Question

In Service Operations Management when we calculate the different capacities of several departments or workstations, which capacity is the one that counts as the OVERALL CAPACITY for the whole factory? Why? Explain with an example of a company's product or service.

Answer 1

Each department or workstation might be capable of delivering different output per unit time ( according to the nature of process ) but the overall capacity of the factory is determined by the output of the slowest workstation. The overall capacity of the process is its ability in number of items to be produced per unit time ( it can be a day, week or a month) or number of customers served per unit time, if it is a service industry. This is so because the net revenue ( sales ) determines the company's income, which in turn is determined by the number of items sold or customers served per unit time.

Example is a service process of providing beauty services to the customers. There are four processes, welcoming and registration, pre conditioning, beauty treatment and finishing touch. The first process takes 5 minutes, the seond takes 10 minutes, the thirs takes 20 minutes and the fourth takes 6 minutes. The output rate of each process is different here, with first one being the fastest with capability of serving 12 customers per hour while the third is slowest as it can serve only 3 customers per hour. Since the output depends on the slowest resource, which is 3 customers per hour. This means even if the other resources work will utmost efficiency, the output can never be more than 3 customers per hour, which is the overall capacity of the process.