Capacity Planning

A process of evaluating and acquiring need for productive resources to ensure availability meets demand. Capacity decisions have a direct influence on performance of a production system in respect of both resource productivity and customer service (i.e. delivery performance). Excess capacity results in low resource productivity while inadequate capacity leads to poor customer service. Capacity planning decisions can be long or short-term decisions. Long-term capacity planning decisions concern expansion/contraction of major facilities required in the conversion process, economics of multiple shift operation, and selection of vendors for major components. Short-term capacity planning decisions concern issues like planning overtime work and sub-contracting, adjusting work shifts. Break-even analysis is a useful tool for capacity planning.

Some common key decisions are:

1. Amount of capacity needed

2. Timing of changes in capacity

3. Amount of capacity flexibility needed in facilities

4. Estimate of future capacity requirements

5. Cost of capacity alternatives

Home | About Us | What's New

Copyright © 2004-15 by D. J. Power (see his home page). PlanningSkills.COM^sm is maintained by Alexander P. and Daniel J. Power. Please contact them at djpower1950@gmail.com with questions. See disclaimer and privacy statement. This page was last modified on December 8, 2015.

Web planningskills.com

Home \| About Us \| What's New
Copyright © 2004-15 by D. J. Power (see his home page). PlanningSkills.COM^sm is maintained by Alexander P. and Daniel J. Power. Please contact them at djpower1950@gmail.com with questions. See disclaimer and privacy statement. This page was last modified on December 8, 2015.