Vishwajeet Dixit (27) Pranav Sachdev (28) Shashank Tulsyan (32) Siddharth Bhasin (40) Aman Shrivastava

Contents:
Introduction Input & Output Strategies for CRP Inventory Control Advantages of CRP Summary

What is Capacity?

The work that the system is capable of doing in a period of time. It must be determined at different levels:
plant department work center.

Used to determine time frame in standard hours of work. Capacity = (no. of machines or workers) x (no. shifts) x (utilization) x (efficiency)

What is CRP?

A tool for determining capacity that is available and required.

Verifies that you have sufficient capacity available

to meet the capacity requirements for MRP plans.

Helping planners make the right decisions on scheduling before problems develop.

Capacity Requirements Planning

Capacity Requirements Planning is a computerized

technique for projecting resource requirements for critical

work stations.
Inputs:
Planned order releases
Routing file Open orders file

Outputs:
Load Profile for each work center

Capacity Requirements Planning

MRP planned order releases

Routing file

Capacity requirements planning

Open orders file

Load profile for each machine center

Input :

Planned Order Releases: Information from the Material Requirements Planning which tells when you should start the order so it can be completed on time. Routing Files: Information that details the requirements of equipment and labor to complete the order as needed in the required time frame. Open Orders Files: Information regarding the orders that are currently started and need to be completed.

Output:
What is a load? Load refers to the standard hours of work assigned to a facility.

CRP uses the information to produce a load profile for each machine or work center. A load profile: Compares released orders and planned orders with the capacity of the work center. Identifies underloads and overloads.

Strategies for Timing Capacity:

CRP provides information to determine the timing of capacity expansion. The basic strategies in relation to a steady growth in demand are:
Capacity Lead Strategy Capacity Lag Strategy Average Capacity Strategy

Capacity Lead Strategy

In anticipation of demand, capacity is increased. Aggressive strategy used to lure customers

Capacity Lag Strategy

Increase capacity after demand has increased. Conservative strategy resulting in loss of customers.

Average Capacity Strategy

Average expected demand is calculated and capacity is increased accordingly. Most moderate strategy.

Inventory Control

Supervision of supply, storage and accessibility of items to ensure an adequate supply without excessive oversupply. Inventory control may refer to: In economics, the inventory control problem, which aims to reduce overhead cost without hurting sales In the field of loss prevention, systems designed to introduce technical barriers to shoplifting It answers the 3 basic questions of any supply chain: 1. When? 2. Where? 3. How much?

Independent Demand Inventory Systems

Independent demand inventory systemEnsures smooth operations & allows storing-up WIP & finished goods. Service firms are unable to inventory their output, but may use appointment backlogs, labor scheduling & cross-training to balance supply & demand.

Four broad categories of inventories

Unprocessed purchase inputs. (WIP)- partially processed materials not yet ready for sales. Products ready for shipment. (MRO)- materials used when producing (e.g., cleaners & brooms).
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The Economic Order Quantity (EOQ) ModelA quantitative decision model based on the trade-off between annual inventory holding costs and annual order costs. The EOQ model seeks to determine an optimal order quantity, where the sum of the annual order cost and the annual inventory holding cost is minimized.

is the direct variable cost associated with placing an

order. is the cost incurred for holding inventory in storage.

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Independent Demand Inventory SystemsCont.

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Adjustments to Capacity
Increase capacity by:

Adding extra shifts Scheduling overtime or weekends Adding equipment and/or personnel

Reduce load by:

Reducing lot sizes Holding work in production control Subcontracting work to outside suppliers

Adjustments to Capacity:
Reduce capacity by:

Temporarily reassigning staff Reducing the length of shifts Eliminating shifts

Increase load by: Releasing orders early Increasing lot sizes Making items normally outsourced

Reason to use CPR

Bottleneck Management

The output of all products processed is controlled by

bottlenecks.
Work centers need to be scheduled at a rate to

prevent bottlenecks.
To eliminate bottlenecks, a time buffer inventory

should be established.

What is CRP Used For?

To determine the capability of a system or resource to produce a quantity of output in a particular time period. For example:
Should the hospital hire more registered nurses to care

for the projected patient load?

Should the hospital build more rooms for patients? What is the projected finish time for the current

projects?

Summary

To operate at maximum capacity, companies must use the resources available. If resources under underutilized,

the profit margin will not be maximum.

Using capacity requirements planning helps a company identify potential problems, such as eliminating the possibility of overworking the current staff, overloading machines, losing customers because the work could not be completed as scheduled, paying penalties for late delivery.