You are on page 1of 28


• Capacity refers to the productive capability potential ( output) of a
plant , machine or work center in a given period of time .
• Capacity is created from the availability of resources such as
machines , time , space and facilities that require capital investment
by a firm .

. • Capacity – Is the maximum amount of work that an organization is capable of completing in a given period of time . CAPACITY PLANNING • Capacity planning is the process of determining the production capacity needed by an organization to meet changing demands of its products .

Why capacity planning ? • Discrepancy between the capacity of an organization and the demands of its customers results in inefficiency either in under utilized resources or unfulfilled customers . . The goal of capacity planning is to minimize this discrepancy .

• Plan for the future . • Analyze current capacity . Steps to Capacity planning • Determine the capacity requirement . .

. How to determine capacity requirement ? • Understand the work load • Determine the unit of work • Identify service levels for each workload .

Analyze current system capacity • Measure service levels and compare to objectives . • Measure overall resource usage • Measure resource usage by workload • Identify components of response time . .

How capacity is measured ? • Units of output • In terms of input .

pcs per hour is not the correct representation of capacity . • Capacity of one sewing operator is 60 minutes per hour maximum . • But as garments do not have standardized work content . .• Capacity of a sewing line is commonly measured in terms of number of garments produced per shift . per hour or per month.

 Size . versatility and productivity of labour force . Factors affecting output capacity Variations in :  Space utilization and limitations . skill . configurations and uses .  Equipment type .  Production variation .

processing time and processing methods also impact the capacity required for a specific product. A change in one variable may also cause a change in others. . • Product variations such as types of materials.• A labour intensive style will require more time ( capacity ) to complete. material handling methods . • Output may be increased or decreased with a change in any one of these variables .

.• Plant capacity – is a projection of the total hours available for production in a given period of time for certain facility . realistically efficiency is somewhat less because of down time . • Although 100 percent efficiency may be a goal. Firms may use an efficiency factor to adjust the maximum capacity to a realistic level of potential capacity. and other demands in a work day. plant or team meetings . absenteeism .

• Maximum Capacity – Total hours available under normal conditions in a given period of time. . • Potential capacity – Maximum capacity adjusted for efficiency. • Committed capacity – Total hours previously allocated for production during a certain time period.

It is based on resources or inputs not being fully used .• Available capacity – Difference between potential capacity committed capacity for a certain time period . • Required capacity – SAHs ( standard allowed hours ) necessary to produce a specified volume of a specific style in a certain period of time . • Excess capacity is potential for increased production and expansion . • It is based on the SAM for operations required to produce the style. . • Excess capacity – Difference between potential capacity and required capacity .

• A key to effective capacity planning is to make necessary resource decisions in advance to ensure that the required capacity and available capacity are compatible. .

and may be part of the work flow. has measurable capacity . .• Individual Operation Capacity – Each individual operation contributes value to the product .

then changes must be made in the bottleneck that limits the number of products that can be completed in a given time frame . Also called as the bottleneck . . • It determines the throughput time and limit capacity .Constraint operation – The slowest operation in a production line . • If capacity needs to be increased .

• A production standard is also an indicator of how many times can an operation be completed in an hour. . Relationship of Production Standards to Capacity • A production standard is the rate stated in standard allowed minutes (SAM) or standard allowed hours ( SAH) that reflects the time required for a normal operator to complete one operation using a specified method.

 Determine the required capacity for an order or style.  Determine production start dates and completion dates for orders. .  Plan daily volume that should be completed . Use of Production standards in production planning:  Estimate the rate or time for completion of each operation .

 Schedule specialized equipment . .  Determine how many operators and machines should be performing each operation .  Balance work flow between departments and work centers .  Monitor production delays  Assess the performance of individual operators . Determine the backup inventory needed to support the work flow.

Efficiency = (SMV earned on standard / attended time ) x 100 • It is usually calculated for a line and not really relevant to the individual unless incentives are paid on efficiency and not performance . . • Efficiency or line utilization is calculated by “minutes produced” / “minutes attended” expressed as percentage. Efficiency • It is primarily a measure of the effectiveness of the manager and supervisor and as such is best applied to sections / departments / factories and not the individual operators .

• In sewing line of 20 operators a style of 20 SMV is produced in 8 hour shift . If the average daily production of the style is 400 pcs / shift then the line utilization or line efficiency can be calculated as under : .

33% • This measure is also called as balance efficiency . .• Minutes utilized = SMV x pcs / shift = 20x400 =8000 • Minutes attended = number of operator X number of minutes per shift = 20 x 480 = 9600 • So . the line utilization or line efficiency is 8000 x 100 / 9600 = 83.

It is calculated from output from an operation generated in attended minutes and SMV of the operation. • SMV earned = ( SMV x output in number of units ) . • SMV earned is the measure of work done by operator . SAM or SMV • SAM – Standard Allowed Minutes • SMV – Standard minute Value • SAM and SMV are considered to be the same .

.• It is usually calculated for individuals as well as for a line . • Also sometimes aggregated for departments and factories to get factory efficiency . • As it is needed for individuals for incentive payment calculation and performance and needed for lines for efficiency calculation .

cord etc ) • Shifting of operators resulting start up loss . zipper . Lost time or lost output Reasons for time loss or output loss : • Poor balancing • No or improper feeding of the cut parts . • Non availability of accessories ( thread . • Machine breakdown • Loss due to repairs .

Numerical 1 .

Numerical 2 .