Production reserve

Reserve capacity (Rc) is the difference between the size of the calculated capacity (Cc) and achieved the size of production in the enterprise (Pr).

Rc = Cc – Pr [unit production]

The presence of reserves is required because of risk of economic processes. The size of the reserves must be subject to optimization containing maintenance costs and changing market demand. Knowledge of production capacity is necessary to determine the increase in production (not requiring additional investments), and for the determination of improving the efficiency of investment processes.

Intensive Reserve

They can be used by:

• reduce machine time per unit of the product
• reduce the participation of auxiliary time and other components in general time of operation
• elimination of non-productive run of machines

Extensive Reserve

Extensive reserves are connected with idle operation of machinery and equipment

• Downtime – device idle time due to lack of workers or during refurbishment, * Whole shift downtime - caused by prolonged preparatory time of machinery and equipment.
• Loss - breaks due to lengthy repairs, accidents, lack of materials, and other organizational issues
• Breaks during the work day - regular break for employees to reduce fatigue. Some downtime due to the fault of the worker: the absence of work, being late to work, early finishing of work.

Production capacity

Production capacity refers to the maximum amount of goods or services that a production system can produce within a given period of time. It is often measured in terms of output per unit of time, such as units per hour, units per day, or units per month. Production capacity can be influenced by a variety of factors, including:

• Equipment and machinery: The type, condition, and capacity of the equipment and machinery used in the production process can affect the overall production capacity.
• Labor: The number and skill level of the workers involved in the production process can affect the overall production capacity.
• Materials and supplies: The availability and quality of the materials and supplies used in the production process can affect the overall production capacity.
• Production process: The efficiency and effectiveness of the production process, including the design of the production line, can affect the overall production capacity.
• Maintenance: The maintenance schedule and effectiveness of maintenance can affect the overall production capacity.
• Market demand: The level of market demand for the goods or services being produced can affect the overall production capacity.
• Government regulations: Compliance with government regulations such as safety, environment, labor laws, and taxes can affect the overall production capacity.

Production capacity can be increased by investing in new equipment and machinery, hiring more workers, improving the efficiency and effectiveness of the production process, and increasing market demand. The production capacity can be measured by using performance indicators such as capacity utilization rate, production yield, and efficiency.

Examples of Production reserve

• Production reserve can refer to the difference between the planned or expected output of a production process and the actual output of the process. For example, a company may plan to manufacture 10,000 units of a certain product, but only manage to produce 9,800 units. The difference, 200 units, is the production reserve.
• Production reserve can also refer to the amount of excess capacity that is available to handle any unanticipated increase in demand. For example, a factory may have the capacity to produce 10,000 units of a certain product, but only actually produces 8,000 units. The remaining 2,000 units represent the production reserve, which can be used to meet any additional demand that arises.
• Production reserve can also refer to the difference between the maximum output of a production process and the actual output of the process. For example, a factory may have the capacity to produce 10,000 units of a certain product, but only manages to produce 9,500 units. The difference, 500 units, is the production reserve.

Advantages of Production reserve

Production reserve has a number of advantages for the enterprise:

• It allows the enterprise to plan its production in advance, accounting for potential disruptions, supply chain problems, and other unexpected events. This helps to avoid any delays in production, thus increasing productivity.
• It also helps the enterprise to remain competitive in the market by helping it to quickly respond to customer needs and orders.
• The reserve also helps to reduce costs, since it allows the enterprise to plan its production in advance, thus avoiding any unnecessary costs for materials, labor, and other resources.
• The reserve also gives the enterprise a buffer zone of security in case of any unexpected events, thus providing a sense of stability in times of uncertainty.
• Finally, the reserve capacity allows the enterprise to grow and expand its production without having to worry about capacity constraints. This enables the enterprise to better serve its customers, providing them with better quality products and services.

Limitations of Production reserve

Production reserve has several limitations:

• It does not take into account the uncertainty of demand - the actual demand for a product can be different than what was predicted and the production reserve may not be enough to cover the difference.
• It does not account for internal and external factors that can affect production capacity, such as unexpected breakdowns or changes in the market.
• It does not consider the cost of setting up the production reserve, which can be significant.
• It can be difficult to accurately determine how much production reserve is necessary and when it should be deployed.

Other approaches related to Production reserve

Introduction: In addition to the reserve capacity, there are other approaches to measure production reserve.

• Capacity utilization rate (CUR) - is a measure of the percentage of the total capacity that is being used. It is the ratio of actual production output to the maximum potential output, expressed as a percentage.
• Capacity planning - is a process by which organizations plan for the right amount of resources, such as labor, materials, or equipment, to meet the demand for their products or services.
• Resource utilization - is the process of managing the amount of resources used to produce goods and services. It involves planning, scheduling, and controlling the use of resources to ensure they are used in the most efficient manner.
• Contingency planning - is the process of preparing for and responding to potential future events that could have a negative impact on the success of an organization. It involves the identification of risks, the development of strategies to address them, and the implementation of those strategies.

Summary: In addition to reserve capacity, other approaches are used to measure production reserve, such as capacity utilization rate, capacity planning, resource utilization, and contingency planning. Each approach has a different purpose, but all are used to ensure that resources are used efficiently and that risks are properly managed.

Production reserve — recommended articles

Uniformity of production — Factor of production — Optimization of the production run-length — Determining the length of the production cycle — Direct labor efficiency variance — Production capacity — Hidden cost — Indirect labor — Departmental planning

References

• Kleindorfer, P. R., Singhal, K., & Wassenhove, L. N. (2005). Sustainable operations management. Production and operations management, 14(4), 482-492.