CAPACITY MANAGEMENT Nyoman Pujawan

MRP is capacity intensive. Validation of MPS is important to establish a feasible schedule. Checking capacity sufficiency is done at MPS level and termed as Rough Cut Capacity Planning (RCCP)

Enterprise Resource Planning Sales & Operations Planning Demand Management Enterprise Resource Planning Front End Master Production Scheduling Detailed Capacity Planning Detailed Material Planning Engine Material & Capacity Plans Shop-floor Systems Supplier Systems Back End

Enterprise Resource Planning Sales & Operations Planning Demand Management Enterprise Resource Planning Front End Rough Cut Capacity Planning Master Production Scheduling Capacity requirements Planning Material Requirements Planning Engine Shop scheduling Supplier Systems Back End

RCCP Techniques Capacity Planning using Overall Factors (CPOF) Bill of Labor Approach Resource Profile Approach

Capacity Planning using Overall Factors (CPOF) Three inputs are needed: MPS The time the total plant requires to produce one “typical” part Historical proportion of total plant time required by each of the key resources CPOF multiplies the “typical” time by the MPS quantity to obtain total time required in the entire plant to meet the MPS. This time is then prorated among the key resources by multiplying total plant time by the historical proportion of time used at a given work center.

The company only produces one product family, i.e., lamps A typical lamp requires 0.22 standard hours of labor / machine time. Bill of Labor for Lamp LAXX Lamp assembly 0.1 hr Oven 0.01 hr Base forming 0.05 hr Plastic molding 0.02 hr Socket assembly 0.04 hr TOTAL 0.22 hr

RCCP using the CPOF Approach Month Total Prod. x 0.22 Lamp Assy Oven Base Forming Plastic Molding Socket Assy Historical Proportion 0.455 0.045 0.227 0.091 0.182 J 15000 3300 1501.5 148.5 749.1 300.3 600.6 F M A 16000 3520 1601.6 158.4 799.04 320.32 640.64 S 19000 4180 1901.9 188.1 948.86 380.38 760.76 O N D 197000 Total Hours 19717.7 1950.3 9838.18 3943.94 7887.88

Bill of Labor Approach Also known as Bill of Resources or Bill of Capacity Is a listing by item number the amount of labor required by a major labor category to produce that item or group of part numbers. It is not intended to be a routing, but merely a means of estimating the capacity requirements for a particular item. The BOL may be compiled for each distinct item or for group of similar items, and extended by the scheduled quantities to determine capacity requirements. In each department, calculate the time required by multiplying the time required in each department to produce a lamp by the number of lamps to produce in a month

RCCP using the BOL Approach Month Total Prod. x 0.22 Lamp Assy Oven Base Forming Plastic Molding Socket Assy BOL X 0.1 hr X 0.01 hr X 0.05 hr X 0.02 hr X 0.04 hr J 15000 3300 1500 150 750 300 600 F M A 16000 3520 1600 160 800 320 640 S 19000 4180 1900 190 950 380 760 O N D 197000 Total Hours 19700 1970 9850 3940 7880

Resource Profile Approach Both of the previous techniques ignore lead-time offsets Here, we will consider it. Each BOL must be time phased in the resource profile approach.

Resource Profile for Lamp LAXX Department Month before due date 2 1 Lamp assembly 0.1 Oven 0.01 Base forming 0.05 Plastic molding 0.02 Socket assembly 0.04

RCCP using the BOL Approach Month Total Prod. x 0.22 Lamp Assy Oven Base Forming Plastic Molding Socket Assy BOL X 0.1 hr X 0.01 hr X 0.05 hr X 0.02 hr X 0.04 hr J 15000 3300 1500 150 750 300 600 F M A 800 160 950 320 640 16000 3520 1600 190 380 760 S 19000 4180 1900 O N D 197000 Total Hours 19700 1820 8350 3640 7280

Choosing an RCCP Technique Resource profile requires more computational time than the bill of labor approach, but for the case where lead times are long, the results are more accurate.

Example A product, W, has two operations, performed in WCs 1 and 2. The BOL and resource profile are as follows: Resource Profile BOL Work until due 1 0 WC1 20 WC2 30 WC1 20 WC2 30 MPS Week 1 2 3 4 100 200 250 100 Develop Capacity Requirement using BOL and Resource Profile Approach

Determining Capacity Available Factors affecting available capacity: Time available Utilization  1 minus the proportion of time typically lost due to machine, worker, tool, or material unavailability Efficiency  time standard / time actually needed to perform an operation Capacity available = Time available x Utilization x Efficiency

Capacity Requirements Planning (CRP) Te function of establishing, measuring, and adjusting limits or levels of capacity …. The process of determining how much labor and machine resources are required to accomplish the task of production.

Closed-Loop MRP MPS MRP Capacity RCCP OK? Capacity OK? CRP Vendor control Detail Schedule Input / Output Control

CRP Logic MPS is exploded via MRP system Planned order release are taken from MRP system and used to perform a deterministic simulation of the time each order passes through each work station A machine load report is produced

Example of CRP Level Part Qty/ Parent Description 100 1 Bill of Material Level Part Qty/ Parent Description 100 1 Finished product 110 2 Subassembly 121 6 Component A 122 10 Component B

Work Center Master File Item Master Record Item Order Quantity On Hand On Order Due Date Lead Time Allocated 100 LFL 250 7/3 1 week 110 400 500 7/10 2 weeks 121 2400 1500 3 weeks 122 6000 2500 4 weeks Work Center Master File Work Center Available Utilization Efficiency Planned Queue 1 2400 minutes 100% 4 days 2 3

Routing Files Part Work Center Setup Time / Lot Run Time / Piece 100 1 30 2.5 110 2 10 0.75 15 0.5 121 3 0.3 25 0.25 122 0.15 75 MPS for Part 100 1 2 3 4 5 6 7 8 9 10 11 12 QTY 250 200 150 300

RCCP WC 1 2 3 4 5 6 7 Average 2604 2083 1562 3125 2232 2657 2125 1594 3188 2277 2734 2187 1640 3281 2343

Fixed period, period to order = 1 Item 100, LT = 1 1 2 3 4 5 6 7 Gross Req 250 200 150 300 Sched receipts Projected OH Planned release Fixed quantity, MOQ = 400, Incremental = 100 Item 110, LT = 2 1 2 3 4 5 6 7 Gross Req 400 500 300 600 Sched receipts Projected OH 100 Planned release

Fixed quantity, quantity to order = 2400 Item 121, LT = 3 1 2 3 4 5 6 7 Gross Req 1200 Sched receipts 2400 Projected OH 1500 300 Planned release Fixed quantity, Quantity to order = 6000 Item 122, LT = 4 1 2 3 4 5 6 7 Gross Req 2000 Sched receipts 6000 Projected OH 2500 500 4500 4000 Planned release

Planned Order Release 1 2 3 4 5 6 7 100 200 250 150 300 110 400 500 121 2400 122 6000 POR is lumpy for items 121 and 122. This could cause problems with the shop floor  uneven flow of work. CRP is needed even when RCCP has been properly developed, to determine whether batching orders for components has created an uneven flow of work.

CRP Computation A separate calculation for setup time and run time Each operation has one week lead time Setup matrix is created directly from Planned Order Release in MRP system and Routing Files Example: Part 122 (6000 is to be released in wek 1). From routing file, 122 is routed to WC2, WC3, WC1, and back to WC3.

Setup Time Matrices 1 2 3 4 5 6 7 WC1 100 30 110 15 121 25 122 75 Total 70 120 45 145 WC2 10 35 WC3

Run Time Matrices = Quantity x Run Time / Unit 1 2 3 4 5 6 7 WC1 100 500 625 375 750 110 200 250 121 600 122 3000 Total 1425 3575 1350 950 4175 WC2 300 4500 4800 975 900 WC3 2100 1500

Capacity requirements of Planned Release (Setup + Run Times) 1 2 3 4 5 6 7 WC1 530 1495 3695 1420 995 4320 WC2 4835 310 1000 925 WC3 615 930 2130 1545

Capacity required by Released Orders Part WC Week Setup Time Run Time Calculation Run Time Total Time 100 1 30 250 x 2.5 625 655 110 2 10 400 x 0.75 300 310 15 400 x 0.5 200 215 121 25 2400 x 0.25 600 615 122 75 6000 x 0.5 3000 3075 3 6000 x 0.75 4500 4530

Summary of Released Order Capacity Requirements WC Week 1 Week 2 1 4355 215 2 310 615 3 4530 Capacity Requirements Plan (Overall) 1 2 3 4 5 6 7 WC1 4885 1710 3695 1420 995 4320 1495 WC2 5145 925 1000 4835 310 WC3 615 5460 2130 1545

Available Vs Required Capacity Available capacity