Capacity Requirement Planning, Rough cut Capacity Planning

ByRaju Pegada

214116020, NITT.

What is load? What is capacity? Are they different?

Relations of Priority and Capacity planning tools

Rough cut capacity planning

• Rough-cut capacity planning converts the MPS into requirements for critical resources in order to check whether sufficient resources are available to support the MPS.• It minimizes the chances of overstated MPS which causes raw

materials and WIP inventories to increase because more materials are purchased and released to the shop than are completed and shipped.

Basically there are three approaches to perform rough cut capacity planning:

1. Capacity planning using overall factors (CPOF) :• It is the least detailed approach. Capacity requirement is quickly computed but

is insensitive to shifts in product mix.

2. “Bill of labour” approach : • It involves multiplying two matrices, “the bill of labour” and the “master

production schedule”. This approach picks up shifts in product mix.

3. “Resource Profile” approach :• It is exactly same as second, except that it takes lead-time offsets into account.

Example: Rough-Cut Capacity PlanningTex print Company makes a line of computer printers on a produce-to-stock basis for other computer manufacturers. Each printer requires an average of 24 labor-hours. The plant uses a backlog of orders to allow a level-capacity aggregate plan. This plan provides a weekly capacity of 5,000 labor-hours.

Tex print’s rough-draft of an MPS for its printers is shown in table. Does enough capacity exist to execute the MPS? If not, what changes do you recommend?

Period 1 2 3 4 5Time required for each printer(hrs) 24 24 24 24 24Production (units) 100 200 200 250 280Capacity (hrs) 5000 5000 5000 5000 5000Load (hrs) 2400 4800 4800 6000 6720Idle (hrs) 2600 200 200 -1000 -1720Under or Over load Under Under Under Over Over

What is CRP?

• Tells you whether you have enough capacity to produce the amount of products you need.• CRP tells how many needed per month per employee per hour per

work station etc.

Types of Capacity• Design capacity: maximum output rate or service capacity an operation, process, or facility is designed

for.

• Effective capacity: Design capacity minus allowances such as personal time, maintenance, and scrap.

• Actual output: rate of output actually achieved--cannot exceed effective capacity.

Efficiency and Utilization Example

• Actual output = 36 units/day

• Effective capacity = 40 units/ day

• Design capacity = 50 units/day

Utilization = 36/50 = 72% Efficiency = 36/40 = 90%

Example of CRP• A product is manufactured in a shop using a five-stage process. The

first step in the process is to cut the sheet metal to required shapes and sizes using a shearing process. After the shearing process, the components are subjected to pressing operations to alter the shape of the flat sheet as per the design. In the third stage of the process welding is done to join the components. The next step in the process is a painting operation. After painting, the components are packed and kept ready for dispatch.The time take for each of these operations are 20, 30, 15, 12 and 6 minutes respectively

Presently, each stage has only one machine for operation. Map the process and analyze the capacity with respect to the following scenarios:

• If the shop works for an 8-hour shift with an effective available time of 450 minutes, what is the production capacity of the shop?• Where is the bottleneck in the system? If we want to add one machine,

where should we make the investment?• Identify the additional capacity required for a daily production target of

25 units. Compute the utilization of the machines as per the revised capacity calculations.

Solution:

CRP using OM explorer ExamplePlowton industries wants to start fabricating a series of faceplates (all of similar design) it had previously bought from an outside supplier. To do this, it must set up a machine shop with stamping machines. Two products produced by Plowton will require faceplates from the machines. One will require about 11000 pieces a year; the second will require 6000 pieces per year.The faceplate for the first product requires six minutes to produce, will be needed in lots of 200, and will need about 15 minutes of setup time. The faceplate for the second product will take 9minutes to produce, will be needed 300-piece lots, and have 24minute of setup time.Plowton operates 302 days per year and runs 7.5hour shift per day. Management has decided on a capacity cushion of 20%.

CRP versus RCCP RCCP should be used in the initial planning stages for master production

schedules Quick feedback

CRP should be used as a near-final capacity check on the master schedules More accurate than RCCP Formerly considered too time-consuming for routine "what-if" analysis Increasingly appropriate for “what-if” analysis as computers speed up

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