Question

Describe how variation can reduce capacity utilization.

Answer 1

The more diversity that a business would add to its product to create differentiation for each category of product that is been produced the processes have to be changed for each batch of product. Hence, if the business gives the opportunity of a similar product to the consumers in various flavors and shapes the same machinery has to be used more than once to make such differentiated products. Lets, for example, talk about the product of L&T which is a cement manufacturer apart from infrastructure developers. The business makes generally 3 types of cement in its plants at the African markets. The types are, Clinker based fly ash added Grey cement, White cement, and concrete Mixture types of cement which is a new kind of instant condensing cement product.

Thus the plants of the L&T have a capacity of 3400 metric tons per day for its products which has to be of all three kinds that is just been talked about. Now if the facilities have a cline that may produce 3400 MT per day needs to be fed materials for each of the cement kinds or variants which make the production output down to 2700MT. The cause is that each of the kinds of products or variations needs different temperatures and clinker quality of limestone content in various ratios. This makes the production rate slow and has various processes for the product variant production where the resources like cline utility, manpower, and time are been reduced due to the variations. This suggests why the production is low or the utilization of the assets is low for such products where the variants are more.