Chapter 5: Capacity Management

Move time (pg. 115)

The time normally taken to move material from one workstation to another.

Standard Time (pg. 117)

(also known as standard hours) for a job can be determined, that is, the time it would take an average qualified operator working at a normal pace to do the job. It provides a yardstick for measuring work and a unit for stating capacity. It is also used in loading and scheduling work to be done.

Shop Calendar (pg. 116)

A calendar of working days.

Open Order (pg. 115)

Appears as a scheduled receipt on the material requirements plan. It is a released order for a quantity of a part to be manufactured and completed on a specific date. It shows all relevant information, such as quantities, due dates, and operations. A record of all the active shop orders is maintained manually or as a computer file or table.

Forward Scheduling (pg. 123)

Begins with a start date at the first operation, and moves forward through the operations calculating the start and completion dates for each operation to determine the completion date.

Capacity Requirements Planning (CRP) (pg. 114)

Capacity planning at a more detailed level and is directly linked to the material requirements plan. Since this type of planning focuses on component parts, greater detail is involved than in rough-cut capacity planning. It is concerned with individual orders at individual work centers and calculates work center loads and labor requirements for each time period at each work center.

Work Center (pg. 115)

Comprised of a number of machines or workers capable of doing the same work. The equipment will normally be similar so there are no differences in the kind of work the machines can do or the capacity of each. Several sewing machines of similar capacity could be considered a work center. Work center data contains information on the capacity and move, wait, and queue times associated with the center.

Planned Orders (pg. 115)

Determined by the computer's MRP logic based upon the gross requirements for a particular part. They are inputs to the CRP process in assessing the total capacity required in future time periods.

Resource planning (pg. 113)

Involves long-range capacity resource requirements and is directly linked to production planning. Typically, it involves translating monthly, quarterly, or annual product priorities from the production plan into some total measure of capacity, such as gross labor hours. Resource planning involves changes in staffing, capital equipment, product design, or other facility changes that take a long time to acquire and eliminate.

Efficiency (pg. 117)

Measures the output as compared to the standard. Efficiency = standard hours produced/hours actually worked * 100%

Scheduling (pg. 122)

Most orders are processed across a number of work centers, and it is necessary to calculate when orders must be started and completed on each work center so the final due date can be met. This process is called scheduling. APICS Dictionary, 14th edition defines a schedule as "a timetable for planned occurrences."

Capacity management (pg. 112)

Responsible for determining the capacity needed to achieve the priority plans as well as providing, monitoring, and controlling that capacity so the priority plan can be met.

Load report (pg. 120)

Shows future capacity requirements based on released and planned orders for each time period of the plan.

Rough-cut capacity planning (RCCP) (pg. 113)

Takes capacity planning to the next level of detail. The master production schedule is the primary information source for RCCP. The purpose of rough-cut capacity planning is to check the feasibility of the MPS, provide warnings of any bottlenecks, ensure utilization of work centers, and advise vendors of capacity requirements.

Capacity (pg. 112)

The amount of work that can be done in a specified time period.

Calculated Capacity (pg. 118)

The available capacity at a work center for a period of time, and accounting for the average utilization and efficiency of that work center. Rated capacity = available time * utilization * efficiency

Rated capacity (pg. 118)

The available capacity at a work center for a period of time, and accounting for the average utilization and efficiency of that work center. Rated capacity = available time * utilization * efficiency

Capacity Required (pg. 112)

The capacity of a system or resource needed to produce a desired output in a given time period.

Capacity Available (pg. 112)

The capacity of a system or resource to produce a quantity of output in a given time period.

Demonstrated (measured) Capacity (pg. 118)

The historical output, or capacity, of a work center. This type of capacity examines the previous production records and uses that information as the available capacity of the work center. This is determined in part by the actual load input to the work center, and is not necessarily reflective of what the work center is capable of producing.

Theoretical Capacity (pg. 118)

The maximum capacity available, with no regard for downtime, utilization, or efficiency. If a company uses two 8-hour shifts at a work center, the theoretical daily capacity would be 16 hours.

Available time (pg. 117)

The number of hours a work center can be used.

Productivity (pg. 118)

The overall measure of the ability to produce a good or a service. It compares the actual output of production to the actual input of all resources, incorporating the utilization of the time available and the efficiency during that time. Productivity = utilization * efficiency * 100%

Routing (pg. 115)

The path that work follows from work center to work center as it is completed. A routing is specified on a route sheet or in a computer routing file or table. Routing data should exist for every component manufactured and contain the following information: ■ Operations to be performed. ■ Sequence of operations. ■ Work centers to be used. ■ Possible alternate work centers. ■ Tooling needed at each operation. ■ Standard times: setup times and run times per piece.

Utilization (pg. 117)

The percentage of time that the work center is active compared to the available time. Utilization = hours actually worked/available hours * 100%

Capacity Planning (pg. 113)

The process of determining the resources required to meet the priority plan and the methods needed to make that capacity available.

Capacity control (pg. 113)

The process of monitoring production output, comparing it with capacity plans, and taking corrective action when needed.

Lead time (pg. 115)

The sum of queue, setup, run, wait, and move times.

Wait time (pg. 115)

The time a job is at a work center after completion and before being moved.

Queue time (pg. 115)

The time a job waits at a work center before being processed.

Standard Hours (pg. 117)

The time it would take an average qualified operator working at a normal pace to do the job. It provides a yardstick for measuring work and a unit for stating capacity. It is also used in loading and scheduling work to be done.

Back Scheduling (pg. 122)

The usual process is to start with the due date and, using the lead times, to work back to find the start date for each operation. This process is called back scheduling or backward scheduling. To back schedule, the following must be known for each order: ■ Quantity and due date. ■ Sequence of operations and work centers needed. ■ Setup and run times for each operation. ■ Queue, wait, and move times. ■ Work center capacity available (rated or demonstrated).

Backward Scheduling (pg. 122)

The usual process is to start with the due date and, using the lead times, to work back to find the start date for each operation. This process is called back scheduling or backward scheduling. To back schedule, the following must be known for each order: ■ Quantity and due date. ■ Sequence of operations and work centers needed. ■ Setup and run times for each operation. ■ Queue, wait, and move times. ■ Work center capacity available (rated or demonstrated).

Capacity cushion (pg. 119)

This capacity is available capacity that is planned to exceed capacity required. It is used to protect against unplanned activities, such as breakdowns, poor quality, preventive maintenance, and so forth. It is also referred to as a capacity cushion, and can be used as an alternative to safety stock. Care should be taken in using both safety capacity and safety stock, as this can cause additional costs for the firm.

Safety Capacity (pg. 119)

This capacity is available capacity that is planned to exceed capacity required. It is used to protect against unplanned activities, such as breakdowns, poor quality, preventive maintenance, and so forth. It is also referred to as a capacity cushion, and can be used as an alternative to safety stock. Care should be taken in using both safety capacity and safety stock, as this can cause additional costs for the firm.

Load (pg. 112)

This is the amount of released and planned work assigned to a facility for a particular time period. It is the sum of all the required capacities.