Capacity Planning

Capacity-Introduction
It is productive capability potential (output) of a plant,
machine or work centre in a given period of time.

Capacity is created from the availability of resources like

machine, time (labor), space and facilities that require
capital investment by the firm.

• Measured in units of out put (garments/garment parts)

• Also expressed in terms of input (number of hrs or days)

• Factors affect capacity:

– Space utilization and limitations

– Equipment type, configurations and uses
– Size, skill, versatility and productivity of labor
– Product variation
 Capacity

• Definition: The potential productive capability

(output) of a plant, machine or work centre in a
given period of time
• It is created from the availability of resources
such as machines, time (labour), space and
facilities that require capital investment by the
firm
• It may be measured in units of output (no. of
garments or parts) but may be expressed in
terms of input (no. of hours or days)
 Factors affecting Output-Capacity

1. Space utilization and limitations

2. Equipment type, configurations
and uses
3. Size, skill, versatility and
productivity of the labour, and
4. Product variation
 Plant Capacity
• Potential capacity (Maximum): Total hours available
under normal conditions in a given period of time
• Predicted capacity: Maximum capacity adjusted for
efficiency
• Committed Capacity: Total hours previously
allocated for production during a certain time period
• Available Capacity: Difference between potential
capacity and committed capacity
• 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
 Measuring capacity
• Capacity, being the ability to produce work in a given
time, must be measured in the unit of work.
• For example, consider a factory that has a capacity of
10,000 " machine hours" in each 40 hour week. This
factory should be capable of producing 10,000
"standard hours of work" during a 40-hour week. The
actual volume of product that the factory can produce
will depend on:
• - The amount of work involved in production (e.g. does
a product require 1, 5, 10 standard hours?)
- Any additional time required in production (e.g.
machine set-up, maintenance)
- The productivity or effectiveness of the factory
 Stitch Taylor Unit
Stitch Taylor operates a small apparel
contract sewing business that employs 10
operators who work 7 hours a day. The
plant has the appropriate equipment and
skills available to make the style. 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
6000 units (500 dozs) requires 30000
SAMs or 500 SAHs. Which factors should
be considered in deciding whether to
accept the order?
Potential capacity for 10 days
= 10 x 7 x 10 = 700 hrs
Predicted capacity for 10 days =
10 x 7 x 90% x 10 = 630 hrs
Required capacity for the order =
5 x 6000 = 30000 SAMs/60 = 500 SAHs

Available capacity = 630 – 300 = 330 hrs

Capacity Shortage for the New order = 170hrs

 Adjustments to be made to
accept that order:
• Expedite the new order so it would have
priority over previously committed order
• Run overtime
• Offer bonus to operators to encourage
operators to achieve over 100% eff. for
these 10 days.
• Out source
 Production standard
• Is a rate, stated in standard allowed minutes
(SAMs) or standard allowed hours (SAHs),
that reflects the time required for a normal
operator to complete one operation using a
specified method
• It is also an indicator of how many times the
operation can be completed in an hour
• The total of the production standards of a
style is the work content which determines
the minimum through put time
 Uses of Production Standards in
Production Planning
• Estimation of rate or time of operation
• To determine the required capacity
• To determine the duration of production
• To plan daily volume of production
• To determine the backup inventory
• To decide requirement of operators and M/Cs
• Balancing workflow
• To monitor production delays
• To assess the performance of operator
 Bottle Neck
Operation SAM
1 0.35
2 0.45
3 0.50
4 0.75
5 0.55
6 0.90
7 0.60
8 0.50
9 0.40
Total production time 5.00
 Managing Plant Capacity
• Routing
– Bridge between long-range production planning
and execution
– Establishes the path a style follows
– Sequence of operation and machine allocation
• Balancing
– Essential to utilize the labor and machines fully
• Loading
– Specifies the work center to be used and the
volume to be processed
– Concerned with weekly and day-to-day actions
• Scheduling
– Assigning start times and completion times to
jobs or orders
• Expediting
– Involves tracking a specific bundle and
reprioritizing order to get the specific order
completed on time
 Learning Curve or Experience curve or
start-up curve or progress function
• Is a scale on which proficiency in completing a
task is related to the frequency of completing a
task
 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 “off-
standard”.
 Definitions- “Measured work”

• That work to which a standard measure

(SMV, SAM) has been applied.
• Example of “measured work” that may be
classified as “off-standard”. An operator
may whilst learning a new operation be
taken 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 • Repairs (not own)

on “Labour cost • Paid average (for
control sheet” balancing)
• Waiting for work • Under re-train
• Machine breakdown • Indirect work –
• Unmeasured work – covering for
operation not yet supervisor
allocated SMV. • Supervisor/manager
• Sampling should be targeted 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
• Incorporates elements of operator
performance & utilisation into the
single measure.
Definitions- Absence/attendance

Attendance
= total operator time attended x 100
total contracted time

Absence = (reverse of above)

Measures – factor/section/operator

• Standard hours (minutes) produced.

• Operator performance
• Operator utilisation
• Section efficiency
• Off-standard time
• Absence (attendance)
 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
 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

Find Operator Performance,

utilisation & Efficiency
 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%
• Operator utilisation = 460 x 100
540
= 85.2%
NOT ACCEPTABLE!
 Measures- examples
• Efficiency = 450 x 100
540
= 83%

• Borderline!
 Exercise- definitions
Operato contra producti Sms Perfor Efficien
Attended Operation SMV OffStd Utilization
r cted on produced mance cy

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

Find Performance, Utilization, Efficiency & Attendance

 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 3.22 255 87.6 94.7 83 Average

Attendance = 4800/5400 = 89%

Total sms earned = 3982.30
 Productivity Index
Style Operation Standard Quantity Minutes
earned
PC60M Sew sleeves 0.774 216 167
PC94M Sew sleeves 0.774 240 186
RC44W Sew sleeves 0.676 156 105
RC54J Sew sleeves 0.676 120 81
Total minutes earned 539
Total minutes available 480

Earned time 539

Productivity Index = --------------------------------- = ---------------- = 112 %
Available time 480
 Capacity planning

• Factory
• Department
• Section
• Machine
• Skill
• Restricting or defining factor
 Capacity planning

• What is the starting point?

• How many garments can a section
produce?
• How many operators/machines do we
need to produce a given number of
garments?
• Same calculation – just reversed!
 Information!!
• Labour content (SMVs/SAMs/Std.hrs)
• Available operators
• Contracted hours
• Absenteeism levels
• Efficiency levels
 Capacity planning

• Information…
• Information…
• Information…
• Obvious but where does it
come from?
• How accurate is it?
 Work content. SAMs, SMVs
• Are they accurate? (can self correct in
capacity planning)
• What operations do they cover?
• What operations are unmeasured or
performed by indirect operators. Be clear!
 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
• 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
• 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
• 18768 std hrs produced
• S.M.V. = 25 mins. or 0.417 std. hrs.
• Garment capacity = 18768
0.417
= 45007 garments.
 Capacity planning
• Under the same conditions how many
people are needed to produced 70000
garments per week.?
• 70000 x 0.417 = 29190 standard hours
required.
• Each operator will produce 48 hours @
85% efficiency
= 48 x 85% = 40.8 std. hrs/week
 Capacity planning
• 29190 standard hours required.
• Each operator will produce 40.8 std.
hrs/week
• Number of operators = 29190
40.8
= 715.4 people.
+ Absence of 8% = 715.4 +8%.= 773 people
 Capacity planning

Capacity planning is only as

accurate as the information it is
based upon!
 Capacity planning
• Limiting factors
– People X
– Machines?
– Department?
 Capacity planning-machines
• 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
• 15 machines x 8.50 hours = 127.50 hours/day.
• @95% efficiency std. hrs produced = 121.13 hrs
• SMV = 0.60 60/0.60=100 pcs per hour at std
• Output = 100 x 121.13 = 12113 garments

• Absence ignored as decision taken to ensure

absence cover (15 machines + 8* absence = 17
operators. 1 spare shared with pressing)
 Capacity planning-machines
• 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 = 263.15/8.5 = 31 machines
• However machines cost $75000 each and
have a six month delivery lead time.
• Try again!!!
 Capacity planning-machines
• Each machine will produce 95 per hour
worked.
• 25000/95 = 263.15 hours for 1 machine
• 263.15 hours / 15 machines = 17.54 hrs
per machine per day
• 2 shifts
 Capacity planning
• Limiting factors
• People X
• Machines X
• Department?
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 (39 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./
3machines @ 44 hour week
 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 = 173.7
• Absence = 8% = 187.6 contracted hours needed
= 4.8 (5) people at 39 hour week.
4 operators work 8.50 hours (when all attending).
1 operator works 2 hours early and through
lunch break = 14 hour extra machine time per
week. Helps on non-machine elements.
 Capacity planning-spreading
• 24000 garments x 0.90 metres = 21600
metres to be cut each week.
• Each metre Smv = 0.1584 therefore
= 0.1584 x 21600
60
= 57.02 std.hrs required
@ 90% efficiency = 63.35 operated hours per
3machines = 21.2 hour week
 Capacity planning- cutting
• 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
Capacity planning –cutting room
• Spreading 63.35 hours needed over 3
machines
• Cutting 20 hours needed.
• Total operating hours = 83.35
• Absence = 8% = 90.85 contracted hours
needed = 2.33 (3) people at 39 hour week.
• 2 operators to be released.
• Can 1 operator be redeployed for part of
the day?
 Exercise- definitions
Section 1
Section 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
 Takt Time
• Takt is German word for a pace or beat, often
linked to conductor’s baton.
• Takt time is a reference number that is used to
help match the rate of production in a pacemaker
process to the rate of sales.
• Takt time can be defined as the rate at which
customers need products i.e. the products should
be produced at least equal to takt time to meet
the customer demand.
 Cycle Time
• Cycle time is defined as how frequently a
finished product comes out of our production
facility (the average time between two
successive products coming out of the end of
the line)
• Cycle time includes all types of delays occurred
while completing a job.
• Total Cycle Time = processing time + set
up time + waiting time + moving time +
inspection time + rework time + other
delays to complete the job
 Cycle Time Vs Takt Time
• The higher cycle time than takt time may
result the late delivery and customer
dissatisfaction.
• Whereas shorter cycle time than takt time
may cause the excess inventory or excess
use of resource.
 Pitch time
• Ratio of total SAM of garment and number of
operations to be set for the style.
• Pitch Time = Garment SAM/No. of operations
• Pitch time is used for line setting and
calculating production target for the line
 Pitch diagram
• A graphical presentation of individual
operation’s time (SAM) and pitch time on a
same chart is called pitch diagram.
• The blue line is showing individual operation
SAM and red line is showing pitch time
 Usage of Pitch Diagram
• Pitch time is to calculating machine
requirement in each operation.
• Pitch diagram is used for line balancing in
an assembly line.
• Pitch diagram is made on operator’s
production capacity per hour and target
quantity per hour in pieces for easy
understanding
 How to make a Pitch Diagram
Capacity Vs Line target
• Conduct a capacity study for all operators and find
out how many pieces operators are making at each
operation.
• Where more than one operator is doing same
operation, sum up their capacity for that particular
operation
• Line target is fixed based on customer demand
 Pitch Diagram (Actual capacity Vs
Target quantity)
• If blue line is below the target line, we get pieces which
are less than target quantity.
• These operations are the potential bottleneck for the line.
• Where blue is top of the target line, operators have
potential to produce more pieces than required