Sparkwest Steel

Industries
Limited

Capacity Requirement Planning

SSIL Planning Department 1

 Sparkwest Steel
Industries
Limited

Defining Capacity
• Capacity is the amount of work that can be done in
a period of time
• It is usually stated in standard hours of work
• It must be determined at plant, department, and
work center levels.

SSIL Planning Department 2

 Sparkwest Steel
Industries
Limited

Capacity Planning Process

• Determine the capacity available
• Translate the released and planned orders into
capacity required
• Sum up capacities required for each work center
• Resolve differences between available capacity
and required capacity

SSIL Planning Department 3

 Sparkwest Steel
Industries
Limited
Determining Capacity Available
• Capacity available is the capability of a system or
resource to produce a quantity of output in a
particular time period.
• Available (theoretical) capacity can be calculated
or measured
• To calculate available capacity, one needs to know
– Available time
– Utilization
– Efficiency
SSIL Planning Department 4
 Sparkwest Steel
Industries
Limited

Capacity Measurements

• Theoretical capacity
• Demonstrated capacity
• Calculated capacity

SSIL Planning Department 5

Sparkwest Steel
Industries
Limited

Utilization and Efficiency

Actual Hours Charged

Utilization =
Scheduled Available Hours

Standard Hours Earned

Efficiency =
Actual Hours Charged

SSIL Planning Department 6

 Sparkwest Steel
Industries
Limited

Rated Capacity

Rated Capacity = Available time x Utilization x Efficiency

SSIL Planning Department 7

 Sparkwest Steel
Industries
Limited
Load Sources
• Open Orders
• MRP - Planned Order Releases
• Other Sources
– Rework
– Excess scrap
– Quality problems

SSIL Planning Department 8

 Routing Data

• Operation identification code

• Operation description
• Planned work center
• Standard setup time
• Standard run time per unit
• Tooling requirements

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 Lead-Time Elements
• Queue
– time waiting before operation begins
• Setup
– time getting ready for operation
• Run
– time performing operation
• Wait
– time waiting after operation ends
• Move
– time physically moving between operations

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 Adjustments to Capacity or Load
• Increasing Capacity
– Add extra shifts
– Schedule overtime or weekends
– Add equipment and/or personnel
• Reducing Load
– Subcontract work to outside suppliers
– Reduce lot sizes
– Hold work in production control
– Reduce the MPS
• Reducing Capacity
– Eliminate shifts or reduce length of shifts worked
– Reassign personnel temporarily

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 Continued
• Increasing Load
– Make items normally purchased or subcontracted
– Release orders early
– Increase lot sizes
– Increase the MPS
• Redistributing the Load
– Use alternate work centers
– Use alternate routings
– Adjust operation start dates forward or backward in time
– Revise the MPS

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Production Activity Control

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 Objectives of PAC

• Execute the MPS and MRP

• Optimize use of resources
• Minimize work in process
• Maintain customer service

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 PAC Functions
• Plan
– Ensure resources available
– Schedule start and completion dates
• Execute
– Gather relevant shop order information
– Release shop orders
• Control
– Establish and maintain order priority
– Track actual performance
– Monitor and control WIP, lead times, and queues
– Report work center performance

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 Data Requirements

• What and how many to produce?

• When parts are needed?
• What operations are needed?
• How much time operations will take?
• How much capacity is available at each work
center?

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 Scheduling

• Objectives
– Meet delivery dates
– Effectively use manufacturing resources
• Involves
– Establishing start and finish dates for each operation
needed to complete an order

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 Scheduling and Loading Techniques

• Forward scheduling:
– Activity starts as soon as the order is received .regardless of due
date
• Backward scheduling
– Activities are scheduled back from the due date
• Infinite loading
– Assumes capacity is infinite at any work center
• Finite loading
– Assumes there is a definite limit to capacity at any work center

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 Bottlenecks Management

• Bottlenecks control the throughput of all products

processed by them
• Work centers feeding bottlenecks should be scheduled at
the rate the bottlenecks can process
• A time buffer inventory should be established before the
bottleneck
• Work centers fed by the bottleneck have their throughput
controlled by the bottleneck

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Input/Output Analysis

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Input, Output, Queue, and Capacity

Input Input Input

Queue

Capacity

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Actual Output Less Than Planned Output

Input Input Input

Not enough input?

Queue
Queues and lead
times increase

Capacity Insufficient Capacity?

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 Actual Input Less Than Planned Output

Input Input Input

Feeding work centers

Queue
behind schedule

Work released late

May run out of work
Capacity Late orders
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 Actual Output Greater Than Planned Output

Input Input Input

Queue

Excess Capacity
May run out of work
Capacity

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Actual Input Greater Than Planned Input

Input Input Input

Queue Feeding work centers

ahead of schedule

Work released early

Capacity
Queues and lead times
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 Actual Output Less than Actual Input

Input Input Input

Queue
Preceding work centers
Queues and lead times increase ahead

Not enough capacity? Capacity Releases early

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 Actual Output greater Than Actual Input

Input Input Input

Queue Feeding centers behind

Releases late
May run out of work
Idle capacity
Capacity
Late orders
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