SamGreeves
Capacity planning is of prime importance in any organization. Capacity planning can be defined as a process that helps in ascertaining the production capacity required by an organization in order to fulfill the changing demand for its products. The main objective of capacity planning is identifying and solving capacity issues in a timely manner to meet customer needs. The secondary objectives are maintaining a balance between required capacity and available capacity and minimizing any discrepancy between them.
Applications
There are several applications of capacity planning across different sectors. The most important application of capacity planning is in production and manufacturing of goods. Capacity planning focuses on the potential of a manufacturing unit produce the required goods and services within the specified time interval. Capacity planning includes both long-term considerations that relate to the overall level of capacity and short term considerations that relate to variations in capacity requirements due to any fluctuations in demand. Capacity planning in important for manufacturing units as its helps in determining the limit of output and provide a major insight to determining operating costs. The three key inputs required for proper capacity planning are as follows:
• The kind of capacity that will be required
• How much capacity will be required?
• When will it be required?
Capacity planning is used for matching the capabilities of a manufacturing organization with the predicted level of future demand.
Strategies of Capacity Planning
There are four key strategies that are used in the capacity planning of an organization. Let’s take a look at these.
Lead strategy – Lead strategy of capacity planning is the concept of increasing capacity in the anticipation of an increase in the demand. This strategy is a more aggressive form of capacity planning. It aims at distracting customers from competitors by improving your level of service and reducing lead time. This strategy may not lead to high inventory levels but it may increase cycle stock costs.
Lag strategy – The lag strategy of capacity planning implies increasing capacity only once the organization is already running at full capacity or beyond due to a spike in demand. This strategy may decrease the risk of wasting capacity, but there is chance that it may lead to loss of possible customer due to low service levels.
Match strategy – The match strategy of capacity planning refers to increasing capacity in lesser amounts in line with the changing market demands.
Adjustment strategy – This strategy implies increasing or reducing capacity in small or large amounts depending on consumer demand or major changes to products or systems.
Capacity planning plays a major role in determining the success or failure of an organization as a manufacturing unit. It can help facilitate better levels of customer service that can contribute to growth.
http://classof1.com/homework-help/operations-management-homework-help
Applications
There are several applications of capacity planning across different sectors. The most important application of capacity planning is in production and manufacturing of goods. Capacity planning focuses on the potential of a manufacturing unit produce the required goods and services within the specified time interval. Capacity planning includes both long-term considerations that relate to the overall level of capacity and short term considerations that relate to variations in capacity requirements due to any fluctuations in demand. Capacity planning in important for manufacturing units as its helps in determining the limit of output and provide a major insight to determining operating costs. The three key inputs required for proper capacity planning are as follows:
• The kind of capacity that will be required
• How much capacity will be required?
• When will it be required?
Capacity planning is used for matching the capabilities of a manufacturing organization with the predicted level of future demand.
Strategies of Capacity Planning
There are four key strategies that are used in the capacity planning of an organization. Let’s take a look at these.
Lead strategy – Lead strategy of capacity planning is the concept of increasing capacity in the anticipation of an increase in the demand. This strategy is a more aggressive form of capacity planning. It aims at distracting customers from competitors by improving your level of service and reducing lead time. This strategy may not lead to high inventory levels but it may increase cycle stock costs.
Lag strategy – The lag strategy of capacity planning implies increasing capacity only once the organization is already running at full capacity or beyond due to a spike in demand. This strategy may decrease the risk of wasting capacity, but there is chance that it may lead to loss of possible customer due to low service levels.
Match strategy – The match strategy of capacity planning refers to increasing capacity in lesser amounts in line with the changing market demands.
Adjustment strategy – This strategy implies increasing or reducing capacity in small or large amounts depending on consumer demand or major changes to products or systems.
Capacity planning plays a major role in determining the success or failure of an organization as a manufacturing unit. It can help facilitate better levels of customer service that can contribute to growth.
http://classof1.com/homework-help/operations-management-homework-help