Capacity & Time Buffer Sizing

Capacity & Time Buffer Sizing

Make signals to the factory may arrive as a replenishment signal from a strategic inventory buffer (Make-To-Stock) or as a pure order from a customer (Make-To-Order) depending on the fulfillment strategy.

Time and capacity buffers are used to manage Make To Order (or Deliver To Order) materials and absorb demand and supply variation for finished goods, raw materials and parts that have much slower average demand relative to the optimum replenishment quantity. They may also be used for high cost materials where the risk, and costs, of obsolescence are high.

What follows is an actual scenario that illustrates the way Capacity (people and assets) and Time Buffers can be designed and manipulated to service a Make-To-Order product;

Time Buffer

A business is asked to supply a high margin product in small volumes. It is a product that changes frequently so the business is keen to minimise its exposure to dated and damaged stock. Consequently it decides not to use a strategic inventory for this product and asks the customer for its maximum delivery time and the customer requests a 3 week delivery time.

The business decides to run the product every week which will give them a 2 week time buffer should there be any supply issues.

Capacity Buffer

In order to run the product every week the business must increase their crewed time (additional labour resources working on weekends) to ensure that the new product is run every week (due to the extra production time and changeover time required). The business has essentially provided a Capacity Buffer by asking people to work weekends when required. This is an expensive use of resources and so they decide to look for other ways of providing the required Capacity Buffer.

After completing a Bullant Demand Filter, industrial engineers identify that the production line is running at less that 50% efficiency. This is because there are a lot of interconnected pieces of high-tech machinery.

A lot of this machinery has a very high capacity and is being restricted by a single piece of machinery with about half the capacity of the rest. Engineers confirm that a flexible buffer of WIP can be placed before the restrictive piece of equipment; so shielding it from upstream downtime and increasing the total efficiency of the line to over 65%.

It is anticipated that the resulting, additional Capacity Buffer will replace the need for additional labour.

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