STRATEGIC CAPACITY PLANNING(WRITTEN REPORT)

Submitted By: AC 401Decano, MykaLamera, Shiela Mae Villa, Stella Marie Submitted To: Sir Barrameda

STRATEGIC CAPACITY PLANNING It determines the overallcapacity level of capital-intensive resources - facilities, equipment, and overall labor force size - that best supports the company's long-range competitivestrategy. It determines the importance of capacity decisions, the measurement of capacity, how capacity requirements are identified, and the development and evaluation of capacity alternatives. Its goal is to achieve a match between the long-term supply capabilities of an organization and the predicted level of long-term demand.

CAPACITY DECISIONS ARE STRATEGIC1. Capacity decisions have a real impact on the ability of the organization to meet future demands for products and services.2. Capacity decisions affect operating costs.3. Capacity is usually a major determinant of initial cost.4. Capacity decisions often involve long-term commitment of resources.5. Capacity decisions can affect competitiveness.6. Capacity affects the ease of management.7. Globalization has increased the importance and the complexity of capacity decisions.8. Capacity decisions often involve substantial financial and other resources.

DEFINING AND MEASURING CAPACITYCapacity refers to an upper limit or a ceiling on the load that an operating unit can handle.DESIGN CAPACITYEFFECTIVE CAPACITY

the maximum output rate or service capacity an operation, process or facility is designed for

the design capacity minus allowances such as personal time, maintenance and scrap

Utilization = Actual Output / Design CapacityEfficiency = Actual Output / Effective Capacity

Utilization how much resources are usedEfficiency performance of the operating unit

DETERMINANTS OF EFFECTIVE CAPACITY1. Facilities2. Product and Service Factors3. Process Factors4. Human Factors5. Policy Factors6. Operational Factors7. Supply Chain Factors8. External Factors