strategy what are we moving towards, where are we going ( normal a 5 year plan) all organization must be thinking into the future and where they want to be. true Capacity Planning how much a company can handle (ex IUS building, class size, parking lot) the investment in things that would effect are output Capacity the upper  limit or ceiling on the load that operating unit can handle Delimans excited do to compasity - it takes time its not emedited if we have more capacity then demand  if you have more demand then capacity we lose money lose market share Capacity vs Load - is a rate at which work is drawn from the system - is the volume of work in the system (how much we are dumping into the system) Ex Funnel strategic capacity planninng GOAL to achieve a match between the long term supply capabilities of an organization and the predicted level of long term demand capacity planning questions what kind of capacity is needed? How much is needed to match demand? When is it needed? a no constraint already has extra capacity sometime paying a premium to fix a constraint can pay off in the long run true Acutal output the rate of output actually achieved it cannot exceed effective capacity design and effective  capacity effeciency- is always larger by % - the maximum output rate or service capacity an operation, process , or facility is disgned for - design capacity minus allowance such as time, and maintenance capacity buffers (cushion) extra capacity to offset demand uncertainty capacity cushion = 100% Utilization -time service capacity planning challenges the need to be near customers the i anbility to store service demand management strategies strategies used to offset capacity limitations and that are intended to achieve a closer match between supply and demand in House or Outsource and factor to consider Organization must always ask decide whether to produce a good or servie itself or outsource ( make or buy discsions) -is it a constraint -available capacity expertise quality considerations developing capacity alternatives things that can be done to enhance capacity management design flexibility into system take stage of life cycle into account take a "big picture" approach design capacity effective capacity the maxium designed service capacity or output rate  design capacity minus allowance such as personal time, equipment maintenance, delays due to scheduling problems, and changing the mix of products Efficiency= Utilization= Actual output/effective capacity Actual outputs/design capacity cost volume analysis focuses on the relationship between cost, revenue, and volume of output Break Even Point (BEP) The volume of output at which total cost and total revenue are equal