Most people associate capacity planning with manufacturing processes. However, capacity planning can be a valuable tool for planning and scheduling almost any work that involves the use of limited resources. Finite and infinite capacity planning each has its own strengths, weaknesses and best applications. Which method is most effective for any particular situation depends on the availability of resources and the extent of the planning horizon.
TL;DR (Too Long; Didn't Read)
An infinite capacity plan ignores any resource constraints and plans production or servicing activities backward from a customer due date or another fixed end date. Finite capacity recognizes that every business has a fixed amount of available resources with which it can produce its products or services, at least in the short run.
Finite Capacity Planning and Scheduling
Finite capacity planning recognizes that every business has a fixed amount of available resources with which it can produce its products or services, at least in the short run. Because of this, providing its services or producing its products requires careful planning and scheduling to stay within its resource constraints. In this context, resources refer to people, tools and expertise. This approach to planning is finite planning, based on the finite amount of resource capacity to apply to the production of products or services to customers.
Examples of businesses with finite capacity in the near-term are window cleaners, construction contractors, automobile manufacturers, specialized product shops and software developers.
Infinite Capacity Planning
Infinite capacity planning ignores any resource constraints and plans production or servicing activities backward from a customer due date or another fixed end date. Infinite scheduling and capacity planning uses the lead times or work times of the production flow to back-schedule work to each resource, whether a work center or one or more individuals. In doing so, infinite capacity loading disregards any existing work or commitments of the resources.
One example of a business operating with infinite capacity planning is an online retail vendor.
Infinite versus Finite Capacity Planning and Scheduling
An infinite loading approach to planning and scheduling assumes that the due date of every order is absolute. Therefore, by scheduling backward from the order due date and loading work tasks to each of the work centers, those that require additional resource capacity stand out. If the resources are not available, the time requirements – on station, between stations or perhaps even the customer due date – need adjustment. The infinite loading approach also depends on the assumption that additional capacity is readily available.
The finite approach to planning and scheduling allows a manager to view the overall impact of new orders on the production capacity and, without reprioritizing the existing work, any due dates that require adjustments. Finite capacity planning creates a more realistic schedule for the production processes than the infinite loading approach, especially in the short run. Finite planning, because it also levels the capacity requirements of each work center, essentially creates a finite schedule for the production facility. Should additional resources become available and capacity increases, the finite plan's loading can be reconsidered regarding filling the plan to the new capacity limit.
Applying Capacity Planning
Beginning in the 1970s, capacity planning has taken on several forms, many of which are still in use. Manufacturing requirements planning, or MRP and MRP II, uses an infinite loading approach to planning and scheduling production that focuses on the scheduling of production materials and resources. Capacity requirements planning, or CRP, uses the MRP model to project inventory, facility, and resource needs in the future. In any business of significant size, MRP and CRP are typically computer applications.
There is no leading application for finite planning, but several methods are in use, some requiring computer applications. Perhaps the oldest of the finite planning methods is the electronic scheduling board that uses a spreadsheet application to emulate the process of the old-fashioned manual schedule boards. Order-based scheduling applies a priority scheme to level the capacity requirements of each work center. Synchronized manufacturing concentrates on loading the bottlenecks of the production process. Finite scheduling software applications are available that use these approaches, and others, to produce a Master Production Schedule, or MPS, built on a finite capacity planning approach.
Ron Price, MBA, has extensive senior level experience in business, information technology, and education. Under his pen name Ron Gilster, Price has written over 40 books for several leading publishers on a topics ranging from business and finance to IT certifications to real estate.