Capacity Planning

Factory capacity500 operators working 48 hour week.Work content of 30 minutes per garmentTherefore capacity of 500 x 48x 60

30

= 48000 garments per week!!!!Ok? Any problems?

Reasons for lost outputAbsenteeismPoor work methods (affects performance & efficiency)Low operator performancePoor operator utilisationStyle change is not itself a cause of lost output, it can cause all or some of the above!!

DefinitionsOn standard : that time the operator spends on measured work earning Standard Minutes.Off-standard : that time the operator spends on un-measured work or measured work that is classified as off-standard.

Definitions- Measured workThat work to which a standard measure (SMV, SAM) has been applied.Measured work sometimes may be classified as off-standard. An operator may be learning a new operation may be taken as off standard for payment purposes but will still be contributing SMs as the operation they complete will have SMV applied.

Off standard timeShould be reported on Labour cost control sheetWaiting for workMachine breakdownUnmeasured work operation not yet allocated SMV.Sampling

Repairs (not own)Paid average (for balancing)Under re-trainIndirect work covering for supervisorSupervisor/manager should be held responsible to stay within budget.

SMV/SAM?Standard Minute Value (S.M.V.) is the time allocated through work measurement for an operation to be completed at a 100 rating.Standard Allocated (Allotted) Minute (S.A.M.) is an S.M.V. + any policy allowances added.

Definitions: Operator PerformancePrimarily a measure of the effectiveness of the individual operator

= SMs earned on standard x 100

Time spent on standardSometimes referred to as Pay performance as it is usually measured within an incentive scheme.

Definitions- operator utilisationA measure of how well the supervisor manages to keep the operators on-standard

= time on-standard x 100 time attended

Definitions- EfficiencyA measure of how well the section/factory is run.

= SMs earned x 100 time attended.A measure of both the operator and the supervisor

Definitions- EfficiencyIncorporates elements of operator performance & utilisation into the single measure.

Definitions- Absence/attendance

= total operator time attended x 100 total contracted time= attendance. Absence =reverse

Measures factor/section/operatorStandard hours (minutes) produced.Operator performanceOperator utilisationSection efficiencyOff-standard timeAbsence (attendance)

ABSENCE CALCULATION

Measures - ExamplesSection = 20 operators working 9 hour/540 minute day2 operators are absent all dayAttendance = 18 x 540 x 100

20 x 540

= 9720 = 90% or 10% absence 10800

PERFORMANCE, UTILISATION, EFFICIENCY

Measures- examplesAn operator attends for 540 minutesProduces 1500 pieces @ SMV of 0.30Waits 60 minutes for workWaits 20 minutes machine breakdown

Measures- examplesSms produced = 1500 x 0.30 = 450.Time on-standard = 540 (60+20) = 460 minutesPerformance = 450 x 100

460= 97.8 or 98%

Measures- examplesOperator utilisation

= 460 x 100 = 85.2% 540

NOT ACCEPTABLE!

Measures- examplesEfficiency = 450 x 100

540= 83%

Borderline!

Exercise- definitionsSection 1

Operator cont. Att op production SMV OffStd Perf Uti Eff mins Alison 540 540 1. 1000 0.37 30 Betty 540 480 2 1120 0.30 charlie 540 0 3 0 0.26 Dorothy 540 540 4 950 0.23 3 350 0.26 75 Ethel 540 540 5 1070 0.45 15 Freda 540 540 6 1250 0.40 30 Gail 540 540 7 1200 0.21 3 880 0.26 Heather 540 540 8 600 0.85 30 Irma 540 540 8 600 0.85 45 June 540 540 9 1275 0.38 30 totals

Exercise- definitionsSection 1

Operator cont. Att op production SMV OffStd Perf Uti Eff mins Alison 540 540 1. 1000 0.37 30 72.5 94 68.5Betty 540 480 2 1120 0.30 70 100 70charlie 540 0 3 0 0.26 Dorothy 540 540 4 950 0.23 66.5 86 57.3 3 350 0.26 75 Ethel 540 540 5 1070 0.45 15 91.7 97 89.2Freda 540 540 6 1250 0.40 30 98 94 92.5Gail 540 540 7 1200 0.21 89 100 89 3 880 0.26 Heather 540 540 8 600 0.85 30 100 94 94.4Irma 540 540 8 600 0.85 45 103 92 94.4 June 540 540 9 1275 0.38 30 95 94 89.7Totals 5400 4800 255 87.6 94.7 83

Exercise- definitionsAttendance = 4800/5400 = 89% total sms earned = 3982.30

CAPACITY PLANNING

Capacity planningHow many garments can a section produce?How many operators/machines do we need to produce a given number of garments?

Capacity planningLimiting factors XPeopleMachines?Department?

Information!!SMVs/SAMs/Std. hrsAvailable operatorsContracted hoursAbsenteeism levelsEfficiency levels

SAMs, SMVsAre they accurate? What operations do they cover?What operations are unmeasured or performed by indirect operators. Be clear!

Capacity planningLimiting factorsPeople XMachines?Department?

Capacity planning - peopleHow many garments can a given number of people produce?Number of operatorsSMV (Labour content)AbsenteeismEfficiency/ inefficiency!

Capacity planning people-1500 direct operators working 48 hours/weekS.M.V. = 25 per garmentAbsence level of 8%Average efficiency of 85%

Calculate standard hour/minutes that can be produced by operators.Calculate how many garments that represents

Capacity planning people-1500 operators x 48 hours = 24000 contracted hours24000 8% (1920 hours) absence = 22080 attended hours (absence costs 40 operators)At efficiency of 85% std. hours produced = 22080 x 85% = 18768 std hrs.5232 hours lost to absence & inefficiency.=

21.8% of original contracted hours

Capacity planning people-118768 std hrs producedS.M.V. = 25 mins. or 0.417 std. hrs.Garment capacity = 18768

0.417= 45007 garments.

Capacity planning People-2S.M.V. = 25 per garmentEach operator will produce 39 hours @ 85% efficiency How many people are need to produced 70000 garments per week.?

Capacity planning People-270000 * 25 / 60 = 29166.67 standard hours required.

= 39 x 85% = 33.15 std. hrs/week29166.67 standard hours required.Each operator will produce 33.15 std. hrs/weekNumber of operators = 29166.67

33.15= 879.84 people.+ Absence of 8% = 879.84 +8%.= 950

Capacity planningLimiting factorsPeople Machines? X Department?

Capacity planning-machines-1Auto pocket set machineS.M.V. 0.60Efficiency = 95%15 machines available8.50 hour dayHow many garments can they supply to sections?

Capacity planning-machines-115 machines x 8.50 hours = 127.50 hours/day.@95% efficiency std. hrs produced = 121.13 hrsSMV = 0.60 = 100 per hour at standardOutput = 100 x 121.13 = 12113 garmentsAbsence ignored if decision taken to ensure absence cover (15 machines + 8% absence = 16.2 operators. 1 spare operator required

Capacity planning-machines-1Capacity must be increased to 25000 per day.Each machine does 100 x 95% = 95 per hour. 25000/95 = 263.15 hours. In 8.5 hour day = 31 machinesHowever machines cost $75000 each and have a six month delivery lead time.Try again!!!

Capacity planning-machines-2Each machine will produce 95 per hour worked.25000/95 = 263.15 hours263.15 hours / 15 machines = 17.54 per machine per day2 shifts

Capacity planningLimiting factorsPeopleMachines Department? X

Capacity planning- DepartmentCutting room using semi-auto spreading machines and computerised cutting head.SMV for spreading = 0.1584 per metreSMV for cutting = 0.050 per metreAverage fabric content per gmt. = 90 cms.Standard working day= 8.50 hours or (39 hrs/ week)3 spreading machines on 4 tables1 cutting machine.Department runs at 90% efficiency and 8% absence

Capacity planning- ExerciseHow many people are needed to supply the factory with 50000 garments per week?What is machine requirement for 50000 garments per week?What do you recommend if production cut to 24000 garments per week?All operators are able to use both spread and cut equipment.

Capacity planning-spreading50000 garments x 0.90 metres = 45000 metres to be cut each week.Each metre Smv = 0.1584 therefore 45000 x 0.1584 = 0.1584 x 45000

60= 118.80 std.hrs required@ 90% efficiency = 132 operated hours.

Capacity planning- cutting50000 garments x 0.90 metres = 45000 metres to be cut each week.Each metre Smv. = 0.05 therefore 45000 x 0.05 = 0.05 x 45000

60= 37.5 std.hrs required@ 90% efficiency = 41.70 operated hours

Capacity planning cutting roomSpreading 132 hours needed over 3 machinesCutting 41.70 hours needed.Total operating hours = 173.9Absence = 8% = 189.02 contracted hours operator req =189.02/39 = 4.8 (5) people at 39 hour week.

Capacity planning cutting roomAvailable spreading m/c = 3spreading m/c untilisation/wk =3 x 39 = 117Required standard hours = 132 hrsExtra hours required = 132-117 = 15hrs/wk

Available cutting m/c = 1Cutting m/c utilisation / wk = 1 X 39 =39Required standard hours = 41.70Extra hours required = 41.7039 =2.7hrs/wkTotal extra hours required = 15 + 2.7 = 17.7 hrs/wkSOLUTIONS???

Capacity planning-spreading-224000 garments x 0.90 metres = 21600 metres to be cut each week.Each metre Smv = 0.1584 therefore 21600 x 0.1584 = 0.1584 x 21600

60= 57.02 std.hrs required@ 90% efficiency = 57.02/ 0.9 = 63.36 operated hours.@ 8% Absent = 68.87operated hours

Capacity planning- cutting -224000 garments x 0.90 metres = 21600 metres to be cut each week.Each metre Smv = 0.05 therefore 21600 x 0.05 = 0.05 x 21600

60= 18.0 std.hrs required@ 90% efficiency = 20 operated hours@ 8% Absentism = 21.74 operated hours

Capacity planning cutting roomSpreading 68.87 hours needed over 3 machinesCutting 21.74 hours needed.Total operating hours = 90.61No of operators req = 90.61 / 39 =2.32 = 32 operators to be released.Can 1 operator be utilised for part of the day?

PLANT CAPACITYMaximum capacityTotal hours available under normal conditions in a given period of timePotential capacityMaximum capacity adjusted for efficiencyCommitted capacityTotal hours previously allocated for production during a certain time period

PLANT CAPACITYAvailable capacityDifference between potential capacity and committed capacity for a certain time periodRequired capacitySAHs (standard allowed hours) necessary to produce a specified volume in a certain period of timeExcess capacityDifference between potential capacity and required capacity

PLANT CAPACITYCASE STUDYStitch Taylor operates a small apparel contract sewing business that employs 10 operators who work 7 hours a day. The plant has a 90% efficiency factor.A customer brought in an order for 6,000 units of style A that needs a 10-day Lead time. The plant has the appropriate equipment and skills available to make the style.

PLANT CAPACITYThe plant has a committed capacity of 300 hours for the 10-day period. Style A has a production time of 5 SAMs. The order for 6,000 units requires 30,000 SAMs or 500 SAHs. Which factors should be considered in deciding whether to accept the order?

PLANT CAPACITYWhat is the potential capacity of Stitch Taylor's plant for the 10 working days? 630 hours70 working hours per day x 90% efficiency = 63 potential production hours per day 63 potential production hours per day x 10 days = 630 hours potential capacity

PLANT CAPACITYWhat is the required capacity for the order? 5 SAMs per unit x 6,000 units = 30,000 SAMs/60 minutes per hour = 500 SAHs for the complete orderIs there adequate potential capacity for the order? Yes630 hours potential capacity - 500 hours required capacity = 130 hours excess capacity

PLANT CAPACITYWhat is the available capacity in the specified time frame? 330 hours630 hours potential capacity - 300 hours committed capacity = 330 hours available capacityIs available capacity adequate to accept the order? No330 hours of available capacity - 500 SAHs of required capacity = -170 SAHs

PLANT CAPACITYWhat adjustments might be made to make adequate capacity available?1. Expedite the new order so it would have priority over previously committed orders.2. Require operators to work overtime to get order completed.3. Offer operators a bonus if the group can average over 100% efficiency for 10 days.