Manufacturing Capacity Planning

Capacity planning is the process of determining the necessary resources to meet the production objectives. The objectives of capacity planning are:

1. To identify and solve capacity problems in a timely manner to meet customer needs.

2. To maintain a balance between required capacity and

available capacity.

Required capacity is simply what is needed to meet the expecta­tions of the Master Schedule. The APICS dictionary defines capacity as "the highest sustainable output rate that can be achieved with the current product specifications, product mix, worker effort, plant and equipment." Of course, that is the current available capacity. What if it is expected that the specifications, mix, effort, or available plant or equipment will change, or if the volume of business we expect to do is going to increase or decrease? That requires that we plan to change future available capacity. That is what capacity planning is all about: planning changes in capacity. If the required capacity never changes, then it is not necessary to do anything about planning future capacity. Just maintain the status quo. But unfortunately it is not realistic to expect that nothing will change.

Required capacity should be calculated directly from scheduled and planned production. Material Requirements Planning (MRP) tells us what manufactured parts are needed and when in order to meet the Master Schedule. The capacity required to meet those material requirements can be calculated from the scheduled receipts and planned orders from MRP. The result is a capacity requirements profile as in Figure 1. Comparing those require­ments with the available capacity—both current and planned— identifies any imbalances that need attention (see Figure 1).

The available capacity can be changed by changing the work schedule (more or less hours), the assigned work force, or the availability of facilities and equipment. If balance cannot be achieved through these efforts, then the required capacity for this work center can be altered by changing the production routing (scheduling the work through an alternate work center), subcon­tracting, or changing the scheduled quantity. As a last resort, the plans from MRP or the Master Schedule can be changed to alter the required capacity.

There are three basic capacity planning tools—Rough-Cut Capac­ity Planning, Capacity Requirements Planning, and Input/Output Control—that can be employed to forecast the need for changes in capacity, fine-tune available capacity, and monitor the execu­tion of the plans. Using these tools in concert with each other helps to avoid the problems of too little capacity to meet the commitments that have been made, or too much capacity that results in under-utilized and inefficient production resources.

There have been lots of discussions as to whether a company entrenched in JIT manufacturing needs to do any capacity plan­ning. There is no real debate. Every company needs to plan future capacities. JIT does not address this need. It isn't a question of "if but of "how." Use of the these techniques vary depending upon the particular manufacturing environment.

To be Continued

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