What is the purpose of a work center hierarchy in capacity planning?

The purpose of a work center hierarchy in capacity planning is to provide a cumulative available capacity for production. This approach allows organizations to examine the overall capacity of multiple work centers in a structured and organized manner, facilitating a clearer understanding of production capabilities and limitations.

By aggregating the capacities of different work centers, businesses can effectively plan their manufacturing processes, ensuring that they have sufficient resources to meet production demands. This holistic view of capacity enables better scheduling and allocation of resources, which can lead directly to improved efficiency and reduced lead times in production.

Understanding the cumulative available capacity also helps in decision-making regarding resource investments, workloads, and balancing production flows—ultimately optimizing the entire production process.