Project Management Essay Example | Topics and Well Written Essays - 1750 words - 1

Project Management - Essay Example There is a great time lag between the conception of a facility and the actual construction and startup. Operating at designed capacity can cause rapid wear and breakdowns. Generally, operating at design capacity basically means operating at the organization’s productive limits. The designed capacity is 20,000 kg. Effective capacity Effective capacity of a facility is important in determining the extent to which a facility can produce. It is therefore defined as the ratio between design capacity and the expected capacity of the intended facility.It is worth noting effective capacity is affected by a firm’s production schedule, production mix, maintenance standards and age of equipment’s. The formula for effective capacity is given by: Effective capacity=expected capacity/design capacity. Effective=16000/20000=0.8=80% The effective capacity=16000 Actual output A production facility can produce a certain amount of product at a given time period. The actual amount of product that can be produced by a production facility at given time period is called actual output. This is different from amount that the facility could produce if it were to run at full theoretical capacity. Specifically, the actual output is given by: 60/100X20000=12000 kg Utilization Utilization is the percent of design capacity. It is given by actual output/design capacity =12000/20000=60% Efficiency Effective capacity is the actual output as a percent of effective capacity. It is given by the formula: actual output/effective capacity =12000/16000=75% B) Capacity of a system is its ability to produce goods or enhance the delivering of services over some time period. For a system to realize its full potential a proper capacity planning is inevitable. That is, the long term and short term plans to help the system achieve its full potential. Short term concerns relate to the variations in capacity requirements as a result of random, seasonal and irregular fluctuations in demand; while long term considerations relate to the overall level of capacity. There are several factors that affect a firm’s productive capacity. Some of these factors are within management’s control while others are not. Factors such as physical resources and utilization of labor are within the management’s control. Organization capacity also faces management challenges such as personal issues, technological maximization and output controls. A firm can profit significantly from efficient resources management. The actual output may be even less than the system capacity since it is affected by short-range factors such as actual demand. Therefore, managing actual output is important for effective production of a firm. As a project manager, I will advice the human resource manager to undertake the following strategies in managing the actual output and to cope with major changes in products and services. These options include; developing a new product line, expanding exis ting facilities and construction or phase out production plants. In some instance, the firm may be forced to use phase-in-strategy for introducing the next model of the same product or service to retain and/or improve its actual output. In general, the firm should be comfortable producing between 80 to 90% capacity utilization because of low fixed costs per unit and there is some scope to meet new orders or carry out maintenance and training. Efficiency should hold a more vital role as it can