Capacity Planning 6k82x

Capacity Planning

Factory capacity • 500 operators working 48 hour week. • Work content of 30 minutes per garment • Therefore capacity of 500 x 48x 60 30 = 48000 garments per week!!!! Ok? Any problems?

Reasons for lost output • Absenteeism • Poor work methods (affects performance & efficiency) • Low operator performance • Poor operator utilisation • Style change is not itself a cause of lost output, it can cause all or some of the above!!

Definitions • “On –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 “offstandard”.

Definitions- “Measured work” • That 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 time • Should be reported on “Labour cost control sheet” • Waiting for work • Machine breakdown • Unmeasured work – operation not yet allocated SMV. • Sampling

• Repairs (not own) • Paid average (for balancing) • Under re-train • Indirect work – covering for supervisor • Supervisor/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 Performance • Primarily a measure of the effectiveness of the individual operator • = SMs earned “on standard” x 100 Time spent “on standard” Sometimes referred to as “Pay” performance as it is usually measured within an incentive scheme.

Definitions- operator utilisation

• A measure of how well the supervisor manages to keep the operators “on-standard” = time “on-standard x 100 time attended

Definitions- Efficiency • A 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- Efficiency • Incorporates elements of operator performance & utilisation into the single measure.

DefinitionsAbsence/attendance = total

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

Measures – factor/section/operator • • • • • •

Standard hours (minutes) produced. Operator performance Operator utilisation Section efficiency Off-standard time Absence (attendance)

ABSENCE CALCULATION

Measures - Examples • Section = 20 operators working 9 hour/540 minute day • 2 operators are absent all day • Attendance = 18 x 540 x 100 20 x 540 = 9720 = 90% or 10% absence 10800

PERFORMANCE, UTILISATION, EFFICIENCY

Measures- examples • • • •

An operator attends for 540 minutes Produces 1500 pieces @ SMV of 0.30 Waits 60 minutes for work Waits 20 minutes machine breakdown

Measures- examples • Sms produced = 1500 x 0.30 = 450. • Time “on-standard” = 540 – (60+20) = 460 minutes • Performance = 450 x 100 460 = 97.8 or 98%

Measures- examples • Operator utilisation = 460 x 100 = 85.2% 540 • NOT ACCEPTABLE!

Measures- examples • Efficiency = 450 x 100 540 = 83% • Borderline!

Exercise- definitions • Section 1 Operator cont. Att mins Alison 540 540 Betty 540 480 charlie 540 0 Dorothy 540 540 Ethel Freda Gail

540 540 540 540 540 540

Heather Irma June totals

540 540 540 540 540 540

op production SMV OffStd Perf Uti 1. 2 3 4 3 5 6 7 3 8 8 9

1000 1120 0 950 350 1070 1250 1200 880 600 600 1275

0.37 30 0.30 0.26 0.23 0.26 75 0.45 15 0.40 30 0.21 0.26 0.85 30 0.85 45 0.38 30

Eff

Exercise- definitions • Section 1 Operator cont. Att op production SMV OffStd Perf Uti Eff mins Alison 540 540 1. 1000 0.37 30 72.5 94 68.5 Betty 540 480 2 1120 0.30 70 100 70 charlie 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 89.2 Freda 540 540 6 1250 0.40 30 98 94 92.5 Gail 540 540 7 1200 0.21 89 100 89 3 880 0.26 Heather 540 540 8 600 0.85 30 100 94 94.4 Irma 540 540 8 600 0.85 45 103 92 94.4 June 540 540 9 1275 0.38 30 95 94 89.7 Totals 5400 4800 255 87.6 94.7 83

Exercise- definitions • Attendance = 4800/5400 = 89% • total sms earned = 3982.30

CAPACITY PLANNING

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

Capacity planning • • • •

Limiting factors X People Machines? Department?

Information!! • • • • •

SMVs/SAMs/Std. hrs Available operators Contracted hours Absenteeism levels Efficiency levels

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

Capacity planning • • • •

Limiting factors People X Machines? Department?

Capacity planning - people • How many garments can a given number of people produce? • Number of operators • SMV (Labour content) • Absenteeism • Efficiency/ inefficiency!

Capacity planning – people-1 • • • •

500 direct operators working 48 hours/week S.M.V. = 25 per garment Absence level of 8% Average efficiency of 85% 1. Calculate standard hour/minutes that can be produced by operators. 2. Calculate how many garments that represents

Capacity planning – people-1 • 500 operators x 48 hours = 24000 contracted hours • 24000 – 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-1 • 18768 std hrs produced • S.M.V. = 25 mins. or 0.417 std. hrs. • Garment capacity = 18768 0.417 = 45007 garments.

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

Capacity planning People-2 • 70000 * 25 / 60 = 29166.67 standard hours required. = 39 x 85% = 33.15 std. hrs/week • 29166.67 standard hours required. • Each operator will produce 33.15 std. hrs/week • Number of operators = 29166.67 33.15 = 879.84 people. • + Absence of 8% = 879.84 +8%.= 950

Capacity planning • • • •

Limiting factors People Machines? X Department?

Capacity planning-machines-1 • • • • • •

Auto pocket set machine S.M.V. 0.60 Efficiency = 95% 15 machines available 8.50 hour day How many garments can they supply to sections?

Capacity planning-machines-1 • • • • •

15 machines x 8.50 hours = 127.50 hours/day. @95% efficiency std. hrs produced = 121.13 hrs SMV = 0.60 = 100 per hour at standard Output = 100 x 121.13 = 12113 garments Absence ignored if decision taken to ensure absence cover (15 machines + 8% absence = 16.2 operators. 1 spare operator required

Capacity planning-machines-1 • Capacity 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 machines • However machines cost $75000 each and have a six month delivery lead time. • Try again!!!

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

Capacity planning • • • •

Limiting factors People Machines Department? X

Capacity planning- Department • Cutting room using semi-auto spreading machines and computerised cutting head. • SMV for spreading = 0.1584 per metre • SMV for cutting = 0.050 per metre • Average fabric content per gmt. = 90 cms. • Standard working day= 8.50 hours or (39 hrs/ week) • 3 spreading machines on 4 tables • 1 cutting machine. • Department runs at 90% efficiency and 8% absence

Capacity planning- Exercise • How 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-spreading • 50000 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- cutting • 50000 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 room • • • •

Spreading 132 hours needed over 3 machines Cutting 41.70 hours needed. Total operating hours = 173.9 Absence = 8% = 189.02 contracted hours operator req =189.02/39 = 4.8 (5) people at 39 hour week.

Capacity planning –cutting room • • • •

Available spreading m/c = 3 spreading m/c untilisation/wk =3 x 39 = 117 Required standard hours = 132 hrs Extra hours required = 132-117 = 15hrs/wk

• • • • •

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

• SOLUTIONS???

Capacity planning-spreading-2 • 24000 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 -2 • 24000 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 room • Spreading 68.87 hours needed over 3 machines • Cutting 21.74 hours needed. • Total operating hours = 90.61 • No of operators req = 90.61 / 39 =2.32 = 3 • 2 operators to be released. • Can 1 operator be utilised for part of the day?

PLANT CAPACITY • Maximum capacity—Total hours available under normal conditions in a given period of time • Potential capacity—Maximum capacity adjusted for efficiency • Committed capacity—Total hours previously allocated for production during a certain time period

PLANT CAPACITY • Available capacity—Difference between potential capacity and committed capacity for a certain time period • Required capacity—SAHs (standard allowed hours) necessary to produce a specified volume in a certain period of time • Excess capacity—Difference between potential capacity and required capacity

PLANT CAPACITY • CASE STUDY • Stitch 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 CAPACITY • The 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 CAPACITY • What is the potential capacity of Stitch Taylor's plant for the 10 working days? 630 hours • 70 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 CAPACITY • What 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 order • Is there adequate potential capacity for the order? Yes • 630 hours potential capacity - 500 hours required capacity = 130 hours excess capacity

PLANT CAPACITY • What is the available capacity in the specified time frame? 330 hours • 630 hours potential capacity - 300 hours committed capacity = 330 hours available capacity • Is available capacity adequate to accept the order? No • 330 hours of available capacity - 500 SAHs of required capacity = -170 SAHs

PLANT CAPACITY • What 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.