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Capacity

In: Computers and Technology

Submitted By krebel
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Capacity planning is the process of determining the production capacity needed by an organization to meet changing demands for its product. In the context of capacity planning, design capacity is the maximum amount of work that an organization is capable of completing in a given period. Effective capacity is the maximum amount of work that an organization is capable of completing in a given period due to constraints such as quality problems, delays, material handling, etc. The phrase is also used in business computing as a synonym for capacity management.

There are four procedures for capacity planning; capacity planning using overall factors (CPOF) capacity bills, resource profiles, and capacity requirements planning (CRP). The first three are rough-cut approaches (involving analysis to identify potential bottlenecks) that can be used with or without manufacturing resource planning (MRP) systems. CRP is used in conjunction with MRP systems.

Capacity using overall factors is a simple, manual approach to capacity planning that is based on the master production schedule and production standards that convert required units of finished goods into historical loads on each work center. Bills of capacity is a procedure based on the MPS. Instead of using historical ratios, however, it utilizes the bills of material and routing sheet (which shows the sequence or work centers required to manufacture the part, as well as the setup and run time). Capacity requirements can then be determined by multiplying the number of units required by the MPS by the time needed to produce each. Resource profiles are the same as bills of capacity, except lead times are included so that workloads fall into the correct periods.

Capacity requirements planning (CRP) is only applicable in firms using MRP. CRP uses the information from one of the previous rough-cut methods, plus MRP outputs on existing inventories and lot sizing. The result is a tabular load report for each work center or a graphical load profile for helping plan-production requirements. This will indicate where capacity is inadequate or idle, allowing for imbalances to be corrected by shifts in personnel or equipment or the use of overtime or added shifts. Finite capacity scheduling is an extension of CRP that simulates job order stopping and starting to produce a detailed schedule that provides a set of start and finish dates for each operation at each work center.

A failure to understand the critical nature of managing capacity can lead to chaos and serious customer service problems. If there is a mismatch between available and required capacity, adjustments should be made. However, it should be noted that firms cannot have perfectly-balanced material and capacity plans that easily accommodate emergency orders. If flexibility is the firm's competitive priority, excess capacity would be appropriate.

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