Scribd
Upload
54 views7 pages

3#capacity Planning

Capacity planning involves determining the needed production capacity to meet future demand. Key questions are what type of capacity is required, how much is needed, and when. Capacity planning affects costs, competitiveness, and ease of management. Effective capacity considers factors like maintenance that reduce maximum output, while utilization compares actual to design output. Determinants of effective capacity include facilities, products, processes, human factors, operations, and external regulations. Alternatives are evaluated financially using methods like payback period, net present value, and internal rate of return to determine the optimal operating level.

Uploaded by

S M Zillur Rahaman
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPT, PDF, TXT or read online on Scribd
54 views7 pages

3#capacity Planning

Capacity planning involves determining the needed production capacity to meet future demand. Key questions are what type of capacity is required, how much is needed, and when. Capacity planning affects costs, competitiveness, and ease of management. Effective capacity considers factors like maintenance that reduce maximum output, while utilization compares actual to design output. Determinants of effective capacity include facilities, products, processes, human factors, operations, and external regulations. Alternatives are evaluated financially using methods like payback period, net present value, and internal rate of return to determine the optimal operating level.

Uploaded by

S M Zillur Rahaman
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPT, PDF, TXT or read online on Scribd
You are on page 1/ 7

Capacity Planning

Capacity refers to an upper limit or ceiling on the


load that an operating unit can handle

The basic questions are:


What kind of capacity is needed?
How much is needed?
When it is needed?
Impact on the ability of the organization to meet future
demands for products & services
Major determinant of initial cost greater the capacity,
larger the investment
Can affect competitiveness excess capacity or flexible
capacity
Affects the ease of management
Capacity Planning
Design Capacity: maximum attainable output
Effective Capacity: maximum possible output with
scheduling difficulties, machine maintenance & so on

Actual output
Efficiency
Effective capacity

Actual output
Utilizatio n
Design capacity

Utilization is always less than efficiency


Capacity Planning
Determinants of Effective Capacity

Facilities
Design including size & provision of expansion
Location transportation cost, distance to market, labor supply
Layout smoothness of flow, as will as lighting & ventilation

Product / services
Design easier the design, easier to produce
Product Mix varieties of product reduce capacity

Process
Quantity obvious determinant of capacity
Quality low quality will require inspection & rework
Capacity Planning
Determinants of Effective Capacity
Human Factor
Job content
Training/Experience
Motivation
Compensation

Operational
Scheduling differences in equipment capabilities
Materials management shortage of materials/ complaints
Quality assurance in process & incoming materials

External
Product standard can restricts increasing capacity
Safety regulations
Unions
Capacity Planning
Capacity Requirement
Long term relates to overall level of capacity e.g., facility size
Determined by forecasting demand over a time horizon, and then
converting those forecasts into capacity requirement

- How long
Trend
- Slope of trend

Short term relates to probable variations e.g., seasonal, random


Deviations are important as they can place severe strain to satisfy
demand at sometimes & yet result in idle capacity at other times
Capacity Planning
Developing Capacity Alternatives
Design flexibility into systems
Provisions for futures expansions in the original design
Differentiate between new and mature products/services
Mature product/services tends to be more predictable
Attempt to smooth out capacity requirement
Need to identify products which can offset each other
Prepare to deal with capacity chunks
Capacity increases are often acquired in fairly large chunks

Identify the optimal operation level


In terms of unit cost of output
Capacity Planning
Evaluating Alternatives

Financial Analysis Cost volume Analysis

Pay back period Total cost TC FC VC


Net present value Variable cost VC Q * U
Internal rate of return Total revenue TR Q * R
Total Profit P TR TC
Q * ( R U ) FC

P FC
Q
R U
FC
For breakeven Q
R U

You might also like

pFad - Phonifier reborn

Pfad - The Proxy pFad of © 2024 Garber Painting. All rights reserved.

Note: This service is not intended for secure transactions such as banking, social media, email, or purchasing. Use at your own risk. We assume no liability whatsoever for broken pages.


Alternative Proxies:

Alternative Proxy

pFad Proxy

pFad v3 Proxy

pFad v4 Proxy