1. Capacity Planning

2. CAPACITY PLANNING CAPACITY IS THE LIMITING CAPABILITY OF A PRODUCTIVE UNIT TO PRODUCE WITHIN A STATED TIME PERIOD, NORMALLY EXPRESSED IN TERMS OF OUTPUT UNITS PER UNIT OF TIME. OVERTIME ADDITIONAL SHIFTS SUBCONTRACTING

3. CAPACITY PLANNING MEASURES OF CAPACITY:

7. CAPACITY PLANNING CAPACITY PLANNING ESTABLISHES THE OVERALL LEVEL OF PRODUCTIVE RESOURCES FOR A FIRM - LONG TERM STRATEGIC DECISION. Capacity is expanded in anticipation of demand growth. This is aggressive strategy UNITS DEMAND CAPACITY LEAD STRATEGY TIME CAPACITY

8. CAPACITY PLANNING Capacity is increased after an increase in demand has been documented. This is conservative strategy UNITS DEMAND CAPACITY LAG STRATEGY TIME CAPACITY

9. CAPACITY PLANNING UNITS DEMAND AVERAGE CAPACITY TIME CAPACITY

10. CAPACITY PLANNING UNITS DEMAND INCREMENTAL EXPANSION TIME CAPACITY

11. Capacity Expansion Strategies

15. Best Operating Level for a Hotel

16. CAPACITY PLANNING A CAPACITY CUSHION IS EQUAL TO CAPACITY MINUS AVERAGE DEMAND. (% OF CAPACITY HELD FOR UNEXPECTED OCCURRENCES). PRODUCTION CAPACITY = 20000 UNITS/MONTH AVERAGE DEMAND/MONTH = 18000 UNITS  CAPACITY CUSHION = 2000 UNITS

17. CAPACITY PLANNING DESIGN CAPACITY (PEAK CAPACITY): IS THE MAXIMUM OUTPUT THAT A PROCESS OR FACILITY CAN ACHIEVE UNDER IDEAL CONDITIONS. EFFECTIVE CAPACITY: IS THE MAXIMUM OUTPUT THAT A PROCESS OR FIRM CAN ECONOMICALLY SUSTAIN UNDER NORMAL CONDITIONS. ACTUAL OUTPUT: IS THE QUANTITATIVE MEASURE OF WHAT IS PRODUCED IN A TIME PERIOD.

18. CAPACITY PLANNING DESIGN CAPACITY = 1500 SHOES/DAY EFFECTIVE CAPACITY = 1200 SHOES/DAY ACTUAL OUTPUT = 1000 SHOES/DAY

19. CAPACITY PLANNING

21. CAPACITY PLANNING EX: A HAIRDRESSING SALON OPERATES 8 HOURS/DAY, 5 DAYS/WK AND AN AVERAGE CUSTOMER IS ‘IN THE CHAIR’ FOR 15 MINUTES; IN A WEEK, 110 CUSTOMERS HAD A HAIRCUT AND THE SOLE HAIRDRESSER USES 60 MINUTES/DAY FOR PERSONAL WORK. CALCULATE THE SYSTEM UTILISATION AND EFFICIENCY RATES. AVAILABILITY / WK = 40 HRS. CUSTOMER TIME = 0.25 HRS. DESIGNED CAPACITY = (40/0.25) = 160 CUSTOMERS / WK = 110 SYSTEM UTILISATION RATE = SYSTEM EFFICIENCY =

22. CAPACITY PLANNING CAPACITY PLANNING & STRATEGY ISSUES ON 3 LEVELS IN THE SHORT RUN - NOT POSSIBLE TO CHANGE SIZE OF WORKFORCE OR THE PHYSICAL CAPACITY - BETTER UTILISATION OF EXISTING RESOURCES - OPTIMAL PRODUCT MIX. LINEAR PROGRAMMING . IN THE MEDIUM TERM - WORK FORCE IS FLEXIBLE BUT PLANT & EQUIPMENT ARE NOT - AGGREGATE PLANNING & ROUGH CAPACITY PLANNING ARE APPLIED IN THE LONG TERM - EVERYTHING IS CHANGEABLE - MUCH GREATER UNCERTAINTY - DECISION TREES . (TIMING AND SIZE) - SIMULATION