Capacity Requirement Planning (1)

7/27/2019 Capacity Requirement Planning (1)

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Vishwajeet Dixit (27)

Pranav Sachdev (28)

Shashank Tulsyan (32)

Siddharth Bhasin (40)

Aman Shrivastava


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Contents:

Introduction

Input & Output

Strategies for CRP

Inventory Control

Advantages of CRP

Summary


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What is Capacity?

The work that the system is capable of doing in a period of time.

It must be determined at different levels:

plant

department

work center.

Used to determine time frame in standard hours of work.

Capacity = (no. of machines or workers)

x (no. shifts)

x (utilization)

x (efficiency)


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What is CRP?

A tool for determining capacity that is available

and required.

Verifies that you have sufficient capacity availableto meet the capacity requirements for MRP plans.

Helping planners make the right decisions on

scheduling before problems develop.


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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


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Capacity Requirements

PlanningMRP planned

order

releases

Routing

file

Capacity

requirements

planning

Open

orders

file

Load profile for

each machine center


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Planned Order Releases: Information from the Material

Requirements Planning which tells when you should start the

order so it can be completed on time.

Routing Files: Information that details the requirements of

equipment and labor to complete the order as needed in the

required time frame.

Open Orders Files: Information regarding the orders that arecurrently started and need to be completed.

Input :


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Output:

What is a load?

Load refers to the standard hours of workassigned to a facility.

CRP uses the information to produce a load profilefor each machine or work center.

A load profile:

Compares released orders and planned orderswith the capacity of the work center.

Identifies underloads and overloads.


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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


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Capacity Lead Strategy

In anticipation of demand, capacity is increased.

Aggressive strategy used to lure customers

Capacity Lag Strategy

Increase capacity after demand has increased.

Conservative strategy resulting in loss of customers.

Average Capacity Strategy Average expected demand is calculated and capacity is

increased accordingly.

Most moderate strategy.


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Inventory Control

Supervision of supply, storage and accessibility of

items to ensure an adequate supply without

excessive oversupply.

Inventory control may refer to:

In economics, the inventory control problem, whichaims to reduce overhead cost without hurting sales

In the field ofloss prevention, systems designed to

introduce technical barriers to shoplifting It answers the 3 basic questions of any supply

chain: 1. When? 2. Where? 3. How much?
http://en.wikipedia.org/wiki/Inventory_control_problemhttp://en.wikipedia.org/wiki/Loss_preventionhttp://en.wikipedia.org/wiki/Shopliftinghttp://en.wikipedia.org/wiki/Shopliftinghttp://en.wikipedia.org/wiki/Loss_preventionhttp://en.wikipedia.org/wiki/Inventory_control_problem


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Independent Demand Inventory SystemsIndependent demand inventory system-

Ensures smooth operations & allows storing-up WIP& finishedgoods.

Service firms are unable to inventory their output, but may useappointment backlogs, labor scheduling & cross-training to balance

supply & demand.

Four broad categories of inventories-

Unprocessed purchase inputs.

(WIP)- partially processed materials not yet ready for sales.

Products ready for shipment.

(MRO)- materials used when producing (e.g., cleaners &brooms).

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The Economic Order Quantity (EOQ)Model-

A quantitative decision model based on the trade-off between annual

inventory holding costs and annual order costs.

The EOQ model seeks to determine an optimal order quantity, where the

sum of the annual order cost and the annual inventory holding cost is

minimized. is the direct variable cost associated with placing an

order.

is the cost incurred for holding inventory in storage.

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Independent Demand Inventory Systems-

Cont.

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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


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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


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Reason to use CPR-

Bottleneck Management

The output 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.


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What is CRP Used For?

To determine the capability of a system or resource toproduce a quantity of output in a particular time period.

For example:

Should the hospital hire more registered nurses to care

for the projected patient load?

Should the hospital build more rooms for patients?

What is the projected finish time for the current

projects?


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Summary-

To operate at maximum capacity, companies must use

the resources available. If resources under underutilized,

the profit margin will not be maximum.

Using capacity requirements planning helps a company

identify potential problems, such as eliminating the

possibility of overworking the current staff, overloading

machines, losing customers because the work could not

be completed as scheduled, paying penalties for late

delivery.

Documents

Capacity Requirement Planning (1)