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Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin Manufacturing Planning and Control MPC 6 th Edition Chapter.

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Presentation on theme: "Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin Manufacturing Planning and Control MPC 6 th Edition Chapter."— Presentation transcript:

1 Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin Manufacturing Planning and Control MPC 6 th Edition Chapter 7

2 7-2 Capacity Planning and Management Capacity planning and management addresses two managerial problems: Matching capacity to plans–by either providing sufficient capacity to execute the plan or adjusting the plan to meet available capacity. Consider the marketplace implications of faster throughput times–at the expense of reduced capacity utilization.

3 7-3 Agenda What is Capacity Planning? Role of Capacity Planning in Master Planning and Control Capacity Planning and Control Techniques Simultaneous Scheduling of Capacity and Materials Capacity Management

4 7-4 Role of Capacity Planning in Master Planning & Control The primary objective of capacity planning techniques is to estimate capacity requirements early enough to be able to meet those requirements Flawless execution of the capacity plan allows the firm to avoid unpleasant surprises Insufficient capacity leads to deteriorating delivery performance Excess capacity may be a needless expense

5 7-5 Resource planning Sales and operations planning Demand management Master production scheduling Detailed material planning Material and capacity plans Shop-floor systems Supplier systems Capacity Planning in the MPC System Resource planning Rough-cut capacity planning Capacity requirement planning Finite Loading Input/output analysis Long Range Medium Range Short Range

6 7-6 Links to other MPC System Modules Resource Planning Linked to sales and operations planning (SOP) Converts SOP data to aggregate resource units Rough-Cut Planning Linked to Master Production Schedule (MPS) Estimates capacity requirements of MPS Capacity Requirements Planning Linked to material requirements planning (MRP) Prepares detailed capacity plan based on time-phased material plans Finite Loading Linked to material planning and shop floor control Considers adjustment of plans due to capacity utilization Input/output Analysis Linked to shop floor control Monitors actual consumption of capacity during execution of detailed material planning

7 7-7 Capacity Planning Using Overall Factors (CPOF) Capacity Bills Resource Profiles Capacity Requirements Planning Capacity Planning and Control

8 7-8 Capacity Planning Using Overall Factors (CPOF) Simplest rough-cut capacity planning approach Data inputs from master production schedule Based on planning factors from historical data (work center utilization, production standards) Overall labor- or machine-hour capacity requirements are estimated from MPS data Estimate is allocated to work centers based on historical workloads Inherent inaccuracies may limit usefulness

9 7-9 CPOF Example Total required capacity = (33*0.95)+(17*1. 85) = Work center capacity = Historical percentage*Total required capacity

10 7-10 Capacity Bills Rough-cut capacity planning method that provides more direct link to individual end products Bill of capacity indicates total standard time to produce one unit of an end product (by work center) Master production schedule data is then used to estimate capacity requirements for each work center Requires more data than CPOF procedure

11 7-11 Capacity Bill Example Std. Setup hours are spread over the standard lot size Total hours include both std. run time and std. setup time

12 7-12 Capacity Bill Example MPS quantities are multiplied by bill of capacity to determine work center capacity requirements by period

13 7-13 Resource Profiles Rough-cut capacity planning technique that includes production lead time information Provides time-phased projections of capacity requirements for individual work centers More sophisticated approach but requires tracking of relatively short time periods (< 1 week)

14 7-14 Resource Profile Example Production of one unit of product A in period 5 requires production activity in periods 3, 4, and 5 and in work centers 100, 200, and 300

15 7-15 Resource Profile Example Requirements (by work center and period) for one unit of end product are multiplied by the MPS plan to determine capacity requirements These requirements are then summed over all periods to finalize the process

16 7-16 Capacity Requirements Planning (CRP) Capacity requirements planning differs from the rough-cut planning procedures Utilizes time-phased material plan from MRP Takes into account materials in inventory Accounts for the current status of work-in- process Accounts for service parts and other demands not accounted for in the MPS Requires more inputs and more computational resources

17 7-17 Capacity Requirements Planning Example Detailed MRP Data Scheduled/planned quantity multiplied by processing time for work center This process is repeated for each work center to complete the plan

18 7-18 Scheduling Capacity and Materials Simultaneously Capacity requirements planning doesnt consider capacity when planning materials Assumes that capacity can be adjusted, given sufficient warning Planning capacity and materials at the same time allows construction of a plan that works within current capacity constraints

19 7-19 Finite Capacity Scheduling Simulates job order start and finish times in each work center Establishes a detailed schedule for each job in each work center When a work centers capacity is not sufficient for all planned jobs, prioritization rules determine which jobs will be shifted to later times

20 7-20 Finite Capacity Scheduling Product A does not consume all available capacity Combination of all products consumes all available capacity in several periods Planned orders are shifted to stay within capacity limitations

21 7-21 Work Center Scheduling Vertical Loading–each work center is scheduled job by job without consideration of other work centers Increases capacity utilization but may result in more partial job completion Horizontal Loading–jobs are scheduled through all work centers in order of priority Lower capacity utilization but generally a higher proportion of jobs are completed in a shorter time span (higher customer service levels)

22 7-22 Finite Capacity Scheduling The FCS plan is a simulation Randomness leads to actual times that dont match scheduled times Should the work center wait for a job that isnt available on time (idleness = lost capacity) Over time, the accuracy of the plan deteriorates Frequent rescheduling may be needed to maintain accuracy Rescheduling process is computationally expensive

23 7-23 Advanced Production Scheduling (APS) Expands Finite Capacity Scheduling to the entire product structure (end products and sub-assemblies) Can lead to a significant reduction in lead times Requires accurate scheduling parameters, flawless execution, and prompt recovery from any problems

24 7-24 Capacity Management Management and Capacity Planning/Utilization Capacity monitoring with input/output control Managing bottleneck capacity Capacity planning in the MPC system Choosing the measure of capacity Choice of specific techniques Using the capacity plan

25 7-25 Capacity Monitoring with Input/Output Control Planned inputs are determined by the capacity planning process Planned outputs depend upon the nature of the work center Capacity-constrained–planned output is determined by the processing rate of the work center Non-capacity-constrained–planned outputs match planned inputs Differences between plan and actual must be addressed (management by exception)

26 7-26 Managing Bottleneck Capacity– Theory of Constraints Concentrate scheduling efforts on managing bottleneck resources Schedule jobs that run through bottlenecks separately from non-bottleneck jobs Use finite scheduling for bottleneck jobs, with horizontal loading and back scheduling for the most critical Look for quick solutions to eliminate bottlenecks Expand capacityAlternate routings Determine bottleneck work centers Rough-cut capacity planningCapacity resource planning

27 7-27 Capacity Planning in the MPC System Short-term capacity planning problems can be reduced by well-executed production and resource planning Efficient use of sufficient capacity by a good shop-floor system reduces capacity issues

28 7-28 Choosing the Measure of Capacity Capacity can be measured in many ways Labor hours, machine hours, physical units, monetary units The firms needs and constraints should determine the capacity measure Trends Shrinking portion of direct labor Less clear distinctions between direct and indirect labor Reduced ability to change labor capacity Outsourcing Flexible automation/cellular technologies

29 7-29 Choice of a Specific Planning Technique Rough-cut methods CPOF Capacity bills Resource profiles Most general Widely applicable Easier to implement but less powerful Useful in JIT situations Capacity requirements planning Requires more data and computational effort Only applicable in conjunction with MRP Unnecessary under JIT APS Systems Highest levels of effort High levels of accuracy possible with good data and flawless execution

30 7-30 Using the Capacity Plan Two broad choices are available when actual capacity and plan are mismatched Change capacity–reduce or increase capacity as indicated (within constraints) Revise material plan–change requirements and/or timing to match available capacity The amount of material that can be produced is limited by the available capacity, regardless of the material plan

31 7-31 Principles Capacity plans must be developed concurrently with material plans if the material plans are to be realized. Capacity planning techniques must match the level of detail and actual company circumstances. Capacity planning can be simplified in JIT environments. Better resource and production planning processes lead to less difficult capacity planning processes. Better shop-floor systems reduce the need for short- term capacity planning.

32 7-32 Principles More detailed capacity planning systems demand more data and database maintenance. When capacity does not match the requirements, it isnt always capacity that should change. Capacity must be planned, but use of capacity must also be monitored and controlled. Capacity planning techniques can be applied to selected key resources. Capacity measures should reflect reasonable levels of output from key resources.

33 7-33 Quiz – Chapter 7 Which capacity planning activities are considered long-range plans? Short-range plans? Medium-range plans? Resource planning is most closely linked with which MPC element? The capacity planning using overall factors (CPOF) technique is likely to perform poorly in a just-in-time (JIT) environment? (True/False) Capacity requirements planning (CRP) ignores current finished goods and WIP inventory? (True/False) According to the Theory of Constraints, bottleneck and non- bottleneck work centers should be managed similarly? (True/False)


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