Capacity Requirement Planning
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Capacity Requirement Planning






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  • This presentation is to fulfill the requirement of the freequality presentation for Operations Management 345.

Capacity Requirement Planning Presentation Transcript

  • 1. Capacity Requirement Planning Presentation by: Kesavan Fabin
  • 2. Capacity Planning
    • Determination of Plant Capacity
    • First Level Planning
    • Design Capacity
    • Based on Long Range Forecast
    • System capacity
    • Output produced by workers and equipments
    • Sys.efficiency = Actual output
    • System Capacity.
  • 3. CRP Strategies
    • Long term capacity strategy:
          • Developing new product line
          • Expand existing facilities
          • Construct or phrase out production plants
    • Short term Capacity strategy
  • 4. Capacity Requirements Planning
    • Capacity Requirements Planning is a computerized technique for projecting resource requirements for critical work stations.
      • Inputs:
        • Planned order releases
        • Routing file
        • Open orders file
      • Outputs:
        • Load Profile for each work center
  • 5. What is Capacity?
    • Capacity = (no. of machines or workers) x (no. shifts) x (utilization) x (efficiency)
    • (Russell & Taylor)
    • Best operating level is the percent of capacity utilization that minimizes average unit cost.
  • 6. Utilization and Efficiency
    • Actual Hours Charged
    • Utilization =
    • Scheduled Available Hours
    • Standard Hours Earned
    • Efficiency =
    • Actual Hours Charged
  • 7. Reason to use CPR
    • Bottleneck Management -
      • The throughput of all products processed is controlled by bottlenecks.
      • Work centers need to be scheduled at a rate to prevent bottlenecks.
      • To eliminate bottlenecks, a time buffer inventory should be established.
  • 8. Economies of Scale: Best Operating System Level Diseconomies of Scale: Occurs only at a certain level of output eg: Higher Rework
  • 9. CRP Produces Load Profile
    • CRP uses the information to produce a load profile for each machine or work center. A load profile:
      • Compares released orders and planned orders with the capacity of the work center.
      • Identifies underloads and overloads.
    • Load percent is the ratio of load to capacity.
    • Load
      • Load percent = x 100%
      • Capacity
  • 10. What Is Load Percent?
    • Load percent is the ratio of load to capacity.
    • Load
      • Load percent = x 100%
      • Capacity
  • 11. Basic Strategies for Timing Capacity
    • CRP provides information to determine the timing of capacity expansion. The basic strategies in relation to a steady growth in demand are:
      • Capacity Lead Strategy
      • Capacity Lag Strategy
      • Average Capacity Strategy
  • 12. Capacity Lead Strategy
    • In anticipation of demand, capacity is increased.
    • This is an aggressive strategy and is used to lure customers away from competitors.
  • 13. Capacity Planning
    • How much to increase capacity demands
    • depend upon a number of factors, including:
    • Anticipated demand – volume & certainty
    • Strategic objectives
    • Costs of expansion and operation
  • 14. Capacity Lag Strategy
    • Increase capacity after demand has increased.
    • This is a conservative strategy and may result in lose of customers.
    • You assume customers will return after capacity has been met.
  • 15. Average Capacity Strategy
    • Average expected demand is calculated and capacity is increased accordingly.
    • This is the most moderate strategy.
  • 16. Adjustments to Capacity
    • Increase capacity by:
    • Adding extra shifts
    • Scheduling overtime or weekends
    • Adding equipment and/or personnel
    • Reduce load by:
    • Reducing lot sizes
    • Holding work in production control
    • Subcontracting work to outside suppliers
  • 17. Adjustments to Capacity
    • Reduce capacity by:
    • Temporarily reassigning staff
    • Reducing the length of shifts
    • Eliminating shifts
    • Increase load by:
    • Releasing orders early
    • Increasing lot sizes
    • Making items normally outsourced