Basic Capacity Definitions

 Capacity Required – capacity needed to produce a desired output in a

given time period
 Capacity Planning – determining the resources and methods needed to
meet the priority plan
 Capacity Control – monitoring production, comparing with the capacity
plan, and taking appropriate corrective actions
 Capacity Management – determining capacity needed as well as
providing, monitoring, and controlling the capacity
 Capacity Planning Levels

 Resource Planning – Long range resource requirements linked to the

production plan
 Rough-cut Capacity Planning – Used to check feasibility of MPS
 Capacity Requirements Planning – Detailed work center capacity plans
linked to MRP
Capacity Planning Levels

Figure 5.2 Planning levels

 Capacity Requirements Planning
Inputs

 Open Order File – found as scheduled receipts on MRP

 Planned order releases from MRP – Potential future orders
 Work Center file
 Information on capacity in the work center
 Move, wait, and queue time information
 Capacity Requirements Planning
Inputs - Continued

 Routing file – the path that the work will follow

 Operations to be performed
 Operation sequence
 Work centers used
 Potential alternative work centers
 Tooling needed
 Standard setup times and run times
Sample Routing File

Figure 5.3 Routing file

 Capacity Available

 Impacted by:
 Product specification
 Product mix
 Methods used to make product
 Pace of work
 Finding Capacity Available

 Rated Capacity = (available time) x (utilization) x (efficiency)

 Available time – number of hours a work center can be used
 Utilization = [(hours worked)/(available hours)] x 100%
 Efficiency = [(actual production rate)/(standard production rate)] x 100%
Capacity Load – Sum of all time required for orders on a work center
Example

Figure 5.5 Work center load report

 Scheduling Orders

 Back scheduling (the typical approach) – Start with the due date, use
lead time to find the proper start date for each operation
 Forward scheduling – Launch the order into the first (gateway) work
center, then use the lead times to find when the order will be completed
at each work center
 Managing the Plan – Adjusting Capacity

 Use Overtime or Undertime

 Adjust the number of workers
 Shift workers from other work centers
 Use alternative work centers to shift load
 Subcontract work
 Production Activity Control
 Responsible for executing the:
 Master Production Schedule (MPS)
 Materials Requirements Plan (MRP)

 At the same time:

 Make good use of labor, machines and materials
 Minimize work-in-process inventory
 Maintain customer service
 Production Activity Control

 Release work orders

 Control work orders to complete on time
 Control the flow of work
 Through manufacturing
 Carrying out the plan
 To completion
 Manage day-to-day activity and provide support
 Production
Planning

Master
Planning Production
Scheduling

Material
Requirements
Planning
Input/
Output
Implement
Production Control
and
Purchasing Activity
Control
Control
Operation
Figure 6.1
Sequencing
Priority planning and production activity control
 Scheduling

 To meet delivery dates

 Make the best use of resources
 Need information on:
 Routing
 Capacity
 Competing jobs
 manufacturing lead times
 Manufacturing Lead Time

 Queue - time spent waiting before operation

 Setup - time to prepare the work center
 Run - time to make the product
 Wait - time spent after the operation
 Move - transit time between work centers
 Manufacturing Lead Time
Queue Setup Run Wait
Need a lift truck here

Move

Move
Queue Setup Run Wait
 Example Problem

Work Center A operation time = 30 + (100 x 10) = 1030 minutes

Wait time = 240 minutes
Move time from A to B = 10 minutes
Work Center B operation time = 50 + (100 x 5) = 550 minutes
Wait time = 240 minutes
Move time from B to stores = 15 minutes
Total manufacturing lead time = 2085minutes

= 34 hours, 45 minutes
 Scheduling Techniques
 Forward Scheduling  Backward Scheduling
 Start when the order is
received
 May finish early
 Used to determine the
earliest completion date
 Determine promise dates
 Builds inventory
 Uses MRP logic
 Schedule last operation
to be complete on the
due date
 Schedule previous
operations back from the
last operation
 Reduces inventory
 Forward and Backward Scheduling:
Infinite Load
Order Recieved Due Date
1 2 3 4 5 6 7 8 9

Forward Scheduling
Material 1st 2nd 3rd
Ordered Operation Operation Operation

Backward Scheduling

Material 1st 2nd 3rd

Ordered Operation Operation Operation

Figire 6.4 Infinite load profile

Infinite Load Profile
Capacity Overload

Capacity

Capacity Underload
Figure 6.5 Infinite load profile
 Forward and Backward Scheduling:
Finite Load
Order Recieved Due Date
1 2 3 4 5 6 7 8 9

Forward Scheduling
Material 1st 2nd 3rd
Ordered Operation Operation Operation

Backward Scheduling

Material 1st 2nd 3rd

Ordered Operation Operation Operation

Figure 6.6 Forward and Backward scheduling: finite load

Finite Load Profile

Capacity

Smoothed Load

Figure 6.7 Finite load profile

 Example Problem
Backward Scheduling

 A company has an order for 50 brand X to be delivered on day 100

 Only one machine is available for each operation
 The factory works one 8 hour shift 5 days a week
 The parts move in one lot of 50

Part Operation Time

X A 10 5
20 3
B 10 10
A B X Assembly 5
Example Problem Answer

Part A

OP 10 OP 20
X

Part B Assembly

OP 10

85 90 95 100
Working Days
 Operation Overlapping
 The next operation is allowed to begin before the entire
lot is completed
 Reduces the manufacturing lead time
 Order is divided into at least two transfer lots

Operartion A
SU Lot 1 Lot 2
T T Transfer Time

SU Lot 1 Lot 2
Operation B
 Operation Overlapping

 Costs involved:
 Handling costs between work centers
 May increase queue and wait for other orders
 Idle time if the second batch doesn’t arrive in time
 Size of the Transfer Batch
SUA = Set up time operation A
SUB = Set up time operation B
RTA = Run time per piece operation A
RTB = Run time per piece operation B
QT = Total order size
T1 = size of the first transfer batch

T1 = QT x RTA - SUB T2 = QT - T1
RTA + RTB
 Size of the Transfer Batch

 If the second operation is slower than the first make the first transfer
batch small
 i.e. get the slower machine started early

 If the second machine is faster than the first make the first transfer batch
large
 i.e. the second machine will be able to catch up
 Example Problem
Operation A
0 30 730 1,000 (Minutes)

30 70 x 10 = 700 30 x 10 = 300

T T Transfer Time
1,010

50 70 x 5 = 350 30x5 = 150

740 790 1140 1290

Operation B
Stores 1305
 Operation Splitting

 Reduces manufacturing lead time

 The order is split into at least two lots
 Similar machines are run simultaneously

 Setup time is low compared to run time

 Operators can run more than one machine
 Operation Splitting

One Machine
SU Run

Two Machine Operation Splitting

SU Run
Reduction in
Lead Time

SU Run

Figure 6.9 Operation splitting

 Load Leveling

 Load Report
 Tells PAC the current and upcoming load on a work center
 Based on standard hours of operation for each order
 Load Report
Work Center: 10 Available Time: 120 Hours per week
Description: Lathes Efficiency: 115%
Number of Machines: 3 Utilization 80%
Rated Capacity: 110 standard hours / wk

Week 18 19 20 21 22 23 Total
Released
80 30 0 0 315
Load 105 100
60 80 130 80 350
Planned Load
Total Load 105 100 140 110 130 80 665
Rated
110 110 110 110 110 110 660
Capacity
(Over) /
Under 5 10 (30) 0 (20) 30 (5)
Capacity

Figure 6.10 Work centre load report

 Scheduling Bottlenecks

 Some workstations are overloaded and some are underloaded

 Bottlenecks
 “a facility, function, department, or resource whose capacity is equal to or less
than the demand put upon it.”
APICs Dictionary 11th Edition
 Throughput

 The total volume of product passing through a facility

 Bottlenecks control the throughput
 Work centers feeding bottlenecks will build inventory
 Work Centers fed by bottlenecks have their throughput controlled by the
bottleneck
 Example Problem - Bottlenecks

 Wagon Wheel Assembly - 1200 sets (2) per week

 Handle Assembly - 450 per week
 Final Assembly - 550 wagons per week
a. What is the capacity of the factory?
b. What limits the throughput of the factory?
c. How many wheel assemblies should be made?
d. What is the utilization of the wheel assembly?
e. What happens if utilization is 100%
 Example Problem - Bottlenecks

a. 450 units per week

b. Throughput is limited by the handle assembly operation
c. 900 wheel assemblies per week
d. Utilization of the wheel assemblies =
900 ÷ 1200 = 75%
e. Excess inventory of wheel assemblies
 Bottleneck Principles (7)
1. Utilization of a non-bottleneck resource is not determined
by its potential, but by another constraint in the system.
2. Utilization of a non-bottleneck 100% of the time does not
produce 100% utilization.
3. The capacity of the system depends on the capacity of the
bottleneck.
4. Time saved at a non-bottleneck saves the system nothing.
5. Capacity and priority must be considered together.
6. Loads can and should be split.
7. Focus should be on balancing the flow in the shop.
 Managing Bottlenecks

1. Establish a time buffer before each bottleneck.

2. Control the rate of material feeding the bottleneck.
3. Do everything to provide the bottleneck with capacity.
4. Adjust loads.
5. Change the schedule.
Back schedule before the bottleneck; forward schedule after the
bottleneck.
 Control

 Control the work going into and out of a work center: Input/output
control

 Set the priority of orders to run at each work center

 Input / Output Control
Input Rate
Control

Queue
(Load, WIP)

Output Rate
Control
Figure 6.13
Input/output control
Work Center: 201
Capacity per period: 40 standard hours

Period 1 2 3 4 5 Total
Planned Input 38 32 36 40 44 190
Actual Input 34 32 32 42 40 180
Cumulative Variance -4 -4 -8 -6 -10 -10

Planned Output 40 40 40 40 40 200

Actual Output 32 36 44 44 36 192
Cumulative Variance -8 -12 -8 -4 -8 -8

Planned Backlog 32 30 22 18 18 22
Actual Backlog 32 34 30 18 16 20

Figure 6.14 Input/output report

 Cumulative Variance

 The difference between the total planned for a given period and the
actual total for that period

 Cumulative variance
= previous cumulative variance + actual
- planned
Work Center: 201
Capacity per period: 40 standard hours

Period 1 2 3 4 5 Total
Planned Input 38 32 36 40 44 190
Actual Input 34 32 32 42 40 180
Cumulative Variance -4 -4 -8 -6 -10 -10

Planned Output 40 40 40 40 40 200

Actual Output 32 36 44 44 36 192
Cumulative Variance -8 -12 -8 -4 -8 -8

Planned Backlog 32 30 22 18 18 22
Actual Backlog 32 34 30 18 16 20

Cumulative variance week 2 = -4 + 32 -32 = -4

Figure 6.14 Input/output report
Example Problem: Input/Output
Week 1 2

Planned Input 45 40

Actual Input 42 46

Cumulative Variance

Planned Output 40 40

Actual Output 42 44

Cumulative Variance

Planned Backlog 30

Actual Backlog 30
 Operations Sequencing

 “a technique for short term planning of actual jobs to be run in each

work center based on capacities and priorities.”
APICS Dictionary 11th Edition

 Priority: The sequence in which jobs should run at a work

center
 Dispatching
 Selecting and sequencing jobs to be run at a work center
 Dispatch list
 Plant, department, work center
 Part number, shop order number, operation number and
description
 Standard hours
 Priority information
 Jobs coming to the work center
 Dispatching Rules

 FCFS - First come, first served

 EDD - Earliest job due date
 ODD - Earliest operation due date
 SPT - Shortest processing time
 CR - Critical ratio
 Critical Ratio

CR= due date - present date CR<1 Behind

lead time remaining Schedule

CR=1 On Schedule
= actual time remaining
lead time remaining CR>1 Ahead of
Schedule

CR<0 Already late

 Sequencing Rules
Process Sequencing Rule
Arrival Due Operation
Job Time
Date Date Due Date FCFS EDD ODD SPT
(days)
A 4 223 245 233 2 4 1 3
B 1 224 242 239 3 2 2 1
C 5 231 240 240 4 1 3 4
D 2 219 243 243 1 3 4 2

Figure 6.16 Application of sequencing rules

 Production Reporting

 Feedback of what is actually happening on the shop floor

 Needed for management decisions

on-hand on-order
job status shortages
scrap material shortages
 Production Activity Control Summary

 Converting MRP plans into action

 Reporting results
 Revising plans
 Need:
 detailed and current schedules and priorities
 Results:
 on-time deliveries, well utilized labor, and equipment, minimum inventory
levels