Capacity planning Essay

WHAT IS cognitive content cooking?Capacity can be defined as the ability to hold, receive, store, or accommodate a measure of an governances ability to provide customers with the look ated services or goods in the amount call for and in a timely manner. Capacity visualisening is the process of de vergeining the harvest-festivalion mental ability requisite by an organization to meet changing demand for its products. The objectives of capableness readying areTo identify and sour cogency problem in a timely manner to meet consumer needs. To maintain a brace between required skill and available capacity. The goal of capacity training is to minimize this discrepancy.Capacity is exert out (number of machines or workers) (number of shifts) (utilization) (efficiency).THE NEED FOR readiness PLANNINGCapacity planning is the first step when an organization pertinacious to produce more or a new product. Once capacity is evaluated and a need for a new expanded facility is d etermined, facility location and process technology activities occur. Too much capacity would require exploring ways to reduce capacity, such as temporarily closing, selling, or consolidating facilities. Consolidation might deal relocation, a combining of technologies, or a rearrangement of equipment and processes. Capacity planning is done in order to idea whether the demand is higher than capacity or lower thancapacity. That is compare demand versus capacity. It helps an organization to identify and plan the actions necessary to meet customers present and future tense demand.HOW IS CAPACITY MEASURED?For some organization capacity is simple to measure. General Motors Corporation can use numbers of automobiles per year. But what about organization whose product lines are more diverse? For these firms, it is hard to find a common unit of return. As a substitute, capacity can be uttered in name of input. A legal potency may express capacity in terms of the number of attorneys em ployed per year. A custom business line shop or an auto repair 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 business. administration banner Output Automobile manufacturer verse of autos Steel producer Tones of steel Power company Megawatts of electricity Input Airline Numbers of lavatory Hospital Number of beds Tax office Number of accountantsCAPACITY PLANNING DECISIONCapacity planning normally involves the following activitiesAssessing existing capacity.Forecasting capacity needs.Identifying alternative ways to modify capacity.Evaluating financial, economical, and technological capacity alternatives.Selecting a capacity alternative most suited to achieving strategic mission.THREE STEPS OF CAPACITY PLANNINGDetermine Service Level RequirementsThe first step on the capacity planning process is to categorize the work done by carcasss and t o quantify users expectation for how the work gets down.Define workloadsDetermine the unit of workIdentify service trains for each workloadAnalyze 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 overall resources usages.Measure resource usages by workloadIdentify components of response timePlanning for futureFinally, using forecasts of future business activity, future system requirements are determined. Implementing the required changes in system configuring pull up stakes ensure that sufficient capacity will be available to maintain service level, even as circumstanced change in the future. Determine future processing requirementsPlan future system configurationSTRATIGES FOR MODIFYING CAPACITYAfter existing and future capacity requirements are assessed, alternative ways of modifying capacity must be identified. Capacity refers to a systems potent ial for producing goods or delivering services over a qualify time interval. Capacity planning involves long-term and short term cipherations. Long-term considerations relate to the overall level of capacity short-run considerations relate to variations in capacityrequirements due to seasonal, random, and irregular fluctuations in demand.Excess capacity arises when actual production is less 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 supply to the market. Excess capacity is ineffective and will cause manufacturers to incur extra be or lose market share.Short-term Responses-For short-term periods of up to one year, fundamental capacity id fixed. Major facilities are seldom opened or unlikeable on a regular monthly or yearly basis. Many short-term adjustments for increasing or decreasing capacity are possible, however. Which adjustment to make depended on whether the convers ion process is primarily labour-or capital-intensive and whether the product is one that can be stored in inventory.Long-term Responses-Expansion from World War II by 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. Organization today cannot be locked into thinking only about expanding the resource base they must also consider optimal approaches to contracting it.Example- A warehousing act foresees the need for an additional 100,000 cheering feet of place by the end of the next five year. One option is to add an additional 50,000 square feet straight and another 50,000 square feet two year from now. Another option is to add the entire 100,000 square feet now. Estimated costs for building the entire addition now are $50/square foot. If expanded incrementally, the initial 50,000 square feet will cost $60/square foot. The 50,000 square feet to be added later a re estimated at $80/square foot. Which alternative is better? At a minimum, the lower construction costs plus inordinateness 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? pledge value analysis 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. secede even analysis to determine the minimum break even volumes of production. Linear programming this is helpful in determining the optimum product mix for maximizing contribution, considering the capacity constraints. Computers simulation it is helpful to determine the do of various scheduling policies. Decision tree analysis this can be applied for long term capacity pr oblems.WHAT ARE ECONOMIES OF SCALE?It is well known principle of economics. It indicates the relationship 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 fall 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 management 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 uneconomical management due to largeness of operation and resultant lack of coordination. Overuse of machineries and break down of framework handling equipments Over hiring of employees, or excessive overtime.Service slowdowns due to increasing complexitiesIncrease in case problems because of mismanagement 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