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