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Chapter Five – Capacity Management

CPIM Exam – Basics of Supply Chain Management Practice Study Sheet  Ch... thumbnail 1 summary
CPIM Exam – Basics of Supply Chain Management Practice Study Sheet 

Chapter Five – Capacity Management

Capacity is the amount of work that can be done in a specific time span. “The capability of a worker, machine, work center, plan or organization to product output per period of time”.

• Capacity is the rate of doing work, not the quantity of work done

Capacity required is the capacity of a system or resource needed to produce a desired output in a given time period

Load is the amount of released and planned work assigned to a facility for a particular time period

Capacity management is responsible for determining the capacity needed to achieve the priority plans. “The function of establishing, measuring, monitoring, and adjusting limits or levels of capacity in order to execute all manufacturing schedules

• Capacity Planning is the process of determining the resources required to meet the priority plan and the methods needed to make that capacity available

Capacity control is the process of monitoring production output, comparing it with capacity plans, and taking corrective actions when needed

• Capacity planning process is as follows

1. determine the capacity available at each work center in each time period
2. determine the load at each work center in each time period
3. resolve differences between available capacity and required capacity

Resource Planning involves long-range capacity resource requirements and is directly linked to production planning. If the resource plan cannot be devised to meet the production plan, then the production plan has to be changed

• Rough cut capacity planning is medium range and the capacity requirements plan is short range.

• Inputs for the Capacity planning include 1) open shop orders 2) planned order releases 3) routings 4) time standards 5) lead times 6) work center capacities

An open order file is a record of all the active shop orders

Planned order releases are determined by the computer’s MRP logic based upon the gross requirements for a particular part

Routing is the path that work follows from work center to work center as it is completed. A routing file should exist for every component manufactured and contain 1) operations to be performed 2) sequence of operations 3) work centers to be used 4) possible alternative work centers 5) tooling needed at each operation 6) standard times for setup and run for each piece

• A work center is composed of a number of machines or workers capable of doing the same work. A work center file contains information on the capacity and move, wait and queue ties associated with the center

• The move time is the time taken to move material from one workstation to another. The wait time is the time a job is at a work center after completion and before being moved. The queue time is the time a job waits at a work center before being handled. Lead time is the sum of queue, setup, run, wait and move times.

Capacity available is the capacity to produce a quantity of output in a given time period. It is effected by 1) product specifications 2) product mix 3) plant and equipment 4) work effort

• Unit of output is appropriate if there is not a wide variety of products produced such as paper mills measuring in tons of paper; if not, the common element is time

Standard time is the time required to make the product using a given method of manufacture (through time study techniques)

Demonstrated capacity is figured from historical data (and is the average, not maximum output). Calculated or rated capacity is based on available time, utilization, and efficiency

Utilization = hours actually worked / available hours * 100%

Efficiency = actual rate of production / standard rate of production * 100%

Rated capacity = available time * utilization * efficiency

• The time needed for each order is the setup time and the run time

Load is the sum of the required times for all the planned and actual orders to be run on the work center in a specified period. Calculate load by 1) determine standard hours of operation time for each planned and released order for each work center by time period 2) add all the standard hours together

• Work center load report shows 1) over capacity 2) under capacity work centers

Scheduling is defined as “timetable for planned occurrences”

• To calculate back scheduling (start with the due date and work backwards to the start date) you need to know

1. quantity and due date
2. sequence of operations and work centers needed
3. setup and run times for each operation
4. queue, wait and move times
5. work center capacity available (rated or demonstrated)

• The process of develop a schedule 1) for each work order, calculate the required time at each work center 2) starting with the due date, schedule back to get the completion and start dates for each operation

• Two ways of balancing capacity available 1) alter the load (shift orders ahead or back) 2) change the capacity of available (schedule over time, adjust the workforce by hiring or firing workers, shift workforce b/n work centers, use alternate routings on work centers to shift away from bottlenecks, subcontract)