Goals The first step for a strategic approach to capacity planning is to specify the objectives your strategy has to accomplish. So, capacity is the maximum productive capability. It is prudent to identify the right equipment of work and provide them to the employees to perform work. One is loss of control over operations. Capacity can be increased through introducing new techniques, equipment and materials, increasing the number of workers or machines, increasing the number of shifts, or acquiring additional production facilities. Capacity planning is the process of determining the production capacity needed by an organization to meet changing demands for its products. Select, implement, and monitor the best alternative to pursue.
Essentially, it is the upper limit on output. The phrase is also used in business computing as a synonym for Capacity Management. Therefore, the companies should ensure that they have the best output possible while maintaining quality. Determine the range of annual volume for which each of the alternatives would be best. It is generally measured in volume of output per unit of time. Affects ease of management 7. Take stage of life cycle into account 3.
This concept can apply to personnel planning, facilities planning and manufacturing projections as well. Any experienced manager will agree that a unit should know the upper limit and understand the procedures that are set to help them reach the goals. Take Stage of life cycle into account o Capacity requirements are often closely linked to the stage of the life cycle that a product or service is in. In contrast, utilization is the ratio of actual output to design capacity. Make sure all other parts of the process support the constraint.
Capacity is calculated: number of machines or workers × number of shifts × utilization × efficiency. Where facilities should be located location How facilities should be arranged layout Importance of Capacity Decisions Impacts ability to meet future demands Affects operating costs Major determinant of initial costs Involves long-term commitment Affects competitiveness Affects ease of management Globalization adds complexity Impacts long range planning Capacity Measurement Design capacity maximum output rate or service capacity an operation, process, or facility is designed for Effective capacity Design capacity minus allowances such as personal time, maintenance, and scrap Actual Output These different measures of capacity are useful in defining two measures of system effectiveness: efficiency and utilization. It is also prudent to put them into in this case and assess their possibility to work perfectly. The goal of capacity planning is to minimize this discrepancy. Budgeting Capacity planning outlines the personnel and equipment your small business will need in order to maintain current operations and reach goals. For example, if your prime competitor expanded its customer service staff by 20 percent, then your capacity planning information can let you know exactly what you would need it terms of money, facilities and personnel to keep up with the competition's level of support.
Design flexibility into systems 2. Production and operation manager is concerned with the determining capacity requirement in term of time dimension. Capacity has different meaning to different people at different level of management. In Bangladesh now as well as the other industries ceramic industries need to compete to make better place in the market. It is what makes some businesses successful while others are still struggling.
Do it in-house or Outsource it? Forecast what demand, pricing, competition and costs will look like so you can fit your strategic approach to the marketplace. A third approach is tracking capacity which adds incremental capacity over time to meet demand. This is concerned with day-to-day planning. Production capacity is equally important if the capacity is not great enough to meet peak demand periods and inventory building is not properly planned, customer demand will go unfilled. A small business should utilize capacity planning because of the financial and logistical benefits it offers. Conversely unique quality requirements or the desire to closely monitor quality may cause an organization to perform a job itself.
Other people will be joining the production unit and will need to learn fast on how to do it the right way. For example, if you goal includes cutting costs, you choose the lowest-cost alternative to avoid relevant constraints. Another is the need to disclosed proprietary information. The forecasts let you adapt your strategy to ensure you get the results you want. Therefore, capacity planning is the process of determining the capacity requirement in future. Economies of Scale o If the output rate is less than the optimal level, increasing the output rate results in decreasing average unit costs.
They are long-ranged and short-ranged. To satisfy this requirement, manufacturers need to plan necessary and sufficient capacity to meet market demands. Common strategies include leading capacity, where capacity is increased to meet expected demand, and following capacity, where companies wait for demand increases before expanding capabilities. Evaluation An evaluation of your forecasts, constraints and alternatives allows you to finalize your strategic approach and implement the most-effective capacity planning strategy for your circumstances. Design capacity refers to the maximum designed service capacity or output rate and the effective capacity is the design capacity minus personal and other allowances.