Introduction to Materials Management Chapter 5 Capacity Management

Basic Capacity Definitions n n Capacity Required – capacity needed to produce a desired

Capacity versus Load Introduction to Materials Management, 7 th Edition Arnold, Chapman, Clive ©

Capacity Planning Levels n n n Resource Planning – Long range resource requirements linked

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

Facility Size and Optimal Operating Level Average cost per unit Minimum cost & optimal

Capacity Planning Levels Introduction to Materials Management, 7 th Edition Arnold, Chapman, Clive ©

Capacity Requirements Planning Inputs n n n Open Order File – found as scheduled

Capacity Requirements Planning Inputs - Continued n Routing file – the path that the

Sample Routing File Figure 5. 3 Routing file Introduction to Materials Management, 7 th

Capacity Available n Impacted by: n n Product specification Product mix Methods used to

Finding Capacity Available n Introduction to Materials Management, 7 th Edition Arnold, Chapman, Clive

Finding Capacity Required (Standard Process Time) = (actual time) x (utilization) x (efficiency) n

Capacity Load – Sum of all time required for orders on a work center

Scheduling Orders n n Back scheduling (the typical approach) – Start with the due

Back Scheduling Example n n n An order for 150 of a component is

Manufacturing Lead Time n n n Queue - time spent waiting before operation Setup

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

Data from the work center file Introduction to Materials Management, 7 th Edition Arnold,

The resulting work schedule Introduction to Materials Management, 7 th Edition Arnold, Chapman, Clive

The work schedule shown graphically Introduction to Materials Management, 7 th Edition Arnold, Chapman,

Making the plan Introduction to Materials Management, 7 th Edition Arnold, Chapman, Clive ©

Managing the Plan – Adjusting Capacity n n n Use Overtime or Undertime Adjust

Homework Assignment Problems 5. 9, 5. 11, 5. 13, 5. 17 Introduction to Materials

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Introduction to Materials Management Chapter 5 – Capacity Management

Basic Capacity Definitions n n 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 Introduction to Materials Management, 7 th Edition Arnold, Chapman, Clive © 2012, 2008, 2004, 2001, 1998, 1996 Pearson Education, Upper Saddle River, NJ 07458. All Rights Reserved.

Capacity versus Load Introduction to Materials Management, 7 th Edition Arnold, Chapman, Clive © 2012, 2008, 2004, 2001, 1998, 1996 Pearson Education, Upper Saddle River, NJ 07458. All Rights Reserved.

Capacity Planning Levels n n n 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 Introduction to Materials Management, 7 th Edition Arnold, Chapman, Clive © 2012, 2008, 2004, 2001, 1998, 1996 Pearson Education, Upper Saddle River, NJ 07458. All Rights Reserved.

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

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

Capacity Planning Levels Introduction to Materials Management, 7 th Edition Arnold, Chapman, Clive © 2012, 2008, 2004, 2001, 1998, 1996 Pearson Education, Upper Saddle River, NJ 07458. All Rights Reserved.

Capacity Requirements Planning Inputs n n n Open Order File – found as scheduled receipts on MRP Planned order releases from MRP – Potential future orders Work Center file n n Information on capacity in the work center Move, wait, and queue time information Introduction to Materials Management, 7 th Edition Arnold, Chapman, Clive © 2012, 2008, 2004, 2001, 1998, 1996 Pearson Education, Upper Saddle River, NJ 07458. All Rights Reserved.

Capacity Requirements Planning Inputs - Continued n Routing file – the path that the work will follow n n n Operations to be performed Operation sequence Work centers used Potential alternative work centers Tooling needed Standard setup times and run times Introduction to Materials Management, 7 th Edition Arnold, Chapman, Clive © 2012, 2008, 2004, 2001, 1998, 1996 Pearson Education, Upper Saddle River, NJ 07458. All Rights Reserved.

Sample Routing File Figure 5. 3 Routing file Introduction to Materials Management, 7 th Edition Arnold, Chapman, Clive © 2012, 2008, 2004, 2001, 1998, 1996 Pearson Education, Upper Saddle River, NJ 07458. All Rights Reserved.

Capacity Available n Impacted by: n n Product specification Product mix Methods used to make product Pace of work Introduction to Materials Management, 7 th Edition Arnold, Chapman, Clive © 2012, 2008, 2004, 2001, 1998, 1996 Pearson Education, Upper Saddle River, NJ 07458. All Rights Reserved.

Finding Capacity Available n Introduction to Materials Management, 7 th Edition Arnold, Chapman, Clive © 2012, 2008, 2004, 2001, 1998, 1996 Pearson Education, Upper Saddle River, NJ 07458. All Rights Reserved.

Finding Capacity Required (Standard Process Time) = (actual time) x (utilization) x (efficiency) n Standard (process) time = Setup time + Run time n Introduction to Materials Management, 7 th Edition Arnold, Chapman, Clive © 2012, 2008, 2004, 2001, 1998, 1996 Pearson Education, Upper Saddle River, NJ 07458. All Rights Reserved.

Capacity Load – Sum of all time required for orders on a work center - Example Introduction to Materials Management, 7 th Edition Arnold, Chapman, Clive © 2012, 2008, 2004, 2001, 1998, 1996 Pearson Education, Upper Saddle River, NJ 07458. All Rights Reserved.

Example Load Profile Introduction to Materials Management, 7 th Edition Arnold, Chapman, Clive © 2012, 2008, 2004, 2001, 1998, 1996 Pearson Education, Upper Saddle River, NJ 07458. All Rights Reserved.

Scheduling Orders n n 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 Introduction to Materials Management, 7 th Edition Arnold, Chapman, Clive © 2012, 2008, 2004, 2001, 1998, 1996 Pearson Education, Upper Saddle River, NJ 07458. All Rights Reserved.

Back Scheduling Example n n n 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: n n 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 Introduction to Materials Management, 7 th Edition Arnold, Chapman, Clive © 2012, 2008, 2004, 2001, 1998, 1996 Pearson Education, Upper Saddle River, NJ 07458. All Rights Reserved.

Manufacturing Lead Time n n n 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 Introduction to Materials Management, 7 th Edition Arnold, Chapman, Clive © 2012, 2008, 2004, 2001, 1998, 1996 Pearson Education, Upper Saddle River, NJ 07458. All Rights Reserved.

Manufacturing Lead Time Queue Setup Run Wait Move Need a lift truck here Queue Setup Run Wait Introduction to Materials Management, 7 th Edition Arnold, Chapman, Clive Move © 2012, 2008, 2004, 2001, 1998, 1996 Pearson Education, Upper Saddle River, NJ 07458. All Rights Reserved.

Data from the work center file Introduction to Materials Management, 7 th Edition Arnold, Chapman, Clive © 2012, 2008, 2004, 2001, 1998, 1996 Pearson Education, Upper Saddle River, NJ 07458. All Rights Reserved.

The resulting work schedule Introduction to Materials Management, 7 th Edition Arnold, Chapman, Clive © 2012, 2008, 2004, 2001, 1998, 1996 Pearson Education, Upper Saddle River, NJ 07458. All Rights Reserved.

The work schedule shown graphically Introduction to Materials Management, 7 th Edition Arnold, Chapman, Clive © 2012, 2008, 2004, 2001, 1998, 1996 Pearson Education, Upper Saddle River, NJ 07458. All Rights Reserved.

Managing the Plan – Adjusting Capacity n n n Use Overtime or Undertime Adjust the number of workers Shift workers from other work centers Use alternative work centers to shift load Subcontract work Introduction to Materials Management, 7 th Edition Arnold, Chapman, Clive © 2012, 2008, 2004, 2001, 1998, 1996 Pearson Education, Upper Saddle River, NJ 07458. All Rights Reserved.

Homework Assignment Problems 5. 9, 5. 11, 5. 13, 5. 17 Introduction to Materials Management, 7 th Edition Arnold, Chapman, Clive © 2012, 2008, 2004, 2001, 1998, 1996 Pearson Education, Upper Saddle River, NJ 07458. All Rights Reserved.