CAPACITY

Capacity refers to the productive capability potential ( output) of a

plant , machine or work center in a given period of time .
Capacity is created from the availability of resources such as
machines , time , space and facilities that require capital investment
by a firm .
 CAPACITY PLANNING
Capacity planning is the process of determining the production
capacity needed by an organization to meet changing demands of
its products .

Capacity Is the maximum amount of work that an organization is

capable of completing in a given period of time .
 Why capacity planning ?

Discrepancy between the capacity of an organization and the

demands of its customers results in inefficiency either in under
utilized resources or unfulfilled customers . The goal of capacity
planning is to minimize this discrepancy .
 Steps to Capacity planning

Determine the capacity requirement .

Analyze current capacity .
Plan for the future .
 How to determine capacity requirement ?

Understand the work load

Determine the unit of work
Identify service levels for each workload .
 Analyze current system capacity

Measure service levels and compare to objectives .

Measure overall resource usage
Measure resource usage by workload
Identify components of response time .
 How capacity is measured ?
Units of output
In terms of input
 Capacity of a sewing line is commonly measured in terms of number
of garments produced per shift , per hour or per month.

But as garments do not have standardized work content , pcs per

hour is not the correct representation of capacity .

Capacity of one sewing operator is 60 minutes per hour maximum .

 Factors affecting output capacity

Variations in :
Space utilization and limitations .
Equipment type , configurations and uses .
Size , skill , versatility and productivity of labour force .
Production variation
 A labour intensive style will require more time ( capacity ) to
complete.

Product variations such as types of materials, material handling

methods , processing time and processing methods also impact the
capacity required for a specific product.

Output may be increased or decreased with a change in any one of

these variables . A change in one variable may also cause a change
in others.
 Plant capacity is a projection of the total hours available for
production in a given period of time for certain facility . Firms may
use an efficiency factor to adjust the maximum capacity to a realistic
level of potential capacity.

Although 100 percent efficiency may be a goal, realistically

efficiency is somewhat less because of down time , plant or team
meetings , absenteeism , and other demands in a work day.
 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.
 Available capacity Difference between potential capacity
committed capacity for a certain time period .

Required capacity SAHs ( standard allowed hours ) necessary to

produce a specified volume of a specific style in a certain period of
time .
It is based on the SAM for operations required to produce the style.

Excess capacity Difference between potential capacity and

required capacity . It is based on resources or inputs not being fully
used .
Excess capacity is potential for increased production and expansion
.
 A key to effective capacity planning is to make necessary resource
decisions in advance to ensure that the required capacity and
available capacity are compatible.
 Individual Operation Capacity Each individual operation
contributes value to the product , has measurable capacity , and
may be part of the work flow.
Constraint operation The slowest operation in a production line .
Also called as the bottleneck .

It determines the throughput time and limit capacity .

If capacity needs to be increased , then changes must be made in
the bottleneck that limits the number of products that can be
completed in a given time frame .
 Relationship of Production Standards to
Capacity
A production standard is the rate stated in standard allowed minutes
(SAM) or standard allowed hours ( SAH) that reflects the time
required for a normal operator to complete one operation using a
specified method.
A production standard is also an indicator of how many times can an
operation be completed in an hour.
 Use of Production standards in production
planning:
Estimate the rate or time for completion of each operation .
Determine the required capacity for an order or style.
Determine production start dates and completion dates for orders,
Plan daily volume that should be completed .
 Determine the backup inventory needed to support the work flow.
Determine how many operators and machines should be performing
each operation .
Schedule specialized equipment .
Balance work flow between departments and work centers ,
Monitor production delays
Assess the performance of individual operators .
 Efficiency
It is primarily a measure of the effectiveness of the manager and
supervisor and as such is best applied to sections / departments /
factories and not the individual operators .

Efficiency = (SMV earned on standard / attended time ) x 100

It is usually calculated for a line and not really relevant to the individual
unless incentives are paid on efficiency and not performance .

Efficiency or line utilization is calculated by

minutes produced / minutes attended expressed as percentage.
 In sewing line of 20 operators a style of 20 SMV is produced in 8
hour shift . If the average daily production of the style is 400 pcs /
shift then the line utilization or line efficiency can be calculated as
under :
 Minutes utilized = SMV x pcs / shift = 20x400 =8000
Minutes attended = number of operator X number of minutes per
shift = 20 x 480 = 9600
So , the line utilization or line efficiency is 8000 x 100 / 9600 =
83.33%
This measure is also called as balance efficiency .
 SAM or SMV
SAM Standard Allowed Minutes
SMV Standard minute Value

SAM and SMV are considered to be the same .

SMV earned is the measure of work done by operator . It is
calculated from output from an operation generated in attended
minutes and SMV of the operation.
SMV earned = ( SMV x output in number of units )
 It is usually calculated for individuals as well as for a line .
As it is needed for individuals for incentive payment calculation and
performance and needed for lines for efficiency calculation .
Also sometimes aggregated for departments and factories to get
factory efficiency .
 Lost time or lost output
Reasons for time loss or output loss :
Poor balancing
No or improper feeding of the cut parts .
Non availability of accessories ( thread , zipper , cord etc )
Shifting of operators resulting start up loss .
Machine breakdown
Loss due to repairs
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