This chapter discussed both materials planning and capacity planning. Consider those concepts in answering the following questions:

Question

a. Which is more appropriate for a conventional service organization? Why?
b. Which is more appropriate for a conventional manufacturing organization? Why?
c. What are the three hierarchical components of materials planning? Provide a brief description of each.
d. What are the three hierarchical components of capacity planning? Provide a brief description of each.

Answer 1

a. Which is more appropriate for a conventional service organization? Why?

Because services are unable to inventory their services, capacity planning is considered more important to service industries than materials planning.

b. Which is more appropriate for a conventional manufacturing organization? Why?

Because manufacturers are typically able to build inventories of their products, materials planning is considered more important to manufacturing industries than capacity planning.

The answers to the first two questions should not imply that both capacity planning and materials planning cannot be important in both service and manufacturing industries, but due to nature of what each provides for their customer, services are more often concerned with meeting demand with available capacity while many manufacturers can meet demand with built up inventories. Nonetheless, many modern manufacturers are moving to pull type systems so they too will be concerned with capacity.

c. What are the three hierarchical components of materials planning? Provide a brief description of each.

1 . Aggregate Production Plan - APP - long-range materials plan/more than 1 year. This plan is likely to deal with product groups/families. This plan sets the aggregate output rate, workforce size, utilization and inventory, and/or backlog levels for an entire facility.

2 . Master Production Schedule - MPS - a medium range materials plan/6 to 18 months. The master production schedule deals with end items. It shows the quantity and timing of the end items or services that will be produced.

3 . Materials Requirement Planning - MRP - a short-range materials plan/days or weeks. MRP deals with components/subassemblies. A detailed planning process for components in parts that supports the Master production schedule. The end item requirements from the Master production schedule are converted into a set of time phased components in part requirements

d. What are the three hierarchical components of capacity planning? Provide a brief description of each.

1 . Resource Requirement Planning - RRP - This is a long-range capacity planning module. The RRP is used to check whether aggregate resources are capable of satisfying the aggregate production plan. The RRP typically considers labor hours and machine offers. Additional considerations include new facilities and/or additional capital equipment.

2 . Rough Cut Capacity Planning - RCCP - the medium-range capacity planning. This plan checks the feasibility of the Master production schedule. The RCCP takes a master production schedule and converts it for production to capacity require. Then it compares the capacity available during each production period.

3 . Capacity Requirement Planning - CRP - this is a short-range capacity planning. This plan is used to check the feasibility of the MRP. This plan computes to capacity requirements required at each workstation during specific periods to see whether or not they will be capable of manufacturing the items specified by the MRP.