Role or forecasting in capacity planning, Operation Management

Assignment Help:

Role or Forecasting in capacity Planning

The marketing department plays a major role in providing demand forecasts based on which both long term as well as short term capacity planning can be done. Figure below shows the different demand patterns or trends possible in a demand forecast provided by the marketing department.

Four types of general trends are possible in demand forecasts growth decline cyclical and stable. The growth trend in demand forecast is an indicator of capacity expansion requirements in the future. Under this situation, provisions should be made for capacity expansion in the future. For example the area of the factory premises should be kept large enough when the plant is built keeping in view the future expansion possible. The decline rend of a product indicates that in the future the company will have to think of unitizing the existing capacity in the processing of some new products. The cyclical demand trend of a product requires the company to produce some other product which has and opposite cyclical demand so that the crest of the demand pattern of on e product can be balanced by the troughs of the demand pattern of another product.

Figure shows two products A and B which have opposite cyclical demand patterns so that the combined demand pattern of the two products is fairly stable. For example a company manufacturing water cooler as well as blower room heater will experience this kind of a situation.

1156_Role or Forecasting in capacity Planning.png

Figure: Trends in Demand Forecasts

Capacity expansion is not the solution for growing demand trend. Other  possible  measures are  meeting  the growing  demand by overtime on part of workers and running the  plant  in more shifts  giving subcontracts to  other small  manufacturers. Or accumulating  inventory during  periods  of low  demand  for utilization  during  period  of high demand. Mature products and services have  more  predictable demand  patterns compared to new  products.


Related Discussions:- Role or forecasting in capacity planning

Describe henry did tax work for joe electrician, Henry did tax work for Joe...

Henry did tax work for Joe electrician. Bill was $900, Hnery reduced it to $600. Joe did wrok for Henry at cost of $700. Henry gave Joe a check for $400, said remaining $300 was th

Explain networking components for an rfid system, Identify the cost of hard...

Identify the cost of hardware, software, and networking components for an RFID system for your company. What factors should be considered? What are the key decisions that have to b

Explain the strategic supply wheel according to cousins, Q. Explain the str...

Q. Explain the strategic supply wheel according to Cousins? The 'strategic supply wheel' suggests that this is imperative to keep an alignment of corporate goals along with the

Calculate first''s rop, First printing has contracts with legal firms in Sa...

First printing has contracts with legal firms in San Francisco to copy their court documents. Daily demand is almost constant at 12,500 pages of documents. The lead time for paper

Plant layout, what are the factors affecting plant layout

what are the factors affecting plant layout

In detail identify three other supply chain issues, a) Determine the total ...

a) Determine the total cost (purchase price + delivery cost) to make a Blaster unit using these woofer and tweeter components and each delivery combination option? W1 & T1: W2 &

Operating budget, The copy center in the College of Business at State Unive...

The copy center in the College of Business at State University has become an increasingly contentious item among the college administration. Department heads have complained to

Explain when a firm is able to move to an assemble, When a firm is able to ...

When a firm is able to move to an assemble- To- Order capability from a make -To- Stock approach, there can be a substantial reduction in the number of things that must be tracked

Explain about the level capacity strategy, Explain about the level capacity...

Explain about the level capacity strategy. Level capacity strategy: The organisation produces or manufactures at a constant rate of output avoiding any changes or fluctua

Factors affecting productivity improvement, Factors Affecting Productivity ...

Factors Affecting Productivity Improvement  As has already been stressed, productivity improvement is not simply concerned with finding ways of making people work harder, nor

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd