BU385 Chapter 5: Strategic Capacity Planning
Document Summary
Capacity the upper limit on the workload that an operating unit can handle: usually measured as maximum production rate or throughput. I. e. the maximum # of motorcycles that can be assembled in a particular plant per shift: unit may refer to a plant, a machine, a department or a person, capacity decisions have different time frames: Long-term: 1-5 years, involves decisions regarding machines, plant size, etc. Medium-term: next 12 months, involves nature and level of workforce and development of annual operations plan. Short-term: up to 12 weeks, considers scheduling, immediate. Production rate normally measured in terms of the units of production per unit of time. Importance of long-term capacity: capacity directly impacts ability of company to meet future demand for products. Capacity essentially limits the rate of output possible: capacity affects operating costs. Capacity and demand requirements should be matched.
