Implementing

Supply Chain best

practices in LTML
Capacity and
Production Planning
01/12/2015

The document mentions the steps which are

considered fundamental in planning
capacity and production to execute
customer orders effectively and efficiently
at a horizontal or vertically integrated
manufacturing facility.
Prepared by:
Muhammad Shoaib Akbar

LTML Capacity and Production Planning

December 1, 2015

Table of Contents
1.
2.
3.
4.
5.
6.

Introduction
Priority
Capacity
Capacity & Production Planning
Level 01 Business Plan
Level 02 Sales and Operations Plan (SnOP Plan)
7. Level 03 Master Production Schedule
8. Level 04 Material Requirement Planning
9. Level 05 Production Activity Control

LTML Capacity and Production Planning

December 1, 2015

Introduction
Manufacturing is complex. Some firms make a few different products, whereas others make many
products. However, each uses a variety of processes, machinery, equipment, labor skills, and material.
To be profitable, a firm must organize all these factors to make the right goods at the right time at top
quality and do so as economically as possible.
It is a complex problem, and it is essential to have a good capacity and production planning system. A
good planning system must answer four questions:
1.
2.
3.
4.

What are we going to make?

When are we going to make?
What do we have to make it?
What do we need to make it?

These are questions of priority and capacity.

Priority
It relates to what products are needed, how many are needed, and when they are needed. The delivery
requirement of the customer who has placed the order is the source of establishing the priorities.

Capacity
It is the capability of manufacturing to produce goods and services. Eventually it depends on the
resources of the companythe machinery, labor, and financial resources, and the availability of material
from suppliers. In the short run, capacity is the quantity of work that labor and equipment can perform
in a given period.

Capacity & Production Planning

There are five major levels in Capacity & Production Planning:
1.
2.
3.
4.
5.

Business Plan
Sales and operations plan
Master Production Schedule
Material Requirement Plan
Production Activity Control

Level 01 Business Plan

The business plan is a document of the major goals and objectives the company expects to achieve over
the next 3 to 10 years or more. It is a statement of the broad direction of the firm and shows the kind of
businessproduct lines, markets, and so onthe firm wants to do in the future. The plan gives general

LTML Capacity and Production Planning

December 1, 2015
direction about how the company hopes to achieve these objectives. It includes participation from
Marketing, Finance and Production.

Marketing is responsible for analyzing the marketplace and deciding the firms response: the
markets to be served, the products supplied, desired levels of customer service, pricing
strategies and so on. It is also responsible for research, development, and design of new product
or modifications to existing ones.
Finance is responsible for deciding the sources and uses of funds available to the firm, cash
flows, profits, Return on investment and budgets.
Production must satisfy the demands of the marketplace. It does so by using plants, machinery,
equipment, labor, and materials as efficiently as possible.

Level 02 Sales and Operations Plan (SnOP Plan)

After the objectives are set by the business plan, the management is concerned with the following:
1.
2.
3.
4.

The quantities of each product group that must be produced in each period
The desired inventory levels
The resources of equipment, labor, and material needed in each period
The availability of the resources needed

The level of detail is not high as only the aggregate demand of a product is planned for production. The
plan must meet deadlines within the resources available to the company.
This process of determining the resources required and comparing them to the available resources takes
place at each of the planning levels and is the problem of capacity management. For effective planning,
there must be a balance between priority and capacity.
The planning horizon should be 6 to 12 months and is reviewed each month in the SnOP meeting.

SnOP Plan
Weaving

2015

Processing

Thermosol Stenter Rotary

Outsource Bleaching
Dyeing
Dyeing Printing

Flat
Digital
Bed
Printing
Printing

December

Sulzer

Airjet

Capacity

4.00

1.20

0.53

2.00

1.00

0.50

2.20

0.30

0.03

Load

3.60

1.08

0.48

1.80

0.90

0.45

1.98

0.27

0.03

Efficiency %

90%

90%

90%

90%

90%

90%

90%

90%

90%

Note: Numbers in million meters

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December 1, 2015

Level 03 Master Production Schedule

The master production schedule (MPS) is a plan for the production of individual end items. It breaks
down the production plan to show, for each period, the quantity of each end item to be made.
For example, at weaving stage the MPS for each fabric quality will be separate showing weekly fabric
production against the aggregate weekly fabric requirement, regardless of customer and relevant user.
The planning horizon should extend from 3 to 6 months.

Yarn MPS
Lead times

Yarn
Master Production Schedule
Weeks
Requisition# 1
Requisition# 2
Requisition# 3
Total Requirement
Total scheduled supply
Balance Inventory
Weeks of Supply

30/s PC 52: 48 carded R/S

200

30 days
45 days
60 days
90 days
Month 1
400
200
400
1000
800
0
0.0

Month 2
400
200
400
1000
1200
200
0.5

Month 3
400
400
400
1200
1200
200
0.5

Month 4
400
400
400
1200
1200
200
0.5

LTML Capacity and Production Planning

December 1, 2015

Weaving MPS
Lead times

Weaving
Master Production
Schedule
Weeks
Sales Contract 1
Sales Contract 2
Projections
Sales Contract 1
Sales Contract 2
Confirmed Orders
Total Requirement
Inventory on hand
In-house production
Outside scheduled supply
Buying
Total scheduled supply
Balance Inventory
Weeks of Supply

PC 52: 48
30/30 76x68
104"

75000

30 days
45 days
60 days
90 days
Week 1

22500
22500
45000
45000
110000
25000
10000
0
35000
65000
0.7

Week 2

Week 3

22500
22500
45000
45000
100000
25000
10000
0
35000
55000
0.6

22500
22500
45000
45000
90000
25000
10000
0
35000
45000
0.5

Week 4

22500
22500
45000
45000
80000
25000
10000
0
35000
35000
0.3

Processing MPS

Processing
Master Production
Schedule
Flat bed Printing
Weeks
Sales Contract 1
Sales Contract 2
Projections
Sales Contract 1
Sales Contract 2
Confirmed Orders
Required Load
Available capacity
Over/under capacity
Efficiency %

Lead times
30 days
45 days
60 days
90 days
Week 1

Week 2

Week 3

Week 4

50000
50000
100000
100000
98000
-2000
102%

50000
50000
100000
100000
98000
-2000
102%

45000
45000
90000
90000
98000
8000
92%

45000
45000
90000
90000
98000
8000
92%

Week 5
25000
25000
50000
25000
25000
50000
100000
98000
-2000
102%

Week 6
25000
25000
50000
25000
25000
50000
100000
98000
-2000
102%

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December 1, 2015

Level 04 Material Requirement Planning

The material requirements plan (MRP) is actually the planning of the input to the MPS. MRP is a plan for
the production and purchase of the components or material used in making the items in the MPS. It
shows the quantities of material needed and when manufacturing intends to make or use them. The
level of detail is high.
For example the MRP for weaving a specific fabric quality will consist of planning of required number of
looms, quantity of size beams required, the warping production required for achieving that sizing
production and the relevant yarn requirement.
It should atleast extend to a period of 3 months.

Yarn MRP

Yarn
Material Requirement
Planning

Confirmed Orders & Projections

Month

Jan-16

Week

30/s cotton carded

Week 1

Week 2

Week 3

Week 4

Sales Contract 1

400

400

400

400

Sales Contract 2

800

800

800

800

Weft requirement

400

400

400

400

Warp requirement

600

600

600

600

Supplier 1 delivery

400

400

400

400

Supplier 2 delivery
Scheduled Yarn
Delivery
Inventory on hand

800

800

800

800

1200

1200

1200

1200

600

800

1000

1200

0.6

0.8

1.0

1.5

Week 1

Week 2

Week 3

Week 4

Sales Contract 1

400

400

400

400

Sales Contract 2

800

800

800

800

Weft requirement

400

400

400

400

Warp requirement

1200

1200

1200

1200

Supplier 1

800

800

800

800

Supplier 2
Scheduled Yarn
Reciept
Inventory on hand

800

800

800

800

1600

1600

1600

1600

400

400

400

400

0.3

0.3

0.3

0.4

400

Weeks of Supply
Week

40/s cotton combed

Weeks of Supply

400

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December 1, 2015

Weaving MRP
Lead times

Weaving

30 days
45 days

Material Requirement
Planning

PC 52:48 Carded
30/30 76x68 104"

60 days
90 days

Weeks

Week 2

Week 3

20,000

20,000

20,000

No. of Looms

14

14

16

Per loom production (m)

875

875

875

Weekly scheduled prod.

12,250

12,250

14,000

67,250

59,500

53,500

341,750

329,500

315,500

3.4

3.0

2.7

Sized length per beam

10,550

10,550

10,550

Ends per sized beam

8,604

8,604

8,604

7,750

16,600

2,600

0.6

1.2

0.2

No. of warp beams

No. of creels

10,456

10,456

10,456

956

956

956

10,456

10,456

10,456

13,256

7,111

14,967

In-house weaving req.

Weaving

Inventory on hand
Balance to weave
Weeks of supply

Week 1
429,000

75,000
354,000
3.8

No. of sized beams

Sizing

Total sized length

Weeks of supply

20,000
1.6

Warped length per beam

Warping

Ends per warp beam

Length available for sizing
Total warp length
Weeks of supply

10,550
0.9

1.1

0.5

1.1

Week 4
20,000
16
875
14,000
47,500
301,500
1.6
2
10,550
8,604
9,700
0.6
9
1
10,456
956
10,456
15,722
1.0

LTML Capacity and Production Planning

December 1, 2015

Level 05 Production Activity Control

Production Activity Control (PAC) represents the implementation and control phase of the MRP. PAC is
responsible for planning and controlling the flow of work through the factory. It includes,

Daily production reports,

Break down reports,
Efficiency reports,
Quality reports etc.

The planning horizon is very short, perhaps from a day to a month. The level of detail is highest since it
is concerned with individual machines, workstations, and orders. Plans are reviewed and revised daily.