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

Explain assess how southwest airlines culture is different, "Southwest Airl...

"Southwest Airlines" Please respond to the following: Assess how Southwest Airlines culture is different from other airline competitors and the resulting impact on business perf

Explain equal employment and affirmative action, Select a business of your ...

Select a business of your choice and visit their websites. From the website only, can you determine if the company supports workplace diversity, equal employment, affirmative actio

Explain the advantages of franchising, Of all the advantages of franchising...

Of all the advantages of franchising, which one would appeal to you as an entrepreneur? Which disadvantages would you dislike the most and why?

What kind of financial ratio might provide insight, Mary Ann has always lov...

Mary Ann has always loved to cook and is interested in starting a catering business. Being aware of the failure rate of new businesses, she is considering buying an existing cateri

Explain the size and timing of planned-order, A firm that produces wood shu...

A firm that produces wood shutters and bookcases has received two orders for shutters: one for 100 shutters and one for 150 shutters. The 100-unit order is due at the start of week

Explain operations management definiton of logistics, Netflix would be an e...

Netflix would be an example of which of the following approaches to managing customer induced variation? Cost penalties Uncompromised reduction Classic reduction Classic accomm

Coca colas change in sales remain competitive and profitable, How would you...

How would you respond to Coca Cola's change in sales policy? How would you ensure Pepsi's board that this response will allow you to remain competitive and profitable?

Explain how do mncs analyze this risk, In the context of International busi...

In the context of International business, what is meant by the term Cpolitical risk? In general, how do MNCs analyze this risk?

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