1. Introduction to Materials Management
Chapter 5 – Capacity Management

2. Basic Capacity Definitions
Capacity Required – capacity needed to produce a desired output in a given time period
Capacity Planning – determining the resources and methods needed to meet the priority plan
Capacity Control – monitoring production, comparing with the capacity plan, and taking appropriate corrective actions
Capacity Management – determining capacity needed as well as providing, monitoring, and controlling the capacity

3. Capacity versus Load

4. Capacity Planning Levels
Resource Planning – Long range resource requirements linked to the production plan
Rough-cut Capacity Planning – Used to check feasibility of MPS
Capacity Requirements Planning – Detailed work center capacity plans linked to MRP

5. Optimal Operating Level
Minimum
cost
Average cost per unit
Rate of output
Optimal
Output
Rate

6. Facility Size and Optimal Operating Level
Minimum cost & optimal operating rate are
functions of size of production unit.
Average cost per unit
Small
plant
Medium
Large
Output rate

7. Capacity Planning Levels

8. Capacity Requirements Planning Inputs
Open Order File – found as scheduled receipts on MRP
Planned order releases from MRP – Potential future orders
Work Center file
Information on capacity in the work center
Move, wait, and queue time information

9. Capacity Requirements Planning Inputs - Continued
Routing file – the path that the work will follow
Operations to be performed
Operation sequence
Work centers used
Potential alternative work centers
Tooling needed
Standard setup times and run times

10. Sample Routing File
Figure 5.3 Routing file

11. Capacity Available Impacted by: Product specification Product mix
Methods used to make product
Pace of work

12. Finding Capacity Available
Rated Capacity = (available time) x (utilization) x (efficiency)
Available time : number of hours a work center can be used
utilization= hours actually worked available hours x 100%
Efficiency= Standard Hours Produced hours actually worked x 100%

13. Finding Capacity Required
Capacity Required (Standard Process Time)
= (actual time) x (utilization) x (efficiency)
Standard (process) time
= Setup time + Run time

14. Capacity Load – Sum of all time required for orders on a work center - Example

15. Example Load Profile

16. Scheduling Orders
Back scheduling (the typical approach) – Start with the due date, use lead time to find the proper start date for each operation
Forward scheduling – Launch the order into the first (gateway) work center, then use the lead times to find when the order will be completed at each work center

17. Back Scheduling Example
An order for 150 of a component is due on day 135
An order starts at the beginning of a day and finished at the end of a day
Operation times for the 150 ordered:
Operation 10 – 4 days in work center 12
Operation 20 – 5 days in work center 14
Operation 30 – 1 day in work center 17
Operation 40 – 2 days in work center 03

18. Manufacturing Lead Time
Queue - time spent waiting before operation
Setup - time to prepare the work center
Run - time to make the product
Wait - time spent after the operation
Move - transit time between work centers

19. Manufacturing Lead Time
Queue
Setup
Run
Wait
Move
Need a lift truck here
Queue
Setup
Run
Wait
Move

20. Data from the work center file

21. The resulting work schedule

22. The work schedule shown graphically

23. Making the plan

24. Managing the Plan – Adjusting Capacity
Use Overtime or Undertime
Adjust the number of workers
Shift workers from other work centers
Use alternative work centers to shift load
Subcontract work

25. Homework Assignment
Problems 5.9, 5.11, 5.13, 5.17