Importance of CAPACITY DECISION

As defined, capacity is a major determinant of operating

costs and is considered a ceiling on output. Therefore,
capacity decision is important. It results to potential
benefits from designing flexible systems, it can affect
competitiveness, it involves substantial financial and other
resources, and it results to a significant impact on the
organization’s chance to get future demands. Capacity
decision is strategic and long-term in nature although
there are three levels: long-term, intermediate term, and
short-term. Basically, it impacts all the areas of the
organization as it is basically the root of all operations.