Intended learning outcomes: Present the objectives of the tasks as well as the overall objective of scheduling and capacity management. Describe the vicious circle caused when capacity bottlenecks prolong the planned production lead-time.
The type of business or company makes no difference when it comes to time management and scheduling and capacity management. Industrial and service companies alike face essentially the same challenges:
- How can individual order processing tasks be synchronized in time?
- What capacities must be available to realize master planning?
- Where and when must special shifts and overtime (or short-time work or part-time work) be put in place? What jobs, or whole orders, must be turned over to subcontractors (due to overload) or taken over from them (due to underload)?
- Where can the rhythm of production be brought into balance? Can short-time work in one area be compensated for by overtime in another?
- When and where can capacity or orders be shifted? For example, what shifts can be made from one shop, production line, office group, team, and so on to another?
- Can lead times and the number of orders in process be reduced?
The objectives of the tasks of time management and scheduling and capacity management are similar to the objectives of materials management (see Section 1.2.1):
- High service level, short delivery times, high delivery reliability rate, and, at the same time, flexibility to adapt to customer requests
- Low invested capital, that is, minimal inventory of work in process; optimization of wait times
- Efficient use of available capacity through good utilization at a constant level; prediction of bottlenecks
- Flexibility and adaptability of capacity to changing conditions
- Minimal fixed costs in production administration and in production itself
Finding solutions for these issues requires consideration of large bodies of data from various open or planned orders. IT-supported handling of the problem is often necessary. The planning problem becomes more complicated because some of the above objectives, such as the first and the third, contradict each other.
Figure 5.3.3.1 shows the consequences of not planning capacity. If capacity is inadequate (here, too low) to begin with, a vicious circle of actions results. To gain an understanding of how this can arise, begin with “increased number of orders in the factory” at the bottom right of the figure.
Fig. 5.3.3.1 A vicious circle caused when capacity bottlenecks prolong the planned production lead time. (From [IBM75]).
- If the number of customer orders increases, the number of orders released to production also increases, thus increasing the load on capacity.
- If the number of orders exceeds capacity, queues will form behind the work centers.
- In consequence, orders must wait and their actual lead times lengthen. Orders cannot be met at their due date, that is, not within the customer tolerance time.
- Standard lead times, particularly the interoperation times, are prolonged to gain more realistic planning.
- As a consequence, orders are released earlier, which in turn causes additional load in the form of released orders. The “game” begins all over again at point 1.
In this example, increasing the capacity could be a way to break out of the vicious circle.
Continuation in next subsection (5.3.3b).
Course section 5.3: Subsections and their intended learning outcomes
5.3 Introduction to Detailed Planning and Execution
Intended learning outcomes: Disclose basic principles of materials management, scheduling and capacity management concepts. Produce an overview of materials management, scheduling and capacity management techniques. Differentiate between available-to-promise and capable-to-promise.
5.3.1 Basic Principles of Materials Management Concepts
Intended learning outcomes: Present the objectives of materials management. Differentiate between deterministic materials management and stochastic materials management. Differentiate between independent demand and dependent demand. Produce an overview on quasi-deterministic materials management, fill rate, stockout, backorder.
5.3.1b The Cumulative Fill Rate
Intended learning outcomes: Explain and experience the cumulative fill rate.
5.3.2 Overview of Materials Management Techniques — Kanban, Order Point Technique, Cumulative Production Figures Principle (CPFP).
Intended learning outcomes: Disclose the basic classification of detailed planning techniques in materials management. Produce an overview on techniques such as Kanban, order point technique, and CPFP (cumulative production figures principle).
5.3.2b Overview of Materials Management Techniques — Customer Order and Material Requirements Planning (MRP)
Intended learning outcomes: Explain the additional classification for unique demand or demand for high-cost items with a discontinuous demand pattern. Produce an overview on techniques such as Kanban, order point technique, CPFP (cumulative production figures principle), and MRP (material requirements planning).
5.3.3 Basic Principles of Scheduling and Capacity Management Concepts
Intended learning outcomes: Present the objectives of the tasks as well as the overall objective of scheduling and capacity management. Describe the vicious circle caused when capacity bottlenecks prolong the planned production lead-time.
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.
5.3.4 Infinite Loading and Finite Loading
Intended learning outcomes: Differentiate between infinite loading and finite loading. Explain the classification of techniques for capacity management in dependency upon flexibility of capacity and flexibility of order due date.
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).
