Mercado, Alissa Mae H. Dr. Flor G. Mangalino
BM 322 TTH 1:20pm – 2:50pm
Why is capacity planning important in Operations Management?
Capacity planning is the process of determining the production capacity needed by an
organization to meet changing demands for its products. In the context of capacity
planning, design capacity is the maximum amount of work that an organization is
capable of completing in a given period.
Capacity planning helps businesses with budgeting and scaling so they can identify
their optimal levels of operations:
• Budgeting benefits: Capacity planning helps determine how services are offered,
and the appropriate time frames and staff required to meet current demand and
cover all operational costs. This is an important consideration when establishing
yearly budgets to effectively allocate money for expenses. The use of demand
planning software and demand forecasting software helps with developing
financial projections.
• Scaling benefits: If a business is considering taking on more staff to help meet
anticipated demand based on their capacity plans, they might find that aside from