CAPACITY PLANNING

SUBMITED TO PROF. NAVLEEN KAUR

EFFORT BY JASPREET SINGH

WHATs

Capacity???

CAPACITY" is the maximum amount of work that an organization is capable of completing in a given period

WHATs

CAPACITY PLANNING

Capacity planning is the process of

determining the production capacity needed by an organization to meet changing demands for its products Capacity planning process is determining what capacity should be devolped in order that products can be made, or services canbe offered to meet the demand of consumer.

MEASUREMENT OF CAPACITY
OUTPUT RATE CAPACITY : For a facility having single product or few homogenious products unit of measure is quite simple For example-(no. of units per month) For a facility having diverse mix of products,an aggregate unit of capacity must be established using a common unit of output

Input Rate Capacity : This system is comonly used for service operations where output measures are particularly difficult. For example: Hospital tend to use available beds per month Theaters use available seats per month

 Capacity Utelisation Capacity utilisation relates actual

input/output to input/output capacity Capacity utelisation,expressedas a percentage is given by ratio Effective capacity or capacity utelisation= Actual capacity used/Design capacity

 Capacity Cushions This is the additional amount of capacity

added on to the expected demand to allow for: Greater than expected demand Demand during peak demand season Lower production coast Improved quality of products and services

DECISION MAKING
It is expansive to add capacity Few expansions are cheaper (per unit} than

many small addiions Expansion require re designing of process

CRITICAL QUESTIONS
Do we have sufficient resources to produce

enough product or service to satisfy the demand of our custmers ? Will we have enough resources to satisfy future demand ? What is the coast effective way to satisfy present and future demand ?

DIFFERENT TIME HORIZONS

Long Range Capacity Planning Intermediate Range Capacity Planning Short Range Capacity Planning

LONG TERM CAPACITY EXPANSION

Sub contract with other company Acquiring other company Constructing new sites Update or modify existing capacity Restarting facilities which has ben earlier put

on hold

CAPACITY EXPANSION STRATEGIES

Capacity Lead Strategy Capacity Lag Strategy Average Capacity Strategy One Step Expansion

LONG TERM CAPACITY REDUCTION

Selling off the existing resources Laying off employs Temporarily shutting down facilities Devolping and phasing new products

DECIDING BEST OPERATING LEVEL

The firm has economies and diseconomies of

scale at differet level of operation.The firm will have to operate at point where the coast per unit is minimum

APPROACHES EXPANDING LONG TERM CAPACITY

ALL AT ONCE

This approach consists of the decision to build to ultimate facility at one time and then growing into it over time.

BENEFITS OF ALL AT ONCE

Little risk of having to turn down business

due to inadequate cpacity Less interuption of production One large construction project coasts less than several smaller projects Due to inflation construction coast will be higher in future.

BUILDING CAPACITY INCREMENTALLY

This approach is one in which capacity is built

incrementally as the demand grows

BENEFITS OF INCREMENTAL APPROACH

Less risky forecast needs do not materialize Funds that could be used for other type of

investments will not be ied up in excess capacity More appropriate for new products

THANK YOU