Description

Capacity planning falls under capacity management. It determines an organisation’s ability to meet the rigours of current and anticipated work by investing in their greatest asset: the resource pool. Capacity Planning is the determination and adjustment of an organisation’s ability to produce products or services to match demand. Capacity management is about matching capacity and demand. In many organisations, capacity does not evenly match demand. A campus book store has the bulk of its sales just prior to the start of each teaching period. For the remainder of the teaching period, sales are quite low. This is a significant mismatch in capacity because a college cannot afford to operate a large bookstore just to satisfy peak level demand and then remain idle from there on.

The management of short-to-medium capacity is not concerned with the details of individual products, but seeks to answer questions about how the budgeted output for the next year will be resourced and accomplished given the variations in demand. In order to do this effectively the organisation needs to look at demand broadly, summing different products into aggregate totals in order to obtain useful information at the budgetary level rather than the individual product level.