Assessing and Improving Beck’s Manufacturing Capacity

Determining the current Beck’s Manufacturing Capacity and establishing how the Company can increase it without Purchasing New Equipment.

Introduction

Capacity is measured to determine the amount of output a system – such as a machine or an operator – is capable of producing within a specified period. All companies should measure their production capacities to manage them properly so as not to incur unnecessary production costs and to operate strategically (Murray, 2017; Marvel, Schaub & Weckman, 2008). One aspect of operations management is expanding a firm’s productivity while reducing production costs and increasing the firm’s flexibility to fulfill the changing customers’ needs. The challenges realized in operations management include designing a production system that can produce outputs of the required quantities within the allowed period and also determining how the system created can be changed to match with market changes (Reference for Business, 2017). This study will evaluate the capacity of the Beck Manufacturing Company and recommend ways of increasing it using the operations data provided without purchasing new equipment. The discussion ends with a conclusion that sums up the findings.

Calculating Capacity

Capacity is measured by either combining inputs and outputs or using them independently. To determine the company’s capacity, the capacity of each operation can be enumerated by dividing the number of machines over the time taken to process a product. The maximum capacity will be established by identifying the bottleneck of the system. Table 1 below shows the computations

Operation	Number of Machines	Run Time per piece (min)	% Reject Rate	Capacity
Milling	5	2	3	5/2=2.5
Grinding	7	3	5	7/3=2.3
Boring	3	1	2	3/1=3
Drilling	6	2.5	7	6/2.5=2.4
Total capacity of the facility is 2.3 per minute of every shift which is equivalent to the capacity of the bottleneck which is the Grinding operation	2.3output/min/shift

Table 1 shows the computation of the capacity of each of Beck’s machines and the capacity of the whole system (Vonderembse & White, 2013)

Capacity Expansion

From a strategic point of view, organizations use different approaches to address an increase in demand. One approach is adding the capacity before realizing the increase, and this enables the firm to be ready to meet the high demand without any capacity development issues. More so, the firm will gain a competitive advantage at the time. However, the problem with this approach is that when the anticipated demand fails to materialize and the capacity created is not flexible enough to produce another product that is in demand. The other approach that the company would use to manage the risk is to increase the capacity when the extra demand has materialized. By choosing this approach, the company will also avoid jeopardizing the good relationships it has with its creditors and investors. Nevertheless, the company may lose out competitively and fail to make sales during the period of the capacity expansion. The third method would  be making smaller expansions that match with demand increments. In this regard, a manager needs to understand his manufacturing capacity in detail and exhaust it as much as possible and to have a thorough knowledge of the market (Murray, 2017).

Milling 2.5           Grinding 2.3           Boring 3                  Drilling 2.4

Figure 1 showing Beck’s flow of operations

Based on what has been gathered above, if Beck wants to expand the capacity of the whole system shown in Figure 1 above, it should focus more on the inputs of the Milling operation because it is where demand is measured. Based on the demand statistics, the company can make adjustments that are not expensive. For instance, the company can improve the efficiency of the grinding operation through regular maintenance. Grinding machines can be made to operate more during the two shifts by extending run time by two hours, for example, or even adding an extra shift. By doing that, the capacity the company can get by employing the less expensive approaches is 2.5-2.3= 0.2/min/shift. By doing this, the Grinding operation will have an equal capacity as milling operations, which is 2.5 and which is less than that of boring, which has 3. However, the drilling operation has a capacity of 2.4 implying that the company will only need to reduce the extra capacity to 2.4 to avoid another bottleneck (Vonderembse & White, 2013).

Assessing how Beck’s System Capacity can be Increased without Purchasing New Equipment

Vonderembse & White (2013) argue that it is important to know how much capacity can be added to a production system without creating a bottleneck. Moreover, it is important to exhaust the less expensive approaches because it is risky to purchase new equipment to increase system’s capacity. According to IQMS (2015), manufacturers commonly use two ways to meet an increase in demand without adding new equipment. One is noted to be maintaining the status quo in regards to the current operations and business processes while exhausting the less expensive approaches, which include adding shifts, introducing overtime, and increasing machine maintenance among others. Another method is to understand the whole system’s capacity and utilize it to the fullest. The effort would include eliminating/reducing waste. For example, Beck’s reject rates in every operation are too high and need to be reduced/eliminated by employing the required solutions. That can be achieved by employing interventions such as- process traceability and increasing process efficiency among others.

Conclusion

The main objective of this paper was to determine the capacity of Beck’s manufacturing plant and establish how the capacity can be expanded without purchasing new equipment. Currently, the system has a bottleneck in the grinding operation putting the capacity of the whole system at 2.3outputs/min/shift. By using the less expensive methods, the company can increase its capacity because the difference between the Milling capacity and Grinding is 0.2. However, because of the bottleneck in the Drilling operation that has a capacity of 2.4, the extra capacity that can be added at the Grinding operation is 0.1 without needing purchasing new equipment. To meet an increase in demand, Beck needs to  efficiently use its operations especially by reducing the rate of rejects and perhaps increasing the number of shifts.

References

IQMS (2015). Measuring ERP. Retrieved from: https://www.iqms.com/products/whitepapers/erp-to-increase-plant-capacity.pdf.

Marvel, J. H., Schaub, M. A., & Weckman, G. R. (2008). Assessing the availability and allocation of production capacity in fabrication facility through simulation modeling: A case study. International Journal of Industrial Engineering, 15(2), 166-175

Murray, M. (2017). Supply chain management- Measuring capacity in manufacturing. Retrieved from: https://www.thebalance.com/measuring-capacity-in-manufacturing-2221213.

Reference for Business (2017). Operations management. Retrieved from: http://www.referenceforbusiness.com/small/Op-Qu/Operations-Management.html.

Vonderembse, M. A., & White, G.P. (2013). Operations management. San Diego, CA: Bridgepoint Education, Inc.