Capacity planning
From Wikipedia, the free encyclopedia
Capacity planning is the process of adjusting the capacity of an organization to do work in response to changing or predicted demands.
In the context of capacity planning, capacity is taken to mean the amount work that an organization is capable of completing in a given period of time. In a simple model, it might be calculated as (number of machines and/or workers) x (number of shifts) x (utilization) x (efficiency).
The demand for work an organization experiences will vary under many circumstances. Notable events that might cause the demand for work to vary greatly include starting a new organization, extending the operations of an existing business, considering additions or modifications to product lines, and introducing new techniques, equipment and materials.
Discrepancy between capacity of an organization and the demands of its customers results in an inefficiency, either in under-utilized resources or unfulfilled customers. The goal of capacity planning is to therefore minimize this discrepancy.
The broad classes of capacity planning are lead strategy, lag strategy, and match strategy.
The lead capacity strategy is adding capacity in anticipation of an increase in demand. Lead strategy is an aggressive strategy with the goal of luring customers away from the company’s competitors. The possible disadvantage to this strategy is that it often results in excess inventory, which is costly and often wasteful.
Lag strategy refers to adding capacity only after the company is running at full capacity or beyond due to increase in demand (North Carolina State University, 2006). This is a more conservative strategy that decreases the risk of waste but may result in the loss of possible customers.
The match strategy (also known as the tracking strategy) is adding capacity in small amounts in response to changing demand in the market. This is a more moderate strategy.
Capacity planning interacts with the discipline of Performance Engineering, both during the requirements and design activities of building a system, and when using performance monitoring as an input for managing capacity of deployed systems.
[edit] References
- North Carolina State University. (2006). Definitions: Capacity Planning and Capacity Strategy. Retrieved January 10, 2006
- Hill, Joyce. (2006). Capacity Requirements Planning. Retrieved January 10, 2006
- Krajewski, Lee J., & Ritzman, Larry P. (2005.) Operations Management; Processes and Value Chains. Upper Saddle River, New Jersey: Prentice Hall
