McDonald's capacity planning process involves determining production needs to meet changing demand. Key aspects include estimating total requirements based on factors like product variety and quality, estimating labor and machine needs, and comparing capacity availability to requirements. McDonald's Sonipat location has a capacity strategy of leading demand by keeping a 2-3 day inventory of buns, patties and 15 day inventory of drinks. The document also presents a hypothetical problem comparing expanding the existing location versus opening a new one, with expanding found to have a higher expected monetary value.

1. CAPACITY PLANNING
with reference to McDonalds

2. Hi, friends I am
Ronald’s
Yes, I am here to
tell you about my
story
Story of McDonald
My Team members are:
Sai Praveen
Piyush Singh
Ankit Verma
Anand Batra

3. CAPACITY
Capacity is the upper limit on the load that
an operating unit can handle.
• The basic questions in capacity handling
are:
• What kind of capacity is needed?
• How much is needed?
• When is it needed?

4. CAPACITY PLANNING
• Capacity planning is the process of
determining the production capacity
needed by an organization to meet
changing demands for its products.
• In the context of capacity planning,
“capacity" is the maximum amount of
work that an organization is capable of
completing in a given period of time.

5. • A discrepancy between the capacity of an
organization and the demands of its customers
results in an inefficiency, either in under-utilized
resources or unfulfilled customers.
• The goal of capacity planning is to minimize this
discrepancy.
• Capacity can be increased through introducing
new techniques, equipment and materials,
increasing the number of workers or machines,
increasing the number of shifts, or acquiring
additional production facilities.

6. Mc Donalds
• McDonald's is the world's leading food service
retailer with more than 33,000 restaurants in 118
countries serving more than 67 million customers
each day.
• In India, it operates under two parent franchisees
 Hardcastle Restaurants Pvt. Ltd – West and South
 Vikram Bakshi's Connaught Plaza Restaurants
Private Limited – North and East
• McDonald's India is a leader in the food retail
space, with a presence of more than 250
restaurants serving more than 6.5 lakh customers
daily in India.

7. McDonalds (Sonipat)
• Located at Ansal Plaza Mall, Kundli,
Sonipat 131001
• Operation Hours – (8a.m-11p.m)
• 115 covers
• 1 Restaurant Manager , 2 Astt. Manager
• 1 Relationship Executive ,1 Crew Trainer
• 25 crews

8. FACTORS AFFECTING CAPACITY
PLANNING
• Product Design
Every product has its own unique recipe
• Process Design
Process of a making of product should be
time
effective but quality cannot
be reduced
• Product Variety
Product having less variation can be
processed together to reduce overall time

9. • Product Quality
Test & Inspection are made in order to
keep a check on quality of product.
• Product Scheduling
Scheduling that keeps the product flow
well balanced and synchronized

10. ECONOMIES OF SCALE
Economies of scale results in lowers the
average cost per unit through increased
production since fixed costs are shared
over an increased number of goods.

11. DISECONOMIES OF SCALE
Diseconomies of scale result in rising long
run average costs which are experienced
1) When a firm expands
2) When govt. policies changes

12. Capacity strategies
• Lead strategy-the company increases
its production capacity in advance of
anticipated increases in demand.
• Lag strategy-the company responds to
actual increases in demand by
boosting capacity after the operation
is running at full steam.
• Match strategy-the company matches
the demand and supply.

13. McDonalds’ capacity strategy
• The company uses lead strategy
• Bun inventory- 2 days advance
• FCD(Fried chilled dried) inventory- 3 days
advance
• Coke inventory- 15 days advance

14. DESIGNED AND ACTUAL CAPACITY
 Design capacity is the maximum
theoretical output of a system
 Actual capacity is the rate of output
actually achieved.

15. DESIGN CAPACITY
• McAloo tikki
• Prepration time = 42s
• Prepration time (hrs.)=
42/3600=0.0116667hrs
• Operating Hours =15
• Total McAloo tikki in a day=15/0.0116667
=1286(approx.)

16. UTILIZATION
• Utilization is the percent of design
capacity achieved
• Actual Output = 352
• Utilization =
Actual Output/ Design Capacity
352/1286 =27 %

17. CAPACITY PLANNING
FRAMEWORK
• Estimating Total Requirements
• Estimating Labor and Machine
Requirements
• Computing Capacity Availability
• Comparison of Availability and
Requirements
• Process Mapping and Capacity Analysis

18. COMPUTING TOTAL
REQUIREMENTS
No. of working days in the outlet(N ) = 7
No. of working hours per day (h) = 15 hrs.
System Availability (WEEKLY) = 7x15= 105
hrs.
d

19. ESTIMATING LABOUR
REQUIREMENTS
• Labor requirements depends fully on
sales
• Requirements will vary in the following
ways
• Peak Time (1pm- 4pm) & (7pm-10pm)
Expected Guest Count- 400
• Weekends
Expected Guest Count- 600
• Holidays

20. RESOURCE AVAILABLITY
• No. of Workers Available (N ) = 25
• Absenteeism (a) = 2%
• Workers Capacity = N X h X N X (1-a/100)
(weekly)
= 7 X 15 X 25 X (98/100)
= 2572 hrs.
L
d
L

21. ESTIMATING MACHINE
REQUIREMENTS
• Machine requirements are totally depend
on Product Variants
• Burgers
• French Fries
• Coke
• Ice-cream
• Cold Coffee & Ice Tea
• McPuff Pizza

22. RESOURCE AVAILABILITY
• No. of Machines Available (N ) = 17
• Machine Capacity= N X h X N
(weekly)
=7 X 15 X 17 = 1785 hrs.
m
d
m

23. PROCESS MAPING

24. VEG-LINE for making Burgers

25. HYPOTHETICAL PROBLEM
• The outlet is small and it is not able to handle the
crowd.
• The plant has two options- to expand the outlet, to
open a new outlet in the locality.
• The marketing research says the probability of
success if we expands the outlet is 80%, with a cost
of 50 lakhs, the revenue generated would be 1 crore.
In case of failure the loss would be 30 lakhs.
• The probability of success if we open a new outlet in
the locality would be 60%, with a cost of 90 lakhs,
the revenue generated would be1.4 crores. In case of
failure the loss would be 40 lakhs.

26. DECISION TREE

27. DECISION
• EMV at node 1
• (0.8 x 1) + (0.2 x -0.3) = 74 lakhs
• EMV at node 2
• (0.6 x 1.4) + (0.4 x -0.4) = 68 lakhs
• Decision at node A is to EXPAND the
plant as it will get more profit.

28. LEARNINGS
• It helped us to ensure that current &
future capacity and performance aspects
of the business requirements are
provided in cost effective manners.
• It helped us in understanding the
importance of decision –tree in order to
select the most effective & efficient
method of capacity expansion.