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Chapter 11 Capacity planning and control 327
Figure 11.18 Capacity planning and control as a dynamic sequence of decisions
The dynamics of capacity planning and control
Our emphasis so far has been on the planning aspects of capacity management. In practice,
the management of capacity is a far more dynamic process which involves controlling and
reacting to actual demand and actual capacity as it occurs. The capacity control process can be
seen as a sequence of partially reactive capacity decision processes as shown in Figure 11.18.
At the beginning of each period, operations management considers its forecasts of demand,
its understanding of current capacity and, if appropriate, how much inventory has been
carried forward from the previous period. Based on all this information, it makes plans
for the following period’s capacity. During the next period, demand might or might not be
as forecast and the actual capacity of the operation might or might not turn out as planned.
But whatever the actual conditions during that period, at the beginning of the next period
the same types of decisions must be made, in the light of the new circumstances.
Summary answers to key questions
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➤ What is capacity planning and control?
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It is the way operations organize the level of value-added activity which they can achieve under
normal operating conditions over a period of time.
It is usual to distinguish between long-, medium- and short-term capacity decisions. Mediumand
short-term capacity management where the capacity level of the organization is adjusted
within the fixed physical limits which are set by long-term capacity decisions is sometimes
called aggregate planning and control.