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    Capacity Requirement Planning

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    vamsibu
    Capacity Requirements Planning is a technique that uses information on planned orders, routing files, and open orders to project the resource requirements and generate load profiles for work centers, in order to determine if sufficient capacity is available to meet production needs and help planners make scheduling decisions to alleviate bottlenecks before issues arise. It analyzes factors like the number of machines, workers, shifts, and efficiency levels to calculate the capacity of plants, departments, and work centers in standard hours and ensure capacity meets demand.

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    Capacity Requirement Planning

    Uploaded by

    vamsibu
    69 views17 pages
    Capacity Requirements Planning is a technique that uses information on planned orders, routing files, and open orders to project the resource requirements and generate load profiles for work centers, in order to determine if sufficient capacity is available to meet production needs and help planners make scheduling decisions to alleviate bottlenecks before issues arise. It analyzes factors like the number of machines, workers, shifts, and efficiency levels to calculate the capacity of plants, departments, and work centers in standard hours and ensure capacity meets demand.

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    Capacity Requirement Planning

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    Capacity Requirements Planning is a technique that uses information on planned orders, routing files, and open orders to project the resource requirements and generate load profiles for work centers, in order to determine if sufficient capacity is available to meet production needs and help planners make scheduling decisions to alleviate bottlenecks before issues arise. It analyzes factors like the number of machines, workers, shifts, and efficiency levels to calculate the capacity of plants, departments, and work centers in standard hours and ensure capacity meets demand.

    Copyright:

    © All Rights Reserved
    Download as PPT, PDF, TXT or read online from Scribd
    Download as ppt, pdf, or txt
    69 views17 pages

    Capacity Requirement Planning

    Uploaded by

    vamsibu
    Capacity Requirements Planning is a technique that uses information on planned orders, routing files, and open orders to project the resource requirements and generate load profiles for work centers, in order to determine if sufficient capacity is available to meet production needs and help planners make scheduling decisions to alleviate bottlenecks before issues arise. It analyzes factors like the number of machines, workers, shifts, and efficiency levels to calculate the capacity of plants, departments, and work centers in standard hours and ensure capacity meets demand.

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    © All Rights Reserved
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    Download as ppt, pdf, or txt
    of 17

    Capacity Requirement

    Planning
    Capacity Requirements
    Planning
    • Capacity Requirements Planning is a
    computerized technique for projecting
    resource requirements for critical work
    stations.
    – Inputs:
    • Planned order releases
    • Routing file
    • Open orders file
    – Outputs:
    • Load Profile for each work center
    Definitions

    • Planned Order Releases: Information from the


    Material Requirements Planning which tells when
    you should start the order so it can be completed on
    time.

    • Routing Files: Information that details the


    requirements of equipment and labor to complete
    the order as needed in the required time frame.

    • Open Orders Files: Information regarding the orders


    that are currently started and need to be completed.
    Capacity Requirements
    Planning
    • A tool for:
    – determining capacity that is available
    and required.
    – Alleviating bottleneck work centers.
    • Helping planners make the right
    decisions on scheduling before
    problems develop.
    • Verifies that you have sufficient
    capacity available to meet the
    capacity requirements for MRP plans.
    What is Capacity?
    • The work that the system is capable
    of doing in a period of time.
    • It must be determined at different
    levels:
    – plant
    – department
    – work center.
    • It is normally stated in standard
    hours of work.
    What is Capacity?
    • Capacity = (no. of machines or workers) x
    (no. shifts) x (utilization) x (efficiency)

    (Russell & Taylor)

    • Best operating level is the percent of


    capacity utilization that minimizes average
    unit cost.
    – Usually 80% with a 20% cushion
    Utilization and Efficiency
    • Utilization is the percent of available time
    spent working.

    • Efficiency is how well a machine or worker


    performs compared to a standard output
    level.

    Russell and Taylor


    Utilization and Efficiency

    Actual Hours Charged


    Utilization =
    Scheduled Available Hours

    Standard Hours Earned


    Efficiency =
    Actual Hours Charged
    Reason to use CPR
    • Bottleneck Management -
    – The throughput of all products processed
    is controlled by bottlenecks.
    – Work centers need to be scheduled at a
    rate to prevent bottlenecks.
    – To eliminate bottlenecks, a time buffer
    inventory should be established.
    Basic Strategies for Timing
    Capacity
    • CRP provides information to determine the
    timing of capacity expansion. The basic
    strategies in relation to a steady growth in
    demand are:
    – Capacity Lead Strategy
    – Capacity Lag Strategy
    – Average Capacity Strategy
    Capacity Lead Strategy
    • In anticipation of demand, capacity is
    increased.
    • This is an aggressive strategy and is used
    to lure customers away from competitors.
    Capacity Planning
    How much to increase capacity demands
    depend upon a number of factors, including:
    • Anticipated demand – volume & certainty
    • Strategic objectives
    • Costs of expansion and operation
    Capacity Lag Strategy
    • Increase capacity after demand has
    increased.
    • This is a conservative strategy and may
    result in lose of customers.
    • You assume customers will return after
    capacity has been met.
    Average Capacity Strategy
    • Average expected demand is calculated
    and capacity is increased accordingly.
    • This is the most moderate strategy.
    Adjustments to Capacity
    Increase capacity by:
    • Adding extra shifts
    • Scheduling overtime or weekends
    • Adding equipment and/or personnel
    Reduce load by:
    • Reducing lot sizes
    • Holding work in production control
    • Subcontracting work to outside suppliers
    Adjustments to Capacity
    Reduce capacity by:
    • Temporarily reassigning staff
    • Reducing the length of shifts
    • Eliminating shifts
    Increase load by:
    • Releasing orders early
    • Increasing lot sizes
    • Making items normally outsourced
    What is CRP Used For?

    • To determine the capability of a system or


    resource to produce a quantity of output in
    a particular time period. For example:
    – Should the hospital hire more registered
    nurses to care for the projected patient
    load?
    – Should the hospital build more rooms for
    patients?
    – What is the projected finish time for the
    current projects?

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