OPERATIONS COMPONENT REASSESSMENT

Operations Component Reassessment

Operations Component Reassessment

Introduction

The course of the study will focus on the different aspects associated with excessive capacity and insufficient efficiency. Both the excess and insufficient capacity incorporates negative and positive outcomes with each other. The study will analyze both the negative and positive aspects in the context with germane examples. The excess capacity which is also commonly known as over capacity is observed when actual output is less than the optimal output or in other words the quantity produced is lower than the maximum quantity that can be produced by utilizing the same resources.

There can be several reasons behind the excess capacity with demand factor being the most dominant one. Whereas, insufficient capacity is the complete opposite of the excess capacity in which the production is higher than the optimum production level. Insufficient capacity and excess capacity both can lead towards the deterioration in terms of delivery performance, increase in work in process, loss of goods, customer retention and time management becomes difficult, and most importantly the employees becomes frustrated due to long extensive working hours that arise due to insufficient capacity especially.

Discussion

To deal with the problems associated with both excess and insufficient capacity an intelligent capacity planning is necessary. In the past few decades, the emphasis put by the companies over the capacity planning has increased significantly (Jonsson 2002, pp. 89-95). Capacity planning has become a significant factor for the success of any business and company have started to emphasize on it due to various benefits like financial benefits that arise due to the efficient and effective management of the inventory, it also improves the production process by improving the planning system and material requirement system.

Insufficient capacity planning leads to the deterioration of the performance, it also increases the delivery time and increase the level of frustration among the employees due to extensive and long working hours. Excess capacity is also unnecessary and results in the higher cost of operations and productions that ultimately results in the higher cost of production. The incompetence of management to manage the capacity with the optimum level can create a barrier for achieving optimum profit and returns to the company.

Long-term capacity planning

Long term capacity planning refers to the primary strategic concerns that involve the key productions of the company's facilities. Furthermore, the long-term capacity problems associated with the decision making related to the position and location. Transferability and technology of the process to different products is also associated with long-term planning for capacity (Allspaw 2008, pp.139-149). The planning of long-term capacity is also required when short-term capacity planning is not sufficient. For example; if the company decides to start a extra shift in order to increase the output but fails to increase the output, means that the company needs to increase capital investment and extend current production facilities to achieve the desired outcome.

Short-Term Capacity Planning

Short term capacity planning involves the scheduling of labor shifts and maintain and balancing resources of the company's ...