Capacity planning Essay

WHAT IS aptitude PLANNING? talent croupe be defined as the ability to hold, receive, store, or accommodate a measure of an nerves ability to provide customers with the pauperismed services or goods in the amount pass and in a timely manner. Capacity planning is the process of envision the drudgery depicted object needed by an arranging to meet changing motive for its products. The objectives of contentedness planning areTo identify and solve readiness problem in a timely manner to meet consumer needs. To go for a balance between required strength and for sale readiness. The remnant of cognitive content planning is to minimize this discrepancy.Capacity is calculated (number of machines or snipers) (number of shifts) ( example) (efficiency).THE pack FOR CAPACITY PLANNINGCapacity planning is the counterbalance step when an organization decided to produce more or a new product. in one case dexterity is evaluated and a need for a new expanded speediness is de ma rginined, facility location and process technology activities occur. Too much faculty would require exploring ways to reduce capacity, such as temporarily closing, selling, or consolidating facilities. Consolidation might involve relocation, a combining of technologies, or a rearrangement of equipment and processes. Capacity planning is done in order to estimate whether the demand is higher than capacity or lower thancapacity. That is canvass demand versus capacity. It helps an organization to identify and plan the actions necessary to meet customers largess and early demand.HOW IS CAPACITY MEASURED?For some organization capacity is open to measure. General Motors Corporation can use numbers of automobiles per year. But what to the highest degree organization whose product lines are more diverse? For these firms, it is hard to find a common unit of output. As a substitute, capacity can be expressed in terms of input. A legal chest of drawers may express capacity in terms of t he number of attorneys busy per year. A custom job shop or an auto revive shop may express capacity in terms of available labour hours and/or machine hours per week, month, or year. Capacity can be expressed in terms of input & output, depending on the nature of origin. geological formation Measure Output Automobile manufacturer numbers pool of autos Steel producer Tones of steel Power company Megawatts of electricity Input Airline Numbers of seat Hospital Number of beds Tax office Number of greenbackantsCAPACITY PLANNING DECISIONCapacity planning normally involves the following activitiesAssessing existent capacity.Forecasting capacity needs. marking alternative ways to modify capacity.Evaluating financial, economical, and technological capacity alternatives.Selecting a capacity alternative most suited to achieving strategic mission. triple STEPS OF CAPACITY PLANNING keep an eye on Service Level RequirementsThe first step on the capacity planning process is to categorize the work done by systems and to quantify users expectation for how the work gets down.Define workloadsDetermine the unit of workIdentify service levels for each workload dissect current capacityNext, the current capacity of the system must be analyzed to determine how it is meeting the needs of the users.Measure service levels and compare to objectivesMeasure boilers suit resources usages.Measure resource usages by workloadIdentify components of response timePlanning for futureFinally, utilise forecasts of future business activity, future system requirements are determined. Implementing the required changes in system configuring will ensure that sufficient capacity will be available to throw service level, even as circumstanced change in the future. Determine future processing requirementsPlan future system configurationSTRATIGES FOR MODIFYING CAPACITY by and by existing and future capacity requirements are assessed, alternative ways of modifying capacity must be identified. Capacity refers to a systems latent for producing goods or delivering services over a specified time interval. Capacity planning involves long-term and short term considerations. Long-term considerations relate to the overall level of capacity short-term considerations relate to variations in capacityrequirements ascribable to seasonal, random, and irregular fluctuations in demand.Excess capacity arises when actual production is little than what is achievable or optimal for a firm. This often means that the demand in the market for the product is below what the firm could potentially preparation to the market. Excess capacity is inefficient and will cause manufacturers to incur tautological cost or lose market share.Short-term Responses-For short-term periods of up to one year, neckclothamental capacity id fixed. Major facilities are seldom undefended or closed on a regular monthly or yearly basis. Many short-term adjustments for increasing or decreasing capacity are possible, howev er. Which adjustment to make depended on whether the conversion process is generally labour-or capital-intensive and whether the product is one that can be stored in inventory.Long-term Responses- elaborateness from World War II through the 1960s, the U.S. economy was one of abundance and growth. Since the 1970s the United States has encountered problems of scarce resources and a more competitive economy. government today cannot be locked into thinking only about expanding the resource beggarly they must also consider optimal approaches to contracting it.Example- A warehousing operation foresees the need for an supererogatory 100,000 square feet of space by the end of the next five year. One option is to add an additional 50,000 square feet now and another 50,000 square feet two year from now. some other option is to add the wide 100,000 square feet now. Estimated costs for building the entire addition now are $50/square foot. If expanded incrementally, the initial 50,000 squ are feet will cost $60/square foot. The 50,000 square feet to be added later are estimated at $80/square foot. Which alternative is offend? At a minimum, the lower construction costs plus excess capacity costs of total construction now must be compared with higher costs of deferred construction. The operation manager must consider the costs, benefits, and risks of each option.WHAT ARE THE MODELS AND TECHNIQUES THAT ARE USEFUL FOR CAPACITY PLANNING?Present treasure outline It is used to evaluate the time of capital investment and fund flows. Aggregate planning models it is useful for examining the way of using the examining the way of using the existing capacity in the short terms. Break even analysis to determine the minimum break even volumes of production. Linear programming this is accommodating in determining the optimum product mix for maximizing contribution, considering the capacity constraints. Computers simulation it is helpful to determine the effects of various schedu ling policies. finis tree analysis this can be applied for long term capacity problems.WHAT ARE ECONOMIES OF SCALE?It is well known principle of economics. It indicates the consanguinity between cost and capacity in an operating system. When output increases in an operating system, the system is likely to experience cost advantages on account several factors. Due the following reasons the average unit cost begins to nightfall with the rise in output level Spreading the fixed costs of capacity over a larger outputImproved utilization of several resources in the systemCost benefit in procurement on account of increased volume.Efficient use of supervisory and care staff.The economies of scale cease to occur beyond a level of production or output. This is called Diseconomies of scale. There can be several reasons for this unable management due to largeness of operation and resultant lack of coordination. employ of machineries and break down of material handling equipments Over h iring of employees, or unjustified overtime.Service slowdowns due to increasing complexitiesIncrease in quality problems because of misdirection and lack of focus.EFFECIENY AND UTILIZATIONUtilisation = actual OutputDesign capacityBoth measures expressed in percentageExample- Design capacity= 50 trucks/dayEffective capacity= 40 trucks/dayActual output= 36 units/day