Capacity Planning

Upper limit or ceiling on the load that an operating unit can handle

Capacity is present in

• output

• input

Three basic questions of Capacity Planning

• What capacity is needed?

• How much is needed?

• When is needed?

Four considerations of Capacity Planning

• Ability to meet future demand

• Capacity and operating costs

• Initial cost involved

• Stems from the often required long-term commitment of resources

maximum output that can be achieved

maximum possible output given product mix, scheduling difficulties, machine factors and so on

Rate of output actually achieved. Cannot exceed effective capacity

Formula of Efficiency ( no space. Use / )

Formula of Utilization ( No space. use / )

7 Determinants of Effective Capacity

• Facilities ------ Operations

• Products and Services

• Processes

• Human considerations

• External Forces