CAPACITY PLANNING

BY
MR. M. G. GADGE
ASSISTANT PROFESSOR,
DEPARTMENT OF MECHANICAL ENGINEERING,
VIIT, PUNE
 CONTENT
Introduction

Measures of Capacity

Factors Influencing Effective Capacity

Capacity Planning

Best operating level

Economies of scale
 INTRODUCTION
• Capacity Planning is the process of determining the production capacity needed by

organization to meet changing demands for its products

• Maximum rate of output of a process or system

• It is rate of productive capability of facilities

• Match the level of operations to the level of demand

 MEASURES OF CAPACITY
Design Capacity- maximum output in a given period under ideal condition. For e.g.- project

engineer design a machine to run at 150 parts per minutes

Effective Capacity: Output expected by the company under current operations constraints.

System or Effective efficiency = Actual output / Effective Capacity

% Utilization = Actual output / Design Capacity

 CAPACITY PLANNING

• Forecast Demand for one to five years Year Units

1 3400
• Calculate capacity requirements to meet forecast demand 2 4100
3 3800
• Measured current capacity 4 4235
5 5890
• Decide how the gap in capacity will be bridged 6 5080
7 6367
8 6552
9 7436
10 6980
FACTORS INFLUENCING EFFECTIVE CAPACITY
• FORECASTING OF DEMAND

• PLANT AND LABOUR EFFICIENCY

• SUBCONTRACTING

• MULTIPLE SHIFT OPERATION

• MANAGEMENT POLICY
 CAPACITY REQUIREMENT NUMERICAL
numerical- manufacture produce a tomato sauce in small and family-sized bottles, with following
demands.
YEAR 1 YEAR 2 YEAR 3 YEAR 4
Small (000) 145 169 201 241
Family (000) 115 138 172 202

Three 100000 units-per year machines are available for small bottle production. 2 operators are required
per machine
Two-124000 units-per year machines are available for family sized bottle production. 3 operators are
required per machine.
How much capacity is used and what are the machine and labor utilization
Machine Capacity-300000 (100000/machine) for small size bottle
Machine Capacity-240000 (120000/machine) for family size bottle
Labor availability- 6 (2operator/machine) small size bottle
Labor availability- 6 (3operator/machine) for family size bottle
Percentage of capacity used for small size (year-1)= 145000/300000=0.4833=48.33%
Percentage of capacity used for family size (year-1)= 115000/240000=0.4833=47.92%
Machine required for family size bottle = 1150000/120000=0.96
Labor required for family size bottle = 0.96* 3/ machine= 2.88==3 operator