Institute of Management Technology
Supply Chain Management
Capacity Requirement Planning
Submitted to: Submitted by: Dr. Anwar Ali Section-B2C Group-
Capacity Requirement Planning
Capacity Requirements Planning is a computerized system for projecting resource requirement for critical work stations. Several components are input into the system to effectively address the capacity and planning needs, including : Inputs as:
Planned order releases
- on forecasted orders
- on customer orders
Open orders file
Load profile for each work center
Capacity requirements planning is a computerized tool that is used to determine the available and required capacity to help alleviate bottlenecks and to help identify potential problems before they occur. It is a tool that measures
capacity to determine you have sufficient capacity to meet the requirements for the Material Requirements Planning. MRP is the computerized inventory system used for generating purchase orders and work orders of materials, components and assemblies.
Alleviating bottleneck work centres.
To fully understand the definition of the information that goes into the capacity requirement planning, it is important to understand the terms used.
Planned order release: The planned order releases is from the material requirements planning which translates a master schedule for end items into time-phased requirements for subassemblies, components and raw materials. It is used to be certain materials are available when needed.
Routing Files: The routing files has a triple component it determines which workers and/or machines are needed for an order, which operations should be completed first, and the length of time each operation will take.
Open order files: They contain the data on the jobs currently being worked on but are not yet completed.
What is Capacity?
Capacity is the maximum output or volume a system can produce, the maximum work that a system is capable of doing in a given period of time. This information is needed to determine projects companies can commit themselves to, bid on or accept. By calculating the capacity, the company can determine if they are capable of completing the project within the timeframe required. It is normally stated in standard hours of work. It is affected by the following:
Product Specifications: If the product specifications change, the work content will change, thus affecting the number of units that can be produced
Product Mix: Each product has its own work content measured in the time it takes to make the product. If the mix of product produced changes, the total work content for the mix will change
Plant and Equipment: This relates to the methods used to make the product. If the method is changed, the output will change. Similarly, if more machines are added to the work center, the capacity will change
Work Effort: This relates to the speed or place at which the work is done. If the workforce changes pace, perhaps producing more in a given time, the capacity will be altered. It must be determined at different levels like:
Plant, which can be considered as a group of different work centres,
Work center ,
Bibliography: • Tony Arnold, Chapman S. and Ramakrishnan RV " Introduction to Materials Management" 5th ed. : Pearson Education 2007
• "Capacity Requirement Planning" MGT 651 –IV, Dr. Ozatalay
Please join StudyMode to read the full document