Capacity Planning

 

Overloaded Master Schedule

Capacity planning is used to ensure that the MPS is not overloaded. Discuss the effects that an overloaded MPS has on the MRP system and the factory.

Operations planning is the detailed calculation of the material and capacity required to execute the Sales and Operations Plan. Material Requirements Planning (MRP) pulls together all the requirements for an individual part from the variety of demand sources and calculates a recommend replenishment plan that meets all the requirements. In addition, MRP also provides information by exception when the demands and the expected supply are out of alignment. This information allows the planner to react specifically to those areas requiring attention rather than requiring a routine detailed examination of every part.

Detailed capacity requirements planning (CRP)provides the visibility of demand for each work centres. The forward visibility allows the operations manager to more accurately plan the overall strategy for the addition or reduction of capacity. This proactive approach to capacity management allows the company to make decisions and plans at a time when many options are possible rather than during a time of crisis. The overall costs and benefits of alternative plans can be evaluated and discussed to determine the best solution. Linking these options back to the sales and operations planning process allows the financial impact of these decisions to also be understood. If the capacity cannot be changed to accommodate the priority plan, a change to the priority plan may be required. This in turn prevents material from being purchased unnecessarily and reduces the assets dedicated to potentially unusable inventory. Integrating detailed MRP and CRP is a key implementation success strategy as it can help in the overall proactive identification and resolution of bottlenecks and identify suspected data errors.

The current world of manufacturing no longer allows a company to commit resources long before customer demand. Planning has become more important than ever. After the completion of the Master Production Schedule, the available capacity should be checked before passing the MPS down to the MRP system and all of the material requirements are calculated. In case of an overload after running the capacity plan, it necessary to go back and adjust the master schedule to reduce the overload. An overloaded master production doesn’t get produced and tends to create late orders and backlogs.

 

Overloading the master production can cause chaos and production can come to a stop because of data errors, shipping issues and even shortages. You will end up have mad customers which is the quickest way to go under as a company owner.

From the information I have read an overloaded master schedule is one in which the procedure is overloaded with constraints. If master schedulers create an invalid schedule that does not balance supply of resources with materials demanded for those resources, then this will lead to an overload condition which is like a domino effect. What I mean is one problem will lead to the other such as production inefficiencies, poor timelines, items not shipped on time, work continues to build up and even financial problems occur.

Because the MPS is derived from the aggregate production plan, its requirements are probably “doable,” but until the MRP system considers the specific resource needs and the timing of those needs, the feasibility of the MPS cannot be guaranteed. Thus, the MRP system is often used to simulate production to verify that the MPS is feasible or to confirm that a particular order can be completed by a certain date before the quote is given to the customer. The master production schedule drives the MRP process. The schedule of finished products provided by the master schedule is needed before the MRP system can do its job of generating production schedules for component items. Once the MPS is set, the MRP system accesses the Product structure file to determine which component items need to be scheduled

What do they mean when say the MPS is nervous?

Due to new information, previous schedules may need to be updated regularly. Because of the dynamic environment, updated schedules may be quite different than previous ones. These differences may cause the following changes in the schedule: assigning new production setups for some periods, calling off some previously scheduled setups for some other periods, and altering the production volumes of previously scheduled setups. Such changes in schedules are referred to as nervousness.

Uncertainty in demand forecasts create volatility in lot-sizing results. This volatility is characterized by frequent changes in predetermined production schedules and is highly undesirable for production managers. It causes nervousness in the system in terms of cancelling existing setups, introducing new setups, and altering the production volumes. MRP nervousness or high frequency of updating the MRP system, cancellations, additions, delays in order/manufacturing quantities of an MRP system, all lead to system becoming unstable and inefficient. Also, if the system is not updated frequently enough, the system becomes inflexible. The trade-off between stability and flexibility is balanced with the use of time fences.

What is the difference between rough cut capacity planning (RCCP) and full capacity planning? You might need to do a little research on this one.

“Rough cut capacity planning (RCCP) is the process of determining if the plan is feasible; it determines whether the organization has sufficient capacity to carry out the plan. Although RCCP is more refined than resource requirements planning (RRP), it is called “rough cut” because it is less refined than capacity requirements planning (CRP).”

Rough Cut Capacity Planning (RCCP): a type of capacity planning. It compares requirements to the available capacity at key work centres or critical bottlenecks. it attempts to balance workloads broadly. It often considers the areas of labour, machinery, storage space, and suppliers’ capacity. Full capacity planning is planning the total working hours or opening hours for a given equipment on a 7/24 basis.

Rough cut capacity planning (RCCP) is a tool used in the validation process. Approximate balancing of capacity and demand to test the feasibility of a master schedule. It also involves checking the capacities of production and warehouse facilities, labor, and vendors to ensure no gross deficiencies exist that will render the MPS unworkable.

During the RCCP process, a bill of resources is attached to each item on the MPS. A bill of resources is a listing of resources required to produce one unit of the item (including labor and machines / equipment, and so on). Rough cut capacity planning is a control technique used by manufacturing companies. As company management develops a manufacturing production schedule (MPS), they base their schedule on the belief that all required materials needed to meet this schedule will be available. This is not always the case in the real world, and a lack of available resources can quickly derail the best laid plans. Rough cut capacity planning allows companies to test the real-world feasibility of the MPS before it is set in motion. This process can alert management to potential scheduling problems so that the MPS can be modified or resources can be added as needed to meet production goals.

Management creates a MPS based on demand forecasts, customer orders, and financial goals. The schedule itself generally has little bearing on the capacity of the factory, or on the amount of raw materials on hand. By performing rough cut capacity planning prior to the start of production, factory owners are able to reconcile the goals of management with the capabilities of those working on the floor.

Rough cut capacity planning is a control technique used by manufacturing companies. It is a term used in relationship with production planning and controlling an environment. Where full capacity planning is the process of determining the production capacity needed by the organization to meet changing demands for its products.

Rough cut capacity planning is a control technique used by manufacturing companies. As company management develops a manufacturing production schedule (MPS), they base their schedule on the belief that all required materials needed to meet this schedule will be available. This is not always the case in the real world, and a lack of available resources can quickly derail the best laid plans. Rough cut capacity planning allows companies to test the real-world feasibility of the MPS before it is set in motion. This process can alert management to potential scheduling problems so that the MPS can be modified or resources can be added as needed to meet production goals.

Rough-cut capacity planning is one of the methods used to check the feasibility of the proposed MPS. RCCP is used to make a quick check on the capacity of the key resources to meet the proposed MPS. It compares requirements to the available capacity at key work centers or critical bottlenecks. it attempts to balance workloads broadly. It often takes into account the areas of labor, machinery, storage space, and suppliers’ capacity.

Capacity planning is the process of establishing the output rate that can be achieved at a facility. To able to maximize the full capacity in planning, management must utilize designed and effective capacity to measure the realistic output that the facility can handle.

How is work in progress affected by an overloaded MPS?

An overloaded MPS causes stress everywhere along the production. The product most likely does not ship on time, partially manufactured product remains in work in progress and this all causes financial stress on a business. If a MPS is over-loaded, there are many things that could go wrong. In the operation that I used to run, we would receive last minute changes in our production levels on occasion. This was never a good thing. Usually, every time that this occurred, we would not have enough components on hand to generate enough product to meet this recent allocation change/customer demand. In order to fix that, we had to exhaust our resources in hopes of finding what we needed at the last second. Another problem that we encountered was manpower. Our team was very lean, and we could not go beyond the assigned head count. Unfortunately, the additional workload was enough to warrant an extra crew. Since we did not have extra manpower, we would be forced to either work over-time or sacrifice quality in one way or another. The list of reasons for why this is a bad thing could go on forever. I know, it drove me crazy when we ran into these situations.

When an MPS is overloaded work in progress is more than likely delayed. Whether it be resource shortages or equipment capacity problems, WIP would take longer than it could if the MPS were not overloaded.

As the planning process moves from the production plan to execution, each of the lower-level plans must be feasible. When one is not (work in progress) feedback to the next higher level is used to make the necessary adjustment. One of the major strengths of MRP is its ability to precisely determine the feasibility of a schedule within aggregate capacity constraints. This planning process can yield excellent results. The production plan sets the upper and lower bounds on the master production schedule. The result of this production planning process is the master production schedule.

When the master schedule is overloaded, it leads to inefficiency in the production and the work in process inventory builds up. Production downtime due to the material shortages are quite common. This environment tends to lead to false forecasts which makes the sales and marketing department discount production capabilities, and they fall into the trap of overloading the master schedule. This gets into a bad cycle and usually has a financial impact for the company.

when MPS is overloaded, the work in progress will have to increase in its speed and it could lead to more error in quality of products being produce. The work in progress would require more labour and equipment to produce more output. An increase in work in progress could lead to increase in inventory and associated costs of overhead expenses.

When I lock the schedule so it can’t be changed, how close to production should this happen?

I am not really too sure about this question since I really am inexperienced in this area however I just started working as a project coordinator and work with a Project manager. We have drivers which are our tasks and materials that need to be ordered we have milestones that are met and for each milestone completed is when we receive payment. When all data and work are done, we receive our final documents from our vendors that say all work is done with supporting documentation. Once we receive what we call a true up and enter it into our system we flag is as MS130 which is project complete. After this step we can no longer make changes or schedule anything else with the project. I would think the closer to production the better, since things are always bound to pop up. The company has a good idea of exactly when product will arrive, who will be working, and what needs to be fixed. Ideally, you could just lock any schedule immediately, but that isn’t very plausible. Having accurate and current information and data is essential for forecasting so I would think that the closer to production would be best time for locking the schedule. Locking the schedule too early can cause an insufficient or excess in production which would be costly either way.

Is it absolutely necessary to use capacity planning on the MPS? Why or why not

Capacity planning allows the organization to see how much work can be done in a certain period. Is it necessary to use capacity planning? No…. but it can help depending on the type of work or service being provided. When it comes to services, it may be hard to calculate the amount of time spend on a service request because o the difference aspects of what is being serviced is not always the same. Capacity planning would make sense maybe on an assembly line as they could speed up or slow the process down. Of course, with quality being the number one priority, it is better to manage because the service or work is consistent.

It is not necessary but if an organization wants to operate at the lowest possible cost maximizing output, they are going to have to implement capacity planning. They will have to plan accordingly to demand but with their MPS and capacity plan it should give them optimum results.

It is not necessary to use the capacity planning on the MPS. The alternatives are:

– Working overtime to meet the demands. These include adding shifts, employing casual or part-time workers, the use of floating workers, leasing workers, and facilities subcontracting.

– Firms may also increase capacity by improving the use of their resources. The most common alternatives in this category are worker cross training and overlapping shifts.

– A more creative approach is to modify the output. In services, one might allow customers to do some of the process work themselves (e.g., self-service gas stations and fast-food restaurants).

Detailed capacity requirements planning (CRP)provides the visibility of demand for each of the work centres. This forward visibility allows the operations manager to more accurately plan the overall strategy for the addition or reduction of capacity. The proactive approach to capacity management allows the company to make decisions and plans at a time when many options are possible rather than during a time of crisis. The overall costs and benefits of alternative plans can be evaluated and discussed to determine the best solution. Linking these options back to the sales and operations planning process allows the financial impact of these decisions to also be understood. If the capacity cannot be changed to accommodate the priority plan, a change to the priority plan may be required. This in turn prevents material from being purchased unnecessarily and reduces the assets dedicated to potentially unusable inventory. Integrating detailed MRP and CRP is a key implementation success strategy as it can help in the overall proactive identification and resolution of bottlenecks and identify suspected data errors.

References

Osman Kazan, Rakesh Nagi, Christopher M. Rump. (2000). New lot-sizing formulations for less nervous production schedules. Computers & Operations Research 27 (2000) 1325}1345

http://www.referenceforbusiness.com/management/Bun-Comp/Capacity-Planning.html#ixzz2KQSl8oYh

http://e-university.wisdomjobs.com/erp-tools/chapter-165-276/operations-planning-material-and-capacity-br-requirements-planning.html

http://www.supplychaindefinitions.com/planning.htm

http://www.tmssonline.com/RCCP.html

https://www.tmssonline.com/RCCP.html