YUSI, Reyne L.

A333
Why is capacity planning important in Operations Management? Answer in not less than
5 sentences.

Entities, especially manufacturing businesses need to know how effective and

efficient their overall performance, especially their production is. They should know the
limits and maximum range of their production as this could help them in accommodating
and serving their clients. This is where capacity planning enters the picture. It is very
useful to the entities as it ensures that the operating costs are maintained at a minimum
level and to avoid over production that can cause losses to the entities. With the help of
capacity planning, knowing their daily average production and their maximum capacity,
they can easily know if they can cater more clients, determine optimum use of
resources and be able to make good decisions for the entity. It also ensures that the
entities remain competitive and can achieve a long-term growth plan.