Capacity & Aggregate Planning

Flashcards covering vocabulary terms related to capacity planning, aggregate planning, and material requirements planning.

Capacity

The throughput, or the number of units a facility can hold, receive, store, or produce in a period of time.

Design Capacity

The maximum theoretical output of a system, normally expressed as a rate.

Effective Capacity

The capacity a firm expects to achieve given current operating constraints.

Utilization

The percent of design capacity actually achieved (Actual output/Design capacity).

Efficiency

The percent of effective capacity actually achieved (Actual output/Effective capacity).

Bottleneck

A limiting factor or constraint; a bottleneck has the lowest effective capacity in a system.

Bottleneck Time

The time of the slowest workstation (the one that takes the longest) in a production system.

Throughput Time

The time it takes a unit to go through production from start to end.

Aggregate Planning

Objective is usually to meet forecast demand while minimizing cost over the planning period.

Disaggregation

Breaks the aggregate plan down into greater detail, resulting in a master production schedule.

Chase Strategy

Match output rates to demand forecast for each period; vary workforce levels or vary production rate. Favored by many service organizations.

Level Strategy

Daily production is uniform; use inventory or idle time as buffer. Stable production leads to better quality and productivity.

Material Requirements Planning (MRP)

A dependent demand technique that uses a bill-of-material, inventory, expected receipts and a MPS to determine material requirement.

Master Production Schedule (MPS)

Specifies what is to be made and when; must be in accordance with the aggregate production plan.

Bills of Material (BOM)

List of components, ingredients, and materials needed to make product; provides product structure.

Enterprise Resource Planning (ERP)

An extension of the MRP system to tie in customers and suppliers; allows automation and integration of many business processes.