Long-term, medium-term, and short-term capacity planning determines how many resources are needed to meet demand.
An organization’s long-term capacity depends on its design, production, sustainable, and effective capacities. The equipment maker specifies the maximum output under optimal operating conditions as the design capacity.Production capacity refers to the highest level of output that may be achieved from equipment during regular working conditions or within a single day.
Sustainable capacity refers to the highest attainable amount of production under actual working conditions, taking into account factors such as normal equipment breakdown and maintenance (Attaran, 2020).
Effective capacity refers to the optimal level of production that may be achieved within a given set of parameters, such as predetermined job and work schedules, typical machine breakdowns, and maintenance activities.
Medium term capacity planning is a strategic process implemented by organizations to plan and allocate resources over a period of 2 to 3 years.
Short-term capacity planning pertains to the strategic planning activities conducted by organizations within daily, weekly, or quarterly time frames.
A bottleneck is a process component with a limited capacity that reduces the process’s overall capacity. Well-defined processes should reveal delays and barriers.
Throughput improvements in bottleneck locations are expected to boost capacity by increasing employee productivity or freeing up time. This means the system can handle more immediate and long-term work.
Understanding an organization’s processes from start to finish might show process overlap and resource sharing. The critical route, the longest sequence of operations that must be completed within the set timeframe to finish the project on time, can help achieve this goal.
Understanding the important path helps visualize dependencies, shortens project duration, and allows quick analysis of the ramifications of missing a milestone. Critical path analysis can also help determine the maximum acceptable slack for each non-essential project activity while maintaining the project deadline. Complex systems often use the critical path strategy. However, multi-partner accountancies with several processes benefit from it.