Capacity Requirements Planning (CRP) is a technique to project resource needs for workstations. It takes inputs like planned orders and outputs a load profile for each work center. The load profile compares released orders to work center capacity to identify underloads and overloads. CRP helps determine timing of capacity expansion using strategies like capacity lead, lag, or average. It also provides information to adjust capacity through methods like adding shifts or outsourcing work. The goal is to balance load and capacity to prevent bottlenecks.

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