Priority and Capacity Scheduling Fundamentals

Priority and Capacity Scheduling Fundamentals – CPIM Detailed Scheduling Guide

Introduction

Priority and capacity scheduling is one of the most critical topics within the CPIM Detailed Scheduling and Planning (DSP) module. It represents the dual challenge every production planner faces: determining what to produce and when (priority), while ensuring there are enough resources to accomplish the plan (capacity). Mastering this topic is essential not only for passing the CPIM exam but also for effective real-world manufacturing management.

Why Priority and Capacity Scheduling Is Important

Manufacturing environments must constantly balance two competing forces:

1. Priority – Which jobs should be worked on first? What is the correct sequence of work?
2. Capacity – Do we have enough machines, labor, tooling, and time to complete the work?

If priority is managed without regard to capacity, schedules become unrealistic, lead times inflate, work-in-process (WIP) increases, and delivery performance deteriorates. If capacity is managed without regard to priority, resources may be available but working on the wrong things. The interplay between these two dimensions is what makes detailed scheduling both challenging and essential.

Effective priority and capacity scheduling leads to:
- Improved on-time delivery to customers
- Reduced work-in-process inventory
- Better utilization of resources
- Shorter manufacturing lead times
- Greater visibility into shop floor status
- Faster response to changes in demand or supply

What Is Priority Scheduling?

Priority scheduling determines the sequence in which jobs or orders should be processed. It answers the question: "In what order should we run these jobs?"

Priority is established through the Material Requirements Planning (MRP) system, which generates planned orders with specific due dates. These planned orders are then released to the shop floor as scheduled receipts or production orders.

Key concepts in priority scheduling include:

1. Dispatch Lists
A dispatch list is a listing of manufacturing orders in priority sequence at each work center. It is the primary tool used by shop floor supervisors to determine which job to run next. Dispatch lists are typically generated daily and reflect the most current priority information from MRP.

2. Priority Rules (Sequencing Rules)
Several rules can be used to determine the sequence of jobs at a work center:

- First Come, First Served (FCFS): Jobs are processed in the order they arrive at the work center. Simple but often ineffective for meeting due dates.
- Earliest Due Date (EDD): The job with the earliest due date is processed first. Tends to minimize maximum tardiness.
- Shortest Processing Time (SPT): The job with the shortest operation time is processed first. Minimizes average flow time and WIP but can cause long jobs to be perpetually delayed.
- Critical Ratio (CR): Calculated as (Time Remaining until Due Date) ÷ (Work Remaining). A CR less than 1.0 means the job is behind schedule; equal to 1.0 means on schedule; greater than 1.0 means ahead of schedule. Jobs with the lowest CR are given highest priority.
- Slack Time: The difference between time remaining and work remaining. Jobs with the least slack are prioritized.
- Slack per Remaining Operation: Slack time divided by the number of remaining operations. Provides a more refined measure than simple slack.

3. Operation Overlapping
Sending a partial lot to the next operation before the entire lot is completed at the current operation. This reduces lead time but increases material handling complexity.

4. Operation Splitting
Running the same operation on two or more machines simultaneously by splitting the lot. This reduces the run time for the operation but requires additional setup.

5. Lot Splitting
Breaking a production lot into smaller lots that can be processed through the entire routing independently. This increases the number of setups but can improve flow.

What Is Capacity Scheduling?

Capacity scheduling determines whether sufficient resources exist to execute the priority plan. It answers the question: "Can we actually do what the priority plan says we should do?"

Capacity planning operates at several levels in the manufacturing planning hierarchy:

- Resource Planning – Long-range, tied to production planning
- Rough-Cut Capacity Planning (RCCP) – Medium-range, tied to MPS
- Capacity Requirements Planning (CRP) – Short-range, tied to MRP
- Input/Output Control – Execution level, monitoring actual vs. planned capacity

For detailed scheduling, the most relevant capacity tools are CRP and Input/Output Control.

Capacity Requirements Planning (CRP)

CRP takes the planned orders and scheduled receipts from MRP, along with routing information, and calculates the capacity required at each work center in each time period. It compares required capacity to available (demonstrated or rated) capacity to identify potential overloads or underloads.

Key terms:
- Demonstrated Capacity: Proven capacity based on actual historical output data. Considered the most reliable measure.
- Rated Capacity: Calculated as: Available Time × Utilization × Efficiency.
- Utilization: The percentage of available time that a work center is actually used for production (accounts for downtime, breaks, etc.).
- Efficiency: The ratio of standard hours produced to actual hours worked.
- Available Capacity: The number of hours a work center can produce in a given time period.
- Required Capacity: The total standard hours of work (setup + run) loaded against a work center.

CRP produces a capacity load profile that shows required capacity vs. available capacity by time period for each work center. Planners use this to identify bottlenecks and take corrective action.

CRP is an infinite loading technique – it assumes unlimited capacity and loads all work regardless of whether the work center can handle it. It is the planner's job to resolve overloads.

Finite Loading vs. Infinite Loading

- Infinite Loading: Loads all work into time periods based on when it is needed, without regard to capacity limits. CRP uses infinite loading. Planners must then resolve overloads manually or with decision support tools.
- Finite Loading: Limits the amount of work loaded into a time period to the available capacity. Work that cannot be loaded is pushed to another period (forward or backward). Finite loading is more realistic but more complex and requires accurate data.

Forward vs. Backward Scheduling

- Backward Scheduling: Starts from the due date and schedules operations backward in time. This is the default method used by MRP/CRP. It minimizes WIP and inventory but leaves no slack for problems.
- Forward Scheduling: Starts from today (or the earliest available date) and schedules operations forward in time. The resulting completion date shows the earliest possible finish. Used to determine realistic delivery dates or to reschedule late orders.

Input/Output Control (I/O Control)

Input/Output Control is the execution-level capacity management tool. It monitors and controls the flow of work into and out of work centers.

Key principles:
- Input refers to the amount of work released to a work center.
- Output refers to the amount of work completed at a work center.
- If input exceeds output over time, WIP (queue) builds up, and lead times increase.
- If output exceeds input, queues shrink and lead times decrease.
- The goal is to control input so that it matches or is less than output capacity.
- Planned input should never exceed planned output unless a deliberate decision is made to build queue.

An I/O report typically shows planned vs. actual input, planned vs. actual output, and cumulative deviations. Tolerance limits trigger corrective action.

The Relationship Between Priority and Capacity

Priority and capacity are two sides of the same coin. The APICS principle states:

"Priority says what is needed and when. Capacity says what can be done. Both must be managed simultaneously for an effective manufacturing planning and control system."

- MRP sets priorities (what and when)
- CRP validates whether the capacity exists to execute those priorities
- If capacity is insufficient, either priorities must change (e.g., reschedule) or capacity must change (e.g., overtime, subcontracting)
- At the execution level, dispatch lists manage priority while I/O control manages capacity

A valid schedule requires both valid priorities and adequate capacity. One without the other leads to poor performance.

Managing Lead Times

Manufacturing lead time consists of five elements:
- Queue Time: Time waiting at a work center before processing begins. Typically the largest component (often 80-90% of total lead time).
- Setup Time: Time to prepare the work center for the operation.
- Run Time: Actual processing time (run time per piece × lot size).
- Wait Time: Time after processing, waiting for movement to the next operation.
- Move Time: Time to physically transport the work to the next work center.

Since queue time dominates lead time, controlling queues through I/O control is the most effective way to reduce lead times.

Planned lead times are fixed parameters in the MRP system. If actual conditions differ significantly from planned lead times, MRP's priorities become invalid. This is why keeping planned lead times aligned with actual lead times is crucial.

Bottleneck Management

A bottleneck (or constraint) is a work center where required capacity exceeds available capacity. Bottlenecks limit overall throughput of the manufacturing system.

Key principles:
- Bottleneck work centers should be scheduled first
- Non-bottleneck work centers should be scheduled to support the bottleneck
- Lost time at a bottleneck is lost time for the entire system
- It is often beneficial to maintain a buffer (queue) in front of a bottleneck to ensure it is never starved
- Capacity at the bottleneck should be maximized (reduce setups, minimize downtime, use overtime)

This connects to the Theory of Constraints (TOC) and the Drum-Buffer-Rope (DBR) scheduling method, where the bottleneck (drum) sets the pace for the entire plant.

How to Answer Exam Questions on Priority and Capacity Scheduling

The CPIM exam tests your understanding of these concepts through scenario-based and definitional questions. Here are strategies for success:

Exam Tips: Answering Questions on Priority and Capacity Scheduling Fundamentals

Tip 1: Understand the Hierarchy
Know which capacity planning tool corresponds to which level of the planning hierarchy. Resource Planning → Production Plan; RCCP → MPS; CRP → MRP; I/O Control → Production Activity Control (PAC). Exam questions frequently test this mapping.

Tip 2: Know the Priority Rules and Their Effects
Be prepared to calculate Critical Ratio (CR = Time Remaining ÷ Work Remaining). Know that SPT minimizes average flow time and WIP, EDD minimizes maximum tardiness, and CR is a dynamic rule that adjusts as time passes. Questions may ask you to rank jobs using these rules.

Tip 3: Remember That CRP Uses Infinite Loading
A common trap is confusing CRP with finite scheduling. CRP is infinite loading—it shows overloads but does not resolve them. The planner must take corrective action. If a question asks what CRP produces, the answer is a load profile showing required vs. available capacity.

Tip 4: Master Input/Output Control Concepts
Key exam points: If actual input exceeds actual output, queues grow. If actual output exceeds actual input, queues shrink. Cumulative deviation is critical—look at the trend, not just individual periods. The primary lever for controlling queues is managing input (controlling work release).

Tip 5: Differentiate Between Forward and Backward Scheduling
Backward scheduling is the MRP default—it works backward from the due date. Forward scheduling starts from today and determines the earliest completion date. If a question describes a situation where an order is already late, forward scheduling would be used to find the earliest realistic completion date.

Tip 6: Know the Lead Time Elements
Queue time is the largest component of manufacturing lead time. This is a frequently tested fact. Reducing queue time through better I/O control and WIP management is the most effective way to reduce lead times.

Tip 7: Understand the Priority-Capacity Relationship
If a question presents a scenario where a schedule is failing, look for whether the issue is a priority problem (wrong sequence, invalid due dates) or a capacity problem (insufficient resources). Often the answer involves addressing both.

Tip 8: Be Comfortable with Capacity Calculations
Know the formula: Rated Capacity = Available Time × Utilization × Efficiency. Be prepared to calculate demonstrated capacity from historical data. If a question gives you hours available, utilization %, and efficiency %, you should be able to compute rated capacity quickly.

Tip 9: Recognize Bottleneck Indicators
If a question describes growing queues, increasing lead times, and missed due dates at a specific work center, that work center is likely a bottleneck. The correct response involves managing the constraint—not just adding capacity everywhere.

Tip 10: Watch for Key APICS Terminology
The exam uses precise APICS terminology. Know the difference between utilization and efficiency, between demonstrated and rated capacity, between operation overlapping and operation splitting, and between load and capacity. Misunderstanding these terms leads to wrong answers.

Tip 11: Eliminate Clearly Wrong Answers
In multiple-choice questions, eliminate options that confuse priority tools with capacity tools, or that suggest CRP resolves overloads automatically. CRP identifies problems; planners resolve them.

Tip 12: Think About Data Requirements
CRP requires: open orders (scheduled receipts), planned orders from MRP, routing files (operations, setup time, run time per piece), work center files (available hours, utilization, efficiency), and shop calendar. If a question asks about CRP inputs, think about all the data it needs.

Summary

Priority and capacity scheduling are the twin pillars of effective detailed scheduling. Priority determines the sequence of work (driven by MRP, managed through dispatch lists and priority rules). Capacity ensures resources are available to execute priorities (managed through CRP and I/O control). Both must be valid and aligned for a manufacturing system to perform well. For the CPIM exam, focus on understanding the relationships between these concepts, know the formulas, and be able to apply the principles to scenario-based questions. A solid grasp of this topic will serve you well on the exam and in practice.