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

5.3.3b The Overall Objective of Scheduling and Capacity Management

Intended learning outcomes: Present the overall objective of scheduling and capacity management. Disclose to which extent capacity can be stored.

Continuation from previous subsection (5.3.3)

The overall objective of scheduling and capacity management is to balance load arising through orders with capacity available to process those orders. Figure shows a chance-produced situation through the course of time (above) and, in contrast, an idealized conception of the possible result of planning (below).

Fig.        Objective of time management and scheduling and of capacity management: balancing load with capacity available.

The problem to be resolved is basically the same in any of the temporal ranges of planning & control. However, the measures taken for capacity planning — such as procuring additio­nal capacity — are very different in master planning and detailed planning and scheduling.

  • In long-term planning, the company can procure additional production means, such as production facilities or persons. In addition, it can make comprehensive arrangements to subcontract to the outside. Or, if capacity must be reduced, this can all be accomplished in reverse.
  • In medium-term planning, on the other hand, a company will attempt to gain at least some measure of flexible capacity through scheduling overtime or arranging rush subcontracts to the outside. Medium-term planning, however, cannot correct major errors in long-term planning. These planning errors result in late deliveries.

Capacity is a potential factor. Can capacity be stored? A firm may think that this can be accomplished by producing ahead, thus creating inventory. However, inventory cannot be reconverted into capacity. Therefore, the firm has to be very sure to produce ahead only items that will be used within a reasonably short time frame. There are capacity management techniques that use this strategy, such as Corma. In other cases, however, producing ahead in order to “store capacity” may simply be a manifestation of a “just in case” mentality. As a result, the wrong items will be produced, and eventually the capacity is lost.

Somewhat “storable” is capacity in the form of personnel — if employees’ presence along the time axis is somewhat flexible. For instance, say that an employee has to work only five hours instead of the usual eight on a specific day. If she or he is willing to go home but to work the three hours on another day where there is overload, you could say that three hours of capacity were stored. While this strategy is quite common, it is very limited with regard to the total capacity. Moreover, a company normally has to pay for the flexible capacity of the workforce.

Generally, capacity cannot be stored effectively. Because this is so, planning must address two dimensions simultaneously; capacity (quantity axis in Figure and dates (time axis) must be planned together.

Course section 5.3: Subsections and their intended learning outcomes

  • 5.3.4b Overview of Scheduling and Capacity Management Techniques

    Intended learning outcomes: Produce an overview on order-oriented infinite loading, order-wise infinite and finite loading, operations-oriented and order-oriented finite loading, constraint-oriented finite loading, load-oriented order release (Loor), capacity-oriented materials management (Corma).

  • 5.3.5 Available-to-Promise (ATP) and Capable-to-Promise (CTP)

    Intended learning outcomes: Explain available-to-promise (ATP) and the determination of ATP quantities. Produce an overview on the techniques of multilevel available-to-promise (MLATP) and capable-to-promise (CTP).