1. Rebekah.
a. What is the system capacity, and which is the bottleneck department?
A process for production using the time to create can assist in defining the capacity. The capacity is the lowest number that can be completed in the allotted time (Vonderembse, & White, 2013). In other words, it is the amount that would be complete, which can different than the maximum ability to be produced by different steps in the process. Using the Monique Foods Processing Company, the capacity would be 175 units per hour. The bottleneck would be when the amount produced is smaller than the output capacity of the next step (Vonderembse, & White, 2013). For Monique foods the bottleneck is the push of step 2 in which only 175 are produced and the next step has the capacity for 200, meaning that while step 3 has space to produce more the narrow allowed frame of step 2 only produces 175. This can be then seen to a higher degree in step 4 in which the capacity is for 300 but the step would need to wait as only 175 are being pushed forward per hour. In this type of review, if one is not careful some departments or steps will not be productive and have idle time due to the variance in production time.

b. How much slack (unused capacity) is available in other departments?
The slack in the process would be the waste left in production after the capacity used. For example, if 175 is the capacity, then the maximum produced is subtracted from the capacity to define the amount of slack or waste. Using the Monique Foods example, the slack is 25 for step 3, then 125 for step 4 and 25 for step 5. Overall, this means that 150 items may be on hold in production.

c. How much system capacity can be gained by adding capacity to the bottleneck?
If one wanted to increase the capacity, then it is best to assess the bottleneck to see what could be changed. For instance, the capacity can be increased for step 2 to a similar level of steps 1, 3, and 5 to 200 it would then make the capacity increase. The increase in capacity then reduces the slack to only 100.

d. What are the key factors that determine when to add capacity?
Key considerations for capacity requirements and analysis of the demand for the products or services to see if the increase in capacity is needed (Douglas, 2012). For instance, if one was to have a pizza parlor that is always busy, then the company may think it is a good item to open another store to increase the capacity and stake in the market. However, one would need to consider if the demand is present. Looking at numbers, the initial restaurant served 300 pizzas a day. Consider that the company can increase the capacity with the new store to 600 pizzas a day, but the demand in the market is only 350 pizzas a day. In this example, the restaurant may choose to add another oven instead of adding an entire store as one needs to have the appropriate production capacity to match the demand of the market.

Another key factor related to capacity is cost. If one wanted to consider adding to the space of a building for more machines or workspace for staff, one would need to consider the amount of time needed to see the return on this investment in adding to the capacity. For instance, if one was to incur 1 million in debt to expand, but it takes ten years to see a profit, one may think the increase in capacity is not a good idea. In a similar manner, if one was to incur 1 million in debt, but see a profit of 2 million in the first year. In the second example, the cost would be worth the investment into capacity increases.

e. Why would an organization want to reduce its capacity?
An increase in capacity is not always best for a company. Consider if a company is producing more than the demand is in the market. If excess above the demand is produced, then prices may need to be dropped to move product. One can see this type of overproduction with the items that are sold in discount stores. It can be that the manufacturing created more than was needed but if the demand is not present then the company will need to cut the costs to break-even or possibly lose money on wasted products.

Reference

Douglas, E. (2012). Managerial Economics (1st ed.) Retrieved from https://content.ashford.edu/
Vonderembse, M. A., & White, G. P. (2013). Operations management. Retrieved from https://content.ashford.edu

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2. Ramajeet.
Capacity is the measurement of an ability to produce goods or services assessed against inputs, throughput, and outputs. Any finished goods or service offered goes through a series of operations involving different machines, equipment, humans, and processes. Thus, system capacity is defined as the ability of the overall operations system to produce goods meeting customer demands on time (Vonderembse & White, 2013).
Monique Food Processing Company produces microwavable snacks, and from the details provided, they follow the product-oriented layout for similar high-volume, low variety of products (Vonderembse & White, 2013). The product-oriented layout consists of a series of interdependent workstations, with optimized capacities for maximum throughput, and any imbalance in the line would result in a bottleneck impacting overall system capacity.
Steps ———————————- Capacity (Units/Hour)
1. Prepare food 200
2. Measure and place in plastic pouch 175
3. Prepare cardboard box 200
4. Insert the pouch into box 300
5. Shrink-wrap box 200
A. What is the system capacity, and which is the bottleneck department
Following the series of production steps, Step1 Food Preparation has a capacity of 200 units/hr. However, the next Step2 Measure and Plastic Pouch is restricted at 175 units/hr. Evaluating Step2, its input is 200, but its throughout is limited to 175, thus Step 2 is holding back the system by not being able to process all the input of 200 units/hr. Therefore, the first bottleneck encountered in the system is at Step2. Moving further with the current system capacity of 175 units/hr., all the following system stages from Step3-5 could satisfy the load, implying there are no further bottlenecks in the flow. In summary, the overall system capacity is 175 units/hour, constrained by a single bottleneck at Step 2 (Measure and place in plastic pouch) of flow.
B. How much slack (unused capacity) is available in other departments
As a result of a bottleneck at Step 2, the overall system capacity is limited to 175 units/hr. Thus,
Stage 3, with a capacity of 200, is underutilized by 25
Stage 4, with a capacity of 300, is underutilized by 125
Stage 5, with a capacity of 200, is underutilized by 25.
Thus, total unused capacity or slack due to the bottleneck is 25+125+25 = 175 units/hr.
C. How much system capacity can be gained by adding capacity to the bottleneck
Organizations use the approach of rounding out capacity to increase system capacity by applying resources to the bottleneck department. In the current scenario, Monique Food Processing Company must carefully evaluate all the steps to identify the proportional increase in the capacity of the bottleneck department to reduce overall system slack. Considering the throughput 200 of Step1, the bottleneck department in Step 2 can be upgraded to the capacity of 200, thus reducing the system slack to 100. Any number greater than 200 would increase the system slack.
Thus, the system capacity can be improved by 25 units/hour by removing the bottleneck and increasing the Step 2 capacity to 200.
D. What are the key factors that determine when to add capacity
Some of the critical pre-requisites to capacity planning are the accurate estimation of existing system capacity, evaluation system bottlenecks, and accurate prediction data of future demand (Vonderembse & White, 2013). Based on the existing system knowledge, management could anticipate the necessary lead time required to increase production, either by optimizing the existing system or acquiring additional infrastructure or assets. Thus, combining lead times with the demand forecasts, management can decide when to begin to increase the capacity.
In my opinion, market competition in the form of an alternative product could also influence the capacity planning decision. Consider an example of an online streaming service like Netflix. A launch of another competitive service like Disney Plus might force Netflix to add or produce more online content as well as upgrade its hardware and technology to enhance user experience further, in order to remain competitive.
E. Why would an organization want to reduce its capacity
While alternative products in the market could influence an increase in capacity as described above, it might also force an organization to reduce the capacity. This is mostly true when the alternative product is superior both in terms of technology and functionality. For instance, the launch of wireless chargers might impact the demand for wired chargers, in turn, pushing manufacturers to reduce the capacity for producing wired products. Another factor could be the change in the business model. For instance, General Motors (GM) strategy to go all-electric, zero-emission is gradually moving GM away from gasoline and diesel-powered vehicles. With the plan of launching 20 new electric models by 2023, GM has already moved out of markets like India to divert its capital into its future vision and gradually plans to pull the plug on its certain gasoline models (Davies, 2017). Thus, GM might slowly reduce its capacity to produce gasoline vehicles and transition towards all-electric or hybrid cars.
References
Davies, A. (2017). General Motors is going all electric. Wired. Retrieved from https://www.wired.com/story/general-motors-electric-cars-plan-gm/
Vonderembse, M. A., & White, G. P. (2013). Operations management. Retrieved from https://content.ashford.edu/

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Monique Food Processing Company and Capacity
Read Problem 6: The “Monique Food Processing Company” in Chapter 8 of your text.

Monique Food Processing Company produces light snacks that can be heated in a microwave. The following steps are included in the process:

Steps
Description
Capacity (Units/Hour)
1
Prepare food
200
2
Measure and place in plastic pouch
175
3
Prepare cardboard box
200
4
Insert pouch into box
300
5
Shrink-wrap box
200

a. What is the system capacity, and which is the bottleneck department?
b. How much slack (unused capacity) is available in other departments?
c. How much system capacity can be gained by adding capacity to the bottleneck?
d. What are the key factors that determine when to add capacity?
e. Why would an organization want to reduce its capacity?
Make and include calculations. Answer questions “a” through “e.” Your response should be 200-250 words.

Guided Response: Respond to at least two of your classmates’ posts. Some ways could include alternate solutions or calculations, and/or by challenging classmates’ on scenarios of when it is best to “add” or when it is best to “reduce” capacity. Include examples.

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Required Resources
Text
Vonderembse, M. A., & White, G. P. (2013). Operations management [Electronic version]. Retrieved from https://content.ashford.edu// (Links to an external site.)
• Chapter 7: Facility Location and Process Selection
• Chapter 8: Capacity Decisions
Recommended Resources
Multimedia
July, E. (Producer) & Rodrigo, J. M. (Director). (2003). Business is blooming: The international floral industry (Links to an external site.) [Video file]. Retrieved from the Films On Demand database.
• Watch the following segments:
o Anticipating Flower Market Demand
https://fod.infobase.com/p_ViewVideo.aspx?xtid=34961
Ecuador: King in the Flower World
https://fod.infobase.com/p_ViewVideo.aspx?xtid=34961
o Ecuador’s Flower Production
https://fod.infobase.com/p_ViewVideo.aspx?xtid=34961
o Exporting Flowers from Ecuador
https://fod.infobase.com/p_ViewVideo.aspx?xtid=34961
o Websites
o American Society for Quality. (n.d). Pareto chart (Links to an external site.). Retrieved from http://asq.org/learn-about-quality/cause-analysis-tools/overview/pareto.html
o American Society for Quality. (n.d). Six sigma (Links to an external site.). Retrieved from http://asq.org/sixsigma/


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