EULOGIO

“AMANG” RODRIGUEZ INSTITUTE OF SCIENCE AND TECHNOLOGY

COLLEGE OF HOSPITALITY AND TOURISM MANAGEMENT

BS TOURISM MANAGEMENT


BMECOPMN – Operations Management in Tourism and Hospitality
Industry


CAPACITY PLANNING AND CONTROL





Submitted by:

DELA CRUZ, LEX BRYAN
DELA CRUZ, PRINCESS
JIMENEZ, MARY ROSE
NAVARETTE, AUBREY
SUBIA, JHAY ANNE
VILLARUEL, JENY BABE

Submitted to:

MS. MORESA JOY V. GREGANA
Instructor

April 5, 2022


I. Report Abstract

It aims to handle securely even without hindrance, as well as to full
y plan and control under any circumstances. It defines, discusses, explains
, and describes various topics. The primary goal is to comprehend the produ
ction and process. Addressing the limitations and determining how to measur
e in order to avoid problems. It demonstrates the importance of capacity pl
anning and control since it is also about business and a marketing strategy
. It is also about the system and how the business can operate. Capacity pl
anning and control aim to achieve efficient and effective management.

Capacity planning and control is an issue which every operation is faced wi
th. Furthermore it is an activity which can profoundly affect efficiency an
d effectiveness of the operation. Capacity planning and control is a task o
f setting the effective capacity of the operation so that it can respond to
the demands placed upon it. This usually means deciding how the operation s
hould react to fluctuations in demand. and is the process of determining th
e production capacity needed by an organization to meet changing demands fo
r its products. A discrepancy between the capacity of an organization and t
he demands of its customers results in inefficiency, either in under-utiliz
ed resources or unfulfilled customers. It is concluded that many of the art
icles on the subject of capacity planning and modeling have been investigat
ed in various fields through simulation while not focused on the issue of c
apacity.

II. Objectives

● Define Capacity planning and Control
● Discuss the aggregate demand and capacity in the operations managemen
t .
● Explain the objectives of capacity planning and control.
● Describe how demand fluctuates and how it be measured.
● Compare the three alternative capacity plans
● Discuss the principles which govern customer's perception of queuing
experience


III. Detailed Discussion

Define Capacity Planning And Control.

Every operation faces the problem of capacity planning and control. Further
more, it is an activity that can be done in a variety of ways.have a signif
icant impact on the operation's efficiency and effectiveness. The task of d
etermining the effective capacity is known as capacity planning and control
.of the operation so that it can respond to the demands made on it. This us
ually entails deciding how the operation should respond to the demands made
on it,Variations in demand.

The correct and actual capacity planning process will vary somewhat from on
e industry to the next. While there are factors that are unique in each ind
ustry that helps to shape the strategy effectively, there are some key elem
ents that tend to be used in any situation. Many of these have to do with c
onfiguration production volume based on expected demand for products, now a
nd in the upcoming production period.

Aggregate capacity management (ACM) is the process of planning and ma
naging the overall capacity of an organization's resources .Aggregate capac
ity management aims to balance capacity and demand in a cost-effective mann
er. It is generally medium-term in nature, as opposed to day-to-day or week
ly capacity management. The term “aggregate” denotes the fact that this f
orm of capacity management considers a resource such as manpower or product
ion capacity in total, without distinguishing different types.

As an example of this concept, in a plant that manufactures various types o

f computers, to be manufactured over a three-month period, without consider
ing the composition of the product mix- desktop- or laptop or tablet compu
ters. An aggregate capacity plan assumes the mix of different products and
services will remain relatively constant during the planning period.

Aggregate capacity management is generally a three-step process-measur

ing aggregate demand capacity levels for the planning period , identifying
alternative capacity plans in case of demand fluctuations and choosing an a
ppropriate capacity plan.

Operations managers are usually faced with a forecast of demand , which

is unlikely to be either certain or constant. They will have some idea of t
heir own ability to meet this demand, but before final decisions are made,
they must have quantitative data on both capacity and demand. So step one w
ill be to measure the aggregate demand and capacity levels for the planning
period.

The second step will be to identify the alternative capacity plans that cou
ld be adopted in response to the demand fluctuations. The third step will b

e to choose the most appropriate capacity plan for their circumstances. Dem
and forecasting is a major input into the capacity management decision. As
far as capacity management is concerned, there are three requirements from
a demand forecast.

It’s quite important for an organization to understand the capacity of its

resources.This knowledge will help business know and understand its product
ion capacity and limitations and what will lead to further sales forecastin
g and prompt supply of products to go to the customer’s.

Aggregate capacity management also helps a company maintain the right amoun
t of balance between the demand and supply without stressing out the resour
ces .Resources can vary from company to company, but aggregate capacity tak
es into account both manual and machinery resources and is not really diffe
rentiable between the two.

Objectives of capacity planning is that it is a company’s maximum possible

sustained level of output of goods or services. Focusing on how to leverage
capacity by long-term planning to achieve company’s goals such as maximizi
ng the profit. Also it describes the process for determining how much capac
ity you really need. After all, more capacity costs more money and a compan
y doesn’t want to build any more than it really needs. After you determine
the capacity to match long-term demand trends, you need other techniques to
help manage short-term fluctuations in demand.

Considering Capacity No simple standard equation exists to tell you how

much capacity you need right now or in the future or when exactly you shoul
d add capacity. Determining the correct capacity level for your business at
any given time to satisfy customer demand takes a great deal of assessment

and careful considerations because demand fluctuates and adding capacity ta

kes time and money.

● When Developing a capacity plan, start by answering these questions:

● How variable is your customer demand?
● How much inventory can you hold?
● How expensive is acquiring and maintaining capacity?
● How long is your customer willing to wait for your product or service
?
● How long does it take to expand or build a new capacity?

Balancing Capacity and Inventory

How do you manage your capacity to make sure you always have enough invento
ry to serve customers while keeping inventory levels as low as possible? Or
looking at it from the other direction, how much capacity should you have a
nd exactly how much inventory should you build up during the periods when y
ou have more capacity than demand? When you set out to determine how much c
apacity and inventory you need, the first thing to do is analyze how invent
ory can build up over the long run, given a set capacity.

In general, carrying inventory is less expensive than carrying idle capacit

y, and inventory is more flexible if demand doesn’t materialize because yo
u don’t need to build up or you can save it for sale later. In comparison,
idle capacity wastes money in excess equipment, floor space, maintenance an
d possibly idle labor.

Addressing Wait Time for Services

Waiting is a critical component of a customer's perception of service quali

ty. On the other hand, customers intensely dislike waiting. If they like th
ey’re waiting too long for service, they may leave the line (or cancel the
ir order) prematurely and may or may not return. Both actions reduce custom
er demand, and eventually revenue and profit take a hit as a result.

Managers can reduce waiting times by increasing capacity, which is also exp
ensive and reduces profit. Finding a waiting time that customers find accep
table while keeping its utilization reasonably high is thus critical to eff
icient operations. But the calculation is not intuitive, because average wa
iting times can be quite long, even when capacity is significantly greater
than demand.

How demand fluctuates and how it be measure

To know how demand fluctuates it needs forecasting. Forecasting is to foret

ell sales demand volume even though the probabilities have never been forma
lly studied. Business people often use their sense of what is happening to
reach decisions that might be better made if someone had kept a record of w
hat had taken place already. There is often some empirical basis for estima
ting what is likely to happen in the future. It is very important when it c
omes to planning and control. It should be demonstrated in terms that might
be beneficial for capacity planning and control. These are the how many hou
rs, machine hour per year, how much etc.

Fluctuations in market demand occur over time due to predictable patterns l

ike seasons or unexpected external factors like economic disturbances and n
atural disasters.

When merchants and businesses are organizing their inventory management and
replenishment schedules, observing current and past market demand can revea
l trends in the company's sales data to inform future purchasing decisions
and prevent understocking or out-of-stock situations.

There are various ways to measure and forecast product demand. Accurately e
stimating the level of demand can help to optimize daily processes such as
labor scheduling and inventory stocking. In order to find the right balance
, companies can consider the 5 common approaches.

The 3 Types of Capacity Planning

The three types of capacity planning make sure you have enough, but not too
much, of three major resources for both the long- and short-term. You’ll w
ant to plan weeks, months, or even a year in advance.

1. Product Capacity Planning

A product capacity plan ensures you have enough products or ingredients for
your deliverable.

to be able to help companies and also need to ensure that they always
have enough raw materials and products needed to complete and to be good a
nd service manufacturers can produce to satisfy customer demand.

2. Workforce capacity planning

Workforce capacity planning ensures you have enough team members and work h
ours available to complete jobs. This type of planning will also help you c
ommunicate overall business, resource & manpower needs to relevant stakehol
ders, show you when you need to hire more employees and help you determine

how far in advance you need to start recruiting based on the length of your
onboarding process.

This is really a business need to help employers and achieve better outc
omes to analyze workforce capacity and inform decisions about how your work
force might need to change to meet service change requirements.

3. Tool capacity planning

Tool capacity planning ensures you have enough tools to complete jobs. This
includes any trucks, assembly line components, or machinery you need to man
ufacture and deliver your product.

It is one of the easiest ways to deal with incoming workloads. It giv

es you accurate insight about resource capacity planning and also helps to
manage and ensure capacity.

Altering customer perception

From a customer’s perspective, two theories are in play: how long the cust
omer waits in line and how long the customer thinks he’s waiting in line.

If you must make a customer wait, you can make the time more comfortable an
d seem shorter than it really is by managing the customer’s perception of
the waiting time. Here are some things to know about managing customer perc
eptions so the wait doesn’t negatively affect satisfaction:

● Customers don’t mind waiting as much if they’re comfortab

le. This is perhaps the most important way to influence customer sat

isfaction. Make sure that you have plenty of space, comfy chairs, and
a pleasant atmosphere in your waiting room. Offering amenities such a
s refreshments, current reading material, and wireless Internet can g
o a long way toward softening the sting of waiting.

● Preprocess wait time feels longer than in-process wait time

. You want to get your customers into the process as quickly as possi
ble. This may involve something as simple as greeting them the moment
they walk in the door. After they enter, they’re less likely to leav
e before being served.

● Unoccupied time feels longer than occupied time. You may want
to break up the processing time into smaller steps with a wait betwee
n each step rather than having a longer wait time upfront. The doctor
’s office is great at doing this. When you arrive at an appointment,
a receptionist greets you and then you wait to be called, usually by
a nurse who shows you to a room and takes your vital statistics. You
then wait again in the exam room for the doctor. On average, you wait
the same amount of time as if you had waited all at once at the begin
ning, but because the wait is interrupted, people often perceive it a
s being less.

● Uncertain waits are perceived to be worse than certain wait

s. By telling customers how long the wait will be, you remove the an
xiety associated with waiting. The customers can then relax, knowing
when they’ll be served.

● Unexplained waits are worse than explained waits. If your cus

tomers are going to have to wait longer than expected, let them know.
For example, if the doctor is handling an emergency patient, inform t
he others who are waiting. Customers are more tolerant of these delay

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s. However, if the wait is longer because the doctor took an extended

lunch, you probably should avoid sharing this information.

● Unfair waits are worse than fair waits. Nothing is worse than
feeling that other customers are cutting in line or getting preferent
ial treatment. Having a well-defined process flow can minimize this e
ffect.

These same principles can apply to back orders or customers waiting for bui
ld-to-order. For example, providing a website link so the customer can chec
k the order status and a tracking number so the customer can check the ship
ping progress of the item can make the wait for an ordered item seem to go
by faster.

IV. Conclusion

The fundamental principles of capacity planning have not changed, and
they are as follows: Determine demand based on sales forecasts. Determine t
he necessary production capacity. Management objectives effectively brought
organizational strategies into practice by involving operations heads and s
taff at some level in the planning process. The discussion of measuring fun
d return is now regarded as a method, and performance is also taken into ac
count. All operations are limited in terms of capacity. Therefore we should
be able to achieve organizational goals and objectives related to the suppl
y chain by planning and controlling the capacity of these operations. As a
result, capacity planning and control is a problem that every operation fac
es. It came to the conclusion that many articles on the subject of capacity
, planning, and modeling had been researched in various fields. While not f
ocusing on the issue of capacity and control, simulation and model analysis
were used. While we know that there is a close relationship between plannin
g and control, many experts believe that a planning system without control

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is meaningless because managers use planning to smooth the activities path

to achieve the organizational goals and control is a process that is used t
o determine if the organizational has achieved its goals. They also believe
that no system can reach its full potential without monitoring and control.
As a result, in future studies, it is recommended to consider capacity cont
rol from two perspectives and to consider capacity planning and control in
various fields. In this field, as well as implementing models in a large ar
ea, the result will have high credit and can be applied in the issue of the
day, potentially ensuring the company's future success.


V. Ppt Slides/Video Report Screenshots

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VII. References (APA style)

- Aarabi M., & Hasanaian S., (2014) International Journal of Scientific
& Engineering Research, Volume 5, ISSN 2229-5518

- Hayes, Adam (2019 ),Aggregate Capacity Management.

- John Wiley & Sons, Inc (2013), Operations Management For Dummies, 2nd
Edition

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