Detailed Capacity Planning Process

Capacity Capability of operations to produce output per period Capacity require: system capability to produce a specified product mix Capacity Planning Determining amount of capacity required o Aggregate/product line level Resource Requirements Planning o Master Scheduling Level Rough-Cut Capacity Planning o Material Requirements Planning Level Capacity Requirements Planning Load Amount of planned work scheduled and actual work released to facility Objective of Capacity Planning High service levels, short delivery times, high reliability Low capital investment Efficient use of available capacity Flexibility/adaptability Minimal fixed costs ULTIMATE GOAL of detailed scheduling and capacity planning Balance Load with Available Capacity Vicious Cycle of not planning capacity 1. Customer orders increase 2. Higher load on work centers 3. Longer queue times 4. Actual lead times prolonged 5. Delivery due dates not met 6. Prolong standard lead times 7. Orders released earlier *REPEAT* Manufacturing Environments and Process Descriptions Project: One-of-a-Kind Production o Large, unique items requiring custom design capability o PERT: Program Evaluation and Review Technique o CPM: Critical Path Method o NOT CRP Job Shop: Intermittent Production o Handle wide range of product designs o Fixed Plant locations o General purpose equipment o Constraining work center may vary depending on product mix/volume. Batch o Similar design items o Wide range of order volumes o Items ordered; of a repeat nature o CRP applicable as product mix/volume changes o CRP essential when constraining work centers change

 Repetitive: Assembly Line Production o Minimize setup, inventory, and manufacturing lead times o Determination of capacity more frequently done at MPS level o Capacity planning might be done at RCCP o Detailed capacity planning may not be performed at all Continuous Process: Flow Production o Capacity constraints designed into physical facility itself o Minimal interruptions in actual process between similar product runs o CRP is least applicable Data Requirements for Capacity Planning Routing o Operations to be performed o Sequence of operations o Workcenters o Setup/Run Standards Unique Routing Information o Tooling o Operator Skill Level o Inspection o Testing Requirements Routing Data o Operation ID Code o Operation Description o Work Center o Set/Tear-out Time o Run time per unit o Tooling Requirements Lead Time: span of time required to perform a process or series of processes Queue Time: time waiting before operations begins Setup Time: time to get ready for operation Run Time: time to perform operation Wait Time: time waiting after operation ends Move Time: time physically moving between operations Distribution of Lead Time Interoperation Time: Do NOT impose Load on work center (Queue, Wait, Move) Operation Time: Impose Load on work center (Setup, Run) Capacity Determination Theoretical Capacity o Based on clock hours 3 machines x 10-hour shifts x 7 Days per week = 210 hours .4 standard hours per unit: 210 .4 = 525 units Demonstrated Capacity o Average Historical Output Last 5 periods in units = 320, 462, 356, 485, 278 Average output in units: 380.2 Demonstrated capacity in hours: 380.2 x .4 = 152.08 hours Rated Capacity

o Hours available adjusted by utilization and efficiency 210 hours available x .95 utilization x .85 efficiency = 169.6 .4 standard hours per unit: 169.6 .4 = 424 units Utilization = Efficiency = Rated Capacity Formula o Standard hours worked = (multiplication of ) Shifts per day Machines or workstations or operators Hours per shift Days per period Utilization Efficiency Sources of Load Open Order (Scheduled Receipts) Planned Orders (Planned by Material Planning) Other Sources o Rework o Scrap o Process yield o Engineering-related downtime o Prototypes, sales samples, etc o Destructive tests Queuing effects High Capacity Utilization = Long Average Queue Time Scheduling Strategies Backward Scheduling: begins with latest due date for order, calculates latest start date for it. (most often used) Forward Scheduling: begins with earliest start date for order, calculates earliest completion date for it. Central Point Scheduling: for critical operations, forward scheduling is used. For operations previous to critical operations, backward scheduling is used. Probable Scheduling: takes slack time into account to increase or decrease lead time, provides element of flexibility in planning, often used for project scheduling Load Profile: future capacity requirements Infinite Loading Calculating loads by time period while ignoring capacity Goal is to meet due dates as scheduled Most useful when priority give with respect to due dates (job shop environment) Finite Loading Considers capacity, not permitting overloads Start and due dates are changed to prevent overloads Goal is good use of capacity through course of time Most useful if limited capacity is major problem (continuous flow production environment) Techniques o Process-oriented: minimize potential delays to individual operationsthus average potential delay of entire production order; rules of priority (sequencing rules)

o Order-oriented: as many orders as possible on time, w/ low levels of WIP; orders scheduled in entirety, one after another; most commonly used technique o Constraint-oriented: orders planned around bottleneck capacities; Optimized Production Technology (OPT) intended to link scheduling and capacity; practical application of Theory of Constraints (TOC); 1. Only orders with minimum batch size are generated 2. Batch size lots come together at bottleneck capacities 3. Operations at bottleneck scheduled 4. Operations before bottleneck then scheduled backward, later ones scheduled forward using normal lead times. Scheduling Manufacturing and Logistics Operations Load Leveling Order-Oriented Finite Loading o Orders scheduled in entirety, one right after another, in time periods o Goal: find priority rules enabling as many orders as possible to be completed o Planning horizon divided into time periods o Capacity limit exceed? Three possible responses: 1. Load the operation 2. Defer operation 3. Refuse order o Capacity and loads reliable o Due dates flexible o Limitations Short planning horizons Regular re-planning needed In short term planning; doesnt allow local, reactive re-planning Long queues With inflexible capacities lower utilization of capacity as soon as due dates are deferred. o Areas of Application Serial production, long period, monopoly situation, sellers market Suitable for discrete manufacturing industries (if capacity is flexible) Shop-floor control Actual work program for next few days Acceptable work program that allows situation planning Long-term planning, few orders, high value added, regular planning/replanning Mixed Manufacturing Produce goods with various market strategies/logistics goals Example: organization may make mass-produced goods and maintain stocks at various stages (goal: to maximize capacity utilization). Also produce to customer order, one-of-akind production (goal: shortest possible lead time) Load-Oriented Order Release (LOOR) o Rough-Cut technique for order-oriented finite loading o Adapts load to actual available capacity Capacity-Oriented Material Management (Corma)

 Enable mixed manufacturers to play WIP off against limited capacity and short deliveries for customer production orders Stock replenishment orders of MTS considered filler loadings Consists of 3 parts 1. Criterion for order release: stock replenishment orders released before re order point 2. Probable Scheduling for shop floor control: priority to early release order only when needed 3. Mechanism that couples shop floor scheduling with materials planning: continually rescheduling stock replenishment orders according to actual usage Review 1. Resource Planning 2. Rough-Cut Capacity Planning 3. Detailed Capacity Planning 4. Planning and Control (shop floor/work place level)