How to Calculate Production Capacity of a Factory?


In Apparel Manufacturing, “Production capacity” is one of the most important criteria used for vendor selection by the buyers. It is because; the production time of an order is directly proportional to vendor’s production capacity. So it is very important that marketing and planning personnel should aware about the production capacity of their production units.

Capacity of a factory is primarily expressed in terms of total machines factory have. Secondly, how much pieces the factory produces on daily for the specific products? In general, total numbers of machines in a factory mostly remains same for a period. But factory may produce various types of product during the season. According to the product (style) category, machine requirement may change and daily average production in each style may vary. So to be specific during booking orders, planner should know exactly how much capacity he or she needed to procure the order in a given time period.
Sewing Floor (Image Credit: Shahi Exports Pvt. Ltd. via Facebook page)

A factory’s capacity is presented in total minutes or hours or in pieces (production per day). The method used to calculate capacity has been explained in the following. To calculate Daily production capacity (in pieces) one needs following information.

1. Factory capacity in hours
2. Product SAM
3. Line efficiency (Average)

1. Calculation of factory capacity (in hours): Check how many machines factory has and how many hours factory runs in a day. For example suppose, 
Total number of machines = 200
Shift hours per day = 10 hours
So total factory capacity (in hours) = 200*10 hours = 2000 hours 

2. Calculation of Product SAM (SAM): Make a list of product category that you manufacture and get standard minutes (SAM) of all products you make from work study engineers. If you don’t have product SAM then calculate the SAM. Or you can use average SAM of the products. Suppose you are producing shirt and its SAM is 25 minutes.

3. Factory Average Efficiency: This data is collected from industrial engineer. Or calculate it with historical data. Suppose average line efficiency is 50%. Read the article - How to calculate efficiency of a production line or batch?

Calculation of production capacity (in pieces): Once you have above information use following formula to calculate production capacity. 
Production capacity (in pieces) = (Capacity in hours*60/product SAM)*line efficiency 

For Example: Suppose a factory has 8 sewing lines and each line has 25 machines. Total 200 machines and working shift is 10 hours per day. Total factory capacity per day is 2000 hours (200 machines * 10 hours). If factory is producing only one style (Shirt) of SAM 25 minutes and used all 200 machines daily production capacity at 50%

= (2000*60/25)*50% Pieces
= (2000*60*50) / (25*100) Pieces
= 2400 Pieces
[Note: Production will vary according to the line efficiency and during learning curve or in the initial days when style is loaded to the line] 

Production (capacity) planning is normally done based on sewing capacity. Having knowledge of the capacity in other processes (internal or external) is also very important. Otherwise planner may fail and will not be able to meet the dead line. Other departments such as Cutting room capacity, Finishing room capacity, Washing Capacity and capacity of the value added jobs.

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