1. Capacity Management and Demand variability during COVID-19

Introduction

All the areas of operation in a company is impacted and influenced by capacity management. here the difficulty of variability in the demand (of the shopping patterns of the customers) as to be met with the production level (capacity) of the business which is influenced by the complicated forecasting issue. hence the three important things to be considered by the production department includes

1. Capacity which is the quantitative amount that can be made
2. The demand- how much is required by the market.
3. Forecasting - weather the capacity or the production level can be matched to the demand variability without any wastage of resources.

Capacity management

When planning the capacity of the business, there are two sides to the coin of capacity management which includes the demand variability and the supply. Capacity management should be done at the optimal level which implies that there should not be too little capacity which would mean missed opportunities as the demand is not met and should not mean over production which is a waste of resources which can lead to higher costs(Boydell, 2011).

Short term variability and capacity management

There could be variability in demand both in short term or long term and as such forecasting demand in short term and long term is essential for planning in both terms. Managers use short term forecasting to estimate demand for the next 6 to 12 months and the output requirements for this estimated demand could be met using adjusting the existing capacity by increasing the labor hired or operating the existing capital intensive facilities more intensively when the forecasted short term demand is higher or using it less intensively when the demand forecasted is lower. Short term variability in demand is often met by increasing the variable inputs like raw materials and manpower and working for more shifts.

Long term variability and capacity management

However long-term demand might be a difficult trend to be forecasted easily as future demand and changes in technology and fashion are uncertain which would be risky job and difficult, as both product and process technology should be expected to change.

Discussion Question How can organizations successfully manage its...