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# BUSI 2405 Lecture 04A - Capacity

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on 19 January 2017

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#### Transcript of BUSI 2405 Lecture 04A - Capacity

Capacity
What is capacity?
How do you measure it?
Design vs Effective Capacity?
Capacity in the news
Full wards mean ER backups at BC hospitals: Royal Columbian Hospital in New Westminster operating at 104% capacity.
McLellan, Wendy. (1998, June). Medical Post, 34(23), 41.
What happens when you run at such a high efficiency?
"Dr. Granger's letter follows the fire marshal being called into Royal Columbian in February to deal with overcrowding"
Theresa McManus. (2008, April 5). 'Radical' change needed, doctor says. The Record,3.
"How a hospital's Tim Hortons became a temporary ER. "
Robert Matas. (2011, March 2). The Globe and Mail,p. S.1.
What is a capacity cushion?
Bottlenecks
Sizing Capacity
Work on Question 18, page 157
Assume customers come in 2 waves (at 5 PM or at 7PM)
Wrap up
Capacity is a crucial decision
Too much capacity - idle capital & resources
Too little capacity - unable to meet demand; lost customers
Utilization vs. Efficiency?
The following diagram shows a four-step process that begins with Operation 1 and ends with Operation 4 The rates shown in each box represent the effective capacity of that operation
Determine the capacity of this process
Which of the following three actions would yield the greatest increase in process capacity (i) increase the capacity of operation 1 by 15%; (ii) increase the capacity of operation 2 by 10%; or (iii) increase the capacity of operation 3 by 10%
Operation 1
Operation 2
Operation 3
Operation 4
12/hr
15/hr
11/hr
14/hr
Source: Stevenson, W. J. & Hojati, M (2011). Operations Management. 4th Canadian Ed. McGraw-Hill Ryerson
Important concepts not in your text

Little's Law
The average throughput time (W) = Average # of things in the system (L) / average arrival rate (l)
W = L/l
Throughput
Total amount of time in the system including wait times
Bottleneck
Is the slowest task step, excluding wait times
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