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MS 401 Production and Service Systems Operations Spring 2009-2010 Capacity Planning Slide Set #12 Murat Kaya, Sabancı Üniversitesi 1 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 Murat Kaya, Sabancı Üniversitesi 2 Capacity Planning Hierarchy in MPC Murat Kaya, Sabancı Üniversitesi 3 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 Murat Kaya, Sabancı Üniversitesi 4 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 Murat Kaya, Sabancı Üniversitesi 5 Capacity Planning and Control Techniques • Capacity planning using overall factors (CPOF) • Capacity bills MPS • Resource profiles • Capacity Requirements Planning (CRP) Murat Kaya, Sabancı Üniversitesi MRP 6 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 Murat Kaya, Sabancı Üniversitesi 7 Capacity Planning Using Overall Factors (CPOF) Murat Kaya, Sabancı Üniversitesi 8 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: Murat Kaya, Sabancı Üniversitesi 9 Capacity Bills Murat Kaya, Sabancı Üniversitesi 10 Capacity Bills • The total hours for MPS in each period is the same as the hours in CPOF • The difference is Murat Kaya, Sabancı Üniversitesi 11 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 Murat Kaya, Sabancı Üniversitesi 12 Resource Profiles • and the requirements for end product B for period 5: Murat Kaya, Sabancı Üniversitesi 13 Resource Profiles Murat Kaya, Sabancı Üniversitesi 14 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 Murat Kaya, Sabancı Üniversitesi 15 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 Murat Kaya, Sabancı Üniversitesi 16 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 • • Murat Kaya, Sabancı Üniversitesi 17 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 Murat Kaya, Sabancı Üniversitesi 18 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 Murat Kaya, Sabancı Üniversitesi 19