Capacity planning is crucial for aligning production with demand, optimizing resource use, and supporting strategic decisions. It spans long-term investments, medium-term seasonal adjustments, and short-term daily scheduling, ensuring efficient operations and customer satisfaction.
management employs various techniques like utilization rate analysis, optimization, and bottleneck identification. Strategies include leading, lagging, or matching capacity to demand, using flexible options, and managing demand through pricing and product mix adjustments.
Understanding Capacity Planning
Importance of capacity planning
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Top images from around the web for Importance of capacity planning
Controlling the Supply Chain | Boundless Business View original
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Capacity planning determines production output levels aligning resources with projected demand ensuring optimal utilization of facilities, equipment, and labor
Prevents underutilization or overutilization of resources minimizing costs associated with idle capacity or overtime
Enables efficient resource allocation supporting meeting customer demand and service levels (just-in-time production)
Long-term capacity planning spans 2-10 years focusing on major capital investments involving facility location and expansion decisions (new manufacturing plant)
Medium-term capacity planning covers 6-18 months addressing seasonal demand fluctuations including workforce scheduling and equipment acquisition (holiday season staffing)
Short-term capacity planning operates daily to weekly dealing with immediate production needs involving shift scheduling and overtime decisions (rush orders)
Capacity Analysis and Management
Techniques for capacity utilization
rate measures efficiency of resource usage CUR=DesignedCapacityActualOutput×100%
Throughput analysis identifies bottlenecks in production processes helping optimize workflow (assembly line balancing)
Bottleneck analysis identifies constraints limiting overall system capacity focusing on improving the slowest process (Theory of Constraints)
Strategies for capacity management
Capacity leading strategy increases capacity ahead of anticipated demand growth allowing capture of market share but risks overcapacity (tech industry expansions)
Capacity lagging strategy increases capacity after demand has grown minimizing risk but may lead to lost sales opportunities (cautious market entry)
Capacity matching strategy adjusts capacity incrementally to closely follow demand changes balancing risk and opportunity