MS 401 Production and Service Systems Operations Spring 2009-2010

1. MS 401 Production and Service Systems Operations Spring 2009-2010 Capacity Planning Slide Set #12

2. 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

3. Capacity Planning Hierarchy in MPC

4. 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

5. 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

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

7. 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

8. Capacity Planning Using Overall Factors (CPOF)

9. 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:

10. Capacity Bills

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

12. 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

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

14. Resource Profiles

15. 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

16. 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

17. 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

18. 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

19. 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