2.4 Capacity Planning
Learning Objectives Explain functions & importance of capacity planning State four techniques for capacity planning Explain capacity planning factor and bill of capacity techniques
Capacity Planning Determining the level of capacity needed to achieve scheduled production Comparing this with available capacity Plan necessary adjustments in capacity levels or schedules Critical elements: Labor Machine hours Facilities Warehouse space Engineering
Results of Insufficient Capacity Shortages Failure to meet production targets Overdue shipments to customers Frustrated production managers, and Loss of confidence in the formal system
Results of Too Much Capacity Low utilization of resources Manufacturing inefficiency High cost, and Reduced profit margins
Actions when Capacity is Under-Utilized Retrenchment Transfer out workers Look for more jobs Re-training of the workers
Prepare Production Schedule Determine Required Capacity Iterative Process for Production Scheduling No Required Capacity = Available Capacity? No Plan Adjusted Capacity Yes STOP and Capacity Capacity Plan Satisfactory? Planning Yes STOP
The Hierarchy of Capacity Plans and their Relationship with Production Schedule Schedule Planning Capacity Planning Production Planning Resource Planning Master Production Scheduling Rough Cut Capacity Planning Material Requirement Planning Capacity Requirement Planning Production Activity Control
Planning Horizons and Degree of Detail for Capacity Plan Planning Horizon Long Resource Plan Medium Rough Cut Capacity Plan Medium- Short Capacity Requirement Plan Plant Department Work Center Degree of Detail
Capacity Planning Techniques Business Planning Capacity Planning Factors Bill Of Capacity Time-Phased Bill Of Capacity Capacity Requirements Planning Demand Management - Forecasting - Distribution Req. Planning - Order Entry Final Assembly Scheduling Production Activity Control - Order Release - Operations Scheduling - Dispatching - Expediting - Production Reporting Market Planning Production Planning Master Production Scheduling Material Requirement Planning (MRP) Resource Planning Rough Cut Capacity Planning Capacity Requirement Planning Purchasing - Vendor Selection - Order Placement - Vendor Scheduling - Order Follow-up Top Management Planning Operations Management Planning Operations Management Execution Performance Measurement
Capacity Planning Factors Conversion unit used to convert a planning output into the number of units of some resource required to produce that output Conversion unit is obtained indirectly from aggregate historical data (Product Family quantity)
Calculating CPF Data Used in Resource Planning using CPF Total standard hours produced last quarter = 840 Number of units of product produce last quarter = 120 Average standard hours per unit (= 840/120) = 7 Department Standard Labor Hours Produced Last Quarter 1 305 36.3 2 535 63.7 Total 840 100.0 Production Plan Next Quarter Month Jan Feb Mar Total Units 40 48 50 138 Percentage of Standard Labor Hours Resource Plan Load in Standard Labor Hours for Next Quarter Department Jan Feb Mar Total 1 0.363X280 101.64 121.97 127.05 350.66 2 0.637X280 178.36 214.03 222.95 615.34 Total 280 336 350 966 7X40 7X48 7X50 7X138 305/840X100
Limitation of CPF Technique No consideration is given to the lead times No consideration is given to current on-hand and work-inprogress inventories of components The average hours per unit used assumes that the same product mix experienced in the past will continue in the future No consideration is given to service parts and rework
Bill of Capacity States the capacities needed to produce a product according to the bill of material Basic data needed to construct a BOC are found in the BOM and routing files No consideration for lead times and current on-hand and in process inventories of components Does not take into account manufacturing lead times or current on hand and in-process inventories of components
Product Structure for Product U and V U V W X W Y
Routing Data Item Oper No Dept No Work Center No Variable Run Time/Unit (Std. Hrs) Fixed per batch Setup Time (Std. Hrs) Batch Size Avg Lot Size U 10 1 15 1.6 2.0 4 V 10 1 15 2.4 3.0 6 W 10 2 35 1.2 1.0 20 20 2 40 0.4 0.5 20 X 10 2 35 1.1 2.1 8 20 2 40 0.6 0.6 8 Y 10 2 35 0.5 1.4 6 20 2 40 2.1 0.5 6
Standard Hours per Units I t e m Ope r No De pt No Work Cent er No Run Time/Uni t (Std. Hrs) Setup Time (Std. Hrs) Avg Lot Size U V U 10 1 15 1.6 2.0 4 V 10 1 15 2.4 3.0 6 W 10 2 35 1.2 1.0 20 W X W Y 20 2 40 0.4 0.5 20 X 10 2 35 1.1 2.1 8 20 2 40 0.6 0.6 8 Y 10 2 35 0.5 1.4 6 20 2 40 2.1 0.5 6 Item Dept Work Center Std. Hrs per unit U 1 15 2.100 V 1 15 2.900 W 2 35 1.250 2 40 0.425 X 2 35 1.363 2 40 0.675 Y 2 35 0.733 2 40 2.183 1.6+2/4 2.4+3/6 1.2+1/20 0.4+0.5/20 1.1+2.1/8 0.6+0.6/8 0.5+1.4/6 2.1+0.5/6
U V Bill of Capacity W X W Y Dept. Product U Std. Labor Work Center Hrs per unit 1 15 2.100 2 35 2.613 40 1.100 Dept. Product V Std. Labor Work Center Hrs per unit 1 15 2.900 2 35 1.25(W)+0.733(Y) 1.983 40 0.425(W)+2.183(Y) 2.608 Item Dept Work Center U 1 15 2.100 V 1 15 2.900 W 2 35 1.250 2 40 0.425 X 2 35 1.363 2 40 0.675 Y 2 35 0.733 2 40 2.183 Std. Hrs per unit
MPS for Product U and V Week 1 2 3 4 5 6 7 8 U 4 3 3 3 3 4 4 5 V 6 7 7 7 8 8 8 8 Total (week) 10 10 10 10 11 12 12 13 Total (month) 40 X 48 4x2.613+6X1.983 Rough Cut Capacity Planning + BOC Dept. Product U Std. Labor X Work Center Hrs per unit 1 15 2.100 2 35 2.613 40 1.100 Dept. Product V Std. Labor Work Center Hrs per unit 1 15 2.900 2 35 1.983 40 2.608 Week 1 2 3 4 5 6 7 8 WC15 25.8 26.6 26.6 26.6 29.5 31.6 31.6. 33.7 WC35 22.4 21.7 21.7 21.7 23.7 26.3 26.3 28.9 WC40 20.0 21.6 21.6 21.6 24.2 25.3 25.3 26.4 Total (week) 68.2 69.9 69.9 69.9 77.4 83.2 83.2 89.0 Total (month) 277.9 332.8 4X1.1+6X2.608
Characteristics of BOC Conversion factors are developed directly and in detail Facilitates the separate and more accurate treatment of capacity required for service parts and rework Conversion factors are developed by product and applied to the MPS, the effects of projected changes in product mix can be taken into account
Time-Phase BOC (TPBOC) Similar to the BOC except time buckets in which loads occur are determined by backward scheduling from MPS using standard lead times Current on-hand and in-process inventories of components are not taken into account