capacity analyssis

8/18/2019 Capacity Analyssis

1/18

Capacity Analysis

Workbook

for

Babson Telecom World

Prof. Robert Engand

Prof. Ashok Rao

Babson College, Wellesley, Mass !"#$%


2/18

About This Workbook

These slides describe &orksheets that

take the participant thro'gh some

str'ct'red analyses to determine yo'r

capacity re('irements. They do notco)er all analytical techni('es. B't

they pro)ide a basis from &hich to

start yo'r analysis. They are catalysts

for tho'ght.


3/18

Tasks and Worksheets

Task Worksheet

*etermining forecast +orecast -PC

demand for -PC

*etermining forecast +orecast /*Cdemand for /*C

*etermining net capacity 0et Capacity

re('ired to meet forecast Re('irements

demand for -PC -PC

*etermining net capacity 0et Capacityre('ired to meet forecast Re('irements

demand for /*C /*C


4/18

*e)eloping a +orecast

-PC

/o& m'ch ser)ice sho'ld 1 plan to pro)ide

in each period2

This is a process that re('ires se)eral estimates to be

made. 1t sho'ld be cond'cted for each co'ntry and

each segment. The process is described first and thenan e3ample pro)ided.

Process4

• Estimate the total market for all s'bscribers as

Total market for all s'bscribers in the pre)io's period

5 estimated gro&th rate

• Estimate the gro&th rate for each period based

on yo'r estimate of the life cycle. +or e3ample,

if the segment is mat're yo' &o'ld pro6ect the

gro&th as a decreasing percentage o)er time say

7$ 8, 7!8, $8, !8

• *emand for ne& s'bscribers 9

Estimated total market for the period :

1nstalled base at end of pre)io's period


5/18

• Estimate the amo'nt of the ne& s'bscriber

demand that is satisfied by all ser)ice pro)iders.

This &o'ld be based on yo'r estimate of the

a)ailable capacity in infrastr'ct're and ofhandsets

• 1nstalled base at the end of the period 9

1nstalled base at the end of the pre)io's period

; amo'nt of ne& s'bscriber demand satisfied

• Target share of ne& s'bscribers

This is a policy decision made by yo'r

management team

• +orecast n'mber of ne& s'bscribers 9

Amo'nt of ne& s'bscriber demand satisfied

5 Target share of ne& s'bscribers

0ote4 the target share &o'ld be ! if the company

chose not to ser)ice a partic'lar segment

• +orecast installed base 9

1nstalled base at end of pre)io's period; +orecast n'mber of ne& s'bscribers


6/18

• Co'ntry .>

Target market share of

ne& s'bs. >!8 >!8 >!8 >!8

+orecast ne& s'bscribers 7.$ . . .%

+orecast installed base $.$ % %. =.= .$


7/18

*etermining 0et Capacity

Re('irements

-PC

/o& m'ch capacity sho'ld 1 plan to pro)ide

in each period2This calc'lation is based on the forecasts of the

installed base. 1t sho'ld be cond'cted for each

co'ntry. The process is described first and then an

e3ample pro)ided.

Calc'lation process4

• *etermine the forecast installed base 'sing the

prior &orksheet.

• Establish a policy &ith respect to s'bscription

le)el. As the s'bscription le)el increases abo)e

7!!8 of act'al capacity c'stomer satisfaction

may s'ffer.

• The pro6ected total capacity re('ired for each

segment is

The forecast installed base s'bscription le)el 8


8/18

• Comp'te the e3isting infrastr'ct're capacity

Ma3. capacity based on infrastr'ct're le)el5 8 of ma3 based on operating staff e3penses

5 7;8 increase based on reengineering e3pense

• Pro6ected net capacity re('ired

Pro6ected capacity re('ired : e3isting capacity

*EC1-10Meet capacity re('irements by increasing the

infrastr'ct're le)el, by increasing the operating staff

e3pense or, by adding to reengineering spending.

0ote4 infrastr'ct're le)el decision taken this period

&ill only affect the capacity for the follo&ing period

0ote4 reengineering spending &ill increase the

ma3im'm capacity b't only for the c'rrent

infrastr'ct're le)el. 1f the infrastr'ct're le)el is

changed the ma3im'm capacity is as sho&n on yo'r

proprietary information for that le)el and re

engineering spending at that le)el is !.


9/18

E3ample4

1n this e3ample &e look at the process for co'ntry


10/18

Co'ntry $

0et capacity re('ired $.> : @.=$ 9 7.%$ >."$ !

*ecision4

Based on costs choose among the follo&ing4

1ncrease the infrastr'ct're le)el if period D7 decision had not yet been made

1ncrease the operating staff e3pense as a 8 of fi3ed e3pense from the c'rrent le)elof $8 . 0ote4 if no money is allocated to operating staff e3pense then the act'al

load capacity &o'ld decrease.

1ncrease the spending on reengineering. This &o'ld add to the $!8 already

spent on reengineering


11/18

*e)eloping a +orecast

/*C

/o& m'ch prod'ct sho'ld 1 plan to pro)ide

in each period2

This is a process that re('ires se)eral estimates to be

made. 1t sho'ld be cond'cted for each prod'ct line.The process is described first and then an e3ample

pro)ided.

Process4

Prod'ct ine4 Analog /andsets

+or each market &ithin &hich yo'r -PC c'stomers

compete

• Estimate the total market for all s'bscribers as

Total market for all s'bscribers in the pre)io's period

5 estimated gro&th rate

• Estimate the gro&th rate for each period based

on yo'r estimate of the life cycle. +or e3ample,


12/18

if the segment is mat're yo' &o'ld pro6ect the

gro&th as a decreasing percentage o)er time say

7$ 8, 7!8, $8, !8

• *emand for ne& s'bscribers 9

Estimated total market for the period :

1nstalled base at end of pre)io's period

• Estimate the amo'nt of the ne& s'bscriber

demand that is satisfied by all ser)ice pro)iders.This &o'ld be based on yo'r estimate of the

a)ailable capacity in infrastr'ct're and of

handsets

• 1nstalled base at the end of the period 9

1nstalled base at the end of the pre)io's period

; amo'nt of ne& s'bscriber demand satisfied

• Estimate the n'mber of handsets the installed

base at the end of the pre)io's period is likely to

replace

•

Estimate the n'mber of handsets to be sold ineach co'ntry as the amo'nt of ne& s'bscriber

demand satisfied ; n'mber of replacement

handsets


13/18

• Estimate the market share each of yo'r -PC

c'stomers are likely to obtain of handsets sold to

the ne& s'bscribers.

• Estimate the market share yo'r retail b'ying

gro'p is likely to obtain in each co'ntry.

• Comp'te the total n'mber of handsets each -PC

c'stomer &ill sell asthe s'm of

no. of ne& s'bscribers in each co'ntry

5 likely market share in that co'ntry

• Estimate the proportion of the ne& c'stomer

handset orders the -PC c'stomer &ill place &ith

yo'.

• Comp'te demand from -PC c'stomers as

the s'm of

total n'mber of handsets each -PC c'stomer sells

5 proportion of orders yo' anticipate recei)ing

• +orecast demand for handsets as demand from

-PC c'stomers ; demand from retail b'ying

gro'p


14/18

Ass'me the -PC c'stomers -PCD7 and -PCD"

compete in co'ntries .>

0o. of handsets being

replaced : estimated 7 7.$ 7.$ 7.$

0o. of handsets sold @.$ @ @ ".>

Estimated market share

-PC : D7 7!8 7$8 "!8 "$8

-PC : D" "$8 @!8 @$8 #!8

Retail channel market share 7!8 7!8 7!8 7!8


15/18

Current period

Pd. 0 Pd. 1 Pd. 2 Pd.3 Pd. 4

Country X2Total demand $ $.$ $.= $.= $."

?ro&th rate est. 7!8 $8 !8 7!8

*emand for ne& s'bs. 7.$ .= ! !

Amo'nt of demand

satisfied 7 .= ! !

1nstalled base at end of period # $ $.= $.= $."

0o. of handsets being

replaced : estimated .# .$ .$ .$

0o. of handsets sold 7.# 7.@ .$ .$

Estimated market share

-PC : D7 $!8 $$8 >!8 >$8

/andsets sold by -PC : D7 7.!$ 7.7>$ . .%$

/andsets sold by -PC : D" .=%$ . 7.!$ 7.!#

Estimated proportion of

-PCD7 sales placed &ith 's $!8 >!8 %!8 %!8

Estimated proportion of -PCD" sales placed &ith 's 7!!8 =! =!8 %!8

+orecast sales to -PC : D7 .$"$ .> .>@ .>=

+orecast sales to -PC : D" .=%$ .%" .=# .%@

+orecast sales to retail channel .@$ .@ .@ .">

Total sales 7.%$ 7.%" 7.%% 7.>%


16/18

*etermining 0et Capacity

Re('irements

/*C

/o& m'ch capacity sho'ld 1 plan to pro)ide

in each period2This calc'lation is based on the forecasts of sales to

-PCs and to the retail channel. 1t sho'ld be

cond'cted for each prod'ct line the /*C sells. The

process is described first and then an e3ample

pro)ided.

Calc'lation process4

•*etermine the forecast of sales to the -PCc'stomers and to the retail channel.

• 0ote the in)entory le)el for the beginning of the

ne3t period

• Comp'te the net re('irements for the ne3t period

as ne3t period sales forecast : in)entory at

beginning of period


17/18

• Ad6'st for ('ality le)el to obtain the net

prod'ction re('irements as

net re('irements ('ality le)el

• *ecide on prod'ction le)el based on capacity

restrictions

E3ample4

1n this e3ample the /*C is at a plant capacity of "million 'nits. The in)entory at the beginning of

period 7 is 7!!,!!! 'nits all of &hich are good. The

c'rrent prod'ction le)el is 7.$ million 'nits. The

('ality is =!8 good prod'ct.

A sales forecast for the ne3t fo'r periods has been

determined to be in millions of 'nits47.% " 7.= ".7


18/18

ne possible prod'ction plan can be 4

Pd. 1 Pd. 2 Pd.3 Pd. 4

-ales forecast 7.% " 7.= ".7

1n)entory at beg. of pd. .7 ! ! .!$

0et re('irements 7.> " 7.= ".!$

0et prod'ction re('irements " ".$ "."$ ".$>

Prod'ction le)el 7.=%$ ".@ ".@ ".$>

Pd. " in)entory 9 Prod. le)el can increase by Capacity

Pd. 7 Prod'ction le)el : at most "$ 8 le)el

Pd. 7 net prod. re(mts increased

0ote4 cannot be less than !

Before selecting this prod'ction plan other plans sho'ld be e)al'ated. Then select

the plan &ith the lo&est cost.

capacity analyssis

Documents