- Maintaining system balance:
- Reasons of imbalance:
- Best operating levels for each stage generally differ
- Variability in product demand and the processes themselves generally leads to imbalance except in automated production lines.
- Dealing with imbalance:
- Add capacity to stages that are bottlenecks such as:
- scheduling overtime
- leasing equipment
- purchasing additional capacity through subcontracting
- Use of buffer inventories in front of the bottleneck stage to ensure that it always has something to work on
- Duplicating the facilities on one department on which another is dependent.(duplicate the flow facilities)
2. Frequency of capacity additions:
- Upgrading capacity too frequently is expensive. Direct costs include removing and replacing old equipment and training employees on the new equipment. the new equipment must be purchased often for more than the selling price of the old. There is the opportunity cost of idling the plant or service site during the change over period.
- Upgrading the capacity too infrequently is also expensive. Infrequent expansion means that capacity is purchased in larger chunks. Any excess capacity that is purchased must be carried as overhead until it is utilized.
3. External sources of capacity
- In some cases it might be cheaper to not add capacity at all but rather to use some existing external source of capacity.
- Two common strategies used by organizations are outsourcing and sharing capacity.
Ahmed Redwan, MBA
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Production Engineer
Shorouk for Modern Printing and Packaging
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Keep moving FORWARD >>
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