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5B. Capacity Management

By Anonymous - Posted on 28 December 2011

At each level, manufacturing develops priority plans to satisfy demand. However, without the resources to achieve the priority plan, the plan will be unworkable. Capacity management is concerned with supplying the necessary resources.

The term capacity, or plant capacity, is used to define the maximum rate of output that a plant is able to produce under a given set of assumed operating conditions. It is closely related to production rate. The assumed operating conditions refer to the number of shifts per day, number
of days in the week that the plant operates, employment levels, whether overtime is included or not, and so on.

Capacity planning is the process of determining the production capacity needed by an organization to meet changing demands for its products. In the context of capacity planning, "capacity" is the maximum amount of work that an organization is capable of completing in a given period of time.
Capacity is defined as the capability of a worker, machine, work center, plan or organization to produce output per period of time. Capacity is a rate of doing work, not the quantity of work done.

3 kinds of capacity are important: capacity available, capacity required & Load.
Capacity available is the capacity of a system or resource to produce a quantity of output in a given time period.
Capacity required is the capacity of a system or resource needed to produce a desired output in a given time.
Load is the amount of released and planned work assigned to a facility for a particular time period. It is the sum of all the required capacities.

Capacity management is the function of establishing, measuring, monitoring and adjusting limits or levels of capacity in order to execute all manufacturing schedules. As with all management processes, it consists of planning and control functions.

Capacity planning is the process of determining the resources required to meet the priority plan and the methods needed to make that capacity available. It takes place at each level of the priority planning system. These priority plans cannot be implemented, however, unless the firm has sufficient capacity to fulfil the demand.

Capacity control is the process of monitoring production output, comparing it with capacity plans and taking corrective action when needed.

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