LONG RANGE CAPACITY PLANNING

NUCLEAR POWER CORPORATION-INCREASING CAPACITY

India's nuclear power programme is poised to expand

rapidly

Efforts need to be made for the multiplication of

manufacturing capacity

NPCIL will embrace a variety of reactor technologies

Boiling Water Reactor (BWR)

Pressurised Heavy Water Reactor (under operation now),

Pressurised Water Reactor (PWR) and Fast Breeder

Reactor (FBR) (UNDER CAPACITY PLANNING)

DEFINITIONS OF CAPACITY

In general, production capacity is the maximum

production rate of an organization.

The Federal Reserve Board defines sustainable

practical capacity as the greatest level of output

that a plant can maintain …

within the framework of a realistic work

schedule

taking account of normal downtime

assuming sufficient availability of inputs to

operate the machinery and equipment in

place

MEASUREMENTS OF CAPACITY

Output Rate Capacity

Choice for high volume processes

For a facility having a single product or a few homogeneous

products

For a facility having a diverse mix of products, an aggregate

unit of capacity must be established

ORGANIZATION MEASURE

Automobile manufacturer Number of autos

Brewery Barrels of beer

Steel Power Tons of steel

Power company Megawatts of electrcity

CONTD….

Input Rate Capacity

Choice of low volume

Flexible processes

Commonly used for service operations

Output measures are difficult

ORGANIZATION MEASURE

Merchandising Square feet of display

Job shop Labor or machine hours

Hospitals Number of beds

Tax office Number of accountants

UTILIZATION

Degree to which equipment, space, or labour

Is currently being used

UTILIZATION = AVERAGE OUTPUT RATE *100

MAXIMUM CAPACITY

CONTD….

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CONTD….

PEAK CAPACITY: Maximum output that

a process or facility that can achieve

under ideal conditions

EFFECTIVE CAPACITY: Maximum output

that a process or firm can

economically sustain under normal

conditions

CONTD….

Capacity Cushion

An additional amount of capacity added onto

the expected demand to allow for:

greater than expected demand

demand during peak demand seasons

lower production costs

product and volume flexibility

improved quality of products and

services

Capacity Cushion = 100% - Utilization

rate(%)

CONTD….

ECONOMIES OF SCALE Economies of scale: Average cost per

unit decreases as the volume increases

toward the best operating level

Why economies of scale can drive cost

down when output increases????

Fixed costs are spread over more units

Construction costs are reduced

Costs of purchase materials are cut

Process advantages are found

DISECONOMIES OF SCALE

Diseconomies of scale - Average cost

per unit increases as the volume

increases beyond the best operating

level

Reasons

Excessive size can bring complexity

Loss of focus

Inefficiencies that raise the average

unit cost of a product or service

ECONOMIES AND DISECONOMIES OF SCALE

Average UnitAverage UnitCost of Output ($)Cost of Output ($)

Annual Volume (units)Annual Volume (units)

Best Operating LevelBest Operating Level

EconomiesEconomiesof Scaleof Scale

DiseconomiesDiseconomiesof Scaleof Scale

STEPS IN THE CAPACITY PLANNING PROCESS

Estimate the capacity of the

present facilities.

Forecast the long-range future

capacity needs.

Identify and analyze sources of

capacity to meet these needs.

Select from among the alternative

sources of capacity.

TOOLS FOR CAPACITY PLANNING

Break-Even Analysis

Present-Value Analysis

Computer Simulation

Waiting Line Analysis

Linear Programming

Decision Tree Analysis

EXPANSION OF LONG-TERM CAPACITY

Subcontract with other companies

Acquire other companies, facilities, or

resources

Develop sites, construct buildings, buy

equipment

Expand, update, or modify existing

facilities

Reactivate standby facilities

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PRESENTED BY :-

1. Niyati vats.