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Thursday, May 20, 2010

Facility Capcity Planning - Steps by step process

Capacity refer as the ability to hold, receive, store, or accommodate. Capacity of a facility is its limiting capability to produce an output over a period of time.

Ex. The annual capacity of the TATA Nano plant is 100000 cars approximately. It means the production is limited to this productive capability over a period of time. 

Capacity planning can be defined as an approach for determining the overall capacity level of capital intensive resources, including facilities, equipment, and overall labor force size. 

Need of Facility Capacity Planning
  • To find the optimal capacity of the facility so that the total of costs of under-capacity and over-capacity is the minimum
  • To satisfy the future demand of products without any shortages
  • To keep the initial investment in the facility as low as possible to achieve lesser break-even volume
  • Investments in facility capacity are long-term and cannot be reversed easily over the period of time.
Steps by step process for Capacity Planning
  • Assessment of future capacity requirements
  • Assess existing capacity
  • Identify alternatives
  • Perform economical analysis
  • Examine key qualitative issues
  • Select best alternative
  • Implement alternative Monitor results

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