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1. CH no 5
Strategic Capacity Planning for Products and
Services

2. Topic
 What is capacity?
 Capacity decision are strategic?
 Measuring capacity?
 Determine of effective capacity?

3. What is capacity
The maximum grade of output that is
basically strategic planning.

4. What is capacity
Different people have the different concept about the capacity that’s
why it is difficult to measure the capacity. 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.

5. Capacity decision are
strategic?
 Capacity decision are real impact of organization to
meet the future demand for the products & services.
 Capacity decision effect on operating cost.
 Capacity is usually major determine of initial cost.

6. Capacity decision are
strategic? Continue…
 Capacity decision often involved are long term
commitment of organization resources & some time is
difficult to take the long term decision.
 Capacity decision can effect the competitiveness.

7. Capacity decision are
strategic? Continue…
 Capacity effect ease of management.
 It is important to increase globalization but complexity in capacity
decision.
 In capacity decision are involved over organization financial
resources & other resources that help in capacity decision. It’s
necessary to plan the fair & advantage able decision.

8. Measuring capacity
 Capacity often refer upper limit on the rate of output.
 If we have the single product & services that is difficult to
measure the capacity.
 If we have measure the same thing that is difficult to
measure the capacity.

9. Measuring capacity
continue…
 If the multiple products & services are involved, as the
capacity based unit out is misleading.
 When the product produced per hour how much out
would be generated.

10. Measuring capacity
continue…
 Different business have different output & different
capacity measuring.
 When start the capacity measuring to defined the
clearly products & services design that should easy to
measure the capacity.

11. Use two functions to explore
the define of capacity
Design capacity
Effective capacity

12. Design capacity
Maximum rate of output is design for the process of products
& services for any organization operations.
(Facility process – Maximum rate)

13. Effective capacity
Design capacity means the personal allowance and other
allowance as like maintains allowance.
(Design capacity – Allowances)

14. Actual output
factors are directly effected of our output like the machine
breakdown , shutdown, shortage of material & the other
outside factor that cannot control.

15. Actual output
continue…
The two main factors & basic system to measuring capacity
in different way is:
 Efficiency
 Utilization

16. Efficiency
Actual output /effective capacity*100

17. Utilization
Actual output/design capacity*100

18. Determine of effective
capacity?
 Facilities
 Product & service factors
 Process factors
 Human factors

19. Determine of effective
capacity? continue…
 Policies factors
 External factors
 Operational factors
 Supply chain factors

20. Facilities
To design of facility, including the size provision the expansion is the key .
The three main things are:
 Design
 Layout
 Environment

21. Product & service factors
 Product & services design can grand influence capacity.
 When plan the product & services design that easily to produced.
 If the product & services are similar that should be faster.
 If the same output rate that same standardization of product is same.

22. Process factors
 In production area how much quantity to produced products.
 How much you capable to produced the product, how much
strong to produced the product, how many time to reprocess the
product.
 Use how much time hour to produced that product.

23. Human factors
 How much they have the skill worker, experienced work,
personality workers, timely worker to full fil the job content task.
 How much you have the potential to produced the product in some
hours.
 The company turnover employee are effect the company output
ratio.

24. Policies factors
What is rules & regulation to produced the product &
services capacity .

25. External factors
 In attitude business plan is directly affected the company
productivity & capacity.
 Products design labor & other externals factors are
affected the capacity.

26. Operational factors
 The operations that are directly effect on output.
 Things are directly effect are miss management, stocking,
inventory & late delivery is major these thongs are
directly effected on the capacity of the output.

27. Supply chain factors
 Gape b/t the capacity, supplier & warehouse.
 If the warehouse, supplier is increase the capacity of
output is increase anyway if the decrease the capacity is
completely opposite.