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Part Three
Planning and control
For any capacity plan to meet demand as it occurs, its cumulative production line must
always lie above the cumulative demand line. This makes it a straightforward task to judge
the adequacy of a plan, simply by looking at its cumulative representation. An impression of
the inventory implications can also be gained from a cumulative representation by judging the
area between the cumulative production and demand curves. This represents the amount of
inventory carried over the period. Figure 11.14 illustrates an adequate level capacity plan for
the chocolate manufacturer, together with the costs of carrying inventory. It is assumed that
inventory costs £2 per tonne per day to keep in storage. The average inventory each month
is taken to be the average of the beginning- and end-of-month inventory levels, and the
Figure 11.14 A level capacity plan which meets demand at all times during the year