Importance of Capacity planning:

Capacity planning is important for following :

Accounting

This prepares the accounting information required to estimate capacity expansion decisions.

Finance

It performs the financial analysis of proposed capacity expansion investments and raises funds to support them.

Human Resources

It hires and trains the workers to sustain capacity plans.

Management Information Systems

It designs the database utilized in determining work standards that help in calculating capacity gaps.

Marketing

It provides the demand forecasts for identify capacity gaps.

Operations

It chooses capacity strategies that provide the capacity levels to meet future demand most effectively.

Purchasing

It get the outside capacity that is outsourced.

Capacity planning is the central idea behind success of an organisation in long run. While selecting the capacity strategy, managers have to consider certain things in their mind: how much of a cushion is required to handle variable, uncertain demand? Should we increased capacity before the demand is there or wait until demand is more certain? Therefore a structured and logical approach is needed to reply these queries thereby developing a capacity strategy appropriate for each situation.

Objectives

After studying this unit, you should be able to

• learn measures of capacity,
• understand capacity of strategies,
• know  about systematic approach to capacity decision, and
• Study various tools for capacity planning.