How to Calculate Production Capacity of a Factory?

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 the 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. Suppose you are producing a shirt and its SAM is 25 minutes.

3. Factory Average Efficiency:
This data is collected from the 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 the above information use the 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 the working shift is 10 hours per day. The total factory capacity per day is 2000 hours (200 machines * 10 hours). If the 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
= (6000000/2500) Pieces
= 2400 Pieces

Table-1: production capacity calculation template

[Note: Production will vary according to the line efficiency and during the learning curve or in the initial days when the 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, the 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.

Updates:
Over time I have received questions on this article in the comment box. Which is currently not visible after upgrading the site. You can view old comments for this post here. I have added some selected questions in the post and answered those questions. Hope you will find the addition helpful.

Q-1: Sewing line includes Sewing m/c as well as pressing m/c, do we need to take all the m/c or only sewing m/c for production capacity? kindly clarify.

 

Answer: The line efficiency that we used here comes from the past data of the line performance. Line efficiency calculation method is shown in this post. SAM is the standard time of the style. Standard time will remain the same for a product. Garment SAM will not change whether the line work at 50% efficiency level or 80% efficiency. The production capacity of a line will change if line efficiency varies.
In the above example, at 50% line efficiency, daily production target is 2400 pieces. If the line efficiency is 75%, daily production quantity will be 3600 pieces.

Q-3: Given the formula above. what if u have 5 products with different SAM…
product A – 5 minutes
product B – 10 minutes
product C – 15 minutes
product D – 20 minutes
product E – 25 minutes
How can I compute the production capacity? Thank you and more powers (hoping for reply).

Answer: You can compute production capacity of factory making product of different SAM. Here you know 

• Product SAM for all 5 different products 
• Find product wise average line efficiency.
• Calculate total capacity in hours. You already have the capacity data machine hours daily. (shown in the step#1)

Out of the total machine hours, how many hours you will allocate for different items? Decide the number of hours you will allocate product wise. See the product wise production capacity Table- 2. I assumed production wise machine allocation, daily shift hours, and line efficiency as mentioned in the Table-2. Then follow the formula and find product wise production capacity. While calculating production capacity, always consider the learning curve.   

Q-4: It will not work if no. of products are very much. Say there are 100 type of products and all products manufactured in the same machine and takes different time there is no certainty of the requirement of the product then how someone can calculate installed capacity.

Answer: It is normal that the product types that you make will change from time to time. SAM of the same product may also change. Production capacity in pieces (dozen) will change accordingly – if the product SAM and line efficiency changes. The number of machines can be fixed, and one machine can be used for making one product at a time.

In such a scenario, don’t fix/show the factory capacity in pieces. You can keep your machine capacity in hours per day, as it will remain the same.

Calculate the production capacity for the current orders / current styles only or for the upcoming styles. Prepare a separate capacity report for each product type you are making with the time frame. For an example, suppose you have 100 sewing machines and currently you are making a t-shirt and shirts only. Out of those 100 sewing machines, 20 machines are allocated for making t-shirts (5 minutes SAM) and 80 machines are allocated for shirts (20 minutes SAM). T-shirt line work at 90% efficiency and shirt line work at 70% efficiency level.

Therefore, your Factory capacity would be as below. (see Table -3)

• 100 sewing machines, 
• 800 hours per day, 
• 1728 units of T-shirts and 1344 units of shirts production capacity per day.

Table-3: Calculate product wise capacity by changing parameters

Q-5: Will this calculation work out for other than garment industry I’m an industrial engineer wanted to know how I calculate about production for sheet metal or manufacturing industry please can you explain with the with respect to other machines like lathe, milling & drilling.

Answer: The production capacity formula is

If you can measure the machine wise available time (capacity) and if know the standard time required to make of item, use this formula and find out the production capacity of your lathe or milling and drilling machine.
In the formula, line efficiency is taken into consideration, because – the standard given for the product is calculated at 100% working efficiency. But in practice, most cases workers take a higher time that the give SAM. If you calculate production capacity without considering the line efficiency, you will get a figure that can’t be achieved.