01-01-2013, 04:29 PM
Strategic Capacity Planning
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Capacity Planning
Capacity is the upper limit or ceiling on the load that an operating unit can handle.
The basic questions in capacity handling are:
What kind of capacity is needed?
How much is needed?
When is it needed?
Strategic Capacity Planning
The amount of resource inputs available relative to output requirements at a particular time
Capacity planning is a long-term strategic decision that establishes a firm's overall level of resources. Capacity decisions affect product lead times, customer responsiveness, operating costs, and a firm's ability to compete. Inadequate capacity can lose customers and limit growth. Excess capacity can drain a company's resources and prevent investments in more lucrative ventures. When to increase capacity and how much to increase capacity are critical decisions.
Three Basic Strategies
Capacity lead strategy. Capacity is expanded in anticipation of demand growth. This aggressive strategy is used to lure customers from competitors who are capacity constrained or to gain a foothold in a rapidly expanding market.
Capacity lag strategy
Capacity is increased after an increase in demand has been documented. This conservative strategy produces a higher return on investment but may lose customers in the process. It is used in industries with standard products and cost based or weak competition. The strategy assumes that lost customers will return from competitors after capacity has expanded.
[attachment=46060]
Capacity Planning
Capacity is the upper limit or ceiling on the load that an operating unit can handle.
The basic questions in capacity handling are:
What kind of capacity is needed?
How much is needed?
When is it needed?
Strategic Capacity Planning
The amount of resource inputs available relative to output requirements at a particular time
Capacity planning is a long-term strategic decision that establishes a firm's overall level of resources. Capacity decisions affect product lead times, customer responsiveness, operating costs, and a firm's ability to compete. Inadequate capacity can lose customers and limit growth. Excess capacity can drain a company's resources and prevent investments in more lucrative ventures. When to increase capacity and how much to increase capacity are critical decisions.
Three Basic Strategies
Capacity lead strategy. Capacity is expanded in anticipation of demand growth. This aggressive strategy is used to lure customers from competitors who are capacity constrained or to gain a foothold in a rapidly expanding market.
Capacity lag strategy
Capacity is increased after an increase in demand has been documented. This conservative strategy produces a higher return on investment but may lose customers in the process. It is used in industries with standard products and cost based or weak competition. The strategy assumes that lost customers will return from competitors after capacity has expanded.