Capacity RequirementsCapacity RequirementsPlanningPlanning

(CRP)(CRP)

Capacity requirements Capacity requirements planning (CRP)planning (CRP)

““A computerized system that A computerized system that projects the load from a given projects the load from a given Material Requirements Plan (MRP) Material Requirements Plan (MRP) onto the capacity of a system and onto the capacity of a system and identifies underloads and overloads.identifies underloads and overloads.””

--Russell and Taylor*Russell and Taylor*

Uses of CRPUses of CRP

To Know:To Know:•• If a construction company can start If a construction company can start

new projects in the future.new projects in the future.•• If production plant can produce a If production plant can produce a

spontaneous order.spontaneous order.•• If there is enough labor to make up If there is enough labor to make up

for increased seasonal sales.for increased seasonal sales.•• If the orders that are do Tuesday can If the orders that are do Tuesday can

be accomplished with current staff.be accomplished with current staff.

Information enteredInformation enteredinto CRPinto CRP

•• Planned order releasesPlanned order releases•• Equipment and labor Equipment and labor

routing filerouting file•• Open orders fileOpen orders file

Planned order releasesPlanned order releases

••From the MRP.From the MRP.••Tells when the order Tells when the order should be started so that it should be started so that it is completed on time.is completed on time.

Equipment and Labor Equipment and Labor Routing FileRouting File

Requirements of equipment Requirements of equipment and labor to complete the and labor to complete the needed orders.needed orders.

Open Orders FileOpen Orders File

Contains the information Contains the information of the orders started that of the orders started that need to be completed.need to be completed.

Information Provided by Information Provided by CRPCRP

Load profile for each Load profile for each operation in the production operation in the production systemsystem

Load profileLoad profile

Makes a comparison of the Makes a comparison of the work that needs to be work that needs to be completed and the work in completed and the work in progress with the systems progress with the systems capacity.capacity.

CRP is company specific CRP is company specific and requires complex and requires complex calculations.calculations.

For large companies For large companies professional help is needed professional help is needed in designing their CRP in designing their CRP models because of the models because of the complexity and importance complexity and importance of accurate information.of accurate information.

Calculating a simple Calculating a simple Load ProfileLoad Profile

•• Inputs into a simple load profile Inputs into a simple load profile are capacity and load.are capacity and load.

•• *Capacity is the productive *Capacity is the productive capability of the system.capability of the system.

•• *Capacity = (number of *Capacity = (number of machines or workers)*(number machines or workers)*(number of shifts)*(utilization) of shifts)*(utilization) *(efficiency)*(efficiency)

Definitions of CapacityDefinitions of Capacity

•• Utilization is the percentage of Utilization is the percentage of total time that the worker works total time that the worker works or the machine runs.or the machine runs.

•• Efficiency refers to how well the Efficiency refers to how well the machine or worker performs to a machine or worker performs to a given standard.given standard.

Definition of LoadDefinition of Load

•• **Load is the standard hours of Load is the standard hours of work (or equivalent units of work (or equivalent units of production) assigned to a production) assigned to a production facility.production facility.

Simple Load ProfileSimple Load Profile

•• A simple load profile can be used by A simple load profile can be used by calculating the Load Percent.calculating the Load Percent.

•• *Load Percent = *Load Percent = (load/capacity)*100%(load/capacity)*100%

•• Systems with a Load Percent over Systems with a Load Percent over 100 will not complete assignments 100 will not complete assignments on time without adjustments to the on time without adjustments to the system. system.

**Solutions to Solutions to Overloaded ConditionsOverloaded Conditions•• Eliminate unnecessary requirements.Eliminate unnecessary requirements.•• Reroute jobs or labor.Reroute jobs or labor.•• Splitting the job between two Splitting the job between two

systems.systems.•• Increase normal capacity.Increase normal capacity.•• Subcontract.Subcontract.•• Increase efficiency.Increase efficiency.•• Push work back to later periods Push work back to later periods •• Revise the master scheduleRevise the master schedule

Load Percent ExampleLoad Percent Example

A local construction company needs each of its houses A local construction company needs each of its houses cleaned of all construction debris before they can close cleaned of all construction debris before they can close with the buyer. They have one dump truck and a part time with the buyer. They have one dump truck and a part time worker who works twentyworker who works twenty--five hours a week. Because of five hours a week. Because of the part time status the worker takes no breaks. For the part time status the worker takes no breaks. For every four hours of work there is one hour to drive the every four hours of work there is one hour to drive the debris to the landfill to be unloaded. Five percent of the debris to the landfill to be unloaded. Five percent of the time at the site is use to prepare the dump truck for travel. time at the site is use to prepare the dump truck for travel. For the month the construction company has 3 houses For the month the construction company has 3 houses closing at the end of the first week, 5 at the end of the closing at the end of the first week, 5 at the end of the second week, 4 at the end of the third week and 6, at the second week, 4 at the end of the third week and 6, at the end of the forth week. What is the load percent at the end end of the forth week. What is the load percent at the end of each week and can the work be accomplished in that of each week and can the work be accomplished in that week.week.

Construction Load Construction Load Calculations (Capacity)Calculations (Capacity)

•• No. of hours =25No. of hours =25•• Shifts = 1Shifts = 1•• Utilization = 4/5 = 80%Utilization = 4/5 = 80%•• Efficiency = 95%Efficiency = 95%•• Capacity = 25*1*0.8*0.95 Capacity = 25*1*0.8*0.95

= 19 hours= 19 hours

Construction Load Construction Load Capacity (Load)Capacity (Load)

•• LoadLoadWeek 1 = 3*4 = 12Week 1 = 3*4 = 12Week 2 = 5*4 = 20Week 2 = 5*4 = 20Week 3 = 4*4 = 16Week 3 = 4*4 = 16Weak 4 = 6*4 = 24Weak 4 = 6*4 = 24

Construction Load Construction Load Capacity (Load Percent)Capacity (Load Percent)•• Load PercentLoad Percent

Week 1 = 12/19 = 63%Week 1 = 12/19 = 63%Can AccomplishCan Accomplish

Week 2 = 20/19 = 105%Week 2 = 20/19 = 105%Cannot AccomplishCannot Accomplish

Week 3 = 16/19 = 84%Week 3 = 16/19 = 84%Can AccomplishCan Accomplish

Weak 4 = 24/19 = 126%Weak 4 = 24/19 = 126%Cannot AccomplishCannot Accomplish

Test Exercise of Test Exercise of Load PercentLoad Percent

A cabinet shop produces and installs cabinets into A cabinet shop produces and installs cabinets into new houses. The cabinets need to be installed in new houses. The cabinets need to be installed in the houses the week they required to be installed to the houses the week they required to be installed to not slow down construction. A crew of two people not slow down construction. A crew of two people each working 40 hours can install a set of cabinets each working 40 hours can install a set of cabinets in 3 hours. They spend about an hour each person in 3 hours. They spend about an hour each person driving to each installation location. Lunch breaks driving to each installation location. Lunch breaks are not part of the forty hours worked and the are not part of the forty hours worked and the cabinets are delivered by a separate crew. Due to cabinets are delivered by a separate crew. Due to experience they are a hundred percent efficient. For experience they are a hundred percent efficient. For the month 10 installations are needed for week one, the month 10 installations are needed for week one, 7 for week two, 13 for week three, 14 for week four. 7 for week two, 13 for week three, 14 for week four. What is the load percent for each week and can the What is the load percent for each week and can the installations be completed. installations be completed.

Capacity Requirements Capacity Requirements PlanningPlanning

•• Used to calculate the ability of Used to calculate the ability of the company to meet its orders.the company to meet its orders.

•• Best if company specific.Best if company specific.•• Load percentage can be used Load percentage can be used

for simple operations.for simple operations.