The objective of capacity planning is to specify which level of capacity will meet market demands in a cost-efficient way. Capacity planning can be viewed in three time duration long range (greater than one year), intermediate range (the next 6 to 12 months). and short range (less than six months).
Our focus in the chapter long-range capacity planning where the firm makes its major investment decision . In addition to planning large chunks of capacity (such as a new factory). typical long-range capacity planning efforts also must address the demands for individual product lines individual plant capabilities and allocation of production throughout
the plant network. Typically these are carried out according to the following steps:
1. Forecast ale for each product line.
2. Forecast sale for individual products within each product line.
3. Calculate labor and equipment requirements to meet product line forecasts.
4. Project boor and equipment instabilities over he planing horizon.