Capacity Planning and Control

8/3/2019 Capacity Planning and Control

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The maximum level of value-added activityover a period of time that the process canachieve under normal operating conditions.


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Organizations find themselves with some

parts of their operation operating below theircapacity while other parts are at their capacityceiling.

It is the parts of the operation that areoperating at their capacity ceiling which arethe capacity constraint for the whole

operation.


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Medium term capacity planning usually

involves an assessment of the demand

forecasts over a period of 218 months.

In practice, however, few forecasts are

accurate and most operations also need torespond to changes in demand which occurover a shorter time scale.


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A term used to indicate medium-term

capacity planning that aggregates different

products and services together in order to geta broad view of demand and capacity.


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o Costo Revenueo Working Capitalo Qualityo Speed

o Dependabilityo Flexibility


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Three requirements from a demand forecast

1. It is expressed in terms which are useful forcapacity planning and control.

2. It is as accurate as possible

3. It gives an indication of relative uncertainty


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The capacity of a process or facility as it isdesigned is called design capacity.

The useful capacity of a process or operationafter maintenance, changeover and otherstoppages and loading has been accounted

for, is called effective capacity.


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It is based on three aspects of performance:

1. The time that equipment is available tooperate

2. The quality of the product or service it

produces

3. The speed, or throughput rate, of the

equipment


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There are three pure options availablefor coping with demand variation.

1. Ignore the fluctuations and keep activity

levels constant (level capacity plan).

2. Adjust capacity to reflect the fluctuations

in demand (chase demand plan).

3. Attempt to change demand to fit capacity

availability (demand management).


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The opposite of a level capacity plan is one which attempts to match capacityclosely to the varying levels of forecast demand.


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An approach to medium-term capacitymanagement that attempts to change orinfluence demand to fit available capacity.

Reduction in prices

Alternative product and services


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A collection of methods that can be used to ensure

that an operation (usually with a fixed capacity)maximizes its potential to generate profit.

Yield management is especially useful where:

o Capacity is relatively fixed.

o The market can be fairly clearly segmented.

o The service cannot be stored in any way.

o The services are sold in advance.

o The marginal cost of making a sale is relatively low.


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Documents

Capacity Planning and Control