Production and Service Systems Operations Spring 2009-2010 Capacity Planning Slide Set #12

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

Capacity Planning Hierarchy in MPC

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

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

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

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

Capacity Planning Using Overall Factors (CPOF)

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:

Capacity Bills

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

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

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

Resource Profiles

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

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

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

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

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