Let’s take an example… we have a

company who is making bottles and bangs and this company is planning to make

60,000 bottles and hundred thousand bags for one process which is Paul’s. The

second process which is called Newman’s… they are planning to make 70 thousand

bottles and two hundred thousand banks and we have for the five years the

planning and for this company first thing that we want to do is when we see

something like this and since the bottles and bottles are the same and the

bags and bags are the same for both Paul’s and Newman’s.

I’m going to make sure that I take the total so I’m going to calculate the

total the total of Pail’s bottles is going to be equal to sixty thousand plus

seventy five thousand and the total for bags is going to be equal to one hundred

thousand plus two hundred thousand I am simply going to copy and paste for the

rest rest of the years so now I have the number of bottles to be produced per

year and number of bags to be produced per year. I want to find whether my

capacity resources are good enough for meeting this planned production. I have for the bottles two operators and

three machines each machine is capable of producing 150 thousand bottles

similarly I have three operators for making bags and I have five machines

each capable of producing 250 thousand bags so let’s look at the Bottles first.

okay. I want to find out what is the available capacity the available

capacity is basically how many bottles that I can produce and how many bottles

that I want to produce I want to produce 135,000 bottles

okay but how many bottles I can produce I can actually produce with three

machines with 150,000 each I can produce three times 150,000 which is four

hundred and fifty thousand bottles that is my total available capacity. My

available capacity for the first year is going to be equal

to how many bottles that I have that I can that I’m planning to make one

hundred and thirty-five thousand this is what I’m planning to make over how many

bottles that I can produce that is four hundred fifty thousand that is about

point three so my available available capacity is 30% which is 0.3.

My machine usage is going to be for one machine I can do 0.3 which is the 30%

available capacity for three machines. I’m going to be three times point three

which is point nine see this 135,000 over 450 thousand gives you the

available capacity okay but I can produce that in with them within one

machine how because 135,000 is less than hundred and fifty thousand and that’s

the reason I have I can use three machines and make it as point nine. The

percentage capacity utilized is what I need to calculate next what is my

percentage capacity utilized it is going to be the same as the available capacity

but that is in percentage the machine requirement is going to be point nine. Machine usage is exactly by Machine

requirement okay and my labor requirement is if I have two operators

per machine then that is going to be twice or two times the Machine

requirement which is one point eight. I’m going to highlight all these numbers and

I’m going to copy and paste and that is going to be my problem… what is my

problem here? I forgot to use my absolute reference! That is my problem.Let’s do

that so for the available capacity the absolute reference should be on which

number the number which is going to be this this is my number which is constant

which is F 17 so I’m going to make this as an absolute number by Machine usage

be 1/8 is be 1/8 that is fine but b-17 which is the 3 is going to be constant

so b-17 should be absolute reference my percentage capacity utilized is going to

be simply the one that has point three so no problems at all I’m not going this

is going to change so it’s fine the Machine requirement is going to be the

same the labor requirement however has to change simply because I’m using this

constant 2 which is going to be B 15 so my B 15 has to be absolute now if I

highlight this copy and paste! This I should be fine! so my capacity utilization rate is 77%

is 77% let me make sure that I am I is so many scientists it’s my sunny seventh

to set let’s do the same thing for bags the number of operators is three the

total available capacity is five machines 250,000 each my so my total

available capacity of five machines is going to be five times

250,000 which is going to be 1,250,000 my available capacity

is going to be for the bags is going to be 300,000 divided by 1 million 250,000

that is 0.24 my total machine usage is going to be point to four times the

number of machines which is one point two zero my percentage capacity utilized

is going to be the available capacity my machine requirements is going to be the

machine usage my labor requirement is machine requirement times the available

capacity oh sorry sorry sorry the number of capita number of operators let’s make

these n seventeen to be absolute the J 50 the j17 to be absolute this is fine

this is fine and for the labor requirements the number of operators

which is j15 has to be obscene absolute now i can copy and paste. I should get

the numbers so my percentage capacity utilized the utilization rate is 94

percent so it is 77 percent for my barrels and 94 percent for my bags. It

has not exceeded my capacity that means my company is good… this company is good

for.. production planning. So, I can meet my

demand with my capacity that is the answer. I would like you to use the OCE 4

which is in your blackboard and practice this and understand… what is

this available capacity… what is the total available capacity… which is this…

and what is the capacity that is needed so that you can find the utilization

rate and this is what you need to know in this chapter.