Capacity Planning Required Capacity-When manufacturing orders are converted to measurable units of capacity, such as standard hours, they can be used in.

Capacity Planning

Required CapacityRequired Capacity-When manufacturing orders are -When manufacturing orders are converted to measurable units of capacity, such as converted to measurable units of capacity, such as standard hours, they can be used in predicting the need standard hours, they can be used in predicting the need for capacity in different work centers over time. This for capacity in different work centers over time. This statement of the resources needed to support the plan is statement of the resources needed to support the plan is called the REQUIRED CAPACITYcalled the REQUIRED CAPACITY

Demonstrated capacityDemonstrated capacity- The current rate of output of a - The current rate of output of a work center that is accepted by the organization as its work center that is accepted by the organization as its proven capability is called the demonstrated capacityproven capability is called the demonstrated capacity

Planned CapacityPlanned Capacity - The predicted output of a - The predicted output of a work center in the future is called its planned work center in the future is called its planned capacity. The planned capacity is the capacity. The planned capacity is the demonstrated capacity plus or minus the expected demonstrated capacity plus or minus the expected results of known capacity adjustmentsresults of known capacity adjustments

Theoretical or Maximum CapacityTheoretical or Maximum Capacity-The -The maximum output a work center can achieve maximum output a work center can achieve assuming the current product specifications, assuming the current product specifications, product mix,plant, and equipment is its theoretical, product mix,plant, and equipment is its theoretical, or maximum, capacity or maximum, capacity

Work CenterWork Center-APICS defines a work center as a -APICS defines a work center as a specific production facility, consisting of one or more specific production facility, consisting of one or more people and/ or machines they can be considered as one people and/ or machines they can be considered as one unit for the purposes of capacity planning and detailed unit for the purposes of capacity planning and detailed scheduling.scheduling.

Capacity ManagementCapacity Management –The function of establishing , –The function of establishing , measuring, monitoring, and adjusting limits or levels of measuring, monitoring, and adjusting limits or levels of capacity in order to execute all manufacturing capacity in order to execute all manufacturing schedules;the production plan, master production schedules;the production plan, master production schedule, material requirements plan, and dispatch listschedule, material requirements plan, and dispatch list

Capacity ActionsCapacity Actions-When there is a discrepancy between -When there is a discrepancy between demonstrated capacity and required capacity, a capacity demonstrated capacity and required capacity, a capacity action is needed. The capacity action must be action is needed. The capacity action must be predictable, meaning that the outcome is fairly certain predictable, meaning that the outcome is fairly certain and measurableand measurable

Symptoms of Poor Capacity Planning

High costs resulting from poor utilization of resourcesHigh costs resulting from poor utilization of resources Over committed schedules causing missed deliveries and Over committed schedules causing missed deliveries and

poor customer servicepoor customer service Invalid priorities because more work is scheduled than can Invalid priorities because more work is scheduled than can

be accomplishedbe accomplished Excess work-in-process inventoryExcess work-in-process inventory Longer cycle timesLonger cycle times High raw materials and purchased components inventoriesHigh raw materials and purchased components inventories If resources are greater than required, excess idle time or If resources are greater than required, excess idle time or

poor efficienciespoor efficiencies

Tools for Solving Capacity Planning Problems Resources requirements plan Resources requirements plan Master production summariesMaster production summaries Capacity requirements plansCapacity requirements plans Finite capacity plansFinite capacity plans Capacity simulationsCapacity simulations Input-Output Controls Input-Output Controls

The Resource Requirements PlanThe Resource Requirements Plan is defined as is defined as the process of establishing, measuring , and the process of establishing, measuring , and adjusting limits of long range capacity. Resource adjusting limits of long range capacity. Resource requirement planning is based on the production requirement planning is based on the production planplan

Master Schedule SummaryMaster Schedule Summary- It assures that the - It assures that the master schedules sum up to management’s master schedules sum up to management’s production planproduction plan

Capacity Requirement PlanningCapacity Requirement Planning-It is the process -It is the process of determining in detail how much labor and of determining in detail how much labor and machines resources are required to accomplish the machines resources are required to accomplish the task of production task of production

Resources Requirement Planning HorizonHorizon ResponsibilityResponsibility Data Required-Select product families,Identify Data Required-Select product families,Identify

critical work centers,Calculate product load profiles, critical work centers,Calculate product load profiles, Calculate the resources requirement planCalculate the resources requirement plan

Selecting product familiesSelecting product families Identify critical work centersIdentify critical work centers Calculate product load profilesCalculate product load profiles Calculate the Resources Requirements PlanCalculate the Resources Requirements Plan

Characteristics of Critical Work Center

New equipment purchases is costly or require long New equipment purchases is costly or require long lead time to obtainlead time to obtain

Subcontracting is costly and difficult to arrangeSubcontracting is costly and difficult to arrange Skilled workers are not easily availableSkilled workers are not easily available Bottlenecks exist under normal conditionsBottlenecks exist under normal conditions Alternate routings are not available or very costlyAlternate routings are not available or very costly There is a proprietary or sole –source operation or There is a proprietary or sole –source operation or

processprocess

Product Load Profiles

FamilyFamily

Critical Work CenterCritical Work Center AA BB CC DD

BlendingBlending .03.03 00 .04.04 .012.012

PressPress .08.08 00 .12.12 .022.022

FinishFinish .05.05 .055.055 .23.23 .036.036

QC TestQC Test .021.021 .02.02 .07.07 00

PackPack .015.015 .015.015 .03.03 .01.01

Special processSpecial process .076.076 .055.055 .06.06 00

Routings

OperationOperation Work centerWork center Setup hoursSetup hours Run hoursRun hours

ItemX101-EndItemX101-End ItemItem

1010 packpack 00 .01.01

2020 shipship 00 00

ItemY202-EndItemY202-End ItemItem

1010 packpack 00 .02.02

2020 shipship 00 00

Item C- SubassItem C- Subass embly(lotsizeembly(lotsize 100)100)

0505 finishfinish 44 .01.01

1010

1515

QC testQC test

Spec processSpec process

11

55

.01.01

.035.035

Cotd…

Item C - SuItem C - Su Bassembly Bassembly (Lot1100)(Lot1100)

0505 FinishFinish 44 .01.01

1010 QC TestQC Test 11 .01.01

1515 Spec proceSpec proce 55 .042.042

Item T- MaItem T- Ma nufacturingnufacturing componentcomponent (lot 500)(lot 500)

0101 WeighWeigh 1.01.0 .003.003

0202 BlendingBlending 1.51.5 .0045.0045

0303 PressPress 0.50.5 .019.019

Production Plan Summary

Product Product familyfamily

JanJan FebFeb MarchMarch AprilApril MayMay JuneJune

AA 20002000 25002500 30003000 30003000 34003400 36003600

BB 40004000 40004000 40004000 40004000 30003000 30003000

CC 700700 700700 700700 800800 10001000 10001000

DD 80008000 80008000 95009500 95009500 98009800 10,00010,000

Resource Requirements Plan

FamilyFamily MarchMarch

CriticalCritical PP3000PP3000 PP4000PP4000 PP700PP700 PP9500PP9500 RequiredRequired DemonstrDemonstratedated

Work Work CenterCenter

AA BB CC DD

BlendingBlending 9090 00 2828 114114 232232 245245

PressPress 240240 00 8484 209209 533533 450450

FinishFinish 150150 220220 161161 342342 873873 750750

QC TestQC Test 6363 8080 4949 00 192192 200200

PackPack 4545 6060 2121 9595 221221 335335

Special Special ProcessProcess

228228 220220 4242 00 490490 350350

End Item Load ProfilesEndEnd ItemsItems

Critical Work Critical Work CenterCenter

X101X101 Y202Y202 M405M405 N225N225 O807O807 N748N748

BlendingBlending .03.03 .03.03 00 00 00 00

PressPress .08.08 .08.08 00 00 00 00

FinishFinish .05.05 .05.05 .035.035 .075.075 .08.08 .03.03

QC TestQC Test .022.022 .02.02 .02.02 .015.015 .025.025 .02.02

PackPack .01.01 .02.02 .01.01 .01.01 .03.03 .01.01

Special ProcessSpecial Process .059.059 .092.092 .065.065 .03.03 .055.055 .070.070

Resource Requirements PlanEndEnd ItemsItems EndEnd ItemsItems

CriticalCritical PPPP

15001500

PPPP

15001500

Total Total ReqdReqd

PPPP

10001000

PPPP

10001000

PPPP

10001000

PPPP

10001000

Total Total ReqdReqd

WorkWork

CenterCenter

X101X101 Y202Y202 Family Family AA

M405M405 N225N225 O807O807 N478N478 Family Family BB

BlendingBlending 4545 4545 9090 00 00 00 00 00

PressPress 120120 120120 240240 00 00 00 00 00

FinishFinish 7575 7575 150150 3535 7575 8080 3030 220220

QC TestQC Test 3333 3030 6363 2020 1515 2525 2020 8080

PackPack 1515 3030 4545 1010 1010 3030 1010 6060

Special Special ProcessProcess

8989 139139 228228 6565 3030 5555 7070 220220

Master Schedule: Part No.R123, Safety Stock:1400, Lead Time:2 Weeks, Time Fence: 8 Weeks, Name: Master Scheduled End Items, On Hand:2900, Lot Size:4000, Family: D.

1/71/7 1/141/14 1/211/21 1/281/28 2/42/4 2/112/11 2/182/18 2/252/25

ForecastForecast 00 700700 11001100 11001100 11001100 11001100 11001100 11001100

Customer Customer OrderOrder

15001500

AvailableAvailable 14001400 47004700 36003600 25002500 14001400 43004300 32003200 21002100

MPSMPS 40004000

A-T-PA-T-P 14001400 54005400 54005400 54005400 54005400 94009400 94009400 94009400

Contd…

MPSMPS ORDERORDERSS

DEMANDEMANDD

DateDate QuantityQuantity OrderOrder TypeType DateDate QuantityQuantity CustomerCustomer Order Order NumberNumber

1/141/14 40004000 M1001M1001 RelRel Week Week 11

15001500 C1001C1001

2/112/11 40004000 M5009M5009 FPOFPO

3/183/18 40004000 M9009M9009 PlanPlan

4/154/15 40004000 M9177M9177 PlanPlan

Master Schedule Summary,Product Family DItemItem JanuaryJanuary FebruaryFebruary MarchMarch AprilApril

R123R123 40004000 40004000 40004000 40004000

T456T456 15001500 00 15001500 00

S884S884 16001600 16001600 32003200 32003200

T773T773 30003000 25002500 500500 25002500

Total MPSTotal MPS 10,10010,100 81008100 92009200 97009700

Production Production PlanPlan

80008000 80008000 95009500 95009500

% Monthly % Monthly DifferenceDifference

+26.2%+26.2% +1.2 %+1.2 % -3.1%-3.1% +2.1%+2.1%

Master Schedule Summary. Product Family Airflow

ItemItem 3/183/18 3/253/25 4/14/1 4/84/8 4/154/15 4/224/22 4/294/29 5/65/6

459C459C 00 1919 1010 1010 3030 1010 1010 00

656B656B 6060 121121 114114 9595 7070 5858 00 00

535C535C 5050 1010 2626 3030 2020 00 2020 00

133A133A 5050 1010 1010 2525 00 00 00 00

Total MPSTotal MPS 160160 160160 160160 160160 120120 6868 3030 00

Production Production PlanPlan

160160 160160 160160 160160 160160 160160 160160 180180

Airflow Airflow Family ATPFamily ATP

00 00 00 00 4040 9292 130130 180180

Shop Order Scheduling- Item No.:8490,Order No.: M7757, Order Quantity:3000, Order Due Date: 6/15/9X, Order start date:5/10/9X

OperatorOperator Work Work CenterCenter

Move&QMove&Queue, ueue, Standard Standard HoursHours

Setup&RuSetup&Run,Standarn,Standard Hoursd Hours

Daily Daily DemonstrDemonstrated ated Capacity, Capacity, Standard Standard HoursHours

Schedule Schedule Start DateStart Date

Schedule Schedule due datedue date

1010 WeighWeigh 88 88 88 5/11/9X5/11/9X 5/12/9X5/12/9X

2020 CompoundCompound 1212 2424 1212 5/13/9X5/13/9X 5/17/9X5/17/9X

3030 Tablet Tablet presspress

88 88 44 5/19/9X5/19/9X 5/23/9X5/23/9X

4040 CoatingCoating 88 1616 88 5/24/9X5/24/9X 5/26/9X5/26/9X

5050 QC lab 1QC lab 1 4848 1212 66 6/8/9X6/8/9X 6/10/9X6/10/9X

6060 QA releaseQA release 1212 66 66 6/14/9X6/14/9X 6/15/9X6/15/9X

CRP Details, Work Center, Coating Department 10

WeekWeek HoursHours Part No.Part No. Order No.Order No. TypeType

5/205/20 16.916.9 10011001 M1011M1011 RR

5/205/20 16.816.8 81628162 M4234M4234 RR

5/205/20 11.311.3 21522152 M6185M6185 RR

5/205/20 19.219.2 38943894 M5344M5344 RR

5/205/20 14.614.6 98339833 M7150M7150 RR

5/205/20 16.016.0 84908490 M7757M7757 RR

5/205/20 23.123.1 12951295 M2120M2120 PP

5/205/20 14.714.7 14431443 M2875M2875 PP

5/205/20 8.58.5 60106010 M7271M7271 PP

Critical Data Elements to Support Capacity Requirements Planning Complete and accurate routingsComplete and accurate routings Good work center definitionsGood work center definitions Accurate move, queue,setup, and run timesAccurate move, queue,setup, and run times Good shop schedulingGood shop scheduling Accurate demonstrated capacitiesAccurate demonstrated capacities Timely and accurate shop reportingTimely and accurate shop reporting

Capacity Requirements PlanWeekWeek Rel.Hrs.Rel.Hrs. Pld. Hrs.Pld. Hrs. Tot. HrsTot. Hrs Pld.Cap.Pld.Cap. % Cap.% Cap.Past duePast due 8888 2121 109109

06/0606/06 182182 3838 220220 204204 161161

06/1306/13 165165 5454 219219 204204 107107

06/2006/20 120120 6868 188188 204204 9292

06/2706/27 6666 9797 163163 204204 8080

07/507/5 8686 111111 197197 204204 9797

07/1107/11 4242 102102 144144 204204 7171

07/1807/18 2727 133133 160160 204204 7878

07/2507/25 1818 179179 197197 204204 9797

08/0108/01 2222 204204 226226 204204 111111

08/0808/08 55 135135 140140 204204 6969

08/1508/15 00 148148 148148 204204 7373

08/2208/22 1414 290290 304304 204204 149149

08/2908/29 00 194194 194194 204204 9595

Capacity Simulation

Once a capacity plan is approved and Once a capacity plan is approved and implemented, it can often change. implemented, it can often change. Manufacturing may not always perform as Manufacturing may not always perform as scheduled, or the requirement can change. scheduled, or the requirement can change. There is a need to regenerate capacity plans There is a need to regenerate capacity plans on a regular basis. Manually this becomes on a regular basis. Manually this becomes impossible.impossible.

Finite Capacity Planning

Finite capacity planning is a method of planning capacity Finite capacity planning is a method of planning capacity that assumes capacity is fixed. that assumes capacity is fixed.

Horizon-Finite capacity planning is limited to shorter time Horizon-Finite capacity planning is limited to shorter time frames than resources requirements planning.Adding frames than resources requirements planning.Adding equipment, expanding a plant, or adding a new facility are equipment, expanding a plant, or adding a new facility are long term capacity decisions.In short term the long term capacity decisions.In short term the demonstrated capacity is nearer to the maximum demonstrated capacity is nearer to the maximum capacity , no action is needed for capacity action.capacity , no action is needed for capacity action.

Loading capacity finitely is more problematic.Forward Loading capacity finitely is more problematic.Forward scheduling is used in finite capacity planning. First to load scheduling is used in finite capacity planning. First to load method is adoptedmethod is adopted

Input – Output Control

It is used for capacity control where planned and It is used for capacity control where planned and actual inputs and planned and actual outputs of a actual inputs and planned and actual outputs of a work center are monitored.It is a measure of work work center are monitored.It is a measure of work center performance.center performance.

It is a short term capacity planning tool usually It is a short term capacity planning tool usually covering 6 to 8 weeks of the planning horizoncovering 6 to 8 weeks of the planning horizon

Data required is planned input , actual input and Data required is planned input , actual input and deviationdeviation

Capacity Simulation Implementation Issues

Defining where and when to use the toolDefining where and when to use the tool Identifying and collecting accurate dataIdentifying and collecting accurate data Developing interfaces for downloading and uploading information to other Developing interfaces for downloading and uploading information to other

systemssystems Determining whether to maintain two sets of data in both the MRPII and in the Determining whether to maintain two sets of data in both the MRPII and in the

capacity simulatorcapacity simulator Defining how often you need to regulate capacity plansDefining how often you need to regulate capacity plans Determine how to integrate it with MRPII and effectively communicate the new Determine how to integrate it with MRPII and effectively communicate the new

plan to manufacturing and purchasingplan to manufacturing and purchasing Specifying to what degree you can afford change and effectively manage it Specifying to what degree you can afford change and effectively manage it Defining hardware requirements Defining hardware requirements Selecting the capacity simulation softwareSelecting the capacity simulation software Developing education and training requirementsDeveloping education and training requirements Identifying the policies and procedures for operating and maintaining the system Identifying the policies and procedures for operating and maintaining the system Justifying how the system will pay for itselfJustifying how the system will pay for itself

Capacity Strategies Reserving capacity for a particular purpose or for a orderReserving capacity for a particular purpose or for a order Load levelingLoad leveling Rate-based planning-It is simply converting the Rate-based planning-It is simply converting the

requirements to an equivalent unit of measure that is requirements to an equivalent unit of measure that is accurate and fitting for the work centeraccurate and fitting for the work center

Capacity planning forum should meet regularly.Capacity planning forum should meet regularly. Long term capacity actions are made to assure that the Long term capacity actions are made to assure that the

resources are available to meet the planresources are available to meet the plan Maser schedulers review the current master schedules to Maser schedulers review the current master schedules to

assure that they are in line with production plan. Master assure that they are in line with production plan. Master schedule summary provides this informationschedule summary provides this information

CRP and input out controls are reviewed weekly and CRP and input out controls are reviewed weekly and actions taken by concerned manager on capacity actionsactions taken by concerned manager on capacity actions

Policies Procedures and Performance Measures

The goal of capacity planning The goal of capacity planning How to measure and maintain demonstrated capacity How to measure and maintain demonstrated capacity The predictable capacity actions that can be taken The The predictable capacity actions that can be taken The

time horizon of each of the capacitytime horizon of each of the capacity The frequency of each of the capacity planning meetingsThe frequency of each of the capacity planning meetings The attendees at each meetingsThe attendees at each meetings The responsibility for the accuracy of the capacity The responsibility for the accuracy of the capacity

information information The documentation and follow-up process to assure that The documentation and follow-up process to assure that

capacity planning is working effectivelycapacity planning is working effectively A good set of capacity performance measuresA good set of capacity performance measures

Performance Measures

No critical work center’s required varies from its planned No critical work center’s required varies from its planned capacity by more than plus or minus 10 percent on a capacity by more than plus or minus 10 percent on a monthly basismonthly basis

The MPS summary report shows the master schedules are The MPS summary report shows the master schedules are within plus or minus 7 % of the production plan for each within plus or minus 7 % of the production plan for each familyfamily

The CRP reports show no work center with past due The CRP reports show no work center with past due requirements greater than 1 week’s worth of demonstrated requirements greater than 1 week’s worth of demonstrated capacitycapacity

The CRP reports show no work center with overstated The CRP reports show no work center with overstated requirements over a period of 4 weeks or morerequirements over a period of 4 weeks or more

Input-output reports show less than 5 % of all work centers Input-output reports show less than 5 % of all work centers out of tolerance each week. out of tolerance each week.

Trading Partner

Trading Partner

Trading Partner

Collaborate

SUPPLIERS

CPFR

EDI

Internet

Promotions

Forecasts

Item Catalog

Orders

GenerateDemand

Determine

Reqts

Make toDemand

APS

CRM

ERP

CPFR Unplanned and uncoordinated events that distort smooth flow of Unplanned and uncoordinated events that distort smooth flow of

product through supply chainproduct through supply chain Channel participants fail to coordinate their individual forecasts of Channel participants fail to coordinate their individual forecasts of

final consumer demand and marketing events designed to stimulate final consumer demand and marketing events designed to stimulate demanddemand

Joint planning and information sharing would increase the likely Joint planning and information sharing would increase the likely hood of a successful relationshipshood of a successful relationships

CPFR is a process initiated by the consumer products industry to CPFR is a process initiated by the consumer products industry to achieve such a coordinationachieve such a coordination

It does not replace automatic replenishment strategies but It does not replace automatic replenishment strategies but supplements them by a cooperative processsupplements them by a cooperative process

CPFR coordinates the requirement plan for the demand creation and CPFR coordinates the requirement plan for the demand creation and demand fulfillment activitiesdemand fulfillment activities

In CPFR collaboratively developed information is used jointly and In CPFR collaboratively developed information is used jointly and iteratively by planners to generate demand, and match production to iteratively by planners to generate demand, and match production to demanddemand

CPFR

In this process joint business planning by retailer, supplier In this process joint business planning by retailer, supplier share , discuss, coordinate and rationalize their own share , discuss, coordinate and rationalize their own individual strategies to create a partnership strategyindividual strategies to create a partnership strategy

Joint plan offers common plan for promotion,sle of Joint plan offers common plan for promotion,sle of merchandisemerchandise

Joint calender is created to share information on a product Joint calender is created to share information on a product flowflow

Common sales forecast is created and shared among Common sales forecast is created and shared among membersmembers

Using consensus forecast, production, replenishment, and Using consensus forecast, production, replenishment, and shipment plans are developedshipment plans are developed

Such a close working arrangement reduces cost of doing Such a close working arrangement reduces cost of doing business for all channel mmbersbusiness for all channel mmbers