CH no 5Strategic Capacity Planning for Products and

Services

Topic What is capacity? Capacity decision are strategic? Measuring capacity? Determine of effective capacity?

What is capacity The maximum grade of output that is

basically strategic planning.

What is capacity Different people have the different concept about the capacity that’s why it is difficult to measure the capacity. The goal of strategic capacity planning is to achieve a match between the long-term supply capabilities of an organization and the predicted level of long-term demand.

Capacity decision are strategic?

Capacity decision are real impact of organization to meet the future demand for the products & services.

Capacity decision effect on operating cost. Capacity is usually major determine of initial cost.

Capacity decision are strategic? Continue…

Capacity decision often involved are long term commitment of organization resources & some time is difficult to take the long term decision.

Capacity decision can effect the competitiveness.

Capacity decision are strategic? Continue…

Capacity effect ease of management. It is important to increase globalization but complexity in capacity

decision. In capacity decision are involved over organization financial resources

& other resources that help in capacity decision. It’s necessary to plan the fair & advantage able decision.

Measuring capacity

Capacity often refer upper limit on the rate of output. If we have the single product & services that is difficult to

measure the capacity. If we have measure the same thing that is difficult to measure

the capacity.

Measuring capacitycontinue…

If the multiple products & services are involved, as the capacity based unit out is misleading.

When the product produced per hour how much out would be generated.

Measuring capacitycontinue…

Different business have different output & different capacity measuring.

When start the capacity measuring to defined the clearly products & services design that should easy to measure the capacity.

Use two functions to explore the define of capacity

Design capacityEffective capacity

Design capacityMaximum rate of output is design for the process of products

& services for any organization operations.

(Facility process – Maximum rate)

Effective capacityDesign capacity means the personal allowance and other

allowance as like maintains allowance.

(Design capacity – Allowances)

Actual output factors are directly effected of our output like the machine

breakdown , shutdown, shortage of material & the other outside factor that cannot control.

Actual output continue…

The two main factors & basic system to measuring capacity in different way is:

Efficiency Utilization

Efficiency

Actual output /effective capacity*100

Utilization

Actual output/design capacity*100

Determine of effective capacity?

Facilities Product & service factors Process factors Human factors

Determine of effective capacity? continue…

Policies factors External factors Operational factors Supply chain factors

Facilities

To design of facility, including the size provision the expansion is the key .

The three main things are:

Design

Layout

Environment

Product & service factors

Product & services design can grand influence capacity. When plan the product & services design that easily to produced. If the product & services are similar that should be faster. If the same output rate that same standardization of product is same.

Process factors

In production area how much quantity to produced products. How much you capable to produced the product, how much

strong to produced the product, how many time to reprocess the product.

Use how much time hour to produced that product.

Human factors

How much they have the skill worker, experienced work, personality workers, timely worker to full fil the job content task.

How much you have the potential to produced the product in some hours.

The company turnover employee are effect the company output ratio.

Policies factors

What is rules & regulation to produced the product & services capacity .

External factors

In attitude business plan is directly affected the company productivity & capacity.

Products design labor & other externals factors are affected the capacity.

Operational factors

The operations that are directly effect on output. Things are directly effect are miss management, stocking,

inventory & late delivery is major these thongs are directly effected on the capacity of the output.

Supply chain factors

Gape b/t the capacity, supplier & warehouse. If the warehouse, supplier is increase the capacity of

output is increase anyway if the decrease the capacity is completely opposite.