Capacity Planning

Production & Operation Management

Change Over Time (i,j) Total Processing Time Queuing Time (j) Dismantling Time (i) Setting Time (j) Processing Time

Waiting Time

Move Time

Loading Time

Run Time

Unloading Time

Work Center WC 1

Arrival of (J) at WC1 Queuing Time (j)

Change Over Time (i,j)

Total Processing Time

Waiting Time Move Time

Arrival of (J) at WC2

Dismantling Time (i)

Setting Time (j)

Processing Time

Loading Time

Run Time

Dismantling Time

Work Center WC 1

Work Center WC 2

Aggregate Production Planning



Production Planning and Master Scheduling involve the determination of future production levels over a time horizon of several months to 1 yr. They are tactical planning decisions They respond to a firms overall business plan

 

Aggregate Production Planning



The production plan sets an intermediaterange goal for the companys products and capacity utilization in total The master schedule provides the input for detailed scheduling and control at the operational level

Aggregate Production Planning



Manufacturing, Marketing, and Financial plans must be coordinated Poor production planning can lead to excessive inventory levels or backorders and thus increase cost or reduce service level.

The Production Planning Process



Accurate forecasts can be made for aggregate groups of items, particularly over long time horizon Since production plans are made for up to 1 year time, demand and production/inventory levels are usually expressed by aggregate measures of capacity such as dollars, tons, gallons, machine hours, or units of product groups

Sales Forecasting

Quality Control

HR
Production

Joint Planning Process

DISPAT CHING

Stores

Finance

Purchasing

Demand Estimation

Accounting

MPS

Marketing
Strategic Plans

Production & Maintenance

Forecasts

Spare Parts &

Warehouse Requirement
Demand Estimation

Services
Orders

Inventory Adjustment
Materials

Marketing

Production Marketing Aggregate Production Planning Finance

Production Planning

Master Production Scheduling

Rough-cut Capacity Planning

CAPACITY REQ PER UNIT

m/c center wc1 11.1111 22.2222 33.3333 44.4444 2 6 5 wc2 5 7 4

Work Center wc3 4 3 5 wc4 6 wc5 3 wc6 6 6 1 wc7 1 5 2

Total Cap
11.1111 22.2222 33.3333 44.4444

MONTHLY PLAN

1 2 3 4 5 6 7 8 9

CAPACITY m/c center 1 WC1 WC2 WC3 WC4 2 3 4 5 Month 6 7 8 9 10 11 12 Cash in Cash out + or Total Cap
m/c center

CASH FLOW month 1 2 3 4 5 6 7 8 9 Total

ORDERS M/c AA BB CC DD
Category 11.1111 22.2222 33.3333 44.4444

INVENTORY LEVEL ADJ

Name 11.1111 22.2222 33.3333 44.4444

Qty 50 20 70 10
Qty 500 300 400 200

Category 11.1111 22.2222 33.3333 44.4444

Name Troya Prothesis Plates Knee

Min stock 75 100 25 10

On hand 55 70 5 20

Adj 20 30 20 -

FORECAST

Name Troya Prothesis Plates Knee

DEMAND ESTIMATION

WAREHOUSE REQ Category Name 11.1111 22.2222 33.3333 44.4444 Troya Prothesis Plates Knee Qty 10 20 5 30

DEMAND ESTIMATION Category 11.1111 22.2222 33.3333 44.4444 Name Troya Prothesis Plates Knee Qty 580 370 495 230

DEMAND ESTIMATION Category 11.1111 22.2222 33.3333 44.4444 Name Troya DEMAND ESTIMATION Prothesis Plates Knee
SALES DISTRIBUTION

CAPACITY

Qty 580

m/c center 1 2 3 4

month 5 6 7 8 9

Total Cap

370 495 230

CAPACITY

WC1 WC2 WC3 WC4 MONTHLY PLAN Total CASH FLOW 1 2 3 4 5 6 7 8m/c 9 center 1 Cash in Cash out Total Cap
Wc7

1 2 3 4 5 6 7 8 9 11.1111 22.2222 33.3333 44.4444 11.1111 22.2222 33.3333 CAPACITY REQ PER UNIT 44.4444 Work Center
wc1 wc2

SALES DISTRIBUTION

CASH FLOW

month 5

Total 7 8 9

m/c center

+ or -

11.1111 22.2222 33.3333 44.4444

2 6 5 -

5 7 4

CAPACITY REQ PER UNIT 4 -

wc3

wc4

wc5

wc6

min 17 17 25 12

3 -

6 6 1

1 5 2

3 5

6 -

Aggregate Plan

Orders

Forecast

MPS
Product File

Inventory File

MRP SYSTEM

Manufacturing file
MRP

Material List

BOM

Purchasing

Production Planning

Insensitive to Capacity

MPS

Closed Loop MRP NO

Capacity Adequat e
YES

Hours
Work Load

MRP SYSTEM

Detailed Schedule Load Report

Time Period

Detailed Capacity Plan CRP

Aggregate Plan

Dispatch Orders Dispatching section

Production Planning
Material Issue Order Inspection Order Move order

MPS Aggregate Plan

Stores Materials Requirement Planning (MRP)

Manufacturing Database

Quality Control Work Order Tool Order

Follow up

Planning section

Workshop

Issue Work Orders & Control Paper Work Dispatching section

Tool Stores

ORDER DISPACTCHING

Aggregate Production Planning



Aggregate production planning is the development of monthly or quarterly production requirements that will meet the estimates of demand. Gross capacity considerations must be taken into account during production planning.

Aggregate Production Planning



If production to satisfy demand cannot be achieved within existing resource limitation, then management may have to make intermediate-range capacity adjustments. If long-term trends are evident, then management may also wish to consider strategic resource changes

Aggregate Production Planning

Once a production plan is made, it must be disaggregated into time-phased requirements for individual products.  This plan is called the Master Production Schedule (MPS).  The MPS usually states weekly product requirements over 6 to 12 month time horizon


Aggregate Production Planning



The master schedule is not a forecast, but rather a schedule of when production should be completed. The MPS is used by operating personnel to make detailed plans for the procurement of materials, the production of components, and final assembly of the finished goods.

Aggregate Production Planning



The Rough Cut Capacity Plan involves the analysis of the MPS to determine if sufficient capacity is available at critical points in the production process It focuses on specific operations such as final assembly, painting, or finishing to determine where bottlenecks will probability occur. This provides a rapid determination of the feasibility of the master production schedule.

Aggregate Production and Capacity Planning

1. Translate demand forecasts into planned monthly production level 2. Establish minimum inventory levels in order to provide specified levels of customer service (starting and ending inventory) 3. The total production required over the horizon is the total sales forecast plus or minus any desired change in inventory 4. Determine monthly or weekly production rates

Aggregate Production and Capacity Planning (Example)

Automotive company uses filters
   

Opening inventory from filters= 80,000 Ending inventory from filters = 50,000 Projected demand during the year=500,000 Total production required=
500,000 (50,000-80,000) = 470,000 Monthly production = 470,000/12 = 39,167 filter/month

Transportation Model for Aggregate Planning



Transportation model is useful in situations when several sources of production are available (for example, regular time, overtime, and subcontracting), where production and inventory costs are linear, and where there is a limited capacity for each source in each period.

Transportation Model for Aggregate Planning (Example) 



Snow Sporting Goods Company

Projected demand for one product, snow skis, over winter months is 5000, 10,000, 11,000, 7500 and 5000 pairs. Labor costs for regular time = $50 per unit Overtime cost = %54 per unit Subcontract cost = $57 per unit Inventory holding costs = $6 per unit each month No shortages are allowed Regular time production = 9000 units Overtime production = 1800 units Subcontracted possible quantity = 2500

       

Developing a Master Schedule