Operations Management, Binder Ready Version: An Integrated Approach
Operations Management, Binder Ready Version: An Integrated Approach
6th Edition
ISBN: 9781118952610
Author: R. Dan Reid, Nada R. Sanders
Publisher: WILEY
Question
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Chapter 9, Problem 1DQ
Summary Introduction

Interpretation: The importance of capacity planning needs to be discussed.

Concept Introduction: Capacity planning is a process demonstrating the output rate which can be accomplished by the facility.

Expert Solution & Answer
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Explanation of Solution

Capacity planning is important because the company will not have enough output capability to meet the customer's demand if the capacity is not planned correctly. For instance in a university that is not able to provide enough courses to the students or having a few students in the classroom. In both cases, the cost will be more to the university. Another example is of Bakery like if the bakery has not enough capacity then it will not be able to produce more baked goods for meeting the customer's demand. The bakery will go out of stock or the customers will start going to another bakery, and it will be a loss for the bakery for not taking the befits of the demands On the other hand if there is a large capacity then bakery will cost unnecessary for the capacity which is not being used and it will have unnecessary high operating cost.

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