30
Capacity Planning Group members::: Ankita Aggarwal(124) Naveen(135) Nitesh(139) Prabhat(140) Vashika Rastogi(180)

Capacity planning framework

  • Upload
    neha160

  • View
    1.229

  • Download
    4

Embed Size (px)

Citation preview

Page 1: Capacity planning framework

Capacity Planning Group members:::

Ankita Aggarwal(124)Naveen(135)Nitesh(139)Prabhat(140)Vashika Rastogi(180)

Page 2: Capacity planning framework

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.

Page 3: Capacity planning framework

Classical formula

C = T * E * U where, C = actual measured capacity (in

standard hours)T = real time availableE = efficiencyU = utilisation

Page 4: Capacity planning framework

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

Page 5: Capacity planning framework

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

Page 6: Capacity planning framework

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

Page 7: Capacity planning framework

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

Page 8: Capacity planning framework

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.

Page 9: Capacity planning framework

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

Page 10: Capacity planning framework

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

Page 11: Capacity planning framework

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

Page 12: Capacity planning framework

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

Page 13: Capacity planning framework

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

Page 14: Capacity planning framework

Example

New Microsoft Office Excel Worksheet.xlsx

Page 15: Capacity planning framework

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)

Page 16: Capacity planning framework

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

Page 17: Capacity planning framework

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)

Page 18: Capacity planning framework

EXAMPLE:-

New Microsoft Office Excel Worksheet.xlsx

Page 19: Capacity planning framework

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

Page 20: Capacity planning framework

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

Page 21: Capacity planning framework

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 .

Page 22: Capacity planning framework

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 .

Page 23: Capacity planning framework

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.

Page 24: Capacity planning framework

. 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.

Page 25: Capacity planning framework

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.

Page 26: Capacity planning framework

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.

Page 27: Capacity planning framework

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)

Page 28: Capacity planning framework

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

Page 29: Capacity planning framework

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.

Page 30: Capacity planning framework

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.