Detailed Scheduling and Planning (Lesson 7)

UUnit nit 22 DDetailed etailed SScheduling cheduling aand nd PPlanning lanning Lesson 7 Detailed Capacity Planning Continued

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 7 – Detailed Capacity Planning Continued...........................................5 Introduction and Objectives.................................................................................................. 5 Capacity Planning Hierarchy Review.................................................................................. 5 Capacity Planning Outputs ................................................................................................... 7 Balancing Load and Capacity ............................................................................................. 10 Unit of Measure for Load.................................................................................................... 10 Calculating Load.................................................................................................................. 11 Balancing Options ................................................................................................................ 11 Detailed Capacity Planning Performance Measurement ................................................. 14 Calculating and Analysing CRP ......................................................................................... 14 MPS, Final Assembly Schedule (FAS), and Configuration to Order.............................. 20 DRP........................................................................................................................................ 20 Interactions within Detailed Scheduling and Planning .................................................... 20 Execution and Control of Operations Interactions ........................................................... 21 Advantages and Disadvantages of CRP ............................................................................. 21 Without CRP ........................................................................................................................ 22 Summary ............................................................................................................................... 23 Further Reading ................................................................................................................... 23 Review ................................................................................................................................... 24 What’s Next? ........................................................................................................................ 27

Appendix.......................................................................................................28 Answers to Review Questions .............................................................................................. 29

Glossary ........................................................................................................31

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Detailed Scheduling and Planning Preface Course Description This document contains the seventh 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 7 – Detailed Capacity Planning Continued Introduction and Objectives This lesson explains how to use detailed capacity planning to adjust capacity or load in order to achieve required dates. The lesson covers the formulation of capacity plans, tooling requirements, and overload or underload information. It also explains how to calculate the ability of the production process to meet capacity targets. Finally, the lesson looks at closing the loop with master planning of resources, distribution planning, detailed scheduling and planning, execution and control of operations. On completion of this lesson you will be able to: Identify the level of detail needed to produce effective load and priority plans Explain the purpose of safety capacity Identify the outputs required from capacity planning to formulate capacity plans, tooling requirements, and overload or underload conditions Balance capacity and load by rescheduling orders, splitting orders, modifying capacity, order quantities or priorities Verify the effectiveness of a capacity planning process by ensuring the workload scheduled is within capacity Analyze ‘failed’ capacity plans through looking at past due load Calculate the ability of production to meet work- in-process (WIP) capacity targets Provide product quantities, timing and priorities to close the loop between capacity planning and master planning of resources / distribution planning Close the loop within the detailed scheduling and planning process with respect to purchased and self- manufactured materials and part quantities, timing and priorities Verify that manufactured parts, subassemblies and assemblies were produced in the required quantities at the right time

Capacity Planning Hierarchy Review Capacity Requirements Planning (CRP) is only one of a series of capacity planning and control activities that depends on the effectiveness of previous resource planning and rough-cut capacity planning efforts. It should be considered a fine-tuning of those efforts while providing a greater level of planning detail, built upon previous planning processes.

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

CRP cannot compensate for mistakes made higher up the planning hierarchy that have led to overloaded conditions. Capacity planning takes place at each level of priority planning and validates each priority © Copyright Leading Edge Training Institute Limited

Operation Sequencing

5

plan. In some cases, if resource planning and rough-cut capacity planning are accurate, it may not be necessary to perform more detailed capacity requirements planning. However, this is only the case under certain MRP conditions and when there is no major change in products or manufacturing processes. Repetitive and continuous production environments do not often use CRP for this reason. CRP is most useful in job shop and batch production environments, both of which are often characterized by varied product mix and product volumes. Resource planning works with general loads such as days of work and numbers of personnel or numbers/types of finished goods. The planning horizon is linked to the business planning cycle, covering years, quarters, and months. Rough-cut capacity planning translates the resource planning figures into capacity figures for key work centers, such as bottleneck work centers. It takes into account the Master Production schedule and bill of resources (BOM) requirements for each item. At this stage, the key work centers are balanced, which should lead to good balance in the work centers upstream and downstream. Relationship between Capacity and Priority Capacity Tools People Equipment

Priority Order Due Dates

The scales above show how Capacity and Priority are both required to balance in order to achieve the common aim of completing the production schedule. Capacity planning at each stage of planning is dependent upon the input it receives from the priority planning functions. These priority plans are in turn validated by the corresponding capacity plan. The accuracy of capacity planning is subject to the period selected. If the period is too long, situations can occur where it appears that there is sufficient capacity but, crucially, there is not sufficient capacity at the time it is needed. Capacity Complications Gauging capacity is complicated by several factors such as: Lot sizing and variability of order mix Variable timing of orders due to aggregation Bottlenecks Complexity, which increases as the number of products increases, the load nears maximum capacity, alternate routings are used, and demand varies The order mix and type varies from period to period, so lot sizing in MRP may cause variation in the timing and quantity of production orders. This complexity requires a further level of control at the capacity requirements planning level, detailing the hours of work at each work center. This is necessary as bottlenecks may move depending on timing and work center loads. Utilization and efficiency may need to be determined where the standard hours used in the higher levels of © Copyright Leading Edge Training Institute Limited

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Detailed Scheduling and Planning planning do not correlate with demonstrated output rates. Another factor to be considered is the requirement for alternative routings, and the subsequent effect on work center loads. Planned Capacity Although capacity may appear sufficient at CRP level, timing of individual products through each work center may still prove difficult and result in delays. For example, if there are two products that must be made, each requiring 4 hours of processing on machines A and B and there are 8 hours of capacity simultaneously available on those two machines, it would appear that there is sufficient capacity to deal with the orders. Available Capacity

Load from Product 1

Load from product 2

Machine A

8

4

4

Machine B

8

4

4

However, if both orders must be processed on machine A before they progress to machine B then the capacity is insufficient. Machine B will be left idle for the first four hours waiting on product from machine A. It will be able to handle the first product, but will not have available capacity when the second product has been processed on machine A. The processing of the second product on machine B must be carried over to the following day. Hours Machine A Machine B

1

2

3

4

5

6

7

8

Product 1 Product 2 Unused Capacity

If capacity isn’t available when it is required orders will be delayed. Finite capacity planning and scheduling is used to seek to prevent this type of situation occurring.

Capacity Planning Outputs Capacity Requirements Planning (CRP) Input/Output Model The CRP model illustrates the basic inputs and outputs of the capacity requirements planning process. Scheduled and planned manufacturing orders, along with the status of each order, routing data and work center data are all required to produce the CRP outputs: a work center load report and a revised schedule of planned manufacturing releases. The revised schedule of planned manufacturing releases loops back MRP with affected orders flagged. The recommended changes are not always incorporated into the materials requirements plan but they will all be considered. Each time the planning cycle occurs the capacity requirements plan is recalculated. © Copyright Leading Edge Training Institute Limited

Production Order Status

Scheduled and Planned Orders

Routing Information

Work Center Information

Capacity Requirements Planning Work Center Load Report

Revised Order Release Schedule

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Detailed Scheduling and Planning Work Center Load Report The work center load report illustrates the loads expected at each work center for each period measured against the capacity of each work center. Usually this is portrayed as a bar chart of load over time with related data for each workstation. This makes it easy to spot when the work center is over or underloaded. In the example below, the work center is unloaded in periods 1 and 4 but overloaded in period 2 Production Overload

40

Production Underload

35 30 25

Capacity

20 15 10 5 0 1

2

3

4

When tooling, personnel or other key resources are constraints on the capacity plan, further reports may be needed. For example, if there are four machines available to perform a particular operation but there are only 3 trained operators then the full capacity of the machines cannot be realised. 1. Which of the following capacity planning techniques translates planning figures into capacity requirements for key work centers such as bottleneck centers, with reference to MPS and BOM information : A. Resource planning Review Q

B. Rough-Cut Capacity Planning C. Capacity Requirements Planning D. Planner estimation

Constraints on Resources Capacity is constrained by the number of available operators if machines cannot run unattended. Additionally, if special skills are required to operate the machines, a further constraint may be imposed relating to the level of training and experience of the available operators. A further consideration may be the availability of tools. It may not be possible to manufacture a product on a machine without a particular tool and if those tools are in short supply they are a constraint to capacity. Revised Planned Order Release Schedule Once CRP outputs have been analyzed the MRP schedule may require revision in order to accommodate the capacity constraints that have been uncovered in the CRP process. By bringing forward or delaying start dates for planned orders, many capacity imbalances can be addressed without the need to change the level of capacity. © Copyright Leading Edge Training Institute Limited

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The loop between CRP and MRP should be closed in this manner as quickly as possible to guard against nervousness in the overall material plan. When planned start dates are moved they can be locked in place by changing their status to that of a firm planned order. Analysis of CRP Work Center Outputs Planners analyse work center reports for evidence of : Balanced load

Safety capacity

Excessive overload

Past due backlogs

The planner must also be aware of the effects of various constraints on the work center as discussed above. Ideally load and capacity will be closely matched in all periods. Typically however, the load on workstations falls off toward the end of the planning horizon as no further customer and planned orders are entered into the calculation. Where load is well balanced but constantly exceeds available capacity, as shown in the example on the right, the work center may become a bottleneck in the process. When all levels of capacity planning are followed correctly, this situation should not occur.

W 210

35 30 25 20 15 10

Constant under loading of a work station, in contrast, is wasteful and should be addressed either by decreasing capacity (for example, by reducing personnel in the work center) or increasing the load.

5 0 1

2

3

4

5

6

7

However, a planned amount of ‘safety’ capacity should be reserved in some cases to protect against the effects of preventive maintenance, machine failure, excessive rework or delays. Load should only be placed on the ‘productive capacity’ (which is equal to total capacity - safety capacity). Cumulative capacity and load are calculated by adding together the number of hours’ capacity (or load) on a work center over several periods. Comparing cumulative capacity and load over a longer period of time will give a clear indication of W 210 the likelihood of bottlenecks occurring. 40 35 30 25 20 15 10 5 0 1

2

3

4

5

6

7

An unbalanced load, as shown in the example on the left, may be resolved by balancing the load between periods. However, cumulative capacity and loading must be compared to ensure there is no long term over or under loading. Although they do not have to be exactly equal, cumulative load and capacity should be quite close.

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Detailed Scheduling and Planning Balancing Load and Capacity Definition of Load Load represents the amount of work imposed on each work center. Where several parts impose a load on the same work center, the overall load is a composite of several smaller loads. In the graphic to the right, each work center is represented by a triangle. Each order is represented by a line that travels through the work center in the same sequence as the order during production. The load imposed on a workstation is denoted by a circle. Where several loads are imposed, the circle becomes larger. The largest circle indicates a work station which is overloaded.

Bottler

Juicer A1

Order 1

Pasteurizer 1

Juicer A2

Labeller Juicer B1

Manual Labelling

Pasteurizer 2 Order 2 Order 3

Definition of Capacity Capacity is the amount of work that can be accomplished. It is based on the number of resources in the work center and the length of time available to work. The capacity, and therefore the production rate, will be affected by facilities, tooling, human resources and equipment. Relationship between Load and Capacity The process represents a single work center. The work- in-process represents already released open orders that are in queue or in process. Capacity represents the rate at which work is performed on open orders. It can be adjusted by adding or removing resources. New orders represent work just being released or processed at prior work centers. The rate of input of work is adjustable. When working with a gateway work center, where the first operation on a work order is performed, the input rate may be adjusted by production control, which decides when to release the work order. Downstream of the gateway work center it is more difficult to adjust the arrival rate of new jobs. This is where CRP or finite capacity planning and control processes are required. The time that elapses from the entry of a work order into a work center queue until it is completed and moved away from that work center is the period of time used to denote the production lead time for that operation.

Unit of Measure for Load Work center loads and capacities are usually measured in hours as time may often be the only common element between work centers. Using a common unit of measure across all work stations helps provide consistency in planning and reporting. Standard hours are the most commonly used measurement. Standard product per time may be more useful for operating personnel. At the MPS level however, aggregate measures such as product type and product category may be used. © Copyright Leading Edge Training Institute Limited

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Detailed Scheduling and Planning Calculating Load The main source of load measured by CRP is from open order status information. This information is derived from production control and from the planned order releases produced by the MRP system. On top of this, additional load may be imposed due to product rework, higher than expected levels of scrap, or quality issues. Where possible these should also be accounted for. Finally, work center efficiency and utilization factors must be incorporated into the capacity of each work center.

Balancing Options Load should be balanced on each workstation to ensure that capacity surpluses or shortfalls are evened out. The cumulative load or capacity measurement is useful in this case for identifying overall overload or underload. In general, the load on workstations downstream from a bottleneck workstation will be affected by changes to that work station. Ways in which load can be balanced on work centers include: Increased capacity Reduced load Reduced capacity Increased load Redistributed load Increased Capacity Capacity can be increased in the following ways: Adding extra shifts, increasing the length of shifts, or including weekend shifts. This is usually a medium-term solution as it is not desirable to change scheduled shifts frequently. Scheduling overtime: an effective solution in the short term where the capacity shortfall is likely to be temporary Add personnel: as this generally involves hiring extra staff it is usually a longer term solution although it may be possible to bring in temporary help for unskilled or commonly known work. Reassignment of indirect personnel to direct jobs. For example, involve some office staff in shop floor operations where they have experience. Add equipment and facilities: an expensive solution, usually only if the capacity shortfall is likely to be long term. It may be possible to rent equipment and space in the shorter to medium term. Reduced Load Load may be reduced by: Subcontracting to outside suppliers where feasible Reducing lot sizes, which often reduces the run-time of the load but at the expense of extra setup time, may be a good solution in the short term depending on the relationship

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of run times to setup times. For special cases, this can be accomplished by using firm planned orders or revising the MRP and CRP for more extended periods. Holding orders in production control: this option reduces the load by delaying orders but increases delivery lead times. This approach may work if there is a subsequent underload and the due date is not in danger. Reducing the MPS: This should be a last resort as a change in the MPS requires a complete rerun of MRP and CRP Reduced Capacity Capacity may be reduced by eliminating shifts or reducing shift lengths. This solution might be appropriate in the context of general business slowdown. Alternatively personnel may be temporarily reassigned if there are overloads on other work centers. The temporary excess capacity provides a useful opportunity to perform extra preventative maintenance or other tasks that cannot be performed during normal production time. Increased Load Increasing load to make use of excess capacity can lead to improved quality and delivery metrics. It can also be useful as a means of retaining skilled staff. Where excess capacity has been identified it may be possible to increase load by manufacturing items that are normally purchased or subcontracted. This approach would require a make-buy analysis to ensure that it makes financial sense to use the excess capacity in this way. Such an approach would not be suitable for short term excess capacity. The load may also be increased by the following steps: Release orders early: this is only advisable in temporary situations as it leads to higher WIP and finished goods inventories. It does not necessarily increase the load unless more orders are added as a result. This option is appropriate for fine-tuning of load balancing rather than for correcting cumulative capacity excess. Increase lot sizes: this can be achieved by using firm planned orders although, as it leads to excess inventory it should only be a short term solution Increase the MPS: As this option requires a full rerun of MRP and CRP, it is the least desirable solution unless sales projections indicate that demand is sufficiently high. This solution can also have unpredictable consequences for workload levels. Redistribution of Load Load can be redistributed, by using alternate work centers and routings where possible. Usually alternate work centers are not the optimal choice: they may be less efficient or more expensive to run. Alternate routings are also a possibility for redistributing load where there are some sequences of operations that can be reordered: for example, when packing aspirin tablets, it may be possible to label bottles before filling them. Capacity Planning in Repetitive Pro duction In repetitive production, capacity planning is often called line balancing. Loads are determined by product mix and line rate. Workstation capacity may be changed by adjusting equipment and personnel to achieve a balanced rate. The capacity at each station should be adjusted to sustain the production rate. © Copyright Leading Edge Training Institute Limited

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Most often, capacity in repetitive production is planned at the MPS level. This is because the capacity is based on line rate and product mix. Both these factors can usually be determined at MPS level. Often, it is possible to perform line balancing using mathematical techniques and CRP, as a balancing tool, is not required. CRP, or line balancing, in repetitive manufacturing is characterised by: Fixed routings and variable run times. A production line is setup for a specific mix of products and all work flows in the same way through the line. Despite this, operation times can vary depending on the type of product, although standard times are estimated for all products in the mix. Insignificant queue and wait times. In repetitive manufacturing work- in-process levels tend to be lower and queue and wait times are very low in comparison to job shop environments. Setup time occurring only during line changeover. Line changeover in repetitive production is often accomplished by shutdown of the line, during which time all workstation setup and balancing is accomplished. Production may run for days or weeks between changeovers. Production rates that are constrained by the slowest workstation, which often dictates the production rate Feedback at key points in production, rather than after every operation, is more efficient as work generally flows quickly in repetitive production. For example, a production line for breaded frozen chicken will involve shaping the meat, covering in breadcrumbs, freezing, and packing. However, the key feedback point may be the freezing of product prior to packing. 2. Which of the following measures lead to increased capacity? A. Increase shift length B. Perform preventive maintenance Review Q

C. Use alternate work stations D. Release orders early

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Detailed Scheduling and Planning Detailed Capacity Planning Performance Measurement Performance Objectives The effectiveness of capacity planning leads to a range of improvements and should therefore be measured in a range of ways. Ultimately, capacity performance impacts customer service by ensuring elimination of past due orders, shorter queues, and higher productivity, all of which contribute to shorter lead times, thereby improving customer delivery. Successful CRP is indicated by: Eliminated past due load. Past due loads, beyond a small amount due to variability in day-to-day execution, indicate capacity imbalances and therefore inefficiency in capacity planning. Eliminating past due loads leads to more accurate material priorities, reduced MRP nervousness, shorter queues and reduced lead times. Balanced load according to capacity, particularly at constraining operations Shorter queues, which perform the function of absorbing minor imbalances during production. Reduced WIP, which can be measured through inventory turns and order cycle times. Higher productivity, due to reduced loads and better load balancing Reduced idle time , as potential idle time is used to offset overloads in other work centers or time periods Reduced overtime , as imbalances are eliminated through forward planning such as shifting start dates or realigning shifts Increased throughput, as orders are subject to fewer exceptions caused by overloads, leading to reduced queues and lead times

Calculating and Analysing CRP The following paragraphs walk through the CRP logic, explaining how the various CRP inputs are used to calculate work center load profiles, the mechanics of backward scheduling and infinite loading, and CRP logic used to distribute load between periods. CRP involves the following activities: Backward scheduling Infinite loading Distribution of load between work centers Load distribution within work centers for each period Calculation of capacity at each work center

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Detailed Scheduling and Planning Work center Data The work center information below shows the work centers available on the production floor along with important information on utilization, efficiency, queue and wait times (in hours).

Pasteurizer B1

Juicer A1

Labeller D1

This information will be used in the calculation of capacity. Bottler C2

Work Center

Description

Number of Machines

Machine Utilization

Efficiency

Planned Queue Hrs

Planned Wait Hrs

A1

Juicer

3

80%

110%

8

4

B1

Pasteurizer

4

70%

90%

12

2

C2

Bottler

2

90%

100%

10

2

D1

Labeller

3

95%

95%

8

4

Figure 1 Work Center Data

Routing, Open Order Status, and Planned Order Data ABC Beverages manufacture a variety of fruit juices and smoothies. The following table indicates several planned orders for weeks 20 to 24.

Part Number

Order Quantity

Planned Order Release

Planned Lead time

Planned Order Receipt

A

40

Week 20

4 weeks

Week 24

B

20

Week 20

3 weeks

Week 23

C

40

Week 20

4 weeks

Week 24

Figure 2 MRP Planned Orders

The table on the next page provides information about routing and open order status for the products manufactured in the above work centers. There are three items in production, Grapefruit juice (GJ), Orange Juice (OJ) and pineapple juice (PJ), each of which has one order in process. Open orders should be completed before the beginning of their due dates. Run times are expressed as hours per piece and must be multiplied by the order quantity to determine total run time for the order.

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Item GJ-A

OJ-B

PJ-C

Order No. 101

106

109

Quantity

Due Date

Operation No.

Work Center

20

415

10

A1

2

.2

Compl

20

C2

2

.4

Compl

30

D1

4

.2

Compl

40

B1

2

.1

Compl

50

D1

2

.3

10

D1

2

.3

20

B1

4

.1

30

C2

2

.2

40

B1

2

.3

10

C2

2

.1

Compl

20

A1

4

.4

Compl

30

D1

2

.4

40

A1

2

.2

50

B1

0

.2

40

30

419

424

Standard Setup Time (Hrs)

Standard Runtime/piece

Unit 2

Detailed Scheduling and Planning Status

Compl

Figure 3 Routing and Open Order Status

Move From/To Matrix This table indicates the times, in hours, required for movement of WIP material between work centers. It will be useful in calculating move times. As these affect interoperation time and therefore overall lead time, they have an impact on CRP. A1

B1

C3

D1

Stores

A1

0

4

2

4

2

B1

2

0

2

2

2

C2

2

4

0

4

2

D1

3

2

2

0

2

Figure 4 Move to/From Matrix

Lead Time Elements It is important that not only operation times such as setup time and runtime are considered but also queue times, wait times and move times. Queue time is the time spent waiting before an operation, wait time is time spent after operation and move time is the time taken to move product between operations. Shop Calendar The shop calendar (Figure 5) shows all available manufacturing days over a four week period. Each day is split into 4 parts, each representing two hours: eight hours per day in total.

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Detailed Scheduling and Planning Week 20 410

411

412

413

414

Holiday

415

416

417

418

419

420

421

422

423

424

425

426

427

428

Week 21

Week 22

Week 23

Figure 5 Shop Calendar

Calculating Capacity The rated capacity for any given work center is equal to the number of hours available multiplied by the number of machines and by utilization and efficiency quotients. The first step is to work out the total number of hours available by performing the following calculation: Total hours = hours per shift x days per week x shifts per day The rated capacity formula is as follows: Rated Capacity = Total Hours available x Number of Machines x Utilization x Efficiency Using the information given on the previous page, and assuming 1 8 hour shift per day and five production days a week, the weekly capacity for each work center would be as follows: Work Center

Calculation

Capacity

A1

8 x 5 x 1 x 3 x 0.8 x 1.10

105.6

B1

8 x 5 x 1 x 4 x 0.7 x 0.9

100.80

C2

8 x 5 x 1 x 2 x 0.9 x 1.0

72.00

D1

3. Using the information in Figure 1, page 15, calculate the capacity for work center D1 over a 5-day week assuming 1 8 hour shift per day. A. 108.3 Review Q

B. 100 C. 132 D. 100.8

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Detailed Scheduling and Planning Week 21 has only four days available, so capacity is reduced accordingly. The table shows capacity for each work centers A1, B1, and C2 in week 21. Work Center

Calculation

Capacity

A1

8 x 4 x 1 x 3 x 0.8 x 1.10

84.48

B1

8 x 4 x 1 x 4 x 0.7 x 0.9

80.64

C2

8 x 4 x 1 x 2 x 0.9 x 1.0

57.60

4. Using the information in Figure 1, page 15, calculate the capacity for work center in D1 for week 21. A. 108.3 B. 72

Review Q

C. 108 D. 86.64 The capacity for each workstation is then represented as a level line on a bar chart. The following table shows the capacity for workstation A1. 110 100 90 80 70 60 50 40 30 20 10 20

21

22

23

The following grids show capacity at the other work centers: 110

110

110

100

100

100

90

90

90

80

80

80

70

70

70

60

60

60

50

50

50

40

40

40

30

30

30

20

20

20

10

10 20

21

22

Work Center B1

23

10

20

21

22

Work Center C2

23

20

21

22

23

Work Center D1

Figure 6 Capacity Levels for Work Centers A1, B1, C2, and D1

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Detailed Scheduling and Planning Calculating Load The shop order 101 has only one operation remaining (number 050). The due date for the order is day 415, so to post the operation to a work center, you backward schedule from the end (4pm) of the previous day, day 414. Backward Scheduling Example After the final operation, time must be allowed to move the finished material to stores. From the matrix on page 16, the time allowed for this is 2 hours. (2pm to 4pm, day 414) The planned wait time for work station D1 is 4 hours. (10 am to 2pm on day 414). Next, the run time for operation 050 is .3 hours per piece. There are 20 pieces, so the operation will take 6 hours in total. (12 noon on day 413 to 10am day 414) Setup for the operation is 2 hours. (10 am to 12 noon on day 413) This confirms that setup for operation 050 on order 101 must commence by 10am on day 413 in order to meet the required due date. The setup and run time for this operation can now be added to the work center load in the correct time period. These can be represented visually on the grids above by shading in the appropriate cells on each grid. Loads have been represented below in tabular form. Order

Operation

Work Center

Load

Week

Shop Order 109 Part C

050 040 030

WC200 WC100 WC400

6 8 14

22 22 21

Planned Order for Part A

050 040 030 020 010

WC400 WC200 WC400 WC300 WC100

14 6 12 18 10

23 23 22 21 20

Planned Order for Part B

040 030 020 010

WC400 WC300 WC200 WC400

8 7 6 8

22 22 21 20

Planned Order for Part C

050 040

WC200 WC100

030 020 010

WC400 WC100 WC300

8 8 2 18 20 6

23 23 22 22 21 20

5. What is the purpose of safety capacity? A. To allow for production delays due to health and safety regulations B. To protect against machine failure or excessive rework Review Q

C. To protect against fluctuations in lead times D. To protect against fluctuations in demand or supply

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Detailed Scheduling and Planning MPS, Final Assembly Schedule (FAS), and Configuration to Order Capacity requirements planning is performed at a level below the master and final production schedules. However, the summarized level of detail used for rough-cut capacity planning may or may not come from the same files that provide the detailed CRP data. Therefore the master planner should monitor key work center capacities and verify that the master planning process is not the cause of the overload. Regular overloads may indicate that the rough-cut capacity planning data must be revised. This also applies if there are consistent under loads although this may also be the result of business conditions.

DRP Detailed capacity planning in a distrib ution and warehousing environment is mainly for manpower planning. The number of people and demonstrated throughput capabilities of automated and mechanized systems will determine the capacity. The key factor is the location of personnel in each wave, shift or day as this will affect capacity in each area. A wave is a set of store orders or routing stops being picked at one time. For example, if twenty trucks are loaded with three stores each of products there will be three waves, beginning with the third store on the route. This ensures that all the items for each store are loaded onto the truck together in reverse unload sequence. As the balance among receiving, storage, split case replenishment, full case, split case, non-conveyable picking, and shipping changes over a day, the need for personnel performing these functions changes. This is where manpower planning is critical: no area must be allowed to get behind the others. Wave planning (cases shipped and replenished) is a critical input in manpower planning The distribution planning function is concerned with demonstrated capacity over time, which can be measured in cases or lines shipped per person. Large distribution centers experience seasonal peaks that may approach 50% or more, so forward planning is critical.

Interactions within Detailed Scheduling and Planning CRP completes the loop with MRP to ensure the required resources are available to support MRP priorities. The less this is an uncoupled batch process and the more it is an online real-time integrated process, the better the material plan. Interactions required to close the loop are: Identification of orders for which capacity exists Identification of orders for which there is a capacity shortage, details of the shortage and suggested alternative dates. The se are to be considered by the materials planner and production control planner, to ensure the best decision is made, for example changing order due dates, splitting orders or changing capacity Based on the feedback to MRP there may be a need to revise manufactured parts timing and quantity to support the revised materials plan. These action messages are generated via the material requirements planning process and related production activity control interactions.

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Detailed Scheduling and Planning Execution and Control of Operations Interactions CRP forms a key link between detailed scheduling and planning and the execution and control of operations. Detailed scheduling and planning provides detailed information on material requirements and priorities. CRP translates these into levels of capacity on each work center in each period. CRP provides valuable information to execution and control of operations, such as: Identification of orders for which capacity exists Identification of orders that cannot be completed with current capacity levels, the extent of the shortage (measured in quantities of hours that can be produced) and recommended new due dates. The production planner and MRP planner will agree on any necessary actions here. Balancing of capacity and loads

Advantages and Disadvantages of CRP Advantages CRP provides advance visibility of load/capacity imbalances by time period in each work center so that action may be taken to ameliorate such problems before they escalate. Finite capacity planning provides even more detail. CRP verifies the rough-cut capacity plan by checking cumulative capacity against cumulative load over the planning horizon. Where CRP is consistently different to RCCP, it can be assumed that the RCCP process needs to be more comprehensive in its consideration of capacity factors. CRP analyzes the effects of the MRP plan using specific lot sizes and routings. It can be used in what- if analysis to evaluate the effects of changing planning factors such as lot sizes or routings. CRP helps stabilise lead times by providing accurate data to the planner and smoothing the load across work centers. This also has the effect of stabilizing queue times. CRP is more accurate than MRP when estimating lead times. Along with forward scheduling, CRP can use slack times to balance loads and provide a more accurate start time. Disadvantages CRP is most applicable in environments where there is variability of load and order priority must be managed. It is only effective if it can be completed quickly enough to support material planning and execution of operations. CRP requires a lot of computer processing and attention from the planner and must be completed in real time for maximum effectiveness Although detailed, CRP uses highly variable lead time and wait time estimates, which can result in misleading figures. Therefore the outputs of CRP must be treated as approximations of load across time periods. CRP cannot provide precise day-to-day short term decisions. This must be provided by execution and control. © Copyright Leading Edge Training Institute Limited

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Detailed Scheduling and Planning CRP does not clearly show the effect of master schedule revisions on achieving load balances. IF the MP Sis revised, CRP must be run again before the effects can be monitored.

Without CRP Although a difficult activity in the overall planning system, where there is great variability in product mix and order priorities, CRP is invaluable for managing work- in-process related inventory turns and customer service objectives. If CRP is not used the consequences can include: Bottlenecks during overloaded periods Lower productivity as idle time is not used to smooth out overloads Higher WIP inventory as queues increase at overloaded work centers Later delivery and possible shortages due to unbalanced and therefore stressed work centers, where items may be rushed through with inadequate quality control, leading to scrap and rework. Longer lead times due to increased queues at bottleneck work centers Higher labor costs as there is likely to be greater idle time, additional setups, split lots, operation overlapping, resulting in poor efficiency and utilization of equipment and labor. Last minute overtime and extra shifts are expensive.

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Detailed Scheduling and Planning Summary This lesson explained how to use detailed capacity planning to adjust capacity or load in order to achieve required dates. It covered the fo rmulation of capacity plans, tooling requirements, and overload or underload information and explained how to calculate the ability of the production process to meet capacity targets. Finally, the lesson examined the process of closing the loop with master planning of resources, distribution planning, detailed scheduling and planning, execution and control of operations. You should be able to: Identify the level of detail needed to produce effective load and priority plans Explain the purpose of safety capacity Identify the outputs required from capacity planning to formulate capacity plans, tooling requirements, and overload or underload conditions Balance capacity and load by rescheduling orders, splitting orders, modifying capacity, order quantities or priorities Verify the effectiveness of a capacity planning process by ensuring the workload scheduled is within capacity Analyze ‘failed’ capacity plans through looking at past due load Calculate the ability of production to meet work- in-process (WIP) capacity targets Provide product quantities, timing and priorities to close the loop between capacity planning and master planning of resources / distribution planning Close the loop within the detailed scheduling and planning process with respect to purchased and self- manufactured materials and part quantities, timing and priorities Verify that manufactured parts, subassemblies and assemblies were produced in the required quantities at the right time

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 © Copyright Leading Edge Training Institute Limited

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Detailed Scheduling and Planning Review The following questions are designed to test your recall of the material covered in lesson 2. The answers are available in the appendix of this workbook. 6. Using the information below, calculate when an order of 100 pieces would be completed, assuming production has an efficiency rate of 100%, is scheduled for eight hours each day and begins the morning of day 1 Queue (Days)

Cycle Time Per Piece (Hours)

Setup (Hours)

Sawing

1

.1

2

Panels

2

.1

2

Padding

2

.5

5

Drilling

2

.3

2

Grinding

2

.4

1

A. Day 20 B. Day 23 C. Day 28 D. Day 30

7. An employee has been in attendance for 10 hours, eight of which have been spent directly on production. He has completed 10 pieces. Given that the standard hours per piece is 1, what are the efficiency and utilization percentages for the employee? A. Efficiency = 80%, utilization = 125% B. Efficiency = 100%, Utilization = 133% C. Efficiency = 125%, utilization = 80% D. Efficiency = 133%, Utilization = 100% 8. ABC Beverages have won a contract to produce a new product range for a large café chain. To cope with the increased capacity requirements they have added a second shift to the work schedule with capacity and efficiency equal to that of the first shift. Given that the input remains constant, which of the following statements are true? I. Planned queue times should be adjusted downward II. Lead time through the shop is reduced III. Planned setup and run times should be reduced © Copyright Leading Edge Training Institute Limited

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Detailed Scheduling and Planning A. I and II only B. I and III only C. II and III only D. I, II, and III

Work Center 1170 Week

153

154

155

156

157

Actual Input

240

120

200

150

190

Actual Output

190

200

200

200

210

The table above is required to answer questions 9, 10 and 11 9. Which of the following problems are illustrated in the input/output control chart shown above? I. Lead time inflation II. Erratic input III. Inability to plan and control output rates A. I only B. II only C. II and III only D. I, II, and III 10. What is the change in the work center backlog, in standard hours from week 153 through 157? A. Minus 50 B. Minus 100 C. Plus 50 D. Plus 100 E. Plus 190

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Detailed Scheduling and Planning 11. Determine a level of planned uniform input that will yield a cumulative deviation of input equa l to zero. A. 180 B. 190 C. 200 D. 210

12. Which of the following reports of shop floor activity does NOT represent a valid transaction? A. End of shift report B. Team activity report C. Change to a planned order D. Request for tool assistance 13. Which of the following factors has the greatest affect on the actual queue time of a job at a work center? A. The size of the queue B. The lot size of the job C. The priority of the job D. The utilization of the work center Time remaining (excluding behind schedule work) Work remaining 14. Which of the following statements are true of the above simplified priority rule? I. The smaller the fraction, the higher the priority II. Work remaining can stay constant from day to day III. Time remaining can stay constant from day to day A. 1I and II only B. I and III only C. II and III only D. I, II, and III

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Detailed Scheduling and Planning What’s Next? Lesson 7 looked at the use of detailed capacity planning to adjust capacity or load in order to achieve required dates, interfacing with master planning of resources, distribution planning, detailed scheduling and planning, and execution and control of operations. At this point you have completed 7 of the 9 lessons in Unit 2. You should review your work before progressing to the next lesson which is: Detailed Scheduling and Planning – Lesson 8 Supplier Relations hips

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Detailed Scheduling and Planning Appendix

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Detailed Scheduling and Planning Answers to Review Questions 1. B RCCP translates the resource planning figures into capacity figures for key work centers, such as bottleneck work centers. It takes into account the Master Production schedule and bill of resources (BOM) requirements for each item. At this stage, only key work centers are balanced. Resource Planning is a less detailed capacity plan. CRP is more detailed then RCCP. It looks at scheduled and planned orders, order status, routing information and work center information in order to balance capacity throughout the facility. 2. A Only the first option increases capacity. 3. A The rated capacity for any given work center is equal to the number of hours available multiplied by the number of machines and by utilization and efficiency quotients. The first step is to work out the total number of hours available by performing the following calculation: Total hours = hours per shift x days per week x shifts per day The rated capacity formula is as follows: Rated Capacity = Total Hours available x Number of Machines x Utilization x Efficiency 4. D See feedback for question 3. 5. B Safety capacity is a planned amount of capacity that is reserved to protect against machine failure, poor quality, rework, delays, and other unplanned activities. Safety capacity plus productive capacity are equal to the total capacity for a facility. Safety stock protects against variations in supply or demand. Safety lead time protects against unreliable lead times. 6. C – 28 days The total time in queues is 72 hours. The total cycle time for 100 pieces is equal to 140 hours and the total setup time requires is 12 hours. 7. C The efficiency of the employee is determined by dividing the standard hours required to produce the output by the actual hours worked by the employee. This is equal to 10 divided by 8 or 125%. The utilization percentage is equal to the number of hours worked divided by the total hours available. The employee was available for work for 10 hours but was involved in direct production for only 8 of those hours, resulting in a utilization percentage of 80%. 8. A by adding a second shift, planned queue times should be adjusted downward and the lead time through the shop is reduced. However, planned setup and run times will not change as a result of © Copyright Leading Edge Training Institute Limited

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adding another shift. It will still take the same amount of time to setup machinery and to run an operation. 9. B Actual output is steady, averaging 200 units per week but the load imposed on the work center varies widely from 120 to 240 units per week. Overall, the load imposed is less than the demonstrated capacity of the work station so lead times are unlikely to be inflated. 10. B The backlog is the amount of work still to complete beyond the targeted completion time. Due to excess loads in week 53, this backlog is 50 units. However, by week 157 the input load has decreased leading to an overall backlog of minus 100. This can also be though of as excess capacity of 100 standard hours. 11. A To ensure a uniform input over the 5 weeks in the plan, the total input can be determined and divided by the number of weeks available, to give 180 standard hours per week. 12. B A change to a planned order should occur at a higher level of planning, such as MRP planning. 13. C The queue time is usually by far the greatest element of lead time. The priority of a job is most affected by its priority. If it has a high priority, it will be processed almost as soon as it arrives at a work center while lesser priority orders wait in the queue. The size of the queue at a work center will have no effect on the queue time of a specific order if that order is the highest priority order. 14. C Both work remaining and time remaining may stay constant from day to day if sufficient slack time has been built in.

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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.

Bottleneck

A resource that cannot cope with the level of demand placed upon it. Such resources can hold up entire production processes, with queues building up before them. Effective manageme nt involves identifying and ameliorating issues that cause bottlenecks

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.

Capacity Requirements Planning (CRP)

The planning activity that determines the capacity requirements for each work center with regard to the material plan. Open shop orders and planned orders from MRP are the main inputs to CRP along with part routings and time standards. These inputs are converted into hours of work by work center for each time period in MRP. CRP may highlight insufficient capacity during some periods.

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

Constraint

A factor that prevents the achievement of a targeted level of performance, such as machine center capacity, lack of raw material, inefficient policy etc.

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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

Continuous line production

A production system involving a plant layout that closely follows the production process for a product. Material flow is continuous during production, routings are fixed and setups are rarely changed.

Customer service The ability of a company to meet custome r needs. The term is also used to refer to the measurement of product delivery to a customer within required time constraints 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 independent demand at the same time.

Distributed requirements planning (DRP)

A time-phased order point approach that uses MRP logic to determine warehouse requirements. This approach is useful in multilevel distribution networks.

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 © Copyright Leading Edge Training Institute Limited

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Detailed Scheduling and Planning usually facilitates the flow of the product through the plant. Forwa rd 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 perfo rmed 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 lo t sizes with some form of replenishment signal, such as an empty bin, or by holding up a card. Kanban is a good example of a ‘pull’ system

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

Lot sizing

The process of determining a lot size. There are several techniques for lot sizing

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

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Detailed Scheduling and Planning 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.

Overload

The result of total hours of work at a work center exceeding the capacity of the work center

Planned order release

A row on an MRP grid that offsets planned order receipts by the lead time for the item, ensuring that the order is released in sufficient time to ensure its arrival when required

Planning horizon The amount of time a plan extends into the future. For a master schedule, this is normally the cumulative lead time combined with lot sizing allowances for low level components and further allowances for capacity changes in primary work centers or important suppliers. 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

Repetitive production

Repeated production of the same products or product families. This approach results in minimal time on setups, reduced inventory and manufacturing lead times and the elimination of work orders. Production scheduling and control are based on production rates.

Resource planning

Capacity planning at business levels, resource planning is the process of establishing, measuring and adjusting long-range capacity. It is based on the production plan but may be driven by higher level strategic plans beyond the time frame of the production plan. Resource planning concerns itself with planning for resources that take a long time to acquire, for example, the necessity for a new production facility or a new strategic partner.

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Rough-cut The process of converting the master production schedule into requirements capacity for potential bottleneck resources such as labor, machines, warehouse space, planning (RCCP) and supplier capabilities. These requirements are compared against available capacity. This helps ensure a feasible master production schedule. Routing

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

Throughput

The total amount of production that flows through a production facility. In the theory of constraints, throughput is the rate at which the company generates money through sales. Throughput and output are not the same.

trend

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

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 center

A specific area of production comprising people and machines/or machines. A work center is considered a single unit for capacity requirements planning and detailed scheduling.

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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