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CAPACITY PLANNING

BECK MANUFACTURING AND PLANT CAPACITY

BUS644: OPERATIONS MANAGEMENT

KIMBERLY JOHNSON

ASHFORD UNIVERSITY

MICHAEL SNELL
FEBRUARY 3, 2014

Capacity planning is a process used to determine production capacity needed by the organization to meet demands for its products. Capacity can be defined as the measurement of the organization’s ability to provide the demand for services or goods requested in a timely manner. Capacity may also be defined as the maximum rate of production. The decisions of management can affect capacity. Most decisions that affect capacity are increases in time and the quality of preventive maintenance which may increase capacity by reducing unexpected equipment failure and changing production rate. Capacity decisions are critical to the organization’s success because they allocate significant resources to assets that usually cannot be changed easily or economically. Capacity decision is based on the best estimate of the future and should be made so that as much flexibility as possible can be retained. If capacity is not obtain in the proper amount, too much capacity can mean that the organization invested in resources where not needed but if capacity is too small, potential sales and market share are lost. Capacity is the maximum amount of work that the organization is capable of completing in any given period. Effective capacity is the maximum amount of work the organization is capable of completing in a period due to constraints like quality problems, material handling, etc. Any discrepancy is capacity of the organization and the demands of customers result in inefficiency, in either calculation of capacity of each machine center. Becker Manufacturing runs two 8 – hour shifts per day with a third shift for maintenance. The industrial engineering department has provided the following data on

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