Learning Objectives
Explain functions & importance of capacity planning State four techniques for capacity planning
Explain capacity planning factor and bill of capacity
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
Actions when Capacity is Under-Utilized
Retrenchment
Transfer out workers Look for more jobs
Iterative
Process for
Production
Scheduling
and
Capacity
Planning
Prepare Production Schedule
Determine Required Capacity
Plan Adjusted Capacity Required Capacity = Available Capacity? Capacity Plan Satisfactory? STOP STOP Yes No Yes No
The Hierarchy of Capacity Plans and their
Relationship with Production Schedule
Production Planning Resource Planning
Master Production Scheduling
Material Requirement Planning
Rough Cut Capacity Planning
Capacity Requirement Planning
Production Activity Control
Planning Horizons and Degree of Detail
for Capacity Plan
Resource Plan
Rough Cut Capacity Plan
Capacity Requirement Plan Planning Horizon Long Medium Medium-Short
Plant Department Work Center
Capacity Planning Techniques
Capacity Planning Factors Bill Of Capacity Time-Phased Bill Of Capacity Capacity Requirements Planning Business Planning Market Planning Production Planning Demand Management - Forecasting- Distribution Req. Planning - Order Entry Final Assembly Scheduling Master Production Scheduling Material Requirement Planning (MRP) Resource Planning Rough Cut Capacity Planning Capacity Requirement Planning
Production Activity Control - Order Release - Operations Scheduling - Dispatching - Expediting - Production Reporting Purchasing - Vendor Selection - Order Placement - Vendor Scheduling - Order Follow-up Performance Measurement Top Management Planning Operations Management Planning Operations Management Execution
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
Calculating 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
Percentage of Standard Labor Hours
1 305 36.3
2 535 63.7
Total 840 100.0
Month Jan Feb Mar Total
Units 40 48 50 138
Department Jan Feb Mar Total
1 101.64 121.97 127.05 350.66
2 178.36 214.03 222.95 615.34
Total 280 336 350 966
Data Used in Resource Planning using CPF
Production Plan Next Quarter
Resource Plan Load in Standard Labor Hours for Next Quarter
305/840X100
7X40 7X48 7X50 7X138
0.363X280 0.637X280
Limitation of CPF Technique
No consideration is given to the lead times
No consideration is given to current on-hand and
work-in-progress inventories of components
The average hours per unit used assumes that the same
product mix experienced in the past will continue in the future
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 W X RM RM V Y W RM RMRouting Data
Item Oper No Dept No Work
Center No Run Time/Unit (Std. Hrs) Setup Time (Std. Hrs) 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 Variable Fixed per batch Batch Size
Standard Hours per Units
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 I t e m Ope r No Dept No Work Cent er No Run Time/Uni t (Std. Hrs) Setup Time (Std. Hrs) 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 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 W X RM RM V Y W RM RM
Bill of Capacity
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 1.983 40 2.608 U W X RM RM V Y W RM RM
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 1.25(W)+0.733(Y) 0.425(W)+2.183(Y)
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 48 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) 277.9 332.8Rough Cut Capacity Planning
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 1.983 40 2.608 X X +
BOC
4x2.613+6X1.983 4X1.1+6X2.608Characteristics 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
