Capacity Planning
Determining Capacity Requirements
Capacity planning decisions involve both long-term and short-term considerations. Long-term considerations relate to overall level of capacity, such as facility size; short-term considerations relate to probable variations in capacity requirements created by such things as seasonal, random, and irregular fluctuations in demand. Because the time intervals covered by each of these categories can vary significantly from industry to industry, it would be misleading to put times on the intervals. However, the distinction will serve as a framework within which to discuss capacity planning. Long-term capacity needs require forecasting demand over a time horizon and then converting those forecasts into capacity requirements. Figure 5.1 illustrates some basic demand patterns that might be identified by a forecast. In addition to basic patterns there are more complex patterns, such as a combination of cycles and trends. When trends are identified, the fundamental issues are (1) how long the trend might persist, because few things last forever, and (2) the slope of the trend. If cycles are identified, interest focuses on (1) the approximate length of the cycles and (2) the amplitude of the cycles (i.e., deviation from average). Short-term capacity needs are less concerned with cycles or trends than with seasonal variations and other variations from average. These deviations are particularly important because they can place a severe strain on a system's ability to satisfy demand at some times and yet result in idle capacity at other times.
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FIGURE 5.1
Common demand patterns
An organization can identify seasonal patterns using standard forecasting techniques. Although commonly thought of as annual fluctuations, seasonal variations are also reflected in monthly, weekly, and even daily capacity requirements. Table 5.3 provides some examples of items that tend to exhibit seasonal demand patterns. When time intervals
Capacity planning decisions involve both long-term and short-term considerations. Long-term considerations relate to overall level of capacity, such as facility size; short-term considerations relate to probable variations in capacity requirements created by such things as seasonal, random, and irregular fluctuations in demand. Because the time intervals covered by each of these categories can vary significantly from industry to industry, it would be misleading to put times on the intervals. However, the distinction will serve as a framework within which to discuss capacity planning. Long-term capacity needs require forecasting demand over a time horizon and then converting those forecasts into capacity requirements. Figure 5.1 illustrates some basic demand patterns that might be identified by a forecast. In addition to basic patterns there are more complex patterns, such as a combination of cycles and trends. When trends are identified, the fundamental issues are (1) how long the trend might persist, because few things last forever, and (2) the slope of the trend. If cycles are identified, interest focuses on (1) the approximate length of the cycles and (2) the amplitude of the cycles (i.e., deviation from average). Short-term capacity needs are less concerned with cycles or trends than with seasonal variations and other variations from average. These deviations are particularly important because they can place a severe strain on a system's ability to satisfy demand at some times and yet result in idle capacity at other times.
p. 191
FIGURE 5.1
Common demand patterns
An organization can identify seasonal patterns using standard forecasting techniques. Although commonly thought of as annual fluctuations, seasonal variations are also reflected in monthly, weekly, and even daily capacity requirements. Table 5.3 provides some examples of items that tend to exhibit seasonal demand patterns. When time intervals