Capacity is defined, in the context of manufacturing, as the maximum rate of production and the ability to yield production. Capacity planning is concerned with defining all resources and factors that affect the ability of a manufacturer to produce including equipment, labor, space, and time (i.e., number of shifts). The outcome of capacity planning is an investment strategy and resource utilization plan defined based on optimal policies that try to fulfill demand and its variation while considering various system’s operational objectives and constraints.
Theory and Application
Capacity planning is motivated by manufacturers’ desire to meet customers’ demand. Uncertainty of the customer’s demand increases the complexity of capacity planning. Capacity planning is often confused with scheduling since both deal with managing production to meet demand. However, a major distinction between both activities is that capacity planning is...
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