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TI Capacity Planning: A Case Study From Cigarette Production

International
Journal of
1983 MCB 2024
10.1108 Finlay, Operations
JOUR 3 1 0144-3577 1983 /01 UP 19 33 /01
/eb054688 P.N. &
/01 Ltd /04
Production
Management
It is conventional for a manufacturing company to equip itself to cope with a demand greater
than that considered most likely to arise. Often the costs associated with excess capacity are not
high, and so little energy is expended on determining least‐cost solutions and options close to
them. Increases in machinery costs in the mid 1970s necessitated one cigarette manufacturer to
AB rethink its policy towards machinery purchase; in particular that governing the size of its
machinery contingency allowance—the machinery to hold over and above that required to meet
the most likely forecast of demand. This article describes the background to the reframing of
this policy on machinery acquisition, including an analysis of the structure of demand for
cigarettes and ways of achieving an appropriate level of supply.
UR https://doi.org/10.1108/eb054688