Capacity, Scheduling and Location Planning, Essay Example

Capacity planning, scheduling and planning of location is an integral part of process execution in organizations. In today’s globalized economy, maintaining the firm’s competitive edge, profits and market share can be influenced by capacity planning, scheduling of change and careful planning of location. The below five points were found the most crucial in the implementation process.

1. Capacity is usually defined by rate, however, time dimension needs to be considered before creating a long-term plan. Every organization needs to develop a metric to measure capacity, i.e. number of deliveries possible a day for a delivery firm, available rooms per night in the hospitality industry. Still, variances also need to be considered, and these are harder to predict in service industries than within manufacturing firms.
2. There are different approaches towards long term capacity planning: sometimes capacity planning is needed for multiple outputs, considering the life cycles of the separate products. Facility size planning is based on the market conditions, demand and the relationship between production costs, determined by the “economies of scale”. A larger facility that is not fully used would result in higher cost per unit figures.
3. Strategies of location planning needs to be based on the location of the firm’s market. Deliveries need to be economical and fast. To decide on the location, the management needs to consider the source of raw materials, the location of delivery addresses, cost of shipment, storage and the level of accessibility. Further, labor availability, taxation and regulation need to be carefully reviewed.
4. Schedule management is a tool that is used to successfully utilize capacity created. It is the timing element of capacity planning, and as it has various aspects, such as demand variation, harmonization of various resources and working hours, it is important to measure time needed for sequential operations needed for each job. Managers also need to consider bottlenecks in the sequential process. Schedule management is executed through an initial aggregate plan, detailing the approximate schedules of operation. It also helps reducing the impact of short-term variations on production. Areas of possible conflicts, delays need to be identified in the beginning of the planning process.
5. Yield management (revenue management) is a capacity and resource planning method that takes into consideration the highest revenue demand on the market and match it when possible. It was originally developed by American Airlines. It is suitable for planning when the capacity is fixed, perishable, sold in advance, there is a segmentable marketplace or uncertain demand. Further, it is a feasible approach when marginal sales costs are low and the cost of adding marginal capacity is high.