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The objective of strategic capacity planning is to provide an approach for determining the overall capacity level of labor-intensive resources.

Capacity planning is to be carried out keeping in mind future growth and expansion plans, market trends, sales forecasting etc. It is a simple task to plan the capacity in case of stable demand. But in practice the demand will be seldom stable. The fluctuation of demand creates problems regarding the procurement of resources to meet the customer demand.

4. demand is at its highest as long as product segments are within the circle

The second operation decision important for organization’s is capacity planning. Capacity planning and control is the task of setting the effective capacity of the operation so that it can respond to the demands placed upon it. This normally means determining how the operation should respond to fluctuations in demand. Operations managers usually distinguish between short, medium and long-term capacity decisions. For short- and medium-term capacity planning, the capacity level of the operation is adjusted within the fixed physical limits that are set by long-term capacity decisions. This is also referred to as aggregate planning and control because it is necessary to aggregate the various types of output from an operation into one figure

* Employees might decrease rate of production as demand decreases to create an impression of need and to preserve jobs

As Coral reviews the master schedule and the pending orders, she can see that given the current plan, they will not process enough subassemblies to cover the upcoming orders. The master schedule is a statement of exactly what will be produced. It must simultaneously satisfy the needs of sales and marketing and be feasible in terms of operations. Developing a master schedule that is close to the aggregate plan, yet still satisfies marketing and operations, is not an easy task. The aggregate plan was developed based on a strategy that maintained acceptable inventory and workforce

Stanton explained that he takes the marketing department's "forecasts and reduces it by 10% or so" (Krajewski, Malhotra,& Ritzman, 2013, p. 315). In fact, this information is used to prepare the monthly final assembly schedule (MPS). He decreases his demand forecasts by 15,000 units because he does not want to overstock. On the other hand, the marketing department wants Mr. Stanton to produce more units. In consequence, Mr. Stanton has caused the company to be backlogged, which is an issue with meeting customer demands.

The old system was outdated, which caused some of their suppliers to use their own production planning systems to forecast and meet anticipated demand. This is because CTC could only commit to firm orders for the first two weeks of an inventory forecast. Additional orders would be communicated to suppliers later electronically. This information might not have been acted on right away, and there was a possibility that the order may not be fulfilled due to shortage of resources along the supply

The first step in the basic planning process is setting objectives. Objectives should be both short-term and long-term performance targets. Short-term objectives define how to improve operations in current period while long-term goals force an organization to think through how actions in place will affect the company in the future (Gamble & Thompson, 2011). Goals must be specific, observable, measurable and achievable (Plunkett, Allen & Attner, 2013). Goals drive what resources and money are needed to meet the objectives. Once goals are set, managers must turn to any barriers in achieving the objectives.

In order to achieve excellent production capacity and reducing the overall costs the production manager has to find an optimal structure of aggregate planning which will help achieving qualitative and quantitative aspects of the organization.

“Determination of the quantity and timing of all of the production resources needed to produce the end items in a master production schedule” Gaither and Frazier and Frazier (1997)

There are constraints on capacity management and these are normally Time and Capacity. Time may be a constraint where a customer has a particular required delivery date. In this situation, capacity managers often "plan backwards". In other words, they allocate the final stage (operation) of the production tasks to the period where delivery is required; the penultimate task one period earlier and so on. This process helps identify whether there is sufficient time to meet the production demands and whether capacity needs to be increased, albeit temporarily.

2. What is the purpose of the “Management Reserve” shown in Figure 2? Does the amount shown appear to be realistic for a project this size? Why or why not?

In my career and personal life I have had many experiences with planning. Professionally, I have had direct experience with yearly goal planning. In the next few weeks I will be meeting with my Manager and setting goals and objectives for next year. My organization operates on a fiscal year schedule, October 1 – September 30. During this meeting with my Manager we will discuss any goals I would like to achieve, along with operational goals and tactical goals that may be assigned to me.

Aggregate planning is the process of developing, analyzing, and maintaining a preliminary, approximate schedule of the overall operations of an organization. The aggregate plan generally contains targeted sales forecasts, production levels, inventory levels, and customer backlogs. This schedule is intended to satisfy the demand forecast at a minimum cost. Properly done,