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Rough Cut Capacity Planning

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Understanding the (RCCP) Approach (Sample of Full-Text)...

Summary: In this section, three approaches to rough cut capacity planning are examined. The least detailed, the capacity planning using overall factors (CPOF) approach, is quickly computed but is insensitive to shifts in product mix. A second approach, bill of labor, involves multiplying two matrices, the bill of labor and the master production schedule. This approach picks up shifts in product mix, but does not consider lead-time offsets. The third approach, resource profile, takes lead-time offsets into account. Both the bill of labor approach and the resource profile approach implicitly assume a lot-for-lot policy for setting lot sizes. If some other technique, such as economic order quantity or the Silver-Meal algorithm is used, then either approach is a very rough estimate. For that reason, the bill of labor approach is recommended because it is easily implemented on a microcomputer and is just as accurate as the more cumbersome resource profile approach. In any event, rough-cut capacity plans should be used only to determine if sufficient capacity exists over broad time frames such as a month or a quarter.

Drum-buffer-rope is an emerging procedure (discussed below) that eliminates the need for iteration found in all three RCCP approaches. It is presently used by a small but growing number of corporations.

In this section, we examine the pro­cess of RCCP. First, we examine the role of RCCP in the overall production planning and control system. Then we look at three RCCP techniques and discuss the selection of a technique. Third, we examine the various decisions that are based on RCCP. Finally, we look at two alternative approaches to capacity management, line balancing under the Just-in-Time philosophy, and the drum-buffer-rope technique of the theory of constraints philosophy.

What is RCCP?

Capacity planning and control techniques were introduced briefly in previous sections. Material requirements planning (MRP) uses a master production schedule (MPS) of end items to determine the quantity and timing of component part production. MRP is capacity insensitive; it implicitly assumes that sufficient capacity is available to produce components at the time they're needed.

A problem commonly encountered in operating MRP systems is the existence of an overstated MPS. An overstated master production schedule is one that orders more production to be released than production can complete. An overstated MPS causes raw materials and WIP inventories to increase because more materials are purchased and released to the shop than are completed and shipped. It also causes a buildup of queues on the shop floor. Since jobs have to wait to be processed, actual lead times increase, causing ship dates to be missed. As lead times increase, forecast accuracy over the lead-time diminishes because forecasts are more accurate for shorter periods than for longer ones. Thus, overstated master production schedules lead to missed due dates and other problems. Validating the MPS with respect to capacity is an extremely important step in MRP. This validation exercise has been termed rough cut capacity planning (RCCP).

There is no general agreement on the level of detail that should be incorporated in the MPS validation. An APICS monograph (Berry, Voliman, and Whybark 1979) presents case histories of several companies, including details on the capacity planning process. Some companies used very crude techniques, other used detailed, time-phased, methods.


Figure 1 shows an overview of the entire production planning and control (PPC) process under MRP. Capacity management techniques usually are separated into four categories: resource requirements planning (RRP), rough cut capacity planning (RCCP), capacity requirements planning (CRP), and input/ output control. These represent the four time horizons considered. In an MRP system the typical sequence is to create a master schedule, use rough cut capacity planning to verify that the MPS is feasible, perform the MRP explosion, and send planned order release data to capacity requirements planning. Plossl and Welch (1979) describe the role RCCP plays in the overall PPC system:

  • Production and inventory planning is the process of dealing with flexibility to meet the desires of the customer, the need for stability in manufacturing and the resultant inventory levels to compensate for the mismatch. The process Involves performing three functions effectively:

  • Developing an achievable Master Production Schedule.

  • Planning and controlling priorities.

  • Planning and controlling capacities.

  • Priority Planning is the process of specifying batch quantities and their start and finish dates for all items where procurement and manufacture are involved

  • Priority Control is making the right things at the right time. It is completely dependent on maintaining a balance between master schedule [MPS] requirements and output rates. If the plant and its vendors do not produce enough in total, they will not be able to hold schedule for the right items.

  • Capacity planning is the task of determining how much output is needed from plant facilities and from suppliers. If less-than-adequate capacity is available, the problem is unmanageable.

  • Capacity control is the comparison between planned levels and actual out­puts achieved and the identification of significant variances above or below plan. Corrective action must be initiated promptly if control is to be maintained, that usually means adjusting capacity, preferable in most cases to the alternative of changing the master schedule... (there's much more!)

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eBook Topics: An Integrated Set of Useful Articles
How to Test and Fine-Tune Strategic and Tactical Plans so that Resources are Only Expended on Achievable Results.
Making and Keeping Promises that are Realistic and Achievable is a Vital Skill Needed at Every Organizational Level.
Available-To-Promise Inventory can be Strategically Projected Using the Tools of Master Scheduling by Aligning Production Plans and Sales Plans.
Projected Resource Constraints are used to Modify Production Schedules to Assure that Available-To-Promise Inventory will Meet Customer Demands.
Detailed Capacity and Material Plans become Actionable, Unanticipated Constraints are Communicated Immediately to the Scheduler.
When the Goal is Zero Inventory, the Method is JIT. Only Buy or Build to Match Real Orders. Inventory Backlog must be Zero as well!
TOC can be seen as Similar to JIT but has a much Wider Application. Once Identified, Constraints are Exploited until it is Aleviated.
Developing Effective Work Relationships is Essential when Communication is central to the Success of Management Metrics.
ERP-MRP Evolution…  
ERP & Hoshin Kanri…  
ERP Implementations…   
Profit-Ability Improvement...  
Profit-Ability Management Principles...  
People, Empowerment & Profit-Ability…  
Hoshin Kanri & Deming's Plan-Do-Check-Act...