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Capacity Planning Manufacturing : Inventory can be used to cushion fluctuations in demand More focused on machinery as a constraint than people Services.

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Presentation on theme: "Capacity Planning Manufacturing : Inventory can be used to cushion fluctuations in demand More focused on machinery as a constraint than people Services."— Presentation transcript:

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2 Capacity Planning Manufacturing : Inventory can be used to cushion fluctuations in demand More focused on machinery as a constraint than people Services : No Inventory People are primary constraint

3 Planning Horizons Business Plan Production Plan Master Production Schedule Matl. Reqs. Plan (MRP) Individual Machine/ Workcenter LONG SHORT

4 Capacity must be matched carefully with Marketing strategy! America on(OFF)line - How NOT to plan!

5 AOL: Number of members on- line at once

6 Me? I thought YOU were going to tell operations!! Marketing Operations

7 How to Deal with Uneven Demand? Vary inventory Change Production Rate Change workforce size REACTIVE alternatives!!

8 Proactive/Aggressive Alternatives Complementary products Promotional campaigns Creative pricing

9 Two Capacity Expansion Strategies..... EXPANSIONIST Demand Forecast Capacity Time

10 Expansionist Strategy CONCEPT: Large, Infrequent jumps in capacity Stays ahead of demand ADVANTAGES: Lost Sales unlikely Economies of scale (construction and learning) Preempt Competition

11 Two Capacity Expansion Strategies..... WAIT-and-SEE Capacity Time

12 Two Capacity Expansion Strategies..... WAIT-and-SEE Demand Forecast Capacity Time

13 Two Capacity Expansion Strategies..... WAIT-and-SEE Demand Forecast Capacity Time

14 Wait and See Strategy CONCEPT: Small, Frequent jumps in capacity Lags behind demand, relying on short-term operations ADVANTAGES: Minimize risk Greater flexibility

15 Capacity Cushion Maximum Capacity (100%) Average Utilization Cushion


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