A realistic master schedule must be consistent with the production capabilities and limitations of the plant that will produce the product. Accordingly the firm must know its production capacity and must plan for changes in capacity to meet changing production requirements specified in the master schedule. In Chapter 2, we defined production capacity and formulated ways for determining the capacity of a plant Capacity planning is concerned with determining what labor and equipment resources are required to meet the current MPS as well as long-term future production needs of the firm (see Section 25.4). Capacity planning also serves to identify the limitations of the available production resources so that an unrealistic master schedule is not planned.
Capacity planning is typically accomplished in two stages, as indicated in Figure 26.8: first, when the Mrs is established: and second, when the MRP computations are done. In the MPS stage. a rough-cut capacity planning (Reep) calculation is made to assess the feasibility of the master schedule. Such a calculation indicates whether there is a significant violation of production capacity in the MPS. On the other hand, if the calculation shows no capacity violation, neither does it guarantee that the production schedule can be met. This
depend on allocation of work orders to specific work cells in the plant. Accordingly. a second capacity calculation is malic at the MRP schedule is prepared. Called capacity requirements planning (CRP). this detailed calculation determine, whether there is sufficient production capacity in the individual departments and work cells to complete the specific parts and assemblies that have been scheduled by MRP. If the schedule is not compatible with capacity, then adjustments must be made either in plant capacity or in the master schedule
Capacity adjustments can be divided into short term adjustments and long-term adjustments. Capacity adjustments for the short term include'
• Employment levels. Employment in the plant can be increased or decreased in response to changes in capacity requirements,
• Temporary workers. Increases in employment level can also be made by using working from a temporary agency. When the busy period is passed, these workers move to positions at other companies where their services are needed.
• Number of work shifts. The number of shifts worked per production period can be increased or decreased.
• Labor hours. The number of labor hours per shift can be increased or decreased, through the use of overtime or reduced hours.
• Inventory stockpiling. This tactic might be used to maintain steady employment levels during slow demand periods
• Order backl"C,5. Deliveries of the product to the customer could be delayed during busy periods when production resources are insufficient to keep up with demand.
• Subcontracting. This involves the letting of jobs to other shops during busy periods. or the taking in of extra work during slack periods
Capacity planning adjustments for the long term include possible changes in production capacity that generally require long lead times. These adjustments include the following types of decisions'
New equipment Investments. This involves investing in more machines or more productive machines to meet increased future production requirements, or investing in new types of machines to match future changes in product design.
New plant construction. Building a new factory represents a major investment for the company. However. it also represents a significant increase in production capacity for the firm. Purchase of existing plants from other companies.
Acquisition oj existing companies. This may be done to increase productive capacity). However. there are usually more important reasons for t<lking over an existing company, for example, to achieve economies of scale that result from increasing market share and reducing staff .
Plant closings. This involves the closing of plants that will not be needed in the future,
Many of these capacity adjustments are suggested by the capacity equations and models presented in Chapter 2
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