Module 5 Capacity Planning
Module 5 Capacity Planning
Module 5 Capacity Planning
CAPACITY PLANNING
Definition :
Aggregate Planning:
ØDefine long term and short term capacity needs of a firm and
how it is me
Capacity Planning Decision
(a) Assessing existing capacity
(b) Forecasting future capacity needs
(c) Identifying alternative ways to modify capacity
(d) Evaluating financial, economical and technological
capacity alternatives
(e) Selecting a capacity alternative most suited to achieve
the strategic mission of the firm. Capacity planning
involves capacity decisions that must merge consumer
demands with human, material and financial resources of
the organization.
Classification of capacity planning
a.Long term
b.Short tem
c.Finite
d.Infinite
e.
Factors affecting capacity planning
Controlled factors – Labour Employed, Machines, tooling's,
overtime work, sub contracting
resources
Developing new sites, building new
Advantage
1.Production capacity is matched with aggregate demand
2.Material flow and machinery capacity are allowed to change
for each quarters
3.Main advantage is lower level of finished goods (ie) less
carry cost compared to level capacity plan
4.
Disadvantage
§Labours and material cost is high because frequent change in
work flow
Strategies for aggregate capacity plan
1.Active strategies
2.Passive strategies
1.Pure Strategy
2.Mixed strategy
Types of pure strategies– Changing any 1 variable
Strategy 1 – Vary in size and work force
Limitation : Labour morale, trade union opposing lay off
Strategy 2 – To vary output rate
Limitation : cost of overtime and idle time
Strategy 3 - Level production and use of inventory buildup,
in periods of high demand
Strategy 4 – Sub contracting to meet the excess demand
which is more than normal capacity available in in-house
Strategy 5 – Capacity utilization, according to demand
Mixed strategies to meet the non-uniform demand
Changing more then 1 of the following variables is called
mixed strategy
a)Workforce
b)Production rate
c)Inventory levels
In produce – to Stock
vOrder come from warehouse within company
vOrder based on future demand
vForecast play important role in demand management.
vLot size depend on economy.
In Product to order
1.Overloaded facilities
2.Under-loaded facilities.
3.Excessive inventory levels on some end items and
frequent stock-outs on others.
4.Unrealistic schedules that production personnel do not
follow.
5.Unreliable delivery promises to customers.
6.Excessive expediting or follow-up.
Resource Requirement Planning:
Inputs:
1.Master Production Schedule
2.Bill of Material BOM or product structure file
3.Inventory status file.
Outputs:
1.Planned order schedule
2.Exception reports
3.Inventory transaction data.
Issues of MRP:
1.Lot sizing
2.Safety stock
3.Scrap allowance
4.Pegging
5.Cycle counting
6.Updating
7.Time fence
1.
Potential benefits of MRP:
1.Inventory
2.Production
3.Sales
4.Engineering
5.Planning
6.Purchasing
7.Scheduling
8.Finance.
Implementation of MRP:
1.Management commitment
2.User involvement
3.Education and training
4.Selection of packages
5.Data Accuracy
6.Realistic MPS
1.Preparation of MPS
2.Maintaining accurate BOM files.
3.Incorrect stock status
4.Unrealistic lead times.
Problems in Designing the MRP system:
1.Inadequacies of software chosen.
2. Deficient system design
3.Improper and ultimately information flow among
various related departments.
Solutions to overcome the problems are,
1.Careful choice of software packages to suit the
organizational specific needs.
2.Careful planning of activities and scheduling
3.Assigning work to competent work power.
4.Continuous monitoring of progress against schedule.
5.Substancial education and training at all the levels.
6.Involvement of users at system design stage itself.
7.Maximum attention at the stage of creating the
database.
Problems in managing the MRP system:
1.Need for the formal system and role of system.
2.Need for proper organization of functions
3.Importance of proper appreciation of planning and control
system
4.Timeliness of generating information required in managing
the plant.
5.Effective communication system
6.Proper motivation of people.
7.Right leadership.
Advantages of MRP:
1.Improved customer service
2.Reduced inventory services.
3.Improved operating efficiencies of production departments.
Production System suitable for MRP should have the
following characteristics
1.Effective computer system
2.Computerized BOM files and inventory status file for
all the end products and materials with highest
accuracy.
3.Production system that manufactures discrete products
made up of raw materials ,parts , assemblies.
4.Production process requiring long processing time.
5.Short and reliable lead times for procurement of raw
materials.
6.The time fence for the frozen MPS should be
sufficient to procure materials without under
expediting effort.
7.Support and commitment of the top management.
Manufacturing Resource Planning(MRP II)
Developed by manufacturing managers to address the
planning and controlling of a manufacturing process.
It is a management for breaking up the business plan
into detailed task that people evaluate ,agree upon and held
accountable.