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Capacity

Capacity planning involves estimating future capacity needs and adding new capacity just in time to meet demand. It aims to maximize efficiency while avoiding underuse or insufficient capacity. The process involves forecasting demand, assessing current capacity, determining future requirements, developing plans to meet requirements, analyzing risks of plans, and implementing the chosen course of action. Key decisions relate to determining needed capacity levels, timing of changes, balancing needs and flexibility.

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106 views

Capacity

Capacity planning involves estimating future capacity needs and adding new capacity just in time to meet demand. It aims to maximize efficiency while avoiding underuse or insufficient capacity. The process involves forecasting demand, assessing current capacity, determining future requirements, developing plans to meet requirements, analyzing risks of plans, and implementing the chosen course of action. Key decisions relate to determining needed capacity levels, timing of changes, balancing needs and flexibility.

Uploaded by

hiteshchd
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PPT, PDF, TXT or read online on Scribd
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Capacity Planning

Capacity Planning
 Capacity planning is the science and art of
estimating the space that will be needed over
some future period of time.

Aim:-
Capacity planner is to plan so well that new
capacity is added just in time to meet the
anticipated need but not so early that resources
go unused for a long period.
Types of Capacity
Measurement of Capacity:-
 When the productive system produces a single output or when the different outputs
are relatively homogeneous, capacity can be measured in number of units of output
per unit of time. The capacity of a thermal power plant is expressed in megawatts of
power, that of a television unit in thousands of television sets per month and that of a
steel mill in million tons of steel in a year.

Service Capacity:-
For those organizations whose output is a service of some kind, the capacity
can be measured using the concepts outline above. If the service produced is
homogeneous, the capacity can be measured in number of services per unit of time-
e.g. number of units of power produced per unit of time for a thermal power plant or
number of insurance policies serviced per year for an insurance company.
The basic questions in capacity handling are:

1. What kind of capacity is needed?

2. How much is needed?

3. When is it needed?
PROCESS FOR CAPACITY PLANNING
 Assess company situation and environment to predict future
demands, including the possible impact of technology,
competition and other events
 Determine the available capacity.
 Translate predictions into physical capacity requirements.
 Develop alternate capacity plans for matching required and
available capacity
 Analyze the risks and other strategic consequences of
alternate plans
 Recommend a course of action
 Implement the course of action.
Determinants of Effective Capacity

 Facilities
 Product and service factors
 Process factors
 Human factors
 Operational factors
 Supply chain factors
Efficiency and Utilization

Actual output
Efficiency = --------------------------------
Effective capacity

Actual output
Utilization = -----------------------------------
Design capacity
Efficiency/Utilization Example
 Design capacity = 50 trucks/day
 Effective capacity = 40 trucks/day
 Actual output = 36 units/day

Actual output = 36 units/day


Efficiency = --------------------------------- = 90%
Effective capacity 40 units/ day

Utilization = Actual output = 36 units/day


------------------------------- = 72%
Design capacity 50 units/day
Forecasting Capacity Requirements

 Long-term vs. short-term capacity needs


 Long-term relates to overall level of capacity such
as Land size, trends, and cycles.
 Short-term relates to variations from seasonal,
random and irregular fluctuations in demand.
Key Decisions of Capacity Planning

1. Amount of capacity needed


• Capacity (100% - Utilization)
2. Timing of changes
3. Need to maintain balance
4. Extent of flexibility of facilities
THANK YOU

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