Integral Logistics Management — Operations Management and Supply Chain Management Within and Across Companies

14.5 Summary

Capacities are workers or machines that can carry out work in order to produce goods or services. To calculate the rated capacity in order to add value, we have to know the utilization and the work center efficiency (or efficiency rate). Planning in two dimensions (time and quantity), as described in Section 5.3.3, is a fundamental problem when planning capacity requirements. Depending on the situation, we must choose one of these dimensions to set the direction, which leads us to various classes of techniques.

Infinite loading is primarily a load profile calculation. The start date for an operation, which results from scheduling an order, determines the timing of an individual load. All the loads for each work center and time period are then added together to obtain the capacity requirement, which, in turn, is compared against rated capacity to obtain an overview. A closer look reveals a number of problems with the algorithms that have to be overcome. The load profile is then used for planning capacities, and the emphasis is placed on measures to alter capacity that are appropriate for the particular planning term. If there are only few orders to be planned, an additional measure — move the operations — is conceivable, although this can be difficult.

The chapter presented three finite loading techniques. The operations-oriented technique plans as many operations as possible for each work center from the perspective of the time axis. Priority rules are applied in order to decide among all the plannable operations in each time period. The result is high-capacity utilization, but some orders will be kept waiting. On the other hand, use of the FIFO priority rule will distribute the delay equally among all the orders.

The order-oriented technique plans entire orders according to a particular priority and all the operations for each order. If there is no more capacity available for an operation, we can defer the remaining operations. The consequences for the performance indicators are similar to those of the operations-oriented technique. Another response is to unload such an order in its entirety. In this case, the remaining orders will be executed on time (according to schedule), with a lower level of goods in process and less favorable capacity utilization than with the operations-oriented technique. However, we still need to find a later completion date for the unloaded orders, which may lead to long delays and possibly even to the loss of these orders. If there are only a few orders to be planned, we can also attempt to move individual operations forward or to defer other orders, although this can be a very time-consuming “manual” task.

A constraint-oriented technique is called drum-buffer-rope. The drum stands for the rate or pace of the bottleneck. This constraint controls the throughput of all products that it processes. A time buffer in front of the constraint absorbs potential disturbances during a certain period of time and helps to avoid idleness at the constraint. A space buffer after the constraint helps to avoid idle time due to disturbances of the succeeding operations. The rope is an analogy for the communication process: the set of planning, release, and control instructions for bringing the necessary material for production to the constraint in due time. For rough-cut capacity planning, we first create a rough-cut network plan for each product family and derive the resource profile for each rough-cut work center needed to manufacture the product family. Infinite loading is first applied, as in the detailed technique. Order-by-order planning then enables us to defer the entire profile, so we can decide whether to accept the order in the short term, for example. With finite loading, we first determine the earliest completion date according to available capacity and then add the lead time to the first date for which any capacity is available. The later of the two dates thus calculated is the earliest completion date for the order.

Course 14: Sections and their intended learning outcomes

  • Course 14 – Capacity Management

    Intended learning outcomes: Present fundamentals of capacity management. Explain in detail load profile calculation and infinite loading. Disclose finite loading. Describe rough-cut capacity planning.

  • 14.1 Fundamentals of Capacity Management

    Intended learning outcomes: Produce an overview on capacity, work centers, capacity determination, and capacity management techniques.

  • 14.2 Infinite Loading

    Intended learning outcomes: Present load profile calculation and problems associated with algorithms for load profile calculation. Explain methods of balancing capacity and load. Describe order-wise infinite loading.

  • 14.3 Finite Loading

    Intended learning outcomes: Explain operations-oriented, order-oriented, and constraint-oriented finite loading.

  • 14.4 Rough-Cut Capacity Planning

    Intended learning outcomes: Describe rough-cut network plans and load profiles. Explain rough-cut infinite loading and rough-cut finite loading.

  • 14.5 Summary