Session 6 - Detailed Capacity Planning
6.1 Influences on detailed capacity planning:
6.1.1 Attributes (output):
- It is the most detailed level in the capacity planing process.
- It determines capacity requirements when material is planned first
- It determines capacity requirements when material is planned first
-It determines Resource utilization when capacity is planned first
-It prepares the operating plan for execution
6.1.2 Major influences:
-Flexibility of capacity and scheduling
-Planning of material or capacity first
-Manufacturing environments
-Flexibility of capacity and scheduling
together with CRP method it is to considered other methods for the detailed capacity planning based on the trade-off bw capacity and scheduling (or due date) flexibility:
a. flexibility of capacity = Infinite loading techniques, material-dominated scheduling, plan material first.
The scenario of "Flexibility of Capacity but not Scheduling" applies to make-to-order production in an intermittent (or job shop) environment, where the preferred detailed capacity planning method would be CRP.
b. flexibility of order due date = finite loading techniques, processor-dominated scheduling, plan capacity first.
-Flexibility of capacity and scheduling
together with CRP method it is to considered other methods for the detailed capacity planning based on the trade-off bw capacity and scheduling (or due date) flexibility:
a. flexibility of capacity = Infinite loading techniques, material-dominated scheduling, plan material first.
The scenario of "Flexibility of Capacity but not Scheduling" applies to make-to-order production in an intermittent (or job shop) environment, where the preferred detailed capacity planning method would be CRP.
b. flexibility of order due date = finite loading techniques, processor-dominated scheduling, plan capacity first.
The scenario of "Flexibility in Scheduling but not Capacity" applies to process flow manufacturing where process flow scheduling would be the capacity planning approach. It also might apply to high-volume repetitive production.
-Planning of material or capacity first
In the manufacturing planning and control system, detailed material planning and detailed capacity planning normally are called MRP and CRP. The system assumes that the material-oriented priority plan, consisting of due dates for quantities of material, must be validated by CRP to ensure resources are available to achieve the priority plan.
companies might need to plan capacity first. for instance, in a process flow or high volume repetitive assembly line environment, capacity is expensive and fixed. managers need to check production from the capacity plan to verify it is consistent with expected demand and inventory investment policy. the expected production from the capacity plan will drive the sales and operations or production plan, ultimately affecting the material requirements plan.
-Manufacturing environments
From High Variety and Low Volume to Low Variety and High Volume:
-Planning of material or capacity first
In the manufacturing planning and control system, detailed material planning and detailed capacity planning normally are called MRP and CRP. The system assumes that the material-oriented priority plan, consisting of due dates for quantities of material, must be validated by CRP to ensure resources are available to achieve the priority plan.
companies might need to plan capacity first. for instance, in a process flow or high volume repetitive assembly line environment, capacity is expensive and fixed. managers need to check production from the capacity plan to verify it is consistent with expected demand and inventory investment policy. the expected production from the capacity plan will drive the sales and operations or production plan, ultimately affecting the material requirements plan.
-Manufacturing environments
From High Variety and Low Volume to Low Variety and High Volume:
Project Manufacturing
One-of-a-kind production is used for large, often unique items or structures that require a custom design capability.
One-of-a-kind production is used for large, often unique items or structures that require a custom design capability.
Project routings have networks of activities instead of simple operation sequences.
Appropriate scheduling techniques that may be used are, in order of sophistication, critical
path method, program evaluation and review technique, and critical chain method.
Detailed capacity planning typically involves allocating resources within project activities and across projects.
Intermittent Manufacturing-Job shop
Functional organization of a typical intermittent production plant or job shop
Production operations are designed to handle a wide range of product designs and are performed at fixed plant locations using general-purpose equipment
the bottleneck work center may vary based on product mix and volume
Detailed capacity planning in this environment must provide a basis for deploying workers, managing queues, and producing dispatch lists at the various work centers.
Bottleneck work centers must be identified and managed.
Detailed capacity planning, beginning with infinite loading, is the most applicable technique, this specific technique is called CRP.
Functional organization of a typical intermittent production plant or job shop
Production operations are designed to handle a wide range of product designs and are performed at fixed plant locations using general-purpose equipment
the bottleneck work center may vary based on product mix and volume
Detailed capacity planning in this environment must provide a basis for deploying workers, managing queues, and producing dispatch lists at the various work centers.
Bottleneck work centers must be identified and managed.
Detailed capacity planning, beginning with infinite loading, is the most applicable technique, this specific technique is called CRP.
Batch Production
Batch production is used for production of items with similar designs
Detailed capacity planning approach is similar to job shops
Lot sizing is an additional factor that determines bottleneck location
Batch production is used for production of items with similar designs
Detailed capacity planning approach is similar to job shops
Lot sizing is an additional factor that determines bottleneck location
Repetitive Manufacturing (Mass production and mass customization)
Continuous Production
Line production with continuous material flow
Process flow scheduling
Localized use of lean
MRP/CRP, and other scheduling methods within the total process
Line production with continuous material flow
Process flow scheduling
Localized use of lean
MRP/CRP, and other scheduling methods within the total process
Remanufacturing
Returns products to like-new condition
Most often is a job shop process
MRP/CRP is used to plan materials and equipment usage
Occurrence factor
RCCP Planning)
Returns products to like-new condition
Most often is a job shop process
MRP/CRP is used to plan materials and equipment usage
Occurrence factor
RCCP Planning)
6.1.3 Capacity-related terminology and concepts:
- Capacity and load definitions and balance bw them:
CAPACITY—1) The capability of a system to perform its expected function; 2) The capability of a worker, machine, work center, plant, or organization to produce output per time period.
LOAD—The amount of planned work scheduled for and actual work released to a facility, work center, or operation for a specific span of time. (Note: Both released and planned components of load can be distinguished)
-Capacity planning and capacity mngmnt definitions:
CAPACITY PLANNING—The process of determining the amount of capacity required to produce in the future. (Note: This is achieved by comparing capacity and load repeatedly into the future)
CAPACITY MANAGEMENT—The function of establishing, measuring, monitoring, and adjusting limits or levels of capacity in order to execute all manufacturing schedules. (Note: Where capacity is flexible, the aim is to provide the required capacity in a timely and cost-effective manner)
- Capacity planning issue:
What capacities must be available in order to execute the master plan?
What capacities must be available in order to execute the master plan?
Where and when must we organize special shifts, overtime, reduced hours, or part-time work?
What jobs must be given to or taken from subcontractors, due to overload or underload?
When and where can adjustments be made to capacity or orders? For example, what shifts can be transferred from one shop, production line, office group, or team to another?
Can lead times and the number of orders in process be reduced?
- Capacity planning objectives (similar to those of materials planning):
High service level, short delivery times, high delivery reliability, and adaptation to customer requests
Low working capital
Efficient use of available capacityFlexibility and adaptability of capacity to changing conditions
Minimizing fixed costs.
6.1.4 CRP
it must deal with work centers in time buckets of 1 week or less (very short horizon (< 90 days))
Major activities involved:
a. Determine capacity requirements
b. Simulate the scheduling of production as necessary based on priority plan due dates and qty
c. Create the load-capacity profile
d. Identify and resolve differences
e. Prepare the operating plan for execution
The above process (CRP) prepares the detailed operating plan for execution by production activity
The above process (CRP) prepares the detailed operating plan for execution by production activity
control.
6.2 Information used in detailed capacity planning
6.2.1 Capacity-related data:
-Work center data
-Shop calendar
-Work cell
-Manufacturing order
-Operation
6.2.2 Lead Time concepts (2 types):
a. Lead time
b. Manufacturing lead time
elements of manufacturing lead time: Queue / set up time / run time / wait time / move time / order preparation lead time
-operation (set up + run) vs interoperation time (queue + wait + move)
6.2.3 Utilization (%) and Efficiency (%)
U = (hrs available - hrs down ) / hrs available x 100
Hours actually worked for a work center = U x available time = U x T
E = std hrs produced / actual hrs worked = actual units produced / std rate of expected production
T = Available time (capacity) = (# shifts) x (# hrs a day) x (# machines) x (# days a week)
Rated capacity (RC) = T x U x E = std hrs
Where std hrs = set up time + (run time x # pieces)
T = std hrs / U x E = RC / U x E
RC can be calculated from utilization, efficiency, and std hrs of work produced data maintained in production records.
RC is the expected output capability of a resource.
Demonstrated capacity (DC) = (average number of items) x (std hrs per item)
DC depends on the utilization and efficiency of a work center but these factors are not included in the calculation of DC as they are in the calculation of rated capacity.
6.2.4 load-related data and sources of load:
a. Load related data:
-Std time
-Routing data
b. Source of load: open orders - scheduled receipts / MRP-planned orders / rework / scrap / process yield / past due orders / eng-related downtime for testing / prototypes, sales samples / destructive tests / plant maintenance orders
NB. Load is planned differently in a repetitive environment. Instead of calculating the load with capacity planning techniques, managers use line balancing after considering the flexibility of capacity!
6.3 detailed capacity planning techniques
6.3.1 System design specs:
-Queue:
a. Primary goal is to compare the capacity of work centers with their planned load, distributed by time period.
NB. In a job shop environment, for utilization to approach 100%, queue time needs to be high!
b. Organizational and economic reasons for queues:
Organizational Queue = Cushion vs potential disturbances in the production process
Economic queue is intended to reduce production costs.
-Infinite and finite loading:
a. Infinite loading primary goal is to meet due dates with high flexibility in capacity. It is typical in MTO production in a job shop manufacturing process where priority is given to due dates, as when material is planned first.
CRP uses infinite loading in conjunction with backward scheduling of operations.
The lean/JIT Kanban system is a variation of the infinite loading technique (execution control by the Kanban system).
Work center load profile
Load leveling
b. Finite loading primary goal is to prevent overloads by changing order start and due dates. The schedule must be highly flexible for finite loading to work.
It is used if capacity is expensive, inflexible, specialized and/or heavily utilized.
The scheduling goal is to achieve high utilization of the resource.
It is appropriate in the process industry, which has a continuous-flow production environment.
The load profile for a finite scheduled productive resource is represented by a Gantt chart.
c. Simulation and modeling techniques
To evaluate capacity, planners must determine the time-phased load the material plan places on resources: the scheduling techniques determine the load on resources (work center).
In capacity planning, scheduling techniques are used in a simulation or modeling mode. During production activity control, the same techniques create actual production schedules.
First step in forward and backward scheduling is to build a Schedule of operations for a manufacturing order by calculating the manufacturing lead time as it follows:
-Calculate the Duration of all operations (set up and run time)
-Interoperation time (lead time for queue, wait, and move bw work centers found in the work center file)
-Forward and backward scheduling
>Forward begins with the order start date:
The scheduler calculates the earliest start date and the earliest due date for each operation.
>Backward responds to an order due date, which is the latest completion date for the order:
The scheduler calculates the latest due date and the latest start date for each operation, as well as the latest start date for the order:
-From finish date reduce operation + queue time to get arrival date
-From arrival date reduce move + wait time to get finish date previous operation
CRP most often uses backward scheduling.
>Central point scheduling combines forward and backward scheduling
Session 7 - Detailed Capacity Mngmnt
7.1 Capacity Requirements Planning (CRP)
7.1.1 introduction
7.1.2 Phases of the CRP process:
a. role of the simulation scheduling in determining work center load profiles
b. purpose of the work center load report
c. five actions that can be taken to redistribute load during CRP
d. when it is appropriate to change the MPS to resolve load-capacity imbalances.
7.1.1 introduction of CRP
Capacity management is:
- the function of establishing, measuring, monitoring, and adjusting limits of levels of capacity, in order to execute all manufacturing schedules (APICS)
- a business process that includes the following:
Capacity planning:
Capacity control:
CRP Characteristics and goals:
a. It has a proven track record in Job Shop and batch production.
b. "Plan material first" approach to capacity planning
c. Due dates are of high priority and not as flexible as capacity
d. Capacity is flexible and accomodates due date priorities
e. Capacity is infinite.
f. The capacity planning process validates the material plan.
g. The goal of the process is to achieve high levels of delivery reliability and adherence to MRP due dates.
7.1.2 CRP process steps:
a. Determine the load on resources over a period of time: UoM in hrs.
b. Using backward scheduling, simulate the scheduling of load at work centers by period, assuming infinite capacity: result is a period-by-period summary of load and capacity requirements for planned order releases at specific work centers (input to create next step).
c. Create work center load-capacity profiles on a period-by-period basis to compare load and available resources.
d. 5 actions to Resolve load-capacity imbalances in CRP: increase capacity, reduce load and capacity, increase load, redistribute load
e. Prepare the operating plan for execution
f. Revise the MPS if imbalances cannot be resolved.
Advantages and limitations of CRP
Resource contention and CRP
Secondary constraints and CRP
CRP integration issues:
- interactions with master scheduling
- interactions with execution and control of operations
7.2 Capacity management in Process Industry (continuous flow)
Process industries: the group of manufacturers that produce products by mixing, separating, forming, and/or by performing chemical reactions (APICS dic)
7.2.1 Key process industry characteristics: Divergent product structure def. / capacity first / continuous flow
Definitions:
-Divergent product structure: a single raw material can be transformed into a large number of different products in contrast with what happens in a job shop or batch production (for discrete products) environment where many raw materials are brought together in an assembly process to produce discrete products singly or in batches.
-Capacity First: process industries are more focused on planning capacity first. The efficiency and effectiveness of planning the use of capital-intensive capacity, including long runs and high utilization, is the key to adding value in process industries.
-Continous flow production: a production system in which the productive equipment is organised and sequenced according to the steps involved to produce the product (APICS dic).
7.2.2 Process flow scheduling (suitable for continuous production and capital-intensive repetitive production):
Applicable in these conditions:
>All the products have similar routings
>Production is often scheduled to meet forecast demands rather than customer orders; most process plants produce intermediate and/or finished goods for stock.
>Production is authorized by production schedules, not work orders.
Basic features:
>The system is based on the production process structure instead of a materials product structure (based on the BOM), as in job shop and batch production.
>the process structure consists of divisions, plants, process trains, and stages, and this structure drives planning and scheduling.
- Process train
>Production lines in plants
>IDEALLY a process train would be a one-stage process in which materials flow continuously from raw material stage to final product. Supports continuous flow within one stage.
>In REALITY, process trains are divided into stages consisting of one or more process units (pieces of equipment).
>Stages are decoupled (with intermediate inventory) from other stages.
>decoupling allows the stages to be scheduled as separate entities, with different lot sizes and production sequences, and to be run independently and more efficiently. Stage by stage scheduling.
>the formal process train representation:
Illustrates generalised definition of resources
Illustrates divergent product structure
Supports stage-by-stage scheduling
Supports continuous flow within a stage.
- 3 process flow scheduling Principles in Process industry:
1. Scheduling calculations are guided by the process structure
2. Stages are scheduled using either of these processes:
Processor-dominated scheduling:
Steps are:
a. Prepare a finite capacity schedule for the processor.
b. Calculate the resulting product or intermediate inventory projection to validate that it remains within the target minimum and maximum inventory levels.
c. Calculate a raw material supply schedule; check that supply is feasible for the required materials inventory.
Material-dominated scheduling:
Steps are:
a. Prepare a material schedule for the product that balances inventory policy and demand (requirements).
b. Check that the processor requirements can be accommodated in a finite schedule.
c. Calculate a raw material supply schedule and check that supply is feasible for the required materials.
Processor-dominated vs material-dominated scheduling:
Capacity is expensive vs materials are expensive
Stage is a bottleneck vs excess capacity exists
Setup costs are high vs setup costs are not significant
0 vs Stage consists of some job shop operations
3. The stages in the process train can be independently scheduled (w intermediate decoupling inventory) using 3 techniques:
a. Reverse flow scheduling: supports demand-based planning (material-dominated scheduling)
b. Forward flow scheduling: supports supply-constrained planning, such as the growing and harvest cycle in the food industry (processor-dominated scheduling)
c. Mixed flow scheduling: supports planning when stage 2 is the logical focus of attention for scheduling because of processing capacity or material supply constraints.
Remarks:
Stages can be scheduled differently within the same process train depending on order fulfilment strategy and processing constraints. Material and capacity are generally reconciled at each stage before the next stage is scheduled.
In process flow scheduling, process trains are scheduled using reverse-flow scheduling, forward scheduling, or mixed-flow scheduling. It means that an intermediate stage is scheduled first when the main bottleneck moves to a processor in that stage.
7.2.3 Three Other key concepts: batch processes / line production / packaging
7.3 Other capacity mngmnt approaches
7.3.1 Line balancing in repetitive man: balances the assignment of tasks to minimize workstations and idle time. It is most appropriate in repetitive man env that repeatedly produces the same discrete product or family of products.
7.3.2 Capacity mngmnt in service industries
Determining capacity: services need to choose their capacity measurement carefully when determine their capacity requirements.
Capacity management strategies:
Operation managers can increase or decrease service capacity by doing the following strategies:
-Changing the level of the workforce
-Cross-training employees
-Hiring part-time workers
-Increasing customer participation
-Renting equipment
-Expanding/renovating facilities
-Employing automation
-Extending service hours
-Better scheduling tools and practices
Capacity management
Resource planning, RCCP, and CRP are all used in aggregate and disaggregate level planning in service industries.
Role of the queue in service lead time.
7.3.3 performance measurements
a. Efficiency and Utilization: both are critical to the determination of available capacity, such as rated capacity (=TxExU)
b. Performance to schedule:
-It measures the readiness for and impact of reducing inventory buffers from the shop floor.
-To drive toward a low inventory environment, operations need to be able to reduce their reliance on decoupling.
-Must replace Efficiency as the crucial performance measure.
c. Zero defects:
-Time and capacity spent producing defects are waste; capacity is effectively reduced.
-Time wasted at bottlenecks is especially costly and needs to be avoided, as in theory of constraints.
d. Dollar days = value of a good x days until expected sale:
It treats inventory as a cost for management accounting purposes.
It encourages plants to write off obsolete inventory and highlights problem areas.
It is an incentive to use JIT purchasing.
It penalizes manufacturers for making items early.
It forces management to speed throughput, reduce lead times, and increase responsiveness to customer demand.
e. Stability of schedule:
The following actions could lead to more schedule stability:
-Good capacity management is reflected in a stable production schedule.
-Frequent changes disrupt shop floor coordination.
-Reducing LT lessens the opportunity for the schedule to be disrupted.
-Closer collaboration with marketing and sales, including holding product and sales managers partly accountable for dollar days.
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