Capacity planning is the process of determining the production capacity needed by an organization to meet changing demands. It involves assessing existing capacity, forecasting future needs, identifying options to modify capacity, evaluating financial and technological alternatives, and selecting the most suitable option. Capacity planning can be classified as long term or short term based on time horizon and finite or infinite based on resources employed. Long term planning accommodates major changes like new products or facilities while short term addresses intermediate fluctuations through overtime or subcontracting. Factors affecting capacity planning include controllable aspects like labor and facilities as well as less controllable issues like absenteeism or machine breakdowns.

1. SEMINAR
Akhil Lal P
MBA-MCMAT
Sub:-Capacity Planning

2. Capacity planning;
 Capacity planning;
capacity planning is the process of
determining the production capacity needed by
an organisation to meet changing demands for
its products.
• Capacity planning concerned with defining the
long-term and short-term capacity need of a firm
and determining how these needs will be met

3. The need for Capacity planning;
 Organization decides to increase
production
 Organization decides to introduce new
products

4. Capacity planning decisions;
 Assessing existing capacity
 Forecasting future capacity needs
 Identifying alternative ways to modify
capacity
 Evaluate financial, economical and
technological capacity alternatives
 Selecting a capacity alternative most suited
to achieve the strategic mission of the firm.

5. Market consideration Resources available
Capacity decision
Market consideration Resources available
Capacity decision
Inputs to capacity decisions;

6. Classification of capacity planning;
 Based on time horizon;
-Long term capacity planning
-short term capacity planning
 Based on amount of resources employed;
-Finite capacity planning
-Infinite capacity planning

7. Long term capacity planning
long term or long range capacity planning is
concerned with accommodating major changes
that affect the overall level of output in the
longer run. major changes are;
-decision to develop new product line
-expand existing facilities
-construct production plants

8. Short term capacity planning;
Short term or short range capacity planning
is concerned with responding to relatively
intermediate variations in demand.
These kinds of fluctuations in demand
caused by seasonal or economic factors. The
ways to adjusting capacity;
-Use of over time or idle time
-Increase the number of shifts
-Sub contracting to other firms

9. Finite and Infinite capacity
planning;
 In operations planning, two constraints are time
and capacity.
 If the processing time is not a constraint in case
where products are produced to stock and sell –
Finite
 Time is the primary constraint and plan
backwards to accommodate these times. Is
called infinite capacity planning

10. Factors affecting capacity
planning;
 Controllable factors;
-Amount of labour employed
-Facilities installed
-Shift work per day
-Over time work
-Sub contracting
-shift worked per week
-Preventive maintenance
-Number of production set-ups

11.  Less controllable factors;
-Absenteeism
-Labour performance
-Machine break-down
-Material shortages
-Scrap and rework
-Unexpected problems
(strike, fire accidents)

12. Thanks.....