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

1.2.4 Resource-Related Business Objects

Intended learning outcomes: Produce an overview on terms such as facilities, workstations, production equipment, work center, capacity, load, work-center load. Explain the load profile of a work center. Differentiate between standard load and actual load. Disclose capacity utilization and work center efficiency. Differentiate between rated capacity and theoretical capacity.



Employees, or workers, in an enterprise are all those people involved directly and indirectly in a company’s performance. 

The term facilities refers to the physical production plant, distribution and service centers, offices, R&D laboratories, and related equipment [APIC16]. Facility location is the physical location (for example, a region or a city) where the facilities come to be. In the following, we use the abbreviated term, location, synonymously. 

The production infrastructure comprises all available production facilities, that is, factories and their workstations, as well as other production equipment. 

A workstation is an assigned location where a worker performs the job; it can be a machine or a workbench ([APIC16]). 

The production equipment includes machines, appliances, devices (such as jigs, fixtures), and tools.

Employees and the production infrastructure of an enterprise make up work centers:

A work center, or load center (or a machine center, if consisting mainly of machines), is an organizational unit of production within the chosen organization of the production infrastructure (see Section 4.4.3). It comprises the totality of employees and production infra­structure required to complete a quantity of work considered to be one unit for the purposes of higher-level planning & control. Internal planning & control of a work center is not necessary or takes place autonomously under consideration of the higher-level orders. Cf. [APIC16]. 

The capacity of a work center is its potential to produce output. This potential is always related to a time period. The unit of measure is called the capacity unit, and it is mostly a unit of time (hours of work).[note 107] 

Theoretical capacity is the maximum output capacity, determined by the number of shifts, the number of workers or machines, and the theoretically available capacity per shift. Theoretical capacity can vary from week to week due to foreseen, overlapping changes, such as vacation time, additional shifts, overtime, or preventive maintenance requirements. 

The capacity profile of a work center represents its capacity over time. See Figure 1.2.4.1.

Economic use of capacity by workload is fundamental in Integral Logistics Management.

Load is the amount of work planned for or released to a facility, work center, or operation for a specific span of time, measured in capacity units.

To calculate load, we must first — once again, as in Section 1.2.3 — take a closer look at the detailed object operation.

Operation load is the work content of the operation, measured in the capacity unit of the work center carrying out the operation.

The terms setup load, run load, and run load per unit are defined in the following analogously to setup time, run time, etc., in Figure 1.2.3.1, with “work content” in the place of “time.” The formula for operation load is analogous to the formula for operation time in Figure 1.2.3.1.

Load can refer to either planned or real manufacturing processes.

Standard load is the given, probable content of work. 
Actual load is the actual content of work, the use of capacity by the content of work.

Standard load of an operation and actual load of an operation are defined in a similar way. The following definitions are again related to the work center.

Work center load is the sum of the load of all operations for orders processed by the work center. 

The load profile, or load projection, of a work center is a display of work center load and capacity over a given span of time. See Figure 1.2.4.1.

(Capacity) utilization is a measure of how intensively a resource is being used to produce a good or service. Traditionally, it is the ratio of its actual load to its theoretical capacity.

Figure 1.2.4.1 shows a typical picture of a load profile, under the assumption of continuous or rectangular distribution within a time period. Similar to product structure and the process plan, the load profile represents a scheme, or natural conception, from the perspective of the people responsible for the processing of the production order.[note 108]

Fig. 1.2.4.1        The load profile of a work center (continuous and rectangular distribution).


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Simulation and Realtiy[kml_flashembed movie="https://opess.ethz.ch/wp-content/uploads/elements/C_124.swf" height="75%" width="100%" /]

The production lead time ignores the actual capacity utilization of the work center, although utilization can strongly influence queue times. Mostly, for long-term planning, the lead time calculation according to Section 1.2.3, which is based on the average duration of operations and inter­operation times, is sufficiently accurate. The shorter the planning term, the more important it is to consider capacity utilization when calculating lead time.


The animation shows a typical picture of a load profile, under the assumption of continuous or rectangular distribution within a time periode.
Press the start button to beginn the animation.


For a detailed analysis of the load profile, it is necessary to take a closer look at capacity.

Work center efficiency, or the efficiency rate of a work center, is a percentage, namely, “standard load divided by actual load” or — equivalently — “actual units produced divided by standard units to produce” (cf. [APIC16]). This is calculated as the average of all operations performed by a work center. 

Rated capacity, or calculated capacity, is the expected output capability of a work center, that is, theoretical capacity times capacity utilization times work center efficiency.

An example of theoretical capacity and rated capacity, along with detailed explanations of the terms, is shown in Figure 14.1.1.1. The above definitions, however, provide a basis for understanding important aspects for planning & control:

Standard load to be scheduled should always refer to rated capacity. To compare capacity with standard load, the capacity profile should always show theoretical capacity multiplied by efficiency.




Course section 1.2: Subsections and their intended learning outcomes

  • 1.2 Business Objects

    Intended learning outcomes: Present business-partner, and order-related business objects in detail. Explain product-related, process-related, and resource-related business objects. Produce an overview on rough-cut business objects.

  • 1.2.1 Business-Partner, and Order-Related Business Objects

    Intended learning outcomes: Present in detail the order as a business object. Produce an overview on terms such as business partner, due date, order promising, order confirmation, order status. Differentiate between order positions for items (to be) delivered and labor (to be) performed.

  • 1.2.2 Product-Related Objects

    Intended learning outcomes: Produce an overview on business objects such as item, specializations thereof (particularly part and component), and item family. Explain the product structure and the bill of material. Differentiate between a convergent and a divergent product structure. Describe the concepts of product family, variant, option and commonality.

  • 1.2.3 Process-Related Business Objects

    Intended learning outcomes: Present in detail business objects such as operation, setup and run time. Explain the routing sheet, the critical path, interoperation time and the production lead time. Describe the product module, the production structure, and the cumulative lead time. Disclose the process plan. and the lead time offset.

  • 1.2.4 Resource-Related Business Objects

    Intended learning outcomes: Produce an overview on terms such as facilities, workstations, production equipment, work center, capacity, load, work-center load. Explain the load profile of a work center. Differentiate between standard load and actual load. Disclose capacity utilization and work center efficiency. Differentiate between rated capacity and theoretical capacity.

  • 1.2.5 Rough-Cut Business Objects

    Intended learning outcomes: Identify reasons and principles for defining rough-cut business objects. Disclose the rough-cut product structure and the rough-cut process plan. Explain a way to derive a rough-cut resource requirement plan from a detailed resource requirement plan. Describe a way to establish the rough-cut process plan and the product load profile.