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

List any three business areas in the umuc pizza shops, List three business ...

List three business areas and/or processes used in the UMUC Pizza shops that could be supported by an IT solution.

Product layout - connected flow, Product Layout - Connected Flow Where...

Product Layout - Connected Flow Where the demand for a single product is sufficiently high to warrant truly continuous operation (mass production for discrete items such as, c

Why scheduling resources is important, Of the six reasons that scheduling r...

Of the six reasons that scheduling resources is important, select which one of the six reasons appears to be the top priority and justify your position.

Explain responsibility of improving automobile loans, A loan manager for Ba...

A loan manager for Bank of Cascades has the responsibility of improving automobile loans. To assist her in this matter, she has compiled data on 428 cars and trucks. This data are

Explain why is it important to continuously update, Why is it important to ...

Why is it important to continuously update the implementation and communication of a strategic plan?

Process charts - process design, Process Charts - Process Design The ...

Process Charts - Process Design The process flow chart is probably the most commonly used means of recording, and comes in several variants. Each of them uses some, or all, o

The budget projections for the cost of computer hardware, The final element...

The final element of the information systems plan specifies resources required to carry it out. The capital budget should include projections for the cost of computer hardware, net

Explain how the project scope will be defined, The project scope planning p...

The project scope planning processes include all of the following EXCEPT: A. How the project scope will be defined B. How the requirements will be collected C. How the work brea

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