Capacity Requirements Planning (CRP)

Capacity requirements planning (CRP) “A computerized system that projects the load from a given Material Requirements Plan (MRP) onto the capacity of a system and identifies underloads and overloads.” -Russell and Taylor*

Uses of CRP To Know: If a construction company can start new projects in the future.If a construction company can start new projects in the future. If production plant can produce a spontaneous order.If production plant can produce a spontaneous order. If there is enough labor to make up for increased seasonal sales.If there is enough labor to make up for increased seasonal sales. If the orders that are do Tuesday can be accomplished with current staff.If the orders that are do Tuesday can be accomplished with current staff.

Information entered into CRP Planned order releasesPlanned order releases Equipment and labor routing fileEquipment and labor routing file Open orders fileOpen orders file

Planned order releases From the MRP.From the MRP. Tells when the order should be started so that it is completed on time.Tells when the order should be started so that it is completed on time.

Equipment and Labor Routing File Requirements of equipment and labor to complete the needed orders.

Open Orders File Contains the information of the orders started that need to be completed.

Information Provided by CRP Load profile for each operation in the production system

Load profile Makes a comparison of the work that needs to be completed and the work in progress with the systems capacity.

CRP is company specific and requires complex calculations. For large companies professional help is needed in designing their CRP models because of the complexity and importance of accurate information.

Calculating a simple Load Profile Inputs into a simple load profile are capacity and load.Inputs into a simple load profile are capacity and load. *Capacity is the productive capability of the system.*Capacity is the productive capability of the system. *Capacity = (number of machines or workers)*(number of shifts)*(utilization) *(efficiency)*Capacity = (number of machines or workers)*(number of shifts)*(utilization) *(efficiency)

Definitions of Capacity Utilization is the percentage of total time that the worker works or the machine runs.Utilization is the percentage of total time that the worker works or the machine runs. Efficiency refers to how well the machine or worker performs to a given standard.Efficiency refers to how well the machine or worker performs to a given standard.

Definition of Load *Load is the standard hours of work (or equivalent units of production) assigned to a production facility.*Load is the standard hours of work (or equivalent units of production) assigned to a production facility.

Simple Load Profile A simple load profile can be used by calculating the Load Percent.A simple load profile can be used by calculating the Load Percent. *Load Percent = (load/capacity)*100%*Load Percent = (load/capacity)*100% Systems with a Load Percent over 100 will not complete assignments on time without adjustments to the system.Systems with a Load Percent over 100 will not complete assignments on time without adjustments to the system.

*Solutions to Overloaded Conditions Eliminate unnecessary requirements.Eliminate unnecessary requirements. Reroute jobs or labor.Reroute jobs or labor. Splitting the job between two systems.Splitting the job between two systems. Increase normal capacity.Increase normal capacity. Subcontract.Subcontract. Increase efficiency.Increase efficiency. Push work back to later periodsPush work back to later periods Revise the master scheduleRevise the master schedule

Load Percent Example A local construction company needs each of its houses cleaned of all construction debris before they can close with the buyer. They have one dump truck and a part time worker who works twenty-five hours a week. Because of the part time status the worker takes no breaks. For every four hours of work there is one hour to drive the debris to the landfill to be unloaded. Five percent of the time at the site is use to prepare the dump truck for travel. For the month the construction company has 3 houses closing at the end of the first week, 5 at the end of the second week, 4 at the end of the third week and 6, at the end of the forth week. What is the load percent at the end of each week and can the work be accomplished in that week.

Construction Load Calculations (Capacity) No. of hours =25No. of hours =25 Shifts = 1Shifts = 1 Utilization = 4/5 = 80%Utilization = 4/5 = 80% Efficiency = 95%Efficiency = 95% Capacity = 25*1*0.8*0.95Capacity = 25*1*0.8*0.95 = 19 hours

Construction Load Capacity (Load) LoadLoad Week 1 = 3*4 = 12 Week 2 = 5*4 = 20 Week 3 = 4*4 = 16 Weak 4 = 6*4 = 24

Construction Load Capacity (Load Percent) Load PercentLoad Percent Week 1 = 12/19 = 63% Can Accomplish Week 2 = 20/19 = 105% Cannot Accomplish Week 3 = 16/19 = 84% Can Accomplish Weak 4 = 24/19 = 126% Cannot Accomplish

Test Exercise of Load Percent A cabinet shop produces and installs cabinets into new houses. The cabinets need to be installed in the houses the week they required to be installed to not slow down construction. A crew of two people each working 40 hours can install a set of cabinets in 3 hours. They spend about an hour each person driving to each installation location. Lunch breaks are not part of the forty hours worked and the cabinets are delivered by a separate crew. Due to experience they are a hundred percent efficient. For the month 10 installations are needed for week one, 7 for week two, 13 for week three, 14 for week four. What is the load percent for each week and can the installations be completed.

Capacity Requirements Planning Used to calculate the ability of the company to meet its orders.Used to calculate the ability of the company to meet its orders. Best if company specific.Best if company specific. Load percentage can be used for simple operations.Load percentage can be used for simple operations.