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

Presume semi-annual coupon payments, What is the yield to maturity of a 16-...

What is the yield to maturity of a 16-year bond that pays a coupon rate of 8% per year, has a $1,000 par value, and is currently priced at $916? Round your answer to the nearest wh

Calculate seasonal indices using all of the data, Attendance at Los Angeles...

Attendance at Los Angeles's newest Disneylike attraction, Vacation World, has been as follows- Quarter Guest in Thousands Quarter Guest in Thousands Winter 07 73 Summer 08 12

Explain car rental agency that calculates rental charges, Create a project ...

Create a project for the local car rental agency that calculates rental charges. The agency that calculates $15 per day plus $0.12 per mile. Form: Use text boxes for the customer n

Substitute favourable market unfavourable market build, Karen Villagomez, p...

Karen Villagomez, president of Wright Industries, is considering whether to build a manufacturing plant in the Ozarks. Her decision is summarized in the following table: Alternativ

Explain human resource strategic partner''s specialized, Is the Human Resou...

Is the Human Resource strategic partner's specialized approach a little boring to the employees and the organization?

Explain how many pounds of pepperoni would you order, Charlie's Pizza order...

Charlie's Pizza orders all of its pepperoni, olives, anchovies, and mozzarella cheese to be shipped directly from Italy. An American distributor stops by every eight weeks to take

Examine any new products in this marketplace, Assess how technology and the...

Assess how technology and the changing demands of customers have impacted the movie rental business. Suggest a strategy for Netflix's to prevent a new entrant into the marketplace

SWOT analysis of McDonald''s order process, Please help with SWOT analysis ...

Please help with SWOT analysis of Mcdonald''s ordering process

Order qualifiers - operations strategy, Order Qualifiers - Operations Strat...

Order Qualifiers - Operations Strategy These are not essential to winning business in their own right. They may however, determine the entry level whereby the organisation is

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