Capacity planning is the process of determining a company's production capacity needs to meet changing product demand. It is divided into long, medium, and short term capacity. Long term capacity considers design and trend capacity, medium term is 2-3 years, and short term is daily to quarterly. Effective capacity planning depends on factors like facilities, technology, scheduling, and resources. It allows companies to match production to demand levels, minimizing waste and inventory costs while earning more profits through new product development.

1. Production & Operation
Management
Capacity planning
Submitted By: Submitted To:
Rishav Verma Rajni Bansal
BBA

2. Capacity Planning
• Capacity Planning is the process of
determining the production capacity needed
by an organization to meet changing demands
for its products.
• Some question for capacity handling :
– What kind of product is needed?
– How much is needed?
– When is it needed?

3. Capacity planning is divided into three parts.
Long Term
Capacity
Medium
Capacity
Short Term
Capacity
Capacity Planning Classification

4. Capacity Planning Classification
• Long Term Capacity is the process of checking
the various factors in an organization like
design capacity, production and trend
capacity.
• Medium Term Capacity planning undertaken
by an organization for 2 or three years.
• Short Term Capacity planning undertaken by
an organization for a daily, weekly, quarterly.

5. Strategic Capacity Planning
• Strategic Capacity Planning is essential as it
helps the organization in the future
requirements of the organization. Strategic
capacity planning is utilized for the important
resource. For example plant, machinery, labor
and etc.
• If strategic capacity planning is good in an
organization then organization can easily
maintain the cost of product

6. Factors Affecting Capacity Planning
Effective capacity planning is dependent
on factors like production facility, production
technology, scheduling and resources.
Forecasting v/s Capacity Planning
If demand is more than production capacity
then a company needs to fulfill its requirement
buying from outside. If the demand is less than
the production capacity , company can choose
to reduce the production.

7. Steps & Benefits
Steps:
• Determine level of Requirements.
• Analyse current capacity.
• Future planning.
Benefits:
• Earn more profit.
• Minimum wastage.
• Manage inventory.
• Development of new products.

8. Thanks