Detailed Scheduling and Planning (Lesson 6)

UUnit nit 22 DDetailed etailed SScheduling cheduling aand nd PPlanning lanning Lesson 6 The Process of Detailed Capacity Planning

Unit 2

Detailed Scheduling and Planning

Unit 2

Detailed Scheduling and Planning

© 2004 e - SCP -The Centre for Excellence in Supply Chain Management No portion of this publication may be reproduced in whole or in part. The Leading Edge Group will not be responsible for any statements, beliefs, or opinions expressed by the authors of this workbook. The views expressed are solely those of the authors and do not necessarily reflect any endorsement by The Leading Edge Training Institute Limited. This publication has been prepared by E-SCP under the guidance of Yvonne Delaney MBA, CFPIM, CPIM. It has not been reviewed nor endorsed by APICS nor the APICS Curricula and Certification Council for use as study material for the APICS CPIM certification examination.

The Leading Edge Training Institute Limited Charter House Cobh Co Cork Ireland

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Detailed Scheduling and Planning Preface............................................................................................................4 Course Description................................................................................................................. 4

Lesson 6 – The Process of Detailed Capacity Planning....................................5 Introduction and Objectives.................................................................................................. 5 Capacity Planning and Priority Planning ............................................................................ 5 Manufacturing Environments............................................................................................... 8 Production Methods ............................................................................................................... 8 Process-Oriented Production Structures ........................................................................... 11 Data Needed for Capacity Planning ................................................................................... 12 Lead Time ............................................................................................................................. 13 Distributing Lead Time ....................................................................................................... 14 Work Centers ........................................................................................................................ 15 Calculating Capacity............................................................................................................ 16 Capacity and Load Sources................................................................................................. 17 Queuing ................................................................................................................................. 18 Scheduling Strategies........................................................................................................... 19 Calculation of Load Profiles................................................................................................ 22 Finite Capa city Planning Techniques................................................................................. 23 Scheduling of Manufacturing and Logistics Operations .................................................. 25 Mixed Manufacturing .......................................................................................................... 29 Capacity-Oriented Materials Management (Corma) ....................................................... 30 Summary ............................................................................................................................... 32 Further Reading ................................................................................................................... 32 Review ................................................................................................................................... 33 What’s Next? ........................................................................................................................ 34

Appendix.......................................................................................................35 Answers to Review Questions .............................................................................................. 36

Glossary ........................................................................................................38

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Detailed Scheduling and Planning Preface Course Description This document contains the sixth lesson in the Detailed Scheduling and Planning unit, which is one of five units designed to prepare students to take the APICS CPIM examination. Before completing the Detailed Scheduling and Planning unit, you should complete the Basics of Supply Chain Management unit or gain equivalent knowledge. The five units that cover the CPIM syllabus are: Basics of Supply Chain Management Detailed Scheduling and Planning Master Planning of Resources Execution and Control of Operations Strategic Management of Resources Please refer to the preface of Lesson 1 for further details about the support available to you during this course of study. This publication has been prepared by E-SCP under the guidance of Yvonne Delaney MBA, CFPIM, CPIM. It has not been reviewed nor endorsed by APICS nor the APICS Curricula and Certification Council for use as study material for the APICS CPIM certification examination.

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Detailed Scheduling and Planning Lesson 6 – The Process of Detailed Capacity Planning Introduction and Objectives This lesson examines the characteristics and methods used to ensure sufficient capacity to support the material plan. The lesson also looks at how work center and routing data is used and explains the use of efficiency and utilization ratios in the determination of rated capacity. The balance of demand and capacity, time availability and due dates are examined along with finite and infinite capacity planning techniques. Finally, the lesson explains the integration of scheduling and capacity planning with material planning for order release and control. On completion of this lesson you will be able to: Explain detailed capacity planning at an intermediate level Explain the effect of the manufacturing environment on the choice of planning technique and information requirements Describe the steps by which work center and routing data are used to schedule orders and identify resource loads in each time period Use efficiency and utilization ratios to determine the rated capacity of a work center Identify load sources for planned and released orders Explain the effects of queuing on job-shop production Describe planning, scheduling, and order release preparation techniques in a variety of production environments

Capacity Planning and Priority Planning Planning for capacity takes place at several distinct stages in the planning and execution hierarchy. Initial top- level resource planning occurs alongside the sales and operations priority plan. Once the master schedule is complete, a rough cut capacity plan verifies the validity of the master schedule. Detailed scheduling and planning must be balanced by detailed capacity requirements planning. Note that the ultimate validation of the plan is successful execution, which is referred to as demonstrated capacity.

Priority Planning

Capacity Planning

Sales and Operations Plan

Resource Requirements Plan (RRP)

Master Production Schedule

Rough-Cut Capacity Plan (RCCP)

Material Requirements Planning (MRP)

Capacity Requirements Plan (CRP)

Purchasing and PAC

Input/Output Control

Capacity Requirements Planning (CRP) takes place at the MRP level of the overall planning process. CRP is used to validate the material plan.

Operation Sequencing

Capacity Definition Capacity is the ability of a resource to produce output per time period. Capacity required represents the system capability needed to make a given product mix (assuming technology, product specification, etc.).

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Detailed Scheduling and Planning Capacity Planning Definition Capacity planning is the process of calculating required capacity in each workstation to manufacture sufficient material to meet requirements. This process may be performed at an aggregate or product- line level (resource planning) at the master schedule level (rough-cut capacity planning) and at the detailed or work center level (capacity requirements planning). Load The load of a work center, production line, or plant is the amount of work scheduled for and released to it for a specific time period. The load is usually a measure of standard hours of work or units or production. The load is also referred to as the workload. MRP

Work Centers

CRP

Routing Information

Capacity Requirements Plan

Capacity Planning Issues CRP receives all manufacturing orders from MRP and breaks these down into individual operations. CRP calculates the standard hours required for each batch at each work center. These hours are then totalled for each work center in each time period and compared to available hours for each work center. For effective capacity planning and consequently efficient production, manufacturing and service industries need to calculate: The capacity required to implement master planning effectively The necessity or otherwise of extra shifts, overtime, short-time work, part-time work or other capacity changing strategies, and the times and places such strategies will be required The areas in capacity and orders where adjustments can be made The possibility of reducing lead times and numbers of orders Aims and Objectives of Capacity Planning Capacity planning, like materials planning, aims to ensure high service levels, short delivery times, high delivery reliability rates, and flexibility in responding to customer requests. In addition, it aims to minimize invested capital by reducing work-in-process inventory levels and optimizing waiting times. To fulfil these aims, capacity planning must ensure: Efficient use of available capacity through good capacity utilization at a constant level © Copyright Leading Edge Training Institute Limited

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Detailed Scheduling and Planning Prediction of bottlenecks Ability to adapt to changing conditions Minimal fixed costs in production Minimal administration costs To meet the aims and objectives outlined above, large bodies of data from open and planned orders must be considered. Often, detailed capacity planning is sufficiently complex to require computer software to ensure the optimal balance between conflicting objectives of high service levels and low costs are met. Capacity planning aims ultimately to balance the load arising through orders with the capacity available to process those orders. The general principles of capacity planning remain the same despite the planning priorities and manufacturing environments. However, the manufacturing environment and planning priority have an effect on determining the technique used and the kind of master data used as input data. For example, rough-cut routing data may be used for long-term planning, whereas detailed and accurate routing data will be used in shorter term planning. Capacity cannot be stored. Therefore, capacity or quantity and due dates must be considered and planned together. In an ideal situation, the load will always match the available capacity. Even when the capacity varies, due to holidays for example, the load must be adjusted to match. Conversely, when the load varies, due to seasonal trends for example, capacity must match the load. Costs of Poor Capacity Planning Poor capacity planning can lead to an ever-worsening spiral of cause and effect that adversely affects all aspects of production and, ultimately, customer service. If the number of customer orders increases, the number of work orders to the production floor will also increase, leading to an increased load on capacity. When the number of orders is higher than the available capacity, queues of workin-process inventory will build up behind each work center. This leads to a lengthening lead time for each order. As a result the orders are unlikely to meet there due date (the delivery date required by the customer). To alleviate this problem, planners may increase lead times, particularly queue times, to plan more realistically. This results in customer orders being released earlier, which further increases the load on capacity. The only way to alleviate the problem at this stage is to increase capacity. 1 Increased Increased orders orders

7

22

Orders Orders are released released early early

Greater Greaterload loadon on work workcenters centers

Cycle of Poor Capacity

6

Planners Planners increase increase standard standardlead lead times times

5 Failure Failure to to meet meet due due dates dates

3 longer longerqueues queues

44 Longer Longeractual actual lead leadtimes times

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By planning work center loads ahead of time, queues can be reduced, thereby resulting in shorter lead times, ensuring that orders can be released on time.

Manufacturing Environments Although material and capacity planning is required in every type of manufacturing environment, the need for material and capacity may be determined differently depending on the type of environment. Each environment has the same basic requirements but the relative importance of each requirement differs according to the environment. This has a major effect on the operation of MRP and CRP. Make -to-Order Either of the following approaches may be implemented in this environment: The company produces or purchases standard products which they then modify to meet particular customer requirements. Effectively, the standard products are made to stock but are then customized for particular orders. The company forecast demand and stock materials such as raw material and components from which they make their products. This shortens the lead time to the customer. Engineer-to-Order This type of environment has a very long lead time as all elements of production from initial product design are part of the customer lead time. The raw materials and other requirement s are ordered only when a customer order is received. This approach is used for high value products such as large specialized machinery. Assemble-to-Order In this environment all sub-assemblies are manufactured and stocked as inventories, using forecasts to determine amounts. The final assembly into finished goods is triggered when a customer order is received. A final assembly schedule is used to ensure customer orders are fulfilled on time. Car manufacturers typically use this approach. Make -to-Stock A make-to-stock company uses finished goods warehouse replenishment orders or distribution requirements planning to determine what should be produced. It maintains specified levels of finished goods to meet forecast customer demand. The products are then distributed from finished goods warehouses. Examples include manufacturers of window frames, cereal, soap and cleaning products.

Production Methods Many companies may employ several production methods at once. The choice of method is influenced by the quantity required and the operating philosophy of company management. Where high quantities are needed a dedicated production facility may be set up for a particular item. Where quantities are low, the item may be produced in a more general purpose facility along with other items.

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Detailed Scheduling and Planning

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Detailed Scheduling and Planning Project Production AutoCon is a typical project production company. IT employees highly qualified engineers to design and build custom automation solutions for large process-oriented manufacturers. AutoCon’s main business is with breweries. It provides the vats, pipes, valves and software control systems when a brewery decides to expand its operations. As the product must closely match customer requirements, each design is unique. Most projects of this nature require custom design. Processes are very flexible and can provide a broad range of product designs. In such environments, the program evaluation and review technique (PERT) or the critical path method (CPM) are used to evaluate capacity requirements. PERT uses an algorithm to identify the critical path of a project, in other words, the sequence of activities that will determine the completion time. PERT time estimates are probable figures, based on time estimates for each activity in the critical path, and offering a range that incorporates pessimistic, most likely, and optimistic estimates. CPM identifies each activity in a project along with its estimated completion time. From this information, the critical path, or longest path to completion, can be identified. This is the path that will constrain the overall time for the project. Load must be planned with capacity at the level of production planning. Detailed capacity planning is of little use here as capacities must be sufficiently flexible to adjust to the schedule calculated by CPM. Job-shops Job shops are usually characterised by intermittent production. Intermittent production makes items to match customer specifications. However, this is not typically one-of a kind produc tion. The constraining work center may vary based on the product mix and order volumes. Detailed planning is very important in a job shop environment where work centers must be flexible in order to adapt to continual load changes and queues. Planning and scheduling capacity issues ahead of time helps eliminate excess lead time and provide alternative plans to avoid bottlenecks. The techniques discussed in this lesson are most useful with job shop or intermittent production, unless capacity is inflexible, in which case, the techniques presented in the Execution and Control of Operations module are of use. Kilner’s pottery company employs a job shop manufacturing environment to produce customized pieces of pottery. These are based on basic designs such as vases, urns, jugs and charger plates, but are individua l pieces in their use of colour and surface pattern. The product mix varies considerably depending on the time of year and the type of customer. Batch Production Batch production is used to produce items of similar design in varied amounts. Usually, the items ordered are a repeat of previous items. A batch manufacturer may require some days or several weeks to produce an order. This means that production cycle times may be considerably less than elapsed time from order receipt to order shipment. CRP is useful when the product mix and volume changes. © Copyright Leading Edge Training Institute Limited

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Typical examples of batch manufacturing include the manufacture of soft drinks, biscuits, and vitamin tablets or over-the-counter pharmaceutical medicines. Assembly Lines Repetitive manufacture relies on line balancing to adjust production to a specific cycle rate. Repetitive methodologies aim for minimal setups, inventories and lead times. In repetitive production work orders are unnecessary and production scheduling and control deals with production rates. Ava ilable capacity is calculated at the level of the MPS rather than to test the validity of the material plan. The master schedule sets the production rate, thereby determining the load. Capacity must be adjusted along the assembly line to maintain that rate. Beyond rough cut capacity planning, there may be no further need of capacity planning in repetitive manufacture. Many car manufacturers employ assembly lines to build their products, as do manufacturers of other mass-produced electronic goods such as kettles, CD players, televisions, etc. JIT Production As with repetitive manufacture, capacity planning in a JIT environment is mainly complete at MPS level. It involves determining the type and number of Kanban cards needed for each Kanban feedback loop. However, the principles of infinite loading apply to JIT-Kanban production. The Toyota factory is the ultimate example of a JIT production environment. Toyota was the originators of the Just-in- Time philosophy. Continuous Process or Flow Production The physical design of many process facilities may itself be a constraining factor in planning. Capacity will mainly depend on the construction of the plant as there are minimal interruptions in the actual processing. The choice of materials often tends to be limited. Both material and detailed capacity planning must consider specific data structures and scheduling techniques compared to those suitable for job shops. In this type of industry Execution and Control of Operations is probably more important than capacity requirements planning. Oil refineries and electricity generating plants are examples of continuous process manufacturing environments. Combinations Some companies incorporate several different manufacturing environments under one roof. For example, a manufacturer of confectionary products may have continuous production of chocolate and candy which are the components of batch-produced items such as boxes of soft centers or chocolate-covered toffees. It is unlikely that a single system would satisfy the planning needs in such an environment. The best approach is to choose the most appropriate tools for each production environment although this may necessitate maintenance of several different systems. © Copyright Leading Edge Training Institute Limited

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Detailed Scheduling and Planning

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Detailed Scheduling and Planning 1. Which of the following statements about CRP are correct? A. It balances and validates detailed scheduling and planning at the MRP level B. It provides a detailed plan of scheduled operations Review Q

C. It aims to ensure good capacity utilization at a constant level D. Poor CRP leads to increased queues and lead times

Process-Oriented Production Structures Some of the typical characteristics of the process industry are by-products, production structures with cycles, and continuous flow production. Material and capacity are equally valuable in productio n processes. Process-oriented production sheets (also called process structures, process trains, or production models) are often used in process-oriented industry. The following diagram is an example of a process-oriented production structure. Raw Material

Stage 1

Energy Capacity

Process 1 Step 1

Flow resources

Equipment

Step 2

By-product Flow resources

Step 3

Flow resources By-product

Process 2 Components

Step 1

Flow resources

Step 2

Flow resources

Step 3

Waste

Primary Product

Stage 2 Process 1 Process 2 Stage 3 Final Product

An item in production goes through several stages and each stage often produces by-products. As it may not be possible to stock intermediate products during the stage, flow resources must be defined. A production stage can be split into individual processes. Items, capacity and production equipment are allocated to a process, which is divided into steps or unit operations. Each step corresponds to an individual operation in a routing sheet. For example, ABC Beverages produce fruit smoothies. This involves 3 produc tion stages: squeezing and crushing fruits, combining and treating the ingredients, and finally, packaging.

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Detailed Scheduling and Planning In the first stage, each individual fruit is prepared as a smoothie ingredient. This may involve a combination of washing, peeling, crushing or squeezing depending on the type of fruit. This stage involves manual labour, machinery, and power to transform the raw materials into fruit juice. The by-products at this stage are peels and pulp. In stage 2, these fruit juices are mixed with the aid of machinery and then pasteurised. There is little waste at this stage. The final stage of production involves filling bottles, sealing bottles, and labelling them. Although mostly automated, it requires manual supervision. Some waste can occur due to machine unreliability. Usable resources include fruit, capacity and equipment.

Data Needed for Capacity Planning Routing A product’s routing information is the data detailing the specific method of manufacture for that item, including: The operations to be performed The sequence of those operations The work centres used to perform the operations The standards required to set up and run the operations Possibly information on tooling, operator skills, inspection and testing. Each part, assembly, or product has its own routing information. Products may follow different paths through the work centers. Often the number of possible routes is large. For example, a pharmaceutical company has four tablet rooms, three blister packing stations, 2 bottling stations, and 1 final packaging room. Any item produced there could follow one of 20 routes. Routing Data Routing data includes information on the sequence of operations needed to complete a manufacturing order. The routing data includes: An operation identification code (often numbered in units of 10 to allow for extra operations) Operation description (identifies work to be done) Planned work center (usually along with the operation description) Standard setup and tear-down time Standard run time per unit Tooling requirements.

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Detailed Scheduling and Planning 2. At the MRP/CRP level, which of these techniques are used in job shop production? A. CPM Review Q

B. PERT C. Backward scheduling D. Level production planning

Lead Time In materials management, lead time is a basic part of manufactured and purchased products. The Bill of material and routing sheet for each item generally contain all the information required to establish lead times. Definition Lead tie is the span of time required to perform a process or series of operations. In this section, we are looking at lead time as it relates to the total time needed to produce an item. Lower-level purchasing lead time is not considered. Elements of Manufacturing Lead Time Manufacturing lead time comprises several elements, some of which are more flexible and subject to change than others. Each element is discussed below.

Queue time

Setup

Run

Wait Move

Queue Time Queue time refers to the amount of time which is spent waiting at a work center before work is actually performed. This element of manufacturing lead time is particularly prone to increase when efficiency of production is lost. Queue time is often assumed to account for 90% of total manufacturing lead time. In many job shop environments, great efforts are made, employing JIT techniques, to reduce queue time. Queue times can vary greatly and are therefore difficult to estimate. Queue time is affected by the balance between load and capacity, unplanned downtime, absenteeism and rework. At detailed capacity planning, an approximate estimate of load between time periods is attempted. It is unnecessary to go any further than that. Queues can be reduced by reducing setup times, leading to reduced batch sizes. It can also be reduced by ensuring that a work center is not working to complete capacity so that it can speed up to reduce any queues. Sometimes extra employees are sent to work centers where queues begin to build. Queue management aims to control lead time and fully utilize bottlenecks. The first step is to examine the nature of the queues at the work center and then apply techniques such as operation overlapping and operation splitting where required. © Copyright Leading Edge Training Institute Limited

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Detailed Scheduling and Planning The following diagrams show the types of queue that may be encountered. Managed Queues 100

80

80

Queuelength(hours)

Queue length (hours)

Excessive Queues 100

60 40 20 0 1

2

3

4

5

6

7

8

9

60 40 20 0

10

1

2

3

4

5

Days

Uncontrolled Queues

7

8

9

10

7

8

9

10

Excessive Idle Time 100 Queue length (hours)

100 Queue length (hours)

6 Days

80 60 40 20 0 1

2

3

4

5

6

7

8

9

80 60 40 20 0

10

Days

1

2

3

4

5

6 Days

Setup Time The time needed to prepare a machine or other resource for the operation it is to perform is called set up time. It is measured from the time of production of the last good piece of one item until the time of production of the first good piece of the next item. The activities involved in setup may include: Preparation of equipment Assembling a work stations Tear-down of previous operation Internal elements while the machine is switched off, for example, rethreading labels on a labelling machine. External elements: activities performed while the machine is running, for example, calibrating the fill level on a bottling machine. Run Time Run time is the amount of time needed to perform an operation on a specific piece or lot once setup has been completed. Wait Time This is also called idle time and refers to the amount of time a job remains at a work center after an operation has been completed but before it has been moved onto the next operation. Move Time Move time is the amount of time spent in transit from one operation to another.

Distributing Lead Time Some of these elements of lead time represent a load on work centers while others do not. Queue time and wait time for example, do not impose a load on any equipment or resources but setup time and runtime do. The total lead time for a manufacturing order is calculated by adding together all the lead time elements across all the operations detailed in the routing. As the order progresses through the route, the operation times in each work center can be recorded. The routing guides the detailed capacity planning process in the same way as the BOM guides the MRP process. © Copyright Leading Edge Training Institute Limited

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Detailed Scheduling and Planning Operation and Interoperation times Operation time is used to denote time that is used in setup and run of operations on a work station making it unavailable for other use. Interoperation time includes wait time, move time, and queue times. These use up space and transport facilities, but not work center facilities, and therefore do not constitute load. Sources of Lead Time Element Data The different elements of manufacturing lead time can be found or measured in various ways. Some of the typical sources of lead times are displayed in the following table: Lead Time Element

Source of Data

Queue time

Average demonstrated queue time

Setup time

An engineering standard value

Run time

Engineering standard value

Wait time

Estimation based on experience

Move time

Distance to travel multiplied by the move rate

Note that the runtime and often the setup time create a load on the work centers. The other lead time elements do not: they constitute interoperation time. Notably, only one of the elements of manufacturing lead time actually adds any value to the product: that is run time. The other elements are of no value whatsoever to the customer.

Work Centers A work center, or load center is a production area, usually comprising several people and machines with identical capabilities, which counts as a single unit in capacity requirements planning. A more detailed definition of the term work center may be found in the APICS Dictionary. In job shop environments, work centers are often separate departments. A work center may be physical or virtual. For example, a company that employs tele-workers to provide design documents for various publications will have a team of designers scattered across the country or even internationally. However, a group of designers on a similar project will be counted as one work center. Data on Work Centers Detailed information on capacity and lead times related to each work center is crucial for effective capacity planning. The information available on work centers usually includes the following: Work center identification code Description of work center Number of scheduled shifts Number of machines, work stations, and/or operators, depending on which of these limits capacity Hours scheduled per shift Workdays per period © Copyright Leading Edge Training Institute Limited

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Detailed Scheduling and Planning Utilization and efficiency factors Planned queue time (a timing factor used to calculate lead time)

Calculating Capacity Capacity may be defined and calculated in a variety of ways, usually involving measures such as theoretical capacity, demonstrated capacity, rated capacity, utilization or efficiency quotients. Rated capacity is used when deciding on the load to be scheduled as it allows for setup and run time. Theoretical Capacity Theoretical capacity is a simple calculation based on the amount of time a work station is available. For example, if there are 4 machines available for one 8 hour shift on five days of the week, the overall hours available will be 320 machine hours. Dividing figure this by the standard hours per unit (.2) gives a theoretical capacity of 1600 units. Theoretical capacity =

no. machines x no. hours available x standard hours per unit

Demonstrated Capacity Demonstrated capacity is derived from historical records of the work station capacity to date. It is usually an average figure based on several months worth of data. Demonstrated Capacity

=

sum of output in last n periods Number of periods (n)

For example, if the output of a unit in the months of January through June was 280, 220, 270, 275, 290, and 265, the average output would be equal to 1600 divided by 6, or just under 267. Rated Capacity To find the rated capacity involves the use of utilization and efficiency quotients, which are explained in more detail below. The basic principle behind rated capacity is that it considers the amount of time that a work station is actually used and its operating efficiency as well as theoretical capacity and standard hours per unit. Rated Capacity

= hours available x utilization x efficiency x standard hours per unit

Utilization The utilization quotient is a measure of the amount of total hours available that were actually worked. This cuts out time spent on setup or repair during the production run. Only time when the machine is running productively is counted in this measure. Utilization

=

Actual hours worked Total hours available

Efficiency The efficiency quotient measures the actual rate of production for a work center against the theoretical measurement of standard hours produced. If an operation is running very efficiently it may produce more units per hour than the rate recorded as standard for that work center. Efficiency

=

Standard hours produced Actual hours worked

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Detailed Scheduling and Planning 3. What data is required for capacity requirements planning? A. Forecast demand, lead times and work center capacity B. MPS data, BOM information, utilization and efficiency ratings Review Q

C. Type of production environment, routing, BOM and MPS data D. Lead times, work center capacity, utilization, efficiency, and routing data

Capacity and Load Sources Detailed capacity planning must take into account all possible sources of load that can be predicted in advance. These include items such as open and planned orders, rates of rework, scrap and yield, scheduled downtime, testing time, and production of extra material needed for testing.

Orders

Input Rate

Open Orders or Scheduled Receipts Information on open orders is maintained in an order status file in production control. The information will include the due date, order quantity, and the number of operations completed / outstanding for the order.

Load Capacity

Manufacturing Lead Time

Output

Planned Orders Planned order releases and firm planned orders may be directly taken from MRP to help in the capacity requirements planning process. The information required includes the release date, receipt date and order quantity for each planned order. Other Load Sources Although not always easy to predict, it is important to include allowances for other sources of load such as rework, scrap, yield, downtime, production of samples, test material, or other nonsaleable items.

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Detailed Scheduling and Planning Queuing The primary objective of detailed capacity planning is to show a comparison between the load imposed on a work center and the capacity of each work center over a period of time. In each time period capacity overload or underload may be identified and, if necessary, replanning can take place to redress the balance. Capacity is the rate at which work can be accomplished. Therefore, the rate of flow into a work center, which constitutes the load on that work center, must be determined so that it closely matches the capacity of the work center. If the flow or orders exceeds available capacity, queues will form at the beginning of the work center. If the flow of orders reduces or capacity is increased, the load will then become stable or even decline. Detailed capacity planning is an attempt to regulated the arrival of work orders and the capacity of the work center in order to achieve a steady flow without buildup of queues. Queues lengthen work center lead time and are to be avoided as this will contribute to the overall manufacturing lead time for the item. Job shops and Queues In a job shop environment, good utilization of capacity and short queue times are impossible to achieve simultaneously. If capacity utilization is close to 100%, queue times increase dramatically. For this reason, most job shops are planned with capacity utilization significantly below 100%.

Mean Queue Times

While it is often necessary to build up queues at bottleneck work centers in a process to ensure high utilization, in a job shop where no one work center creates a bottle- neck or constraint on the process, it is more important to reduce queues than to achieve high utilization.

60

40

10 100% Utilization

Reasons for Queues before Work Centers At any point where the rhythm of operation in a particular work center fails to correspond to the rhythm in which orders are received, a waiting queue begins to build up. To minimize lead times, excessive queues should be avoided, although there are certain valid reasons for maintaining queues between workstations such as those listed below. To guard against disturbance on a workstation such as scrap, rework, material shortage, or absence of operator To improve utilization of a constraining work center To guard against imbalances in process time To cushion disturbances around workflow, such as replenishment of materials or on-the run maintenance of machinery To balance flow around bottleneck work centers © Copyright Leading Edge Training Institute Limited

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Detailed Scheduling and Planning Queues to reduce production costs, for example, to save on setup time To motivate workers as high queue levels tend to increase speed of work, although it is important to ensure the queue is not big enough to demoralize workers Queues may be deliberately planned to address some of the issues listed above. However, those planning or tolerating queues must remain aware that queues result in increased lead times and increased work- in-process (WIP) inventory. Both of these mean fewer inventory turns and therefore a greater amount of money is tied up in WIP inventory. These disadvantages must be weighed against the possible advantages of maintaining queues.

Scheduling Strategies Using techniques such as scheduling strategies, load profile calculations, finite and infinite loading, the capacity of a plant can be evaluated. By comparing and contrasting the results of the different techniques, much can be learned about current operations and possible methods of optimizing the operation. The method of scheduling used in an organization will depend on the following factors: The volume of orders The nature and complexity of operations The need to minimize completion time The need to maximize utilization The need to minimize WIP The need to minimize customer wait time Backward Scheduling With backward scheduling, the latest due date for an order is calculated. Then the lead time is applied to determine the latest start date for the production of that order. Forward Scheduling Forward scheduling begins with the order start date (the earliest start date for the order) and calculates the earliest due date for each operation and subsequently the earliest completion date for the order. Earliest possible start date

Backward Scheduling OP 20

OP 10

OP 30

OP 40

Forward Scheduling OP 10

OP 20

OP 30

OP 40

Latest possible due date

Time

It is a good idea to perform backward scheduling from a customer’s requested date to determine a start date. If the start date has already passed, then it will be necessary to forward schedule

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from the current date to provide an accurate due date, which can then be communicated to the customer. Capacity requirements planning usually uses backward scheduling as this is the most efficient use of time and resources while ensuring that the customer’s requested due date is met. Central Point Scheduling This technique combines both forward and backward scheduling. The central point date is the start date of a critical operation, for example, one that is performed at a constraining work center. This critical operation determines the rest of the lead time and therefore both the start and due dates. In other words, the start and due dates for the order are dependent on when the order can be processed on the constraining work station. Earliest possible start date

Critical Point

Backward Scheduling OP 10

OP 20

Forward Scheduling OP 30

Latest possible due date

OP 40

Time

From the central point, which marks the beginning of the critical operation, forward scheduling is used to set subsequent operation times and due dates, while backward scheduling is used to determine the timing of all operations that must occur before the central point. Forward scheduling tends to have all operations completed as soon as possible, thereby bringing forward the due date. Backward scheduling has the opposite effect, where operations are timed to ensure that the order will be complete just in time for the latest possible due date. Dates determined by central point scheduling usually fall somewhere in between. Central Point Scheduling and Theory of Constraints (TOC) Central point scheduling is useful for constraint-oriented finite loading. The theory of constraints involves drum-buffer and rope scheduling, where the drum is the constraining operation in the process and therefore sets the tempo of the entire process. The buffers are queues in the process to guard against the constraining workstation operating at less than full capacity, and the rope is the Kanban or other mechanism that moves work along the process. Performance measurement of throughput, inventory and operating expense is important to ensure the process is running smoothly, and thinking process tools are used to identify the root causes of any problems and potential process improvements. Optimized production technology (OPT) is a practical application of the theory of constraints with which central point scheduling can be very effective. Quite often the earliest start date is the current date, particularly for urgent customer production orders or early released orders. In such cases, probably scheduling may be used. Probable Scheduling Like central point scheduling, dates determined by probable scheduling fall somewhere in between the extremes of first possible starting date and last possible due date as determined by forward and backward scheduling respectively. Probably scheduling builds in slack time. In backward scheduling, slack time is the difference between the latest possible start date and the © Copyright Leading Edge Training Institute Limited

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earliest possible start date. In forward scheduling it is the difference between the earliest possible due date and the latest due date. Slack time provides for flexibility in planning. Positive slack time (where extra time is built in between operations on top of expected wait, move, and queue times) leads to longer lead times. Negative slack time (where time periods between operations are shortened) requires that lead times be shortened. The example below is of probable scheduling using positive slack time in comparison with forward and backward scheduling. Earliest possible start date

Backward Scheduling OP 20

OP 10

OP 30

OP 40

Probable Scheduling OP 20

OP 10

OP 30

OP 40

Forward Scheduling OP 10

OP 20

OP 30

OP 40

Latest possible due date

Time

The technical process itself determines the duration of operations and the technical and interoperation time. Slack time can only be gained by increasing or reduc ing non-technic al interoperation times or administration times. Probable scheduling determines the lead time stretching factor, a numerical factor by which the non-technical interoperation and administrative times are multiplied. By combining several strategies, it is possible to build a powerful simulation of the capacity scheduling process. 4. Which of the following is NOT a load source that must be accounted for in CRP? A. Open orders and scheduled receipts Review Q

B. Planned orders from MRP C. Rework, yield or downtime D. Sub-contracted orders

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Unit 2

Detailed Scheduling and Planning Calculation of Load Profiles The load profile, as described in the APICS dictionary, is the future capacity requirements based on released orders, planned orders, or both over a specified time period. Often, the load profile is displayed as a bar chart, which helps to quickly identify overload and underload. Detailed capacity planning usually involves the development of load profiles for each work center. The next lesson in this module will demonstrate the mechanics and logic of lead time calculation, forward scheduling, load calculation, and resulting load profiles. Infinite and Finite Loading Unless there is flexibility available in capacity and order due dates, it is not possible to resolve planning proble ms through balancing load and capacity. By ensuring flexibility in either or both, capacity planning techniques may be employed to resolve planning problems. The techniques used are based on either modifying times or modifying capacity. They can be classified as either infinite loading (without regard for capacity) or finite loading techniques. Both approaches are based on the fact that: If enough overall flexibility is available, all orders can be planned using batch procedure without the planner. Once planning is complete, the planner may intervene daily or weekly to resolve unusual situations. If there is little or no flexibility, planning takes place order for order with each new order added to already planned orders. The planner may, at any point, change due dates or capacity levels. Infinite Loading

Finite Loading Capacity

Capacity

Infinite Loading Infinite loading calculates work center loads by time period but does not take into consideration the capacity of each work center. The main aim of infinite loading is to ensure scheduled due dates are met with the optimal control of fluctuation in capacity requirements. It is useful when meeting due dates are prioritized over other factors as would be the case with customer order production in a job-shop environment. In many cases, where it is possible to modify capacity significantly on a day to day basis, infinite loading techniques, which plan load by time period without regard to capacity, are the best techniques for production activity control (PAC). Short-term flexibility of capacity is an important principle in JIT manufacturing. © Copyright Leading Edge Training Institute Limited

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Detailed Scheduling and Planning Finite Loading Finite loading does not allow any work station to be loaded beyond its capacity. To prevent this occurring it may be necessary to change start or due dates. In finite loading, time rather than capacity is the variable parameter. Finite loading aims to optimize capacity utilization over time. It is useful in continuous flow production and other environments where limited capacity is the most pressing planning issue.

Finite Capacity Planning Techniques Manufacturing environments that employ assembly line or process- flow production are often subject to inflexible capacity. In addition, many companies although flexible with regard to capacity over the longer term, must firm up capacity levels in the short term. In these cases, finite loading techniques must be used at the detailed capacity planning level and often at higher levels also, such as rough-cut capacity planning and resource planning. This is particularly true of continuous flow production environments. Finite capacity planning, where load never exceeds capacity, is most effectively illustrated by portraying load as a horizontal bar, as in Gantt charts. This makes it easier to visualize the load on each workstation and to identify problems of operation planning. For example, the diagram below shows how two operations for a new order are slotted into the existing planning arrangements. Notice how, when accommodating earliest start date and the need for interoperation time between the two operations required to complete the order, the second operation must be completed in two lots, before and after a previously scheduled operation. 1

2

3

4

5

6

7

8

9 10 11 12 13 14 15 16 17 18 19 20

WS 1 WS 2 WS 3 WS 4 WS 5 previously scheduled operations operation 232.20 operation 232.40

A key input in this type of scheduling is the priority of the order. Priority rules for operations and order sequencing are important aspects of finite loading techniques. Many of them also provide for the rescheduling of previously scheduled orders. Most finite loading techniques are based on the following methods. Process-oriented finite loading This approach aims to minimize delays suffered by individual operations and thereby reduces the potential delay of the entire production order. Each operation is planned by time period on the basis of order beginning with the start date determined by lead-time scheduling. This involves determining order priority rules to ensure operations are scheduled, using sequencing rules, to achieve maximum throughput. Queues upstream of work centers must be monitored and adjusted. This type of planning results in an actual working program for the duration of the planning horizon.

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Detailed Scheduling and Planning Order-oriented finite loading The goal of order-oriented finite loading is to enable the completion of as many orders as possible. Those orders that cannot be scheduled must be assigned new start and due dates and then monitored. This technique is the most commonly used finite loading technique. It is explained in more detail in the next lesson. Constraint-oriented finite loading This approach plans orders around bottleneck capacities. It uses optimized production technolo gy (OPT) to link scheduling dates and available capacity. To begin with, only orders with a minimum batch size are generated. These lots come together at bottleneck capacities but are kept apart in other operations. After this, all operations at the bottle neck work stations are scheduled. When this is complete, backward scheduling is used to schedule operations prior to the bottleneck and forward scheduling is used to schedule those occurring after the schedule. The backward and forward planning assumes normal lead times. This is a similar approach to the central point scheduling theory explained earlier in this lesson. To prevent overloading any workstation, finite loading techniques evaluate latest start dates, earliest completion dates and various other combinations of start and end dates using mathematical modelling techniques. Rule-based and constraint-based finite schedulers are used for rapid problem-solving, usually with the aid of supply chain management software. Such software can maintain a description of the nature of a production and logistics network in a company along with constraints at any point. Another module of the software will make use of this detailed description to perform advanced planning and scheduling within feasible planning time. The algorithms used by APS software include mathematical modelling techniques such as branch and bound, linear programming, simulated annealing, and genetic algorithms, and newer techniques such as constraint-based scheduling and case-based reasoning. 5. How is the utilization factor for a work center calculated? A. Dividing the standard hours produced by the actual hours worked B. Dividing the output over several periods by the number of periods Review Q

C. Dividing the actual hours worked by the total hours available D. Multiplying the number of hours worked by the standard hours per unit

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Detailed Scheduling and Planning Scheduling of Manufacturing and Logistics Operations It’s important that material planning, scheduling and capacity planning are all closely linked with the common aim of optimizing costs and order delivery times. To ensure this happens, shop floor control must be able to optimally distribute the amount of work to be completed within a particular time period. Detailed capacity planning techniques such as finite loading techniques or mixed manufacturing techniques can help to achieve this outcome. Load Levelling Load leveling is important in shop floor control. This means that the amount of work to be completed in a particular time period should be evenly distributed and readily achievable. Load leveling or capacity smoothing as it is also called, is defined more comprehensively in the APICS dictionary. Order Oriented Finite Loading Order-oriented finite loading achieves maximum capacity utilization or ensures that as many orders as possible are executed on time with low levels of goods in process. Complete orders are scheduled one after the other in each time period. If a time period begins with an empty load, any orders that have already started are scheduled first, and only those operations that have not yet been carried out are considered. Strategy Priority rules are determined that will enable the completion of as many orders as possible. Orders that cannot be scheduled must have their start and due dates modified and must be closely monitored. Process There are seven main stages in the order-oriented finite loading decision process. Several of the stages form decision points that loop back to previous process stages. Initially, orders are planned and handled according to priority. The next stage involves handling, in the correct sequence, the operations planned for a specific order, and loading each operation to the appropriate work center. At this point, if the capacity limit has been reached, an exception rule must be applied. This process repeats until all the operations for a specific order have been planned. The next order in the priority list must be determined and planned in the same way as before. When all orders have been planned, or unloaded if sufficient capacity did not exist to plan them all, then the exceptions raised at earlier stages must be dealt with, either by raising capacities or shifting due dates or start dates. The following diagram illustrates the process, which is explained in more depth below.

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Start

Unit 2

Detailed Scheduling and Planning 1. Identify orders and priorities 2. Load workstation

3. Capacity limit reached?

No

Yes 4. Apply exception rule

5. All ops planned?

No

Yes 6. All orders planned or unloaded? Yes 7. Are there exceptions to deal with?

Deal with Exceptions

No Finish

1. Identify and Prioritise Planned Orders The first step is to ensure that all necessary orders to be planned within the planning horizon have been identified in the system. Once that is complete, the orders must be treated according to defined priorities. Generally orders already begun and all orders with start dates within the chosen time limit will be planned. Orders might then be sequenced according to: The proximity of the order start date, with fixed start date orders loaded first Proximity of the order due date, using the earliest due date available The ratio of order lead time divided by the time still available for the order. In other words, orders that will require a high level of operation time and little slack within the available time must be scheduled first. The ratio of remaining lead time for the order divided by the number of remaining operations © Copyright Leading Edge Training Institute Limited

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Order priorities originating from external factors, such as a rush order for a key customer Any combination of the above priority rules. 2. Handle and load operations in order Once the orders have been identified and listed in order of priority, the operations are loaded to work centers, working wither from start date forward, or from due date backward. Interoperation times such as setup and move time are factored in but queues are not considered. 3. Apply Exceptions When an operation must be started on a work center that has already reached full capacity for the period in question there are three exception rules that can be applied: Load without considering available capacity, which may be useful if the operation to be performed is quite short or the order has already begun. Defer the operation until the next period where the work center has available capacity Unload the entire order and demote it down the list or priorities. 5, 6, and 7. Check the planning status At step 5, an operation has been loaded and the system must check for any outstanding operations for that order. If there are further operations to be planned for the order, the next operation is selected and steps 2 and 3 are repeated. When all operations for an order have been completed the system moves on to the next check. The second check is performed when the operations for an order have been planned. The system must now che ck to see if all orders have been planned or otherwise dealt with. When there are more orders to plan, step 1 is completed to identify the next order in the priority list. Steps 2 and 3 are completed for each operation in that order. Only when all orders are planned or unloaded, does the system finally break out of the loop and perform the final check. The last check is for any outstanding exceptions that have not already been dealt with. If these do not exist, the planning process is complete. Where they do exist, contingency plans must be applied. Apply Contingency Plans Some of the contingency plans that may be adopted include the following: For every capacity that is overloaded in a particular time period, either provide more capacity, or unload orders. For orders that will not be completed on time defer the order of deliberately increase critical capacity in order first to unload the order. For every unloaded order, bring forward the start date or, if the due date is flexible, defer the order. It may also be possible to increase critical capacities so that the order can be loaded again. Any unloaded orders remaining after such contingencies have been applied will then be rescheduled. This can either be performed at the end of the planning process or in conjunction with the process each time an order is unloaded.

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Unit 2

Detailed Scheduling and Planning Limitations of Order-Oriented Finite Loading The technique of order-oriented finite loading requires that capacity and load figures are reliable so that planned schedules and reported progress of work will closely tally. Otherwise, calculated due dates will quickly become invalid. There must be some flexibility with due dates, particularly if operations are to be deferred each time maximum capacity is reached on a work center. Occasionally, by random chance, one or two orders will be delayed way beyond their expected lead times when such an approach is used. With these requirements in mind, the limitations of order-oriented finite loading are: The further into the future plans extend, the higher the chance that the planning forecast will be in error. Therefore, the technique should be used for short planning horizons and regularly repeated. Regular and efficient replanning is needed Depending on the exception rules used, the technique does not always allow for local reactive replanning to ensure that all scheduled operations are completed during the specified period. By deferring operations either forward or backward until the next period with available capacity is found, the best use of capacity is achieved. However, this may be at the expense of long queues, leading to an increase in tied capital. By unloading entire orders where it is found that one of the operations in the order cannot be performed on the designated work station due to capacity issues, the plan that results will definitely be within capacity. However, this approach may lead to lower utilization of capacity because the load that would have been caused by other operations in the dropped order will be taken away. Where no other orders are entered, this is wasted capacity. In addition, deferred orders will be subject to long delays and it may be impossible to accept new orders, even though the system is not working to full capacity. Applications of Order-Oriented Finite Loading When order-oriented finite loading defers operations that create an overload to periods of available capacity, it is suitable for serial production over a long period or in a monopoly or seller’s market where the customer due date is of reduced importance as they are unlikely to go elsewhere for the product. When the technique overloads work stations where necessary and defers orders where necessary, it is suitable for any manufacturing industry capable of meeting the requirements of quantitative flexibility in capacity and due dates. In shop floor control, the technique provides either an actual work program for the next few days, or an acceptable work program that allows a degree of flexibility, depending on the exception rules that are implemented. Individual orders can often be replanned very efficiently on a Gantt chart that shows available space on each work center. The technique is a highly visible and easily manipulated tool, which lends itself to long term planning of a few high- value added orders so long as regular planning and replanning is completed.

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6. Which scheduling technique results in scheduling toward the earliest possible due date for an item? A. Forward Scheduling Review Q

B. Backward Scheduling C. Critical point scheduling D. Probable Scheduling

Mixed Manufacturing Mixed manufacturing organizations produce products with a variety of market strategies and logistics objectives. Some may produce and sell mass-produced goods, holding WIP and finished goods inventories. The goal of such organizations is to ensure maximum capacity utilization while at the same time producing a wide variety of products to meet customer demand. Short lead times are very important in mixed manufacturing. Load-Oriented Order Release (LOOR) LOOR is a type of rough-cut order-oriented finite loading method that aims to adapt the load to the available capacity. The matching of load to capacity can be limited to one time period. A single time period is multiplied by the loading percentage. This is then balanced against the loads which will arise in this and later periods. A conversion factor is then applied to progressively convert the loads of all subsequent operations as these will not be loaded with full work contents. The main aim of LOOR is to maintain high loads. Apart from this, it also aims to minimize work- in-process, shorten lead times, and improve reliability of delivery. Steps Involved in LOOR Step 1. The first step is the scheduling of orders. For example, the planner for a clothing manufacturer must add five new orders to the existing workload. Initially, each of the five orders are shown together with their operations on a time axis. Each operation is labelled with the work center where it should be executed. Each order has a scheduled start date. LOOR us es a time filter, or time limit to eliminate all orders with a start date later than the time limit. In the example given below, 2 of the orders are eliminated using this time filter and are set as not urgent. The rest of the orders are designated ‘urgent’ are passed to the next step. Order 5 Not Urgent

WC100

Order 4

WC100

Order 3 Urgent

WC100

Order 2 Order 1

WC100 WC100

WC300

WC300

WC300 WC300

WC210

Time Limit

WC300 WC210

WC210 WC210

WC400 WC400

WC400

Time

Step 2. © Copyright Leading Edge Training Institute Limited

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In this step, the load of each operation in each of the urgent orders is converted by a factor. The factor is used in an attempt to account for the fact that the further out you try to plan, the less certain the pla nned load of a job will consume the planned capacity. The greater the number of operations before a particular operation, the greater the chance that the operation will not be completed on time. In the example shown, the factor is 50%. This means that the load of the first operation is taken fully into account. With the second operation, only 50% is taken into consideration. The graph below shows the load profile of one of the orders, both original and converted, on each work center. Note that the operations are shown in work center order rather than in the order that they are performed. This is done in preparation for the final LOOR step. 14 12 10 8

converted

6

Order

4 2 0 100

210

300

400

Step 3. In step 3, the existing preload for each workstation and the additional load of the new orders are combined. The preload stems from different periods on the time axis and may be greater than the scheduled output capacity for any one time period. A loading percentage for each workstation is chosen, for example 200%. This sets the load limit for each work center. The orders are then loaded in start date sequence. When the addition of a new order results in an excessive load on the work center the entire order is unloaded. The load limit in step 3 is therefore acting as a further load filter. So, for example, due to the preload on workstation 100 and the load limit set for that workstation, it is not possible to load order 3, even though it passed through the filter in step 1. Having worked through the LOOR steps, only orders 1 and 2 of the original set of orders ha ve passed and can be released. Order 3 must be dealt with as an exception and orders 4 and 5 will be dealt with in the next LOOR period. Calculating Conversion Factors and Loading Percentages in LOOR The conversion factors and loading percentages are key aspects of the LOOR method. They have been arbitrarily set in the example above. In most situations, the conversion factors and loading percentages would be derived from historical data.

Capacity-Oriented Materials Management (Corma) Corma is an operations management principle that enables mixed manufacturers to balance work in process against limited capacity and short deliveries. Corma comprises three parts: Criterion for order release Probable scheduling Coupling of shop floor scheduling and materials planning. © Copyright Leading Edge Training Institute Limited

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Unit 2

Detailed Scheduling and Planning The Criterion for Order Release Corma releases stock replenishment orders earlier than needed, that is before inventory levels hit the order point. An early order release is considered as soon as there is available capacity in work centers. Proba ble Scheduling This is required for shop floor control and gives priority to early released orders as needed. The priority is calculated by continually monitoring the lead-time-stretching factor of each order. Coupling of Shop Floor Scheduling and Materials Planning Stock replenishment orders are constantly rescheduled according to actual usage on the shop floor. The current physical inventory is converted into an appropriate latest due date for open replenishment orders. Stock replenishment orders of make-to-stock materials are treated as filler loadings. They fill in capacity not required by other orders. However, this may mean production earlier than required. Therefore the trade-off for improved capacity utilization is a higher level of work in process. Corma aims to minimize capacity costs, work in process and warehouse stock levels by performing continual balancing acts between material requirements and stock replenishment order production. Effects of Corma Orders that are released early are scheduled without priority. They are performed when there is available capacity on the required work centers and there are no more urgent orders to process. When unplanned customer orders are added to the schedule they take precedence over stock replenishment orders in process. This may mean that these stock replenishment orders will not be started until later. Continual order rescheduling occurs and as the waiting orders are left closer and closer to their latest due date, they are assigned smaller lead-time-stretching factors. This in turn gives them higher priority in the order list. If inventory stocks fall faster than expected the latest due date of some of the stock replenishment orders may be advanced. This again reduces the lead-time-stretching factor and the order may be expedited. Alternatively, if stocks fall more slowly than expected the latest due date will be postponed. This has the effect of increasing the lead-timestretching factor and delaying the order as it is therefore lower in the priority list. The Corma technique is useful for mixed production and manufacturing environments where onthe-spot planning is required. Corma uses critical capacity available short-term to achieve balanced loading and reduce queuing and lead times. Orders are generated periodically, providing for optimal sequencing and reducing setup times. They are released prior to inventory falling below order point levels, as soon as there is available capacity to handle them. Replenishment orders take a lower priority than customer orders and are continually rescheduled according to the actual usage levels of the material to be replenished. They are therefore tightly coupled to the material plan.

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Detailed Scheduling and Planning Summary In this lesson, the characteristics and methods used to ensure sufficient capacity to support the material plan were examined. The lesson also looked at the use of work center and routing data, and explained the calculation of rated capacity using efficie ncy and utilization ratios. The balance of demand and capacity, time availability and due dates were examined along with finite and infinite capacity planning techniques. Finally, the lesson explained the integration of scheduling and capacity planning with material planning for order release and control. You should be able to: Explain detailed capacity planning at an intermediate level Explain the effect of the manufacturing environment on the choice of planning technique and information requirements Describe the steps by which work center and routing data are used to schedule orders and identify resource loads in each time period Use efficiency and utilization ratios to determine the rated capacity of a work center Identify load sources for planned and released orders Explain the effects of queuing on job-shop production Describe planning, scheduling, and order release preparation techniques in a variety of production environments

Further Reading Introduction to Materials Management, JR Tony Arnold, CFPIM, CIRM and Stephen Chapman CFPIM 5th edition, 2004, Prentice Hall APICS Dictionary 10th edition, 2002 Manufacturing Planning and Control Systems, Vollmann, T.E.; W.L. Berry; and D.C. Whybark 5th edition, 2004, McGraw-Hill Production & Inventory Management, Fogarty, Donald W. CFPIM; Blackstone, John H. JR. CFPIM; and Hoffmann, Thomas R. CFPIM 2nd edition, 1991, South-Western Publishing Co., Cincinnati, Ohio

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Detailed Scheduling and Planning Review The following questions are designed to test your recall of the material covered in lesson 6. The answers are available in the appendix of this workbook.

7. Using which loading method are orders that are released early scheduled without priority? A. Order-oriented finite loading B. LOOR C. CORMA D. Infinite Loading 8. Which scheduling technique builds in slack time and works within the time frame of earliest possible start date and latest possible due date? A. Forward Scheduling B. Backward Scheduling C. Probable Scheduling D. Critical Point Scheduling 9. How is the efficiency of a work station calculated? A. Dividing the sum of output over a number of periods by the number of periods B. Multiplying the hours available by the standard hours per unit and the utilization quotient C. Dividing standard hours produced by actual hours worked D. Dividing actual hours worked by the total hours available 10. Calculate the rated capacity of a work center where there are 3 eight hour shifts available, the work center is in use for 7 out of 8 hours. The work center produces 7 hours of work against 6.5 standard hours . A. 2637 B. 19 C. 144 D. 8050

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Detailed Scheduling and Planning What’s Next? This lesson introduced some concepts and techniques required in detailed capacity planning. At this point you have completed 6 of the 9 lessons in the Detailed Scheduling and Planning unit. You should review your work before progressing to the next lesson which is: Detailed Scheduling and Planning – Lesson 7 Detailed Capacity Planning Continued

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Detailed Scheduling and Planning Appendix

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Detailed Scheduling and Planning Answers to Review Questions 1. All except B CRP is performed on the material plan to ensure that it is feasible. CRP is a detailed process that calculates the work load for each work center during each MRP time bucket, taking into account all operations required to fulfill the MPS. It is concerned with load balancing rather than scheduling operations. 2. B PERT and CPM are often used in project-based production. Level production planning is completed at the master planning level. Backward scheduling, forward scheduling, or probable scheduling are suitable for job shop environments. 3. D Capacity requirements planning requires information on work centers, particularly work center capacity, utilization and efficiency levels, planned queue time and load sources. It also requires item lead times and routing information. Although the type of production environment influences the choice of capacity planning technique, it does not affect the capacity planning activity subsequently. 4. D CRP must take into account all potential loads on production. This involves examining the order status file in production control for details of open orders and scheduled receipts, the MRP for information on planned orders, and examining historical records and other sources for likely rework, yield, downtime and other factors affecting throughput. 5. C The utilization quotient is a measure of the amount of total hours available that were actually worked. This cuts out time spent on setup or repair during the production run. Only time when the machine is running productively is counted in this measure. Utilization is used in the calculation of rated capacity. Utilization

=

Actual hours worked Total hours available

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Detailed Scheduling and Planning 6. A Forward scheduling assumes that an order will start as soon as possible. It then works forward, calculating operations and lead times to estimate the earliest due date for the order. 7. C The order-oriented finite loading method achieves maximum capacity utilization or ensures that as many orders as possible are executed on time with low levels of goods in process. Complete orders are scheduled one after the other in each time period but prioritization rules are applied. LOOR aims to adapt load to capacity and maintain high loads. This involves some order prioritization. Infinite loading is a method of loading that does not take work center capacity into account. Orders must still be prioritized in this situation. CORMA does not apply priority rules to orders that are released early. 8. C Probable scheduling starts somewhere between the earliest and latest possible start date and schedules a completion date somewhere between the earliest and latest possible due dates. It builds in slack time and is very flexible. As order priorities change, slack times can be modified. 9. C The efficiency quotient measures the actual rate of production for a work center against the theoretical measurement of standard hours produced. It is used in the calculation of rated capacity. If an operation is running very efficiently it may produce more units per hour than the rate recorded as standard for that work center. Efficiency

=

Standard hours produced Actual hours worked

10. A To find the rated capacity involves the use of utilization and efficiency quotients, which are explained in more detail below. The basic principle behind rated capacity is that it considers the amount of time that a work station is actually used and its operating efficiency as well as theoretical capacity and standard hours per unit. Rated Capacity

= hours available x utilization x efficiency x standard hours per unit

Rated Capacity

= 24 x 0.875 x 0.92 6.5

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Detailed Scheduling and Planning Glossary Term

Definition

Backward scheduling

This is a technique for calculating the start dates and due dates of an operation. The due date for the order is the starting point. The planner works back in time to determine the necessary start and due dates for each operation in the order

bill of material (BOM)

A listing of all the subassemblies, intermediates, parts, and raw materials needed for a parent assembly, showing the required quantity of each. It is used with the MPS to determine items that must be ordered. Also called formula or recipe.

Capacity

The capability of a system to perform its expected function. This could be the capability of an operator, machine, work center, plant or organization to produce output per time period. Available and required capacity must be measured to assist in planning.

Capacity planning

This is the process of determining the amount of capacity needed to produce the required quantities of product in the future. Resource planning, rough-cut capacity planning, and detailed capacity planning are performed at different levels of the planning structure.

Capacityoriented materials management (Corma)

A scheduling principle that increases work- in-process to ensure flexibility in utilization of capacity. When used appropriately it leads to reduced total cost when taking into account work in process, capacity, and finished goods inventory

Central point scheduling

A scheduling method that starts at a critical point in production and uses both backward and forward scheduling to work backward and forward from that critical point

Constraintoriented finite loading

This finite-loading technique is used to plan orders around bottleneck work centers, aiming to maximize total throughput. Small orders are aggregated into one larger lot size and loaded at the constraining work center. Operations are then backward and forward scheduled as required

Delphi method

A qualitative forecasting technique where the opinions of experts are combined in a series of iterations. The results of each iteration are used to develop the next, so that convergence of the experts' opinion is achieved.

Demonstrated capacity

A level of capacity that is calculated from historical performance data and therefore proven to be achievable.

dependent demand

Demand that is directly related to or derived from the bill of material structure for another item or end product. Dependent demand should be calculated rather than forecast. Some items may have both dependent and

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Detailed Scheduling and Planning independent demand at the same time. Earliest due date(EDD)

A priority rule used in sequencing of queued orders depending on their operation or order due dates.

Efficiency

A measure of actual output compared to standard output.

Exceptions

Items that deviate from plan

exponential smoothing

A weighted moving average forecasting technique in which past records are geometrically discounted according to their age with the heaviest weight assigned to most recent data. A smoothing constant is applied to avoid using excessive historical data.

extrinsic forecast A forecast based on a correlated leading indicator, for example, estimating furniture sales based on house builds. Extrinsic forecasts are more useful for large aggregations like total company sales. Finite loading

A method of loading work centers that ensures the available capacity of the work station is not exceeded.

Flow production Uninterrupted flow of material through the production process. May also be called mass production or continuous manufacturing. The plant layout usually facilitates the flow of the product through the plant. Forward scheduling

A scheduling technique that involves progressing from a known start date and determining the completion date for an order.

independent demand

Demand for an item that is unrelated to the demand for other items. Examples include finished goods and service part requirements.

Infinite loading

Calculation of capacity needed at work centers regardless of the maximum capacity of the work centers in question

Interoperation time

The elapsed time between completion of one operation and the beginning of the next

intrinsic forecast A forecast based on internal factors, such as an average of past sales. Job shop

A manufacturing environment that produces items to customer specification. Usually a wide range of product designs are possible and are performed at fixed locations using general equipment

Just-in-Time (JIT)

A manufacturing philosophy that seeks to eliminate waste in all areas of production and to continuously improve processes.

Kanban

A method of JIT production that uses bins or standard lot sizes with some form of reple nishment signal, such as an empty bin, or by holding up a card. Kanban is a good example of a ‘pull’ system

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Latest start date The last day upon which a given activity may be started without jeopardizing the project completion date. lead time

Lead time is the span of time required to perform a process.

Load

The amount of work planned for a work center or other facility during a specific period of time.

Load leveling

The process of spreading out orders so that bottlenecks are ironed out where possible

Manufacturing environment

The type of manufacturing strategy currently implemented in a plant. For example, a plant may be laid out according to functional area and covering several small projects. It is often used to refer to whether a company is make-to-stock, make-to-order or assemble-to-order

master production schedule (MPS)

The anticipated build schedule for those items assigned to the master scheduler. The master scheduler maintains this schedule and it drives material requirements planning. It specifies configurations, quantities and dates for production.

Move time

The time spent moving items from one operation to the next.

moving average

An arithmetic average of a certain number of the most recent records. As each new record is added, the oldest record is dropped. The number of periods used for the average reflects responsiveness versus stability.

Open order

A released manufacturing order

Operation time

The amount of setup and run time for a specific operation on a specific work center.

Program Evaluation and Review Technique (PERT)

A network analysis technique in which each activity is assigned a pessimistic, most likely and optimistic estimate of duration. The critical path method is applied using a weighted average of these times in order to estimate the final project duration.

Queue time

The amount of time a job waits at a work center before the work commences

random variation

A fluctuation in data that is caused by random or uncertain events.

Rated capacity

The expected output of a resource given the efficiency and utilization parameters

Routing

Information on the method of manufacture for an item, indicating the operations to be performed, their sequence and the work centers at which

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Unit 2

Detailed Scheduling and Planning

Unit 2

Detailed Scheduling and Planning they are to be completed/ Run time

The amount of time needed to process a specific operation

Scheduled receipts

An open order with an assigned due date.

seasonality

A repetitive pattern of demand from year to year or month to month (or other time period) showing much higher demand in some periods than in others.

Setup time

The amount of time between the production of the last item of one run and the first usable item in another production run for a different product

Theoretical capacity

The maximum output capability for a workstation without considering maintenance or other down times.

Theory of constraints

A management philosophy that incorporates logistics, performance measurement, and logical thinking

trend

General upward or downward movement of a variable over time, for example in product dema nd.

Utilization

A measure of how intensively a resource is used, calculated by comparing available time to actual time

Wait time

The length of time a processed item waits at the end of an operation before being moved to the next operation

Work in Process Work in process is material that has been released for initial processing and (WIP) is about to or has already undergone manufacturing processes. work order

An order to the machine shop for tool manufacture or equipment maintenance or an authorization to start work on an activity or product.

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