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Review the provided materials and perform the following calculations related to a manufacturing factory’s production capacity and efficiency. Specifically, determine the design capacity based on working hours and shifts, then calculate the capacity utilization and efficiency based on actual output against the designed and effective capacities.

Given Information:

• Actual output last week: 160,000 items
• Design capacity of the factory: 900 items/hour
• Effective capacity of the factory: 195,000 items
• Operations: 5 days/week, 5 shifts/week, 9 hours per shift

Tasks:

1. Calculate the design capacity of the factory in terms of total items produced per week.
2. Calculate the capacity utilization percentage.
3. Calculate the efficiency percentage.

Paper For Above instruction

Introduction

Manufacturing efficiency and capacity planning are fundamental components in production management. Accurate assessments of a factory's design capacity, utilization rate, and efficiency help optimize productivity and identify areas for improvement. This paper examines these concepts through the example of a mobile manufacturing company's weekly production data, providing detailed calculations of its design capacity, capacity utilization, and efficiency based on given operational parameters.

Calculating the Design Capacity

The initial step in capacity analysis involves determining the design capacity, which refers to the maximum output a factory can produce under ideal conditions within a specific period. The given data indicates that the factory operates at a design capacity of 900 items per hour. To calculate weekly design capacity, it's essential to understand the total number of work hours available per week.

The factory operates 5 days per week, with 5 shifts per day, each lasting 9 hours. Therefore, the total hours of operation per week are:

Total hours per week = 5 days/week x 5 shifts/day x 9 hours/shift = 225 hours/week.

By multiplying the total hours by the design capacity per hour, the weekly design capacity can be determined as:

Design capacity (items/week) = 900 items/hour x 225 hours/week = 202,500 items/week.

This value represents the maximum number of items the factory can theoretically produce within a week, assuming maximum efficiency and no downtimes.

Calculating Capacity Utilization

Capacity utilization measures how effectively the factory uses its designed capacity. It is computed as the ratio of actual output to the design capacity, expressed percentage-wise:

Utilization (%) = (Actual Output / Design Capacity) x 100

Given the actual output is 160,000 items, and the calculated design capacity is 202,500 items, the utilization becomes:

Utilization = (160,000 / 202,500) x 100 ≈ 79.01%

This indicates the factory utilized approximately 79% of its designed capacity during the week, reflecting operational efficiency levels.

Calculating Efficiency

Efficiency evaluates how effectively the factory converts its productive capacity into actual output, relative to the effective capacity—a measure that accounts for real-world constraints such as maintenance, downtime, or worker productivity variations. It is calculated as:

Efficiency (%) = (Actual Output / Effective Capacity) x 100

Given the effective capacity of 195,000 items, the efficiency is:

Efficiency = (160,000 / 195,000) x 100 ≈ 82.05%

This suggests the factory operates at roughly 82% efficiency concerning its effective capacity, highlighting room for operational improvements, possibly through reducing downtime or enhancing workforce productivity.

Discussion

The analysis reveals that while the factory operates near a high efficiency level, it underutilizes its design capacity. This gap could stem from various factors such as equipment maintenance, employee shifts, or process inefficiencies. By enhancing operational processes or reducing downtime, the factory could approach or reach its design capacity, further increasing productivity. Regular capacity analysis ensures the factory remains aligned with market demand and internal performance targets.

Conclusion

Understanding and calculating the design capacity, utilization, and efficiency are vital steps in optimizing manufacturing operations. In this case, the factory’s weekly output demonstrates significant utilization and efficiency, though it still operates below its maximum potential. Continued analysis and process improvement can help elevate overall productivity, reduce costs, and support strategic growth objectives in manufacturing.

References

• Heizer, J., Render, B., & Munson, C. (2020). Operations Management (13th ed.). Pearson.
• Chase, R. B., Jacobs, F. R., & Aquilano, N. J. (2019). Operations Management for Competitive Advantage (15th ed.). McGraw-Hill Education.
• Slack, N., Brandon-Jones, A., & Burgess, N. (2019). Operations Management (9th ed.). Pearson.
• Jacobs, F. R., & Chase, R. B. (2018). Manufacturing Planning and Control for Supply Chain Management (7th ed.). McGraw-Hill Education.
• Mahadevan, B. (2010). Operations Management: Theory and Practice. Pearson Education.
• U.S. Department of Commerce. (2022). Manufacturing Profile and Capacity Utilization Data. Bureau of Industry and Security.
• Stevenson, W. J. (2020). Operations Management (13th ed.). McGraw-Hill Education.
• Chung, K. H., & Kwon, S. J. (2018). Capacity Utilization and Efficiency Optimization in Manufacturing. Journal of Manufacturing Systems.
• Vollmann, T. E., Berry, W. L., Whybark, D. C., & Jacobs, F. R. (2017). Manufacturing Planning and Control Systems (7th ed.). McGraw-Hill Education.
• Heizer, J., & Render, B. (2017). Principles of Operations Management. Pearson.