledge and experience in processing, technologies and markets).
[TBD]
Workforce Resource Analysis View
The resource view of an organization or any of its parts as a bundle of resources (real assets). Viewing operations as a bundle of real assets is most useful when the decision is on amounts human resources of particular role types that the operation needs. This investment or capital budgeting decision, along with the allocation of resources to activities, is one of the major tasks of management.
This view focuses on the assets used in operations to create and deliver value. The resource view of an organization or any of its parts as a bundle of resources (real assets). Viewing operations as a bundle of real assets is most useful when decision on amounts and types of resources the operation needs. The resources/assets can be categorized into tangible resources (i.e., people/human resources, capital assets – property, plant and equipment), and intangible resources (i.e., relationship with suppliers and customers, intellectual property, reputation and brands, knowledge and experience in processing, technologies and markets).
Facility and Equipment Resource View
The resource view of an organization or any of its parts as a bundle of resources (real assets). Viewing operations as a bundle of real assets is most useful when the decision is on amounts and types of equipment resources the operation needs. This investment or capital budgeting decision, along with the allocation of resources to activities, is one of the major tasks of management. This view focuses on the assets used in operations to create and deliver value. The resource view of an organization or any of its parts as a bundle of resources (real assets). Viewing operations as a bundle of real assets is most useful when decision on amounts and types of resources the operation needs. This investment or capital budgeting decision, along with the allocation of resources to activities, is one of the major tasks of management. The resources/assets can be categorized into tangible resources (i.e., people/human resources, capital assets – property, plant and equipment), and intangible resources (i.e., relationship with suppliers and customers, intellectual property, reputation and brands, knowledge and experience in processing, technologies and markets).
Simulation Output Analysis & Visualization
The Production and/or service systems simulation enable managers and key operations staff to gain insight into the "real world" capacity problems facing the company, and improves their understanding of the factors that affect production and service delivery performance. The simulation and visualization informs decisions on:
Simulation informs decisions on the optimum configuration of processes such as:
The Production and/or service systems simulation enable managers and key operations staff to gain insight into the "real world" capacity problems facing the company, and improves their understanding of the factors that affect production and service delivery performance. The simulation and visualization informs decisions on:
- Demand Management - Specifying how to match demand to available resources; and tactical allocation of capacity.
- Process Network Structure - Decision of the layout of the activity network in terms of locations of activities, buffers and interconnections. For example, processes can be organized by activity, or by product line; job shops such as consulting companies, and tool-die-shops often have a functional or process layout, while flow shops such as assembly plants, and chemical processing plants usually have a product layout.
- Coordination and Information technology decisions on how to coordinate, communicate, and plan execution throughout the network. Coordination is typically a managerial activity and includes assignment of responsibility, incentives, measurements and control.
- Product architecture decisions on structure and parts to facilitate production.
- Transportation technology decisions on how goods are exchanged among different activities in the network. This is a key driver in logistics and supply chain management, as well as how insurance policies are moved between the different processing steps.
Simulation informs decisions on the optimum configuration of processes such as:
- Supply or Sourcing Decisions - These decisions specify which activities are performed internally, and which activities are outsourced, and how to manage suppliers. Decisions involve defining the process boundaries and interfaces. It includes strategic sourcing decisions, vertical integration, and supply network configuration.
- Technology Decisions - These decisions characterize how to process inputs into outputs. It includes the methods and systems employed, as well as the know-how and intellectual property. The technology decisions can be grouped into the following key categories: a) coordination and information technology decisions such as assignment of responsibility, incentives, measurement, and control; b) product technology decisions in product philosophy, product architecture, and product capabilities; c) process technology decisions on how to structure the conversion processes and methods used in execution; and d) transportation technology decisions on how goods are exchanged among different activities in the network.
- Demand Forecast Decisions - These decisions specify how to match demand to available supply. These decisions characterize the interfaces and relationships with customers and include demand planning and forecasting, as well as tactical capacity allocation and order management. Demand management is an important driver in inflexible supply processes that cannot quickly adapt to changes in demand such as the core processes in airlines, hotels, hospital wards, and car rental companies, It also relates to service and customer relationship management.
- Improvements and Innovation Decisions - These are decisions on characterizing the processes and incentives to improve and innovate products and processes.
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