Capacity strategies How might long-range capacity strategies help your target or

Question

Capacity strategies

How might long-range capacity strategies help your target organization (choice any organization) meet long-range capacity issues? Which one(s) would possibly work and why? Then, explain how the organization might use each of the five ways to adjust short-term capacity levels.  Please be specific. Again, this is to help you build your understanding of the organization you are planning to use for your course project and all the pieces of the value chain and your identified operations issue.

Explanation / Answer

Capacity planning is the process of determining the production capacity neede by an organization to meet the fluctuation in demand of its products. Capacity is the maximum out put that an organization is capable in a given period. capacity is determined with the availability of machines, material and manpower. Capacity planning is required when an organization decides to produce more or new products. capacity planning is -

1. Long Term planning

2. Short term planning.

Long term planning relates primarily to strategic issues involving the organizations's major production facilities. It also relates with location decision, technology upgradation and transferability of the process to other products. Long term planning may evolve when short term changes in capacity are insufficient. It helps the organization to identify and plan the actions necessary to meet the customer's present and future demand.

Capacity planning normally involve the following activities -

1. Assessing existing capacity

2. Forecasting future needs

3.Identifying the alternate ways to modify capacity

4.Evaluating financial, economical and technological capacity alternatives

5.Selecting a most suitable alternative for long term strategy

The various ways used for short term planning are -

1. Undertand the work force

2. Analyse the out put of the work force.

3.Conduct a demend analysis (How much work needed to complete)

4. Conduct a supply analysis ( availability of resources)

5. Conduct financial analysis

In case of short term capacity planning the bottlenecks in production are determined and necessary corrective steps are taken accordingly.

The various ways to adjust short term capacity levels are as under -

1.Add or share equipment

2.Sell unused capacity

3.Change labour capacity and schedules - like over time working, out sourcing, temporary employees etc.

4.Change labour skill mix

5.Shift work for slack period

For example if the bottleneck is the production time and the plant is working in 2 shifts, then all 3 shifts working may be done to over come the bottleneck.

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