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

1.2.4b Work Center Load, Load Profile, Capacity Utilization, Work Center Efficiency, Rated Capacity: Resource-Related Business Objects

Intended learning outcomes: Explain the work-center load and the load profile of a work center. Disclose capacity utilization and work center efficiency. Differentiate between rated capacity and theoretical capacity.

Continuation from previous subsection (1.2.4).

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

(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 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.

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

It is also a common practice to set the capacity profile at 100%, that is, to make it the horizontal value and to express load as percentages thereof.

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. [ASCM22]). 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 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