Capacity- The upper limit or ceiling on the load that an operating unit can handle.
- maximum capability of an entity to produce.
Planning- strategic decision that establishes a firm’s overall level of re- sources.
The goal of strategic capacity planning is to achieve a match between the long-term
supply capabilities of an organization and the predicted level of long-term demand.
strategic decision that establishes a firm’s overall level of re- sources.
Strategic Capacity Planning for Products and Services
5.2 CAPACITY DECISIONS ARE STRATEGIC
1. Capacity decisions have a real impact on the ability of the organization to meet future
demands for products and services;
2. Capacity decisions affect operating costs.
3. Capacity is usually a major determinant of initial cost.
● Typically, the greater the capacity of a productive unit, the greater its cost
4. Capacity decisions often involve long-term commitment of resources and the fact that,
once they are implemented, those decisions may be difficult or impossible to modify
without incurring major costs
5. Capacity decisions can affect competitiveness.
6. Capacity affects the ease of management
7. Globalization has increased the importance and the complexity of capacity decisions.
8. Because capacity decisions often involve substantial financial and other resources, it is
necessary to plan for them far in advance.
Strategic Capacity Planning for Products and Services
5.10 CONSTRAINT MANAGEMENT
I will be Describing the steps that are used to resolve constraint issues.
Constraint Something that limits the performance of a process or system in achieving its Goals.
In short these are hindrances problems or situations that stops us from executing
or implementing our plans
There are seven categories of constraints:
Market: Insufficient demand. Example, online shopping in demand to physical shop
Resource: Too little of one or more resources (e.g., workers, equipment, and space)
Material: Too little of one or more materials.
- Materials availability, they bought outside of the country
Financial: Insufficient funds.
Supplier: Unreliable, long lead time, substandard quality.
Knowledge or competency: Needed knowledge or skills missing or incomplete.
Policy: Laws or regulations interfere.
Constraint issues can be resolved by using the following five steps:1
- maximum capability of an entity to produce.
Planning- strategic decision that establishes a firm’s overall level of re- sources.
The goal of strategic capacity planning is to achieve a match between the long-term
supply capabilities of an organization and the predicted level of long-term demand.
strategic decision that establishes a firm’s overall level of re- sources.
Strategic Capacity Planning for Products and Services
5.2 CAPACITY DECISIONS ARE STRATEGIC
1. Capacity decisions have a real impact on the ability of the organization to meet future
demands for products and services;
2. Capacity decisions affect operating costs.
3. Capacity is usually a major determinant of initial cost.
● Typically, the greater the capacity of a productive unit, the greater its cost
4. Capacity decisions often involve long-term commitment of resources and the fact that,
once they are implemented, those decisions may be difficult or impossible to modify
without incurring major costs
5. Capacity decisions can affect competitiveness.
6. Capacity affects the ease of management
7. Globalization has increased the importance and the complexity of capacity decisions.
8. Because capacity decisions often involve substantial financial and other resources, it is
necessary to plan for them far in advance.
Strategic Capacity Planning for Products and Services
5.10 CONSTRAINT MANAGEMENT
I will be Describing the steps that are used to resolve constraint issues.
Constraint Something that limits the performance of a process or system in achieving its Goals.
In short these are hindrances problems or situations that stops us from executing
or implementing our plans
There are seven categories of constraints:
Market: Insufficient demand. Example, online shopping in demand to physical shop
Resource: Too little of one or more resources (e.g., workers, equipment, and space)
Material: Too little of one or more materials.
- Materials availability, they bought outside of the country
Financial: Insufficient funds.
Supplier: Unreliable, long lead time, substandard quality.
Knowledge or competency: Needed knowledge or skills missing or incomplete.
Policy: Laws or regulations interfere.
Constraint issues can be resolved by using the following five steps:1
