strategic capacity planning

1. Discuss strategic capacity planning and lean production for the supply chain of electric fans. The example does not have to be exact.

2. How would you determine the if the capacity is to be provided by your company or through an outside partner.

Note- This is based off the Riordan simulation that sells electric fans. If you can find this info online great, if not just give good information on the info asked for above.

Notes for answering questions

Production Plan for Riordan Manufacturing

Riordan Manufacturing, Inc. founded in n1991 under the name of Riordan Plastics and the name was changed 1993 to its actual denomination. Riordan manufacturing is an industry leader in the field of plastic injection molding. With facilities in San Jose, California, Albany, Georgia, Pontiac, Michigan and Hangzhou, China, the company is capable of create innovative plastic designs for products such as plastic bottle, fans-all sizes, heart valves, medical stents, and custom plastic parts. Plastics bottles are produced at the Albany, GA facility. The Pontiac, MI facility handles the company's custom plastic fabrication while the Hangzhou, China facility which operated as a decentralized unit of Riordan Manufacturing, is a make-to-stock for future demand for fans, and develops and designs customized electric fans products. The paper here will analyze and discuss the strategic capacity planning and lean production for the new process design and supply chain process for the electric fans at Riordan.

Business Processing

Business processing is "operations effectiveness relates to the core business processes needed to run the business. Business processes span all the business functions from taking customer orders, handling returns, manufacturing, managing the updating of Web sites, to shipping products." (Chase, Jacobs, and Aquilano, 2005, p.24) There are three different types of business processes; they are management, operational, and supporting. The management are the actual processes that control the operational system, the operational process takes care of the core business such as purchasing, manufacturing, and sales. Lastly the supporting processes are the departments that support the core such as finance, HR, and training. "A business process begins with a customer's need and ends with a customer's need fulfillment." (Wikipedia, 2009)

Capacity Planning

The objectives of capacity planning are usually viewed in three different time intervals; the first one is long range, this one is more than a year because the resources needed for production will take a long time to acquire such as buildings and equipment. There is intermediate range which breaks down to monthly or quarterly, this time may vary due to things such as hiring, training, and small equipment purchases; lastly there is short range which is less than one month or broken down to a weekly scale, this one is to make adjustments to the process to eliminate variances between the estimated and actual output.

The long term goals of the company are to strengthen their position in the market place, with their current accounts, reduce operating expenses. They plan on achieving this by strengthening their brand name and achieving a competitive advantage in the market place. They plan on implementing product development teams. This will allow the company to work on what is and is not working. They also plan on maintaining their cost competitiveness by looking into retooling their current facilities and possibly outsourcing the production of certain parts.

Measure of available capacity versus required capacity

"The objective of strategic capacity planning is to provide an approach for determining the overall capacity level of capital-intensive resources - facilities, equipment, and overall labor force size - that best supports the company's long-range competitive strategy" (Chase, Jacobs, and Aquilano, 2005, p. 431). The actual capacity - the amount of output that a system is capable of achieving over a specific period of time - of Riordan Manufacturing, is well distributed throughout its various facilities. Since the company is focusing in evaluating new process designs and supply chain process improvement at the Hangzhou plant, the available capacity of the plant is showing some deficiencies to provide to the customer "the brand through delivery of designs recognized as world class couple with high revenue generating experience solutions" (Riordan Manufacturing, 2007), meaning that the capacity utilization rate which reveals how close a firm is to its best operation point (Chase et al., 2005) is the comparison point between the available and the required capacity. The Hangzhou plant required a new strategic plan to quickly cover the clients demand even if orders are randomly placed during the year. The company, in determining the capacity requirement, in order to overcome the ultimate growing demand forecasted for the future to come, demands for individual product lines, individual plant capabilities, and allocation of production throughout the plant network have to be review in depth to accommodate the available company's capacity (Chase et al., 2005). By properly implementing the steps related to these objectives, Riordan would be able to project a positive capacity cushion that would allow the company to equate the outcome of each of their facilities.