Presentation on

Capacity Planning
Group 8 Members :

Harsh Parmar (127)

Astha Jain (137)
Shyam Nandanwar (155)
Harshal Rajput (161)
Kartik Ramesh Kumar (162)
Kalpesh Tailor (173)
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What is mean by Capacity Planning?
Definition

 In operations, management capacity is referred to as an amount of the input resources

available to produce relative output over a period of time.
 In general, term capacity is referred to as maximum production capacity, which can be
attained within a normal working schedule.

Objective of capacity planning

 To identify and solve capacity problem in a timely manner to meet consumer needs
 To maintain a balance between required capacity and available capacity
 The goal of capacity planning is to minimize this discrepancy.
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Needs for facility capacity planning

Cost
To find optimum capacity of
facility so that sum of costs is
minimum.
Profit
To keep initial investment in
facility as low as possible to
achieve lower break-even
volume.

Duration Demand
Investments in facility capacity To satisfy future demand of
are long-term and cannot be products without any shortages.
reversed easily.
 Types of Capacity

Design Capacity Effective Capacity Actual Capacity

Measures of Performance :

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Forecasting Methods Proper process
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quality control

Proper facility
By properly
location,
following
layout, and
environmental
internal
& pollution
working
norms
conditions

Ways of
increasing
effective
capacity
Good
coordination with Good training,
suppliers for high
timely & defect- motivation, less
free supplies & absenteeism &
proper high turnover
scheduling of on part of
products on workers
machines By making
products &
services as
uniform as
possible in
design
Best Operating Level 5

Example: Engineers Design engines and assembly lines to

operate an ideal or best operating level to maximize output and
minimize wear.

Average unit
Cost of Output
Under Utilization Over Utilization

Best Operating Level

Volume
Economies of scale and Diseconomies of scale
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Economies of scale and operating Curve level

Average
Cost Of 100unit Plant
Output
200unit Plant 400 unit Plant
300 unit plant

Diseconomies of scale start to take effect

Volume
 Case study

Neiman-Marcus, is an American chain of luxury department

stores headquartered in Dallas, Texas. The company deals in
premium fashion apparel and gifts through direct marketing
division like catalog .

About Neiman Marcus :

Since 1939, Neiman Marcus had been issuing an annual

Christmas catalog( unusual and extravagant gifts not sold in
its stores), which has been extremely popular, thanks to the
national media, who had been giving so much media
coverage to the catalog.

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 Actions Taken

0 Demand Forecasting from

the analysis of sales of past 02 Close relations with
suppliers

1 months

03 Move fast- moving items to

warehouses
04 Separate expensive multi
color conveyor for
segregation of gifts

0 Hired 300+ employees in

September and train them
0 Provide Incentives for
better performance

5 before Holiday Season

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 Results Obtained

 Despite spike in demand in the

month of November and December
NM shipped 90% of holiday order in
one day and 99 % of them in 2 days
with 99.5% accuracy.

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Thank you!