Lecture Introduction to operations management - Chapter 12: Capacity planning

In this chapter we will discuss: Facilities decisions, facilities strategy, sales & operations planning definition, cross-functional nature of S&OP, planning options, basic aggregate planning strategies, aggregate planning costs, aggregate planning example.

Contemporary Concepts and Cases

Chapter TwelveCapacity Planning 

Hierarchy of Capacity Decisions

(Fig 12.1)

Facilities decisions

Aggregate planning

Factors Affecting Facilities Strategy

Predicted demandCost of facilitiesLikely behavior of competitorsBusiness strategy

International considerations

How Much?: Strategies for

What Type?

Types of Facilities

Product­focused (55%) ­ computers, chain 

saws, dishwashersMarket­focused (30%) ­ electricity, bakeries

Process­focused (10%) ­ computer chips

General purpose (5%) – furniture, banking

Facilities that are considered fixed (cannot be expanded 

or reduced)

Cross-Functional Nature of S&OP

(made possible by concurrent planning)

resources.

7 Continue (go to 5) until you meet all constraints.

Options for Influencing

Level Load Strategy

Produce products and services at a 

constant rate  

Avoid making changes to 

operations

Table 12.1: Comparison of Chase

versus Level Strategy

Chas e 

End of Chapter Twelve