Introduction to Materials Management

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 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

4. Capacity Planning Levels Figure 5.2 Planning levels

5. Capacity Requirements PlanningInputs • 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

6. Capacity Requirements PlanningInputs - 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

7. Sample Routing File Figure 5.3 Routing file

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

9. Finding Capacity Available • Rated Capacity = (available time) x (utilization) x (efficiency) • Available time – number of hours a work center can be used • Utilization = [(hours worked)/(available hours)] x 100% • Efficiency = [(actual production rate)/(standard production rate)] x 100%

10. Capacity Load – Sum of all time required for orders on a work centerExample Figure 5.5 Work center load report

11. 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

12. 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