Capacity and Investment Planning

The most important aspect in manufacturing is to establish the correct installed capacity based on clear premises (Cycle Time, Line Balancing, Utilization, Working Hours, Defectives, Type-Mix, Set-ups, etc.). Once this is done, only then can the performance be measured to check if the installed capacity is being fully unitized. The investment planning then is done based on the sales forecast and the actual performance of the installed capacities. Therefore the sales forecasting accuracy also is very important to invest on a timely manner. Based on the past experience of the accuracies of the sales forecast, strategies can be developed for the investment planning to compensate the risk of having idling investments.