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EPEI Part 5 – EPEI for Capacity

Phil Coy @leaniac

Managing Director of Strategic Services

We’re back for round 5. Let’s look at how to use EPEI to dynamically understand the capacity of your value stream.

A while ago when we were considering takt time for a value stream, we made the point that the takt time is a decision you make. In effect, every process is designed to support an expected takt time requirement. In much the same way, every process is designed to support an expected interval.

For high mix/low volume (HMLV) value streams with a number of products in the product family, it’s difficult to anticipate a specific mix and volume especially when there are high runners, repeaters, and strangers all running in the same operation. While EPEI is an aggregate metric over an anticipated mix and volume of products, a single EPEI value can support many different combinations of mix and volume. For example, a mix and volume of few products with high changeover times could have the same EPEI as a mix and volume with many products that have low changeover times. And thinking back to the previous post about different kinds of changeovers, the same EPEI may be able to support a wide range of actual mix and volume patterns.

It can be helpful to look over your historic demand patterns, as you determine what your target mix and volume; and therefore EPEI, should be. Consider taking several “time slices” from historic demand and calculate the interval on each to see whether you can set an EPEI that accommodates your changing mix and volume.

Then, once we set an expected or targeted interval that expresses our actual capacity, we can calculate the EPEI for that specific mix and volume. The ratio of actual EPEI to targeted EPEI is an accurate reflection of the capacity utilization of the value stream required by the specific mix and volume that you are planning.

As mentioned earlier, EPEI is calculated on a process by process basis and so can vary throughout the value stream. Expressing capacity as a ratio, however, normalizes the absolute differences, thus allowing a consolidated view of capacity to be graphically presented quite easily.

Here’s an example of how capacity utilization of a value stream can be shown graphically and simply even when there are wide differences in the processes and mix and volume patterns themselves.

We’re just about at the end of our consideration of EPEI. One more to go!