lecture crp

7/28/2019 Lecture CRP

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Capacity Requirement

Planning


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Capacity Requirements Planning

Capacity Requirements Planning is acomputerized technique for projecting resourcerequirements for critical work stations.

Inputs:Planned order releases

Routing file

Open orders fileOutputs:

Load Profile for each work center


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Definitions

Planned Order Releases: Information from theMaterial 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 are currently started and need to be completed.


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Capacity Requirements Planning

A tool for:determining capacity that is available and required.

Alleviating bottleneck work centers.

Helping planners make the right decisions on

scheduling before problems develop.

Verifies that you have sufficient capacity available tomeet the capacity requirements for MRP plans.


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What is Capacity?

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

It must be determined at different levels:

plantdepartment

work center.

It is normally stated in standard hours of work.


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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.Usually 80% with a 20% cushion


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Utilization and Efficiency

Utilization is the percent of available time spentworking.

Efficiency is how well a machine or workerperforms compared to a standard output level.

Russell and Taylor


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Utilization and Efficiency

Actual Hours Charged

Utilization =

Scheduled Available Hours

Standard Hours Earned

Efficiency =Actual Hours Charged


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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.


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Basic Strategies for Timing Capacity

CRP provides information to determine thetiming 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 isincreased.

This is an aggressive strategy and is used to

lure customers away from competitors.


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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.


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Average Capacity Strategy

Average expected demand is calculated

and capacity is increased accordingly.

This is the most moderate strategy.


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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 sizesHolding 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 earlyIncreasing lot sizes

Making items normally outsourced


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CRP Used For-

To determine the capability of a system or resourceto produce 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 thecurrent projects?


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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.


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What is a load?

Load refers to the standard hours ofwork assigned to a facility.

Russell and Taylor


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What Is Load Percent?

Load percent is the ratio of load to capacity.

LoadLoad percent = x 100%

Capacity

Russell and Taylor


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