What Is Capacity Planning

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Capacity Planning 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. Capacity planning is strategic in nature. Capacity is the rate of productive capability of a facility. Production managers are more concerned about capacity planning because, sufficient capacity is required to meet the customer demand in time, capacity affects the cost of efficiency of operations, capacity affects the scheduling system, capacity creation requires an investment. According to Matsson and Johnsson (2003), the extent of how capable a company is to use its resources to add value is called Capacity.…show more content…
Different levels of capacity planning are used at IKEA depending on the time frame of the planning. Central Mid Term Capacity planning which has a planning horizon of the nearest 1-2 years. Mid Term Capacity Planning to, for example, plan its capacity of transports, central warehouses and goods receptions at stores for the nearest 84 weeks. The Capacity need is therefore estimated in cubic meter, and would be most straight forward to calculate through aggregating forecasted volume for each article into a total capacity
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