Tools for capacity planning, measurement of capacity, capacity planning process
Capacity planning framework
Transcript of Capacity planning framework
Capacity Planning Group members:::
Ankita Aggarwal(124)Naveen(135)Nitesh(139)Prabhat(140)Vashika Rastogi(180)
What is capacity planning?Capacity planning is the process of
determining the production capacity needed by an organization to meet changing demands for its products. In the context of capacity planning, "capacity" is the maximum amount of work that an organization is capable of completing in a given period of time.
Example-If a machine can run 200hrs in a month & 2000
washers per hour are made, then the capacity of machine can be expressed 4lakhs washers per month.
Classical formula
C = T * E * U where, C = actual measured capacity (in
standard hours)T = real time availableE = efficiencyU = utilisation
Need of capacity planning
To keep low production cost To minimize loadings To meet expected demand Optimum utilization of resources To manage change in production To avoid loss of productivity
Measurement of capacity
Capacity can be measured in terms of output or input of the conversion process.
Examples:- Organization Measures of
capacityAutomobile industry No. of vehicleSteel mill Tonnes of steelHospital No. of bedsAirlines No. of seats
Factors that Influence Effective Capacity FACILITIES POLICY
DesignLocation OPERATIONALLayout SchedulingEnvironment Materials Management
Quality assurancePRODUCT / SERVICES Maintenance policies
Design Equipment breakdownsProduct or service MIX
SUPPLY CHAINSPROCESS
Quantity capabilities EXTERNAL FACTORSQuality capabilities Product standards
Safety regulationsHUMAN FACTORS Unions
Job Content Pollution control standardsJob DesignTraining and ExperienceMotivationCompensation
Learning CurveAbsenteeism & labor turnover
Capacity time horizon Long-range capacity planning- strategic
Time horizon of 3 to 10 years Physical plant expansion Plant level
Medium-range capacity planning- tactical Time horizon of 6 months to 3 years Aggregate production planning fits here Only critical resources are considered
Short-range capacity planning- operational Time horizon of 0 to 6 months/material
planning fits here Detailed, at the work center level
Contd….. In the long range, how much to increase
capacity depends on:
1) the volume and certainty of anticipated demand,
2) the strategic objectives in terms of growth, customer service, and competition, and
3) the costs of expansion and operation.
Capacity planning framework
•Estimate the capacity requirements for the planning horzion
•Compute the available capacity & identify quantum of capacity to be augmented
•Identify available alternatives & select the best one for capacity augmentation
Step 1Estimating Total Requirement Two major sources
Labour Machines
Capacity calculations are done on the basis of man hour & machine hour requirements per unit of product manufactured
Estimating Labour & machine requirements
Labour requirement depends on two factors- Amount of standard labour hours required
per unit of the product Efficiency of Labour
Capacity requirements ( labour) = D*SL
EL
Contd…..
Here , Projected demand per unit time during the planning horizon = D
Standard labour hours required per unit of the product = SL
Efficiency of labour = EL
Computation of machine requirement
Capacity requirements ( Machine) = D*SM
EM Here , Projected demand per unit time
during the planning horizon = D
Standard machine hours required per unit of the product = SM
Efficiency of Machine = EM
Example
New Microsoft Office Excel Worksheet.xlsx
Step 2 computing capacity availablity Function of two parameters:-
System availability f( no.of working days & the no. of
hours per day)
Resource availability F( maintenance schedules & break down
behaviour in case of machines and Absenteeism in the case of labour)
Contd…..
Capacity available in the system can be computed by-
System availability:- No. of working days in the planning
horizon: Nd No. of working hours per day: h System availability( hours) = Nd * h
Contd…..
Resource availability:- No. of machines available : Nm
Machine: Time lost in breakdown & maintenance = b%
Labour: Absenteeism of the workers = a% No. of workers available: NL
Capacity available in the system ( Hours):- Machine: Nd * h * NM * (1-b/100) Labour: Nd * h * NL * (1-a/100)
EXAMPLE:-
New Microsoft Office Excel Worksheet.xlsx
Types of Capacity Planning1. Fixed capacity 2. Adjustable capacity 3. Immediate capacity 4. Potential capacity 5. Design capacity 6. Operating capacity 7. System capacity 8. Rated capacity 9. Utilised capacity
1. FIXED CAPACITY- The capital assets the company will have at a particular time .
For e.g..- building, equipments etc.
2. ADJUSTABLE CAPACITY-The size of the workforce, the number of hours per week they work, the number of shifts & extent of sub-contracting
3)DESIGN CAPACITY - The planned rate of output of goods or services under normal or full scale operating conditions.
4)SYSTEM CAPACITY-The maximum output of a specific product or product- mix that the system of workers & machines is capable of producing .
5. POTENTIAL CAPACITY The capacity that can be made available to
influence the planning of senior management e.g. in helping them to make decisions about
overall business growth, investment etc. This is essentially a long-term decision that
does not influence day-to-day production management.
6. IMMEDIATE CAPACITY The amount of production capacity that
can be made available in the short-term. This is the maximum potential capacity - assuming that it is used productively .
7) EFFECTIVE or PRACTICAL or OPERATING CAPACITY
Not all productive capacity is actually used or usable. It is important for production managers to understand what capacity is actually achievable. Effective capacity is the capacity which is used with the current budgeted period.
. NORMAL or RATED CAPACITY This is the estimated quantity of output or
production that should be usually achieved as per estimation done by industrial engineering department.
9. ACTUAL or UTILIZED CAPACITY This is the actual output achieved during a
particular time period. The actual output may be less than the
rated output because of short range factors.
Definition of decision tree: A decision tree is a schematic model in
which different sequences and steps involved in a problem and the consequences of the decisions are systematically portrayed.
or
Decision trees are tools for helping you to choose between several courses of action. They provide a highly effective structure within which you can lay out options and investigate the possible outcomes of choosing those option.
Drawing a decision tree:
1. Draw a small square to represent decision point.
2. Write the solutions along the line/branches.
3. Draw a small circle to represent the outcome.
4. Draw another square if the outcome is another decision.
Decision Trees and Capacity Decision
RS 8,50,000/yearHigh revenue
Moderate revenue RS 4,00,000/yearA
Add new capacity
High revenue
RS 2,00,000/year
RS 4,50,000/yearBexpand
RS 1,80,000/yearC
Go for sub contracting
1Moderate revenue
Moderate revenue
2Add new capacity
Continue with sub contracting
RS 8,50,000/yr (revenue) Rs 3,50,000/yr (revenue)
Queuing FormulasSingle Server Model with Poisson Arrival and Service Rates:
M/M/1
1. Mean arrival rate:2. Mean service rate:3. Mean number in service:4. Probability of exactly “n” customers in the system:5. Probability of “k” or more customers in the system:6. Mean number of customers in the system:
7. Mean number of customers in queue:
8. Mean time in system:
9. Mean time in queue:
Pn
n ( )1P n k k( )
Ls
Ws1
Wq
Lq
WAITING LINE MODELS This models make use of queueing
theory fundamentals to analyse the impact of alternative capacity choices of important operational measures in operating systems such as queue length , waiting time and utilisation of resources.
Conclusion Planning should take into account not only
facility production and distribution costs, but also lost sales.
Capacity should be effectively planned by devising various methods of augmenting it.
The optimal capacity of the facility is that at which sum of costs of under capacity and over capacity is minimum.
The primary purpose of capacity planning is to match the company ‘s production capability with customer in the most profitable way.