Which of these in not an approach to capacity planning?
Multiple Choice
a. Tracking
b. Leading
c. Forecasting
d. Following
The correct answer and explanation is :
The correct answer is: c. Forecasting
Explanation:
Capacity planning is the process by which an organization determines the production capacity needed to meet changing demands for its products or services. It involves evaluating current capacity and deciding how to adjust resources to meet future business needs. In operations management, there are three primary approaches to capacity planning:
- Leading – This approach involves increasing capacity in anticipation of future demand. It is a proactive strategy. The organization expands resources ahead of time to ensure that demand is met even as it increases. This strategy can improve customer service and reduce the risk of lost sales but may result in higher operating costs if the demand doesn’t materialize.
- Following – In contrast to leading, the following strategy adds capacity only after demand has been proven. It is a reactive method and reduces the risk of investing in unneeded resources. However, it may result in short-term shortages or reduced customer satisfaction if capacity lags behind actual demand.
- Tracking – The tracking approach is a balanced, middle-ground strategy. It involves adding capacity in small increments to match increasing demand trends. This approach allows the organization to respond more flexibly and avoid the risks associated with leading or following extremes.
On the other hand, forecasting is not a direct approach to capacity planning. Instead, forecasting is a tool or technique used within the capacity planning process to predict future demand based on historical data, market trends, and other influencing factors. While it is essential for making informed decisions in capacity planning, it is not a strategy in itself for adjusting capacity.
In summary, forecasting supports capacity planning but is not one of the three recognized approaches to it. The actual capacity planning strategies are leading, following, and tracking.