chapter 2

• Capacity- refers to a system’s potential for producing goods or delivering services.
• Capacity planning is used to determine the amount of works an organization can do over a specific period of time
• three key inputs to capacity planning are

  1. the kind of capacity
  2. how much capacity will be needed?
  3. When it will be needed?
• 8 Determinants of effective capacity

  • Facilities- size and provision
  • product and service factors- more uniform the output
  • process factors-quantity capability
  • human factors- tasks that are needed in certain jobs
  • policy factors- management policy
  • operational factor- scheduling problem may occur
  • supply chain factors- questions: what impact will the changes have on suppliers, warehousing, transportation, and distributors?
  • external factors
• 3 types of capacity planning

  1. Workforce capacity planning- deals with human resources
  2. Product capacity planning- figure out production capacity to meet the changing demand of a product
  3. Tools capacity planning- helps to forecast how many resources you’ll need and how to allocate those resources at the right time
• (3) Capacity planning strategies help you to meet demand, cover your resource requirements and increase your team member productivity
• (3) Capacity planning strategies

  Lag strategy- consists of having enough resources to meet actual demand, not projected demand estimates. This capacity planning strategy is beneficial for smaller organizations that have low capacity requirements
• (3) capacity planning strategy

  Lead strategy- consists in having enough resources to meet demand forecasts. this is beneficial when demand increases, as your excess capacity can cover the increased demand
• (3) capacity planning strategy

  Match strategy- mix of lead and lag capacity planning strategies. Project managers need to monitor actual demand, demand planning forecasts and market trends to adjust capacity accordingly
• 4 capacity planning benefits

  • reduce costs
  • prevent stock-outs
  • reduces production lead time
  • eliminates excess capacity
• Capacity planning Strategy

  Helps with supply chain management
• Capacity planning Strategy (benefits)

  helps with resource management
• 8 Determinants of effective capacity

  • facilities
  • product and service factors
  • process factors
  • human factors
  • policy factors
  • operational factors
  • supply chain factors
  • external factors