Capacity Planning

Capacity
Definition: The potential productive capability (output) of a plant, machine or work centre in a given period of time It is created from the availability of resources such as machines, time (labour), space and facilities that require capital investment by the firm It may be measured in units of output (no. of garments or parts) but may be expressed in terms of input (no. of hours or days)

Factors affecting Output-Capacity 1. Space utilization and limitations 2. Equipment type, configurations and uses 3. Size, skill, versatility and productivity of the labour, and 4. Product variation

Plant Capacity
Potential capacity (Maximum): Total hours available under normal conditions in a given period of time Predicted capacity: Maximum capacity adjusted for efficiency Committed Capacity: Total hours previously allocated for production during a certain time period Available Capacity: Difference between potential capacity and committed capacity Required capacity: SAHs (Standard Allowed Hours) necessary to produce a specified volume in a certain period of time Excess Capacity: Difference between potential capacity and required capacity

Stitch Taylor Unit

Stitch Taylor operates a small apparel contract sewing business that employs 10 operators who work 7 hours a day. The plant has the appropriate equipment and skills available to make the style. The plant has a committed capacity of 300 hours for the 10 day period. Style A has a production time of 5 SAMs. The order for 6000 units (500 dozs) requires 30000 SAMs or 500 SAHs. Which factors should be considered in deciding whether to accept the order?

Potential capacity for 10 days = 10 x 7 x 10 = 700 hrs Predicted capacity for 10 days = 10 x 7 x 90% x 10 = 630 hrs Required capacity for the order = 5 x 6000 = 30000 SAMs/60 = 500 SAHs Available capacity = 630 300 = 330 hrs Capacity Shortage for the New order = 170hrs

Factory capacity
500 operators working 48 hour week. Work content of 30 minutes per garment Therefore capacity of 500 x 48x 60 30 = 48000 garments per week!!!! Ok? Any problems?

Reasons for lost output

Absenteeism Poor work methods (affects performance & efficiency) Low operator performance Poor operator utilisation Style change is not itself a cause of lost output, it can cause all or some of the above!!

Definitions
On standard : that time the operator spends on measured work earning Standard Minutes. Off-standard : that time the operator spends on un-measured work or measured work that is classified as offstandard.

Definitions- Measured work

That work to which a standard measure (SMV, SAM) has been applied. Example of measured work that may be classified as off-standard. An operator may whilst learning a new operation be taken off standard for payment purposes but will still be contributing SMS as the operation they complete will have SMV applied.

Off standard time

Should be reported on Labour cost control sheet Waiting for work Machine breakdown Unmeasured work operation not yet allocated SMV. Sampling Repairs (not own) Paid average (for balancing) Under re-train Indirect work covering for supervisor Supervisor/manager should be targeted to stay within budget.

SMV / SAM?
Standard Minute Value (S.M.V.) is the time allocated through work measurement for an operation to be completed at a 100 rating. Standard Allocated (Allotted) Minute (S.A.M.) is an S.M.V. + any policy allowances added.

Definitions: Operator Performance

Primarily a measure of the effectiveness of the individual operator = SMs earned on standard x 100 Time spent on standard Sometimes referred to as Pay performance as it is usually measured within an incentive scheme.

Definitions- operator utilisation A measure of how well the supervisor manages to keep the operators on-standard = time on-standard x 100 time attended

Definitions- Efficiency
A measure of how well the section/factory is run. = SMs earned x 100 time attended A measure of both the operator and the supervisor Incorporates elements of operator performance & utilisation into the single measure.

Definitions- Absence/attendance Attendance = total operator time attended x 100 total contracted time Absence = (reverse of above)

Measures factor/section/operator
Standard hours (minutes) produced. Operator performance Operator utilisation Section efficiency Off-standard time Absence (attendance)

Measures - Examples
Section = 20 operators working 9 hour/540 minute day 2 operators are absent all day Attendance = 18 x 540 x 100 20 x 540 = 9720 = 90% or 10% absence 10800

Measures- examples
An operator attends for 540 minutes Produces 1500 pieces @ SMV of 0.30 Waits 60 minutes for work Waits 20 minutes machine breakdown

Find Operator

Performance, utilisation &

Efficiency

Measures- examples
Sms produced = 1500 x 0.30 = 450 Time on-standard = 540 (60+20) = 460 minutes Performance = 450 x 100 460 = 97.8 or 98% Operator utilisation = 460 x 100 540 = 85.2% NOT ACCEPTABLE!

Measures- examples
Efficiency = 450 x 100 540 = 83% Borderline!

Exercise- definitions
Section 1 Section 1 Operator cont. Att mins Alison 540 540 Betty 540 480 charlie 540 0 Dorothy 540 540 Ethel Freda Gail Heather Irma June totals 540 540 540 540 540 540 540 540 540 540 540 540 op production SMV OffStd Perf Uti 1. 2 3 4 3 5 6 7 3 8 8 9 1000 1120 0 950 350 1070 1250 1200 880 600 600 1275 0.37 30 0.30 0.26 0.23 0.26 75 0.45 15 0.40 30 0.21 0.26 0.85 30 0.85 45 0.38 30 Eff

Exercise- definitions
Operator contracte Attended d Alison Betty charlie Dorothy 540 540 540 540 540 480 0 540 1 2 3 4 3 Ethel Freda Gail 540 540 540 540 540 540 5 6 7 3 Heather Irma June 540 540 540 540 540 540 8 8 9 Operation production SMV 1000 1120 0 950 350 1070 1250 1200 880 600 600 1275 0.37 0.30 0.26 0.23 0.26 0.45 0.40 0.21 0.26 0.85 0.85 0.38 30 45 30 75 15 30 OffStd 30 Sms Performa Utilization Efficiency produced nce

Find Performance, Utilization, Efficiency & Attendance

Exercise- definitions
Section 1
SMV OffStd 0.37 0.30 0.26 0.23 0.26 0.45 0.40 0.21 0.26 0.85 0.85 0.38 3.22 30 Perf Uti Eff 72.5 94 68.5 70 100 70 66.5 75 15 30 91.7 98 89 100 103 95 87.6 86 57.3 Operator cont. Att op production mins Alison 540 540 1 1000 Betty 540 480 2 1120 charlie 540 0 3 0 Dorothy 540 540 4 950 3 350 Ethel 540 540 5 1070 Freda 540 540 6 1250 Gail 540 540 7 1200 3 880 Heather 540 540 8 600 Irma 540 540 8 600 June 540 540 9 1275 Totals 5400 4800

97 89.2 94 92.5 100 89 94 94.4 92 94.4 94 89.7 94.7 83

30 45 30 255

Average

Attendance Total sms earned

= 4800/5400 = 89% = 3982.30

Capacity planning
Factory Department Section Machine Skill Restricting or defining factor

Capacity planning
What is the starting point? How many garments can a section produce? How many operators/machines do we need to produce a given number of garments? Same calculation just reversed!

Information!!
Labour content (SMVs/SAMs/Std.hrs) Available operators Contracted hours Absenteeism levels Efficiency levels

Capacity planning Information Information Information Obvious but where does it come from? How accurate is it?

Work content. SAMs, SMVs

Are they accurate? (can self correct in capacity planning) What operations do they cover? What operations are unmeasured or performed by indirect operators. Be clear!

Capacity planning - people

How many garments can a given number of people produce? Number of operators SMV (Labour content) Absenteeism Efficiency/ inefficiency!

Capacity planning - people

500 direct operators working 48 hours/week S.M.V. = 25 per garment Absence level of 8% Average efficiency of 85%

1. Calculate standard hour/minutes that can be produced by operators. 2. Calculate how many garments that represents

Capacity planning - people

500 operators x 48 hours = 24000 contracted hours 24000 8% (1920 hours) absence = 22080 attended hours (absence costs 40 operators) At efficiency of 85% std. hours produced = 22080 x 85% = 18768 std hrs. 5232 hours lost to absence & inefficiency = 21.8% of original contracted hours

Capacity planning - people

18768 std hrs produced S.M.V. = 25 mins. or 0.417 std. hrs. Garment capacity = 18768 0.417 = 45007 garments.

Capacity planning
Under the same conditions how many people are needed to produced 70000 garments per week.? 70000 x 0.417 = 29190 standard hours required. Each operator will produce 39 hours @ 85% efficiency = 39 x 85% = 33.15 std. hrs/week

Capacity planning
29190 standard hours required. Each operator will produce 33.15 std. hrs/week Number of operators = 29190 33.15 = 880.54 people. + Absence of 8% = 880.54 +8%.= 951 people

Capacity planning
Capacity planning is only as accurate as the information it is based upon!

Capacity planning
Limiting factors
People X Machines? Department?

Capacity planning-machines
Auto pocket set machine S.M.V. = 0.60 Efficiency = 95% 15 machines available 8.50 hour day How many garments can they supply to sections?

Capacity planning-machines
15 machines x 8.50 hours = 127.50 hours/day. @95% efficiency std. hrs produced = 121.13 hrs SMV = 0.60 60/0.60=100 pcs per hour at std Output = 100 x 121.13 = 12113 garments

Absence ignored as decision taken to ensure absence cover (15 machines + 8* absence = 17 operators. 1 spare shared with pressing)

Capacity planning-machines
Capacity must be increased to 25000 per day. Each machine does 100 x 95% = 95 per hour. 25000/95 = 263.15 hours. In 8.5 hour day = 263.15/8.5 = 31 machines However machines cost $75000 each and have a six month delivery lead time. Try again!!!

Capacity planning-machines
Each machine will produce 95 per hour worked. 25000/95 = 263.15 hours for 1 machine 263.15 hours / 15 machines = 17.54 hrs per machine per day 2 shifts

Capacity planning
Limiting factors People X Machines X Department?

Capacity planning- Department

Cutting room using semi-auto spreading machines and computerised cutting head. SMV for spreading = 0.1584 per metre SMV for cutting = 0.050 per metre Average fabric content per gmt. = 90 cms. Standard working day= 8.50 hours (39 week) 3 spreading machines on 4 tables 1 cutting machine. Department runs at 90% efficiency and 8% absence

Capacity planning- Exercise

How many people are needed to supply the factory with 50000 garments per week? What is machine requirement for 50000 garments per week? What do you recommend if production cut to 24000 garments per week? All operators are able to use both spread and cut equipment.

Capacity planning-spreading
50000 garments x 0.90 metres = 45000 metres to be cut each week. Each metre Smv = 0.1584 therefore 45000 x 0.1584 = 0.1584 x 45000 60 = 118.80 std.hrs required @ 90% efficiency = 132 operated hours./ 3machines @ 44 hour week

Capacity planning- cutting

50000 garments x 0.90 metres = 45000 metres to be cut each week. Each metre Smv. = 0.05 therefore 45000 x 0.05 = 0.05 x 45000 60 = 37.5 std.hrs required @ 90% efficiency = 41.70 operated hours

Capacity planning cutting room

Spreading 132 hours needed over 3 machines Cutting 41.70 hours needed. Total operating hours = 173.7 Absence = 8% = 187.6 contracted hours needed = 4.8 (5) people at 39 hour week. 4 operators work 8.50 hours (when all attending). 1 operator works 2 hours early and through lunch break = 14 hour extra machine time per week. Helps on non-machine elements.

Capacity planning-spreading
24000 garments x 0.90 metres = 21600 metres to be cut each week. Each metre Smv = 0.1584 therefore = 0.1584 x 21600 60 = 57.02 std.hrs required @ 90% efficiency = 63.35 operated hours per 3machines = 21.2 hour week

Capacity planning- cutting

24000 garments x 0.90 metres = 21600 metres to be cut each week. Each metre Smv = 0.05 therefore 21600 x 0.05 = 0.05 x 21600 60 = 18.0 std.hrs required @ 90% efficiency = 20 operated hours

Capacity planning cutting room

Spreading 63.35 hours needed over 3 machines Cutting 20 hours needed. Total operating hours = 83.35 Absence = 8% = 90.85 contracted hours needed = 2.33 (3) people at 39 hour week. 2 operators to be released. Can 1 operator be redeployed for part of the day?