1. Production and Service Systems Operations
Spring
Capacity Planning
Slide Set #12

2. Capacity Planning The two major activities of MPC
planning / control of materials
planning / control of capacity
Capacity plans must be developed concurrently with materials plans if the materials plans are to be realized
Trade-off
insufficient capacity versus excess capacity
Chapter 10 in VBWJ

3. Capacity Planning Hierarchy in MPC

4. Capacity Planning Hierarchy in MPC
Resource planning
converting monthly, quarterly or annual data from the APP into aggregate resources such as gross labor hours, floor space and machine hours
the level of planning involves new capital expansion, bricks and mortar (buildings), machine tools, warehouse space etc.
Rough-cut capacity planning
to modify the resource levels or material plan to ensure the execution of the MPS
three techniques
capacity planning using overall planning factors (CPOF)
capacity bills
resource profiles

5. Capacity Planning Hierarchy in MPC
Capacity Requirements Planning (CRP)
time-phased capacity requirements determined from MRP data
Finite loading
shop scheduling process
Input / Output analysis
method for monitoring the actual consumption of capacity during the execution of detailed material planning

6. Capacity Planning and Control Techniques
Capacity planning using overall factors (CPOF)
Capacity bills
Resource profiles
Capacity Requirements Planning (CRP)
MPS
MRP

7. Capacity Planning Using Overall Factors (CPOF)
Simple technique
Allocates workload to work centers based on historical data
Assumes that product mixes and historical divisions of work between work centers remain unchanged

8. Capacity Planning Using Overall Factors (CPOF)

9. Capacity Bills
Takes into account the period-to-period shifts in product mix
BOM and routing data required
The Bill of capacity indicates the total standard time required to produce one end product in each work center
Sample product structures:

10. Capacity Bills

11. Capacity Bills
The total hours for MPS in each period is the same as the hours in CPOF
The difference is

12. Resource Profiles Introduces the time dimension
Leadtimes: Assume 2 week for component C, and 1 week for all other end products and components
Consider, as an example, the requirements for

13. Resource Profiles
and the requirements for end product B for period 5:

14. Resource Profiles

15. Resource Profiles
The work center percentage allocations and the total hours (939.20) is the same as the “capacity bill” method results
However, the period requirements for individual work centers vary due to

16. Capacity Requirements Planning (CRP)
Medium-term capacity planning utilizing time-phased MRP data (including lot sizes and timing)
improved accuracy in timing capacity requirements
The other three methods use only MPS data
Accounts for available inventories
through MRP’s gross-to-net feature
Recognizes the completed shop orders
considers only the capacity needed to complete the remaining work on open shop orders
Takes into account the demand that may not be accounted for in the MRP
for example, demand for service parts

17. Capacity Requirements Planning (CRP)
Item C is processed at work center 300 during the second week of the 2-week leadtime
1+40*.175=8 hours
watch out for timing

18. Capacity Monitoring with Input / Output Control
Monitoring the execution of the plan
Compare the planned work input and output with the actual input and output

19. Capacity Monitoring with Input / Output Control
Backlog
decouples input from output, allowing work center operations to be less affected by variations in requirements
Do not release orders to a work center that already has an excessive backlog
The bathtub analogy to input/output analysis (VBWJ, p355)
backlog: the water in the tube
Find the bottlenecks in the system, and concentrate on managing their capacities efficiently
an hour of capacity lost in a bottleneck work center is an hour lost to the entire company
an hour of capacity gained in a non-bottleneck work center will only increase work in process inventory and confusion