AOM4801 ASSIGNMENT 3
SEMESTER 2 - 2023
UNIQUE NUMBER: 878272
DUE DATE: 18 SEPTEMBER 2023
,AOM4801 ASSIGNMENT 3
UNIQUE NUMBER: 878272
CLOSING DATE: 18 SEPTEMBER 2023
MARKS: 75
3.1 CAPACITY MANAGEMENT
3.1.1 “Capacity can be viewed in two ways, as the maximum rate of output per unit of
time, or as units of resource availability”.
With reference to capacity as viewed in a movie-theatre and a hospital, demonstrate your
understanding of the above statement. (4)
Capacity in a Movie Theater:
Units of Resource Availability: In a movie theater, this would refer to the number of
seats, projection equipment, and staff available to run the screenings. It represents
the physical resources and human resources needed to operate the theater
efficiently.
Maximum Rate of Output per Unit of Time: In a movie theater, this refers to the
maximum number of seats available for each show-time, indicating how many
tickets can be sold per screening. It represents the theater's ability to accommodate
a certain number of moviegoers during a specific time frame (e.g., a two-hour movie
screening).
Summary – Movie Theatre:
Example for units of resource availability: Seats available, number of theatres,
number of showings
Example for maximum rate of output per unit of time: Number of customers
attending per day
1
,Capacity in a Hospital:
Units of Resource Availability: In a hospital, this would include the number of
available beds, medical equipment, healthcare professionals (doctors, nurses,
technicians), and other resources needed for patient care. It represents the
resources required to meet the healthcare needs of patients.
Maximum Rate of Output per Unit of Time: In a hospital, this relates to the
maximum number of patients that can be treated, admitted, or served within a
specific time frame. It indicates the hospital's ability to provide medical care and
services promptly.
Summary - Hospital:
Example for units of resource availability: Number of beds available in the hospital
Example for maximum rate of output per unit of time: Number of patients per day
In both cases, capacity management involves optimizing the utilization of resources to meet
demand efficiently. The movie theater aims to fill as many seats as possible during each
screening, while the hospital seeks to provide medical care to as many patients as needed
within its resource constraints.
2
, 3.1.2 Refer to case study 2:
With reference to capacity expansion strategies, which type of capacity expansion
strategy should Eskom follow in order to solve their capacity-related problem. Justify your
chosen strategy in context of Eskom, by means of an analysis of that strategy’s risks and
benefits. (4)
In the context of Eskom, the most suitable strategy would be "Small capacity increases
that match demand".
Strategy: Small Capacity Increases that Match Demand
Justification - Benefits:
Risk Mitigation: This strategy aligns capacity expansion with actual demand,
reducing the risk of overcommitting resources in the event of inaccurate demand
forecasts. Given the volatility and complexity of the energy market, this strategy
allows Eskom to be more adaptable and responsive to changes in demand patterns,
minimizing the risk of overcapacity.
Efficient Resource Utilization: By closely matching capacity to demand, Eskom can
optimize its resource utilization. There is less likelihood of periods of underutilization
or overutilization of capacity, leading to cost efficiency. Eskom can operate closer to
its production frontier, ensuring a higher return on investment.
Customer Satisfaction: Eskom's primary responsibility is to provide reliable
electricity supply to its customers. This strategy ensures that capacity is available to
meet customer demand consistently. It reduces the risk of load shedding and
blackouts, improving customer satisfaction and maintaining Eskom's reputation as a
reliable electricity provider.
Financial Prudence: Small, incremental capacity increases are more financially
manageable compared to large-scale expansions. Eskom can allocate resources
incrementally as needed, reducing the strain on its financial resources. This approach
is less likely to burden the organization with substantial debt or financial risks
associated with a single large expansion.
Flexibility: Eskom can adapt to changing circumstances, such as new technologies,
government regulations, or shifts in energy demand. Unlike a single large capacity
increase, this strategy allows for more agility in responding to evolving market
conditions.
Stability: This strategy offers stability in capacity planning. Eskom can maintain a
balanced supply-demand relationship, avoiding prolonged periods of overcapacity or
capacity shortages. It helps in achieving a steady, reliable energy supply.
3
SEMESTER 2 - 2023
UNIQUE NUMBER: 878272
DUE DATE: 18 SEPTEMBER 2023
,AOM4801 ASSIGNMENT 3
UNIQUE NUMBER: 878272
CLOSING DATE: 18 SEPTEMBER 2023
MARKS: 75
3.1 CAPACITY MANAGEMENT
3.1.1 “Capacity can be viewed in two ways, as the maximum rate of output per unit of
time, or as units of resource availability”.
With reference to capacity as viewed in a movie-theatre and a hospital, demonstrate your
understanding of the above statement. (4)
Capacity in a Movie Theater:
Units of Resource Availability: In a movie theater, this would refer to the number of
seats, projection equipment, and staff available to run the screenings. It represents
the physical resources and human resources needed to operate the theater
efficiently.
Maximum Rate of Output per Unit of Time: In a movie theater, this refers to the
maximum number of seats available for each show-time, indicating how many
tickets can be sold per screening. It represents the theater's ability to accommodate
a certain number of moviegoers during a specific time frame (e.g., a two-hour movie
screening).
Summary – Movie Theatre:
Example for units of resource availability: Seats available, number of theatres,
number of showings
Example for maximum rate of output per unit of time: Number of customers
attending per day
1
,Capacity in a Hospital:
Units of Resource Availability: In a hospital, this would include the number of
available beds, medical equipment, healthcare professionals (doctors, nurses,
technicians), and other resources needed for patient care. It represents the
resources required to meet the healthcare needs of patients.
Maximum Rate of Output per Unit of Time: In a hospital, this relates to the
maximum number of patients that can be treated, admitted, or served within a
specific time frame. It indicates the hospital's ability to provide medical care and
services promptly.
Summary - Hospital:
Example for units of resource availability: Number of beds available in the hospital
Example for maximum rate of output per unit of time: Number of patients per day
In both cases, capacity management involves optimizing the utilization of resources to meet
demand efficiently. The movie theater aims to fill as many seats as possible during each
screening, while the hospital seeks to provide medical care to as many patients as needed
within its resource constraints.
2
, 3.1.2 Refer to case study 2:
With reference to capacity expansion strategies, which type of capacity expansion
strategy should Eskom follow in order to solve their capacity-related problem. Justify your
chosen strategy in context of Eskom, by means of an analysis of that strategy’s risks and
benefits. (4)
In the context of Eskom, the most suitable strategy would be "Small capacity increases
that match demand".
Strategy: Small Capacity Increases that Match Demand
Justification - Benefits:
Risk Mitigation: This strategy aligns capacity expansion with actual demand,
reducing the risk of overcommitting resources in the event of inaccurate demand
forecasts. Given the volatility and complexity of the energy market, this strategy
allows Eskom to be more adaptable and responsive to changes in demand patterns,
minimizing the risk of overcapacity.
Efficient Resource Utilization: By closely matching capacity to demand, Eskom can
optimize its resource utilization. There is less likelihood of periods of underutilization
or overutilization of capacity, leading to cost efficiency. Eskom can operate closer to
its production frontier, ensuring a higher return on investment.
Customer Satisfaction: Eskom's primary responsibility is to provide reliable
electricity supply to its customers. This strategy ensures that capacity is available to
meet customer demand consistently. It reduces the risk of load shedding and
blackouts, improving customer satisfaction and maintaining Eskom's reputation as a
reliable electricity provider.
Financial Prudence: Small, incremental capacity increases are more financially
manageable compared to large-scale expansions. Eskom can allocate resources
incrementally as needed, reducing the strain on its financial resources. This approach
is less likely to burden the organization with substantial debt or financial risks
associated with a single large expansion.
Flexibility: Eskom can adapt to changing circumstances, such as new technologies,
government regulations, or shifts in energy demand. Unlike a single large capacity
increase, this strategy allows for more agility in responding to evolving market
conditions.
Stability: This strategy offers stability in capacity planning. Eskom can maintain a
balanced supply-demand relationship, avoiding prolonged periods of overcapacity or
capacity shortages. It helps in achieving a steady, reliable energy supply.
3
