Question

How does knowing the manufacturing capacity of a production system affect our decisions as operations managers? What role does machine capacity and labor capacity play in this decision?

Answer 1

A business is a collective process of various systems that the organization possess and there are various factors that affect a business and its functioning. If the business is a manufacturing unit then the capacity of production is important and if the actual manufacturing capacity is known then the operations manager will find it easy to continue and estimate and forecast the demand of the business to some extent. It will help the manager in managing the work and resources accordingly because once the capacity is reached there is no point is working aimlessly and in order to be smart the manager can actually plan the production beforehand so that even the employees are benefitted from the process. As an operations manager it will easy for me to actually make decisions regarding the business and deals that needs to be made to execute the business effectively.

Again, Production Capacity depends primarily on Machine Capacity and Labor Capacity and that is very obvious because the production generally depends on these two factors, the machine is required to execute the job efficiently and the labor has to command the machine accordingly. The capacity should be in synchronization because if the labor capacity is higher than the machine capacity then the labor is not utilized to its extent again the vice versa is also valid when the machine capacity may remain unutilized therefore if they are in sync the cost is saved. Knowledge of the production capacity, machine capacity and labor capacity helps the operations manager to take decisions accordingly for the betterment of the organization.