Capacity Planning

Capacity Capacity is the amount of work that can be done in specified time period Capacity is a rate of work done, not quantity of work done Two types of capacity: (1) capacity required or load and (2) capacity available

Diagram of Capacity

What Makes Up Capacity Facility Machines Labor Force Hours of Working Time (Shifts, Overtime) Vendors (Materials)

Capacity Planning Determine capacity available at each work center in each time period Determine the load at each work center in each time period Translate MRP or MPS into hours of work required at each work center in each time period Sum up capacities for different items on each work center Resolve differences between available capacity and required capacity

Capacity Inputs Open Order File MRP (or MPS) Routing File Work Center File

Determining Capacity Available A work center consists of 4 machines and is operated 8 hours per day for 5 days a week. Utilization (1-idle time) is 85% and labor efficiency is 110%. Available time = (4)(8)(5) = 160 hours Rated capacity = (160)(.85)(1.1) = 149.6 standard hours

You Do One Work Days = 5 Number of 8-Hour Shifts = 2 Number of Machines = 2 Labor Efficiency = .7 Machines Efficiency = .7 ?? Standard Hours ??

Determining Capacity Required or Load A work center processes 150 units of item Z. Set up is 1.5 hours and runtime is 0.2 hours per item. Efficiency is 120% and utilization is 80%. Standard time is 1.5 + (150)(0.2) = 31.5 standard hours Actual time is 31.5 / (1.2)(0.8) = 32.8 hours

You Do One Units of Item X = 300 Set Up = 2 Hours Run Time = .3 Hours per Item ?? Standard Hours ??

Comparing Load with Capacity Available Be consistent with times, either all standard or actual Example of work center load report: Week 20 21 22 23 24 Total Released Load 51.5 45 30 25 181.5 Planned Load 100.5 120 100 90 510.5 Total Load 152 165 130 125 692 Rated Capacity 140 700 (Over)/Under (12) (25) 10 15 8

Correcting Capacity Problems Short Term: Control Capacity Overtime Outsourcing Alternate Routings Flexible Work Force Reschedule (Expedite) Overlap Lot Splitting

Correcting Capacity Problems Medium Term: Plan Capacity Make/Buy Decisions Plan Alternate Routings Add Tooling Retrain Work Force Long Term: Model Capacity Facility Changes Capital Equipment Changes