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Capacity Planning. Manufacturing : Inventory can be used to cushion fluctuations in demand More focused on machinery as a constraint than people Services : No Inventory People are primary constraint. Planning Horizons. Business Plan. LONG. Production Plan. Master Production Schedule.

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Capacity planning
Capacity Planning

Manufacturing:

  • Inventory can be used to cushion fluctuations in demand

  • More focused on machinery as a constraint than people

    Services:

  • No Inventory

  • People are primary constraint


Planning horizons
Planning Horizons

Business

Plan

LONG

Production

Plan

Master

Production

Schedule

SHORT

Individual

Machine/

Workcenter

Matl. Reqs.

Plan (MRP)


Capacity must be matched carefully with marketing strategy
Capacity must be matched carefully with Marketing strategy!

America on(OFF)line - How NOT to plan!



Me?

I thought YOU were

going to tell operations!!

Marketing

Marketing

Operations


How to deal with uneven demand
How to Deal with Uneven Demand?

  • Vary inventory

  • Change Production Rate

  • Change workforce size

    ............... REACTIVE alternatives!!


Proactive aggressive alternatives
Proactive/Aggressive Alternatives

  • Complementary products

  • Promotional campaigns

  • Creative pricing


Two capacity expansion strategies expansionist
Two Capacity Expansion Strategies ..... EXPANSIONIST

Capacity

Demand

Forecast

Time


Expansionist strategy
Expansionist Strategy

CONCEPT:

  • Large, Infrequent jumps in capacity

  • Stays ahead of demand

    ADVANTAGES:

  • Lost Sales unlikely

  • Economies of scale (construction and learning)

  • Preempt Competition


Two Capacity Expansion Strategies ..... WAIT-and-SEE

Capacity

Time


Two Capacity Expansion Strategies ..... WAIT-and-SEE

Capacity

Demand

Forecast

Time


Two Capacity Expansion Strategies ..... WAIT-and-SEE

Capacity

Demand

Forecast

Time


Wait and see strategy
Wait and See Strategy

CONCEPT:

  • Small, Frequent jumps in capacity

  • Lags behind demand, relying on short-term operations

    ADVANTAGES:

  • Minimize risk

  • Greater flexibility


Capacity cushion
Capacity Cushion

Maximum Capacity (100%)

Cushion

Average Utilization


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