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Production Capacity and Site Selection

A. The production of a good or service requires careful balance of orders with the capacity to produce that item. There may often be more labor hours available than orders needed to fill or orders that are backed up because they exceed capacity. Whatever the case there are many reasons for an imbalance in capacity and demand -- orders may exceed capacity or capacity may exceed orders

What options do you have as a manager when faced with these dilemmas. What are solutions to these challenges. Pick one of these challenges and offer one solution. Our goal by the end of this forum is to identify as many solutions to the capacity - demand problem as possible.

B. As you drive to work, school or other places, notice a manufacturing facility or a place of business that provides a service. Identify one of these businesses and try to figure out why the business chose that particular location? Consider the following criteria and discuss how they might apply to that business and the location site.
-Inexpensive labor
-Abundance of qualified labor
-Proximity to customers
-Proximity to suppliers
-Taxes and government/community support
-Location cost
-Access to transportation

Solution Preview

There are indeed many reasons for the imbalance between capacity and demand requirements. Listed below are some of the reasons for this situation:
1. Long machine cycle times to make the product
2. Inexperienced labor force to make the required cycle time
3. Ineffective management of the production line
4. Huge amount of machine downtime resulting in low operation ratio
5. Significant amount of changeover time resulting in large lot sizes and huge amount of inventory
6. Inability of suppliers to supplier the required low materials
7. Low line balance ratio or work configuration efficiencies
8. Inability of the manufacturing company to perform kaizen (continuous improvement) in their production lines
9. Inability of the company to install full proof devices in their machines resulting in poor quality products and rework. Re-work is lost time and significantly affects capacity.
10.Low demand for the product resulting in excess capacity (both machine capacity and required manpower)

As a manager, ...

Solution Summary

Production capacity and site selections are analyzed. Taxes and government/community supports are provided.