CAPACITY PLANNING AND PROCESS PLANNING

• Capacity planning is the process of determining the

production capacity needed by an organization to meet
changing demands for its products.

• 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.
Actual output
System efficiency = × 100
System capacity
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CAPACITY PLANNING AND PROCESS PLANNING

Calculating Processing Requirements

Standard If the department works one eight
Annual processing time Processing time
Product Demand per unit (hr.) needed (hr.) hour shift, 250 days a year, calculate
the number of machines that would
#1 400 5.0 2,000 be needed to handle the required
volume.
#2 300 8.0 2,400

#3 700 2.0 1,400

5,800

5800/(250)(8) = 2.9, i.e., 3 machines are needed

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Bottleneck

Operation 1 Operation 2 Operation 3

10/hr.
20/hr. 10/hr. 15/hr.

Maximum output rate

limited by bottleneck

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CAPACITY PLANNING AND PROCESS PLANNING

A manufacturing company has a product line consisting of five work stations in

series. The individual workstation capacities are given. The actual output of the
line is 500 unit per shift.
Calculate (i) system capacity
(ii) Efficiency of the production line
Workstation. A B C D E
No.
Capacity/Shift 600 650 650 550 600

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CAPACITY PLANNING AND PROCESS PLANNING

• Efficiency/Utilization
Design capacity = 50 trucks/day
Effective capacity = 40 trucks/day
Actual output = 36 units/day

Actual output = 36 units/day

Efficiency = = 90%
Effective capacity 40 units/ day

Utilization = Actual output = 36 units/day

= 72%
Design capacity 50 units/day

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CAPACITY PLANNING AND PROCESS PLANNING

A company intends to buy a machine to act as an constituting element

on a production line. The actual output of line is 1,70,000 units per
annum. The system efficiency of the product line is 85%.
(i) Find the system capacity.
(ii) If the time required to produce each part is 100 seconds and the
machine works for 2000 hours per year. If the utilization of the
machine is 60% and the efficiency of the machine is 90%,
compute the output of the machine.
170000
System capacity= = 2,00,000 units / annum
0.85
200000
= = 100 units / hour
2000

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CAPACITY PLANNING AND PROCESS PLANNING

(ii) If the time required to produce each part is 100 seconds and the
machine works for 2000 hours per year. If the utilization of the
machine is 60% and the efficiency of the machine is 90%, compute
the output of the machine.
60 ×60 sec
Capacity per hour = = 36 units
100 sec per unit
Output per hour = unit capacity × % utilization × efficiency
Output per hour = 36 × 0.6 × 0.9 = 19.44 units ≈ 20 units
(iii) Calculate the number of machines required?
System capacity 100
Number of machines req. = = = 5 machines
Output per hour 20

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 CAPACITY PLANNING AND PROCESS PLANNING

Impact of Set-ups on Capacity Produce Part 1

Setup Part 1
Assembly requires two parts (1 Nos part and 2 Nos part 2)
Produce Part 2
Setup Part 2

Batch size = 12 parts Batch size = 300 parts

Set up for part 1 = 60 min Set up for part 1 = 60 min
Produce part 1 = 12 parts in 12 mins Produce part 1 = 300 parts in 300 mins
Set up for part 2 = 60 min Set up for part 2 = 60 min
Produce part 2 = 24 parts in 12 mins Produce part 2 = 600 parts in 300 mins
Total 144 mins to produce parts for 12 Total 720 mins to produce parts for 300
assemblies (assuming negligible assembly time) assemblies (assuming negligible assembly time)
Cap. is 12/144=0.0833 Assembly/min. Cap. is 300/720=0.4166 Assembly/min.
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CAPACITY PLANNING AND PROCESS PLANNING

Impact of Set-ups on Capacity

and so does inventory

t: processing time per unit does not include the setup time

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CAPACITY PLANNING AND PROCESS PLANNING

Impact of Set-ups on Capacity

Situation A: If the setup is at a bottleneck resource and the system is capacity-
constrained, capacity of the bottleneck is very important.

Increase the batch size to increase the capacity.

Situation B: If the setup is at a non-bottleneck resource or the system is

demand-constrained, capacity of the resource which requires the setup is not
important.

Decrease the batch size to decrease the inventory in the system.

Increase the batch, decrease the batch, but how much? Remember EPQ
Can we be more specific? (EBQ) + Material
Handling + ABC
Classification
System

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Impact of Set-ups on Capacity

Consider the rate of part consumption is 0.33 at the assembly.
Situation A: For Batch size = 12 parts the Cap. is 12/144 = 0.0833 Assembly/min.
Cannot feed the assembly operations at this rate
Situation A: For Batch size = 300 parts the Cap. is 0.4166 Assembly/min.
Can feed the assembly operations but may result in more inventory than necessary.
What is the smallest B that can feed in assembly?

Set up for both parts = 120 mins

Batch Size = B
Time (1 nos part 1 and 2 nos part
2) = 1 + .5 + .5 = 2 min

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CAPACITY PLANNING AND PROCESS PLANNING

Following activities constitute a work cycle.

Consider machine efficiency of 85% and operator efficiency of 75%, the factory
operates for 8 hour shift and 26 days per month.
(i) Find the total time
(ii) Theoretical output obtained from the machine.
(iii) Calculate the number of machines required to produce the three components from the
information given below
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CAPACITY PLANNING AND PROCESS PLANNING

(i) Total cycle time (T) = 0.25 + 0.35 + 0.40 + 0.90 = 1.90 min.
60
(ii) Output per hour = = 31.5 ≈ 31 units
1.9

Production quantity
= × setup time (hrs) + Operation time
Batch size

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Total time (hrs) required to process all the three components

= 74.374 + 227.33 + 104.375 = 406.079 hrs
Number of hours available (8 hr shift & 26 working days) pm = 8×26=208 hrs.

Therefore, Number of machines required =

Total number of machine hours required 406.079
= = 1.955 ≈ 2
Total number of hours available 208
Given, machine efficiency of 85% and operator efficiency of 75%, the number of machines
required are:
406.079
Total hours required per month = = 636.98 hrs
0.85 ×0.75
636.98
Number of machines required = = 3.06 ≈ 4 machines
208

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CAPACITY PLANNING AND PROCESS PLANNING

Thank You

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