Introduction to Materials Management Chapter 5 – Capacity Management

Basic Capacity Definitions Capacity Required – capacity needed to produce a desired output in a given time period Capacity Planning – determining the resources and methods needed to meet the priority plan Capacity Control – monitoring production, comparing with the capacity plan, and taking appropriate corrective actions Capacity Management – determining capacity needed as well as providing, monitoring, and controlling the capacity

Capacity versus Load

Capacity Planning Levels Resource Planning – Long range resource requirements linked to the production plan Rough-cut Capacity Planning – Used to check feasibility of MPS Capacity Requirements Planning – Detailed work center capacity plans linked to MRP

Optimal Operating Level Minimum cost Average cost per unit Rate of output Optimal Output Rate

Facility Size and Optimal Operating Level Minimum cost & optimal operating rate are functions of size of production unit. Average cost per unit Small plant Medium Large Output rate

Capacity Planning Levels

Capacity Requirements Planning Inputs Open Order File – found as scheduled receipts on MRP Planned order releases from MRP – Potential future orders Work Center file Information on capacity in the work center Move, wait, and queue time information

Capacity Requirements Planning Inputs - Continued Routing file – the path that the work will follow Operations to be performed Operation sequence Work centers used Potential alternative work centers Tooling needed Standard setup times and run times

Sample Routing File Figure 5.3 Routing file

Capacity Available Impacted by: Product specification Product mix Methods used to make product Pace of work

Finding Capacity Available Rated Capacity = (available time) x (utilization) x (efficiency) Available time : number of hours a work center can be used utilization= hours actually worked available hours x 100% Efficiency= Standard Hours Produced hours actually worked x 100%

Finding Capacity Required Capacity Required (Standard Process Time) = (actual time) x (utilization) x (efficiency) Standard (process) time = Setup time + Run time

Capacity Load – Sum of all time required for orders on a work center - Example

Example Load Profile

Scheduling Orders Back scheduling (the typical approach) – Start with the due date, use lead time to find the proper start date for each operation Forward scheduling – Launch the order into the first (gateway) work center, then use the lead times to find when the order will be completed at each work center

Back Scheduling Example An order for 150 of a component is due on day 135 An order starts at the beginning of a day and finished at the end of a day Operation times for the 150 ordered: Operation 10 – 4 days in work center 12 Operation 20 – 5 days in work center 14 Operation 30 – 1 day in work center 17 Operation 40 – 2 days in work center 03

Manufacturing Lead Time Queue - time spent waiting before operation Setup - time to prepare the work center Run - time to make the product Wait - time spent after the operation Move - transit time between work centers

Manufacturing Lead Time Queue Setup Run Wait Move Need a lift truck here Queue Setup Run Wait Move

Data from the work center file

The resulting work schedule

The work schedule shown graphically

Making the plan

Managing the Plan – Adjusting Capacity Use Overtime or Undertime Adjust the number of workers Shift workers from other work centers Use alternative work centers to shift load Subcontract work

Homework Assignment Problems 5.9, 5.11, 5.13, 5.17