Strategies of capacity planning | Short term and Long term |

1.) Short term capacity strategies

2.) Long term capacity strategies

1.) Short term capacity strategies

Short-term capacity covers a shorter time span, normally up to one year. The ultimate aim of the short-term strategy is to meet the sudden changes in demand due to dynamic economic changes. It involves day-to-day planning also to choose the best way of increasing the capacity. 

Short-range capacity planning can include :

1.) Working overtime to meet the demand.

2.) Transfer of workforce

3.) Change the sequence of production

4.) Change in inventory

5.) Hire more workforce for a shorter time.

6.) Upgrade the current machine

2.) Long term capacity strategies

This strategy includes a time frame of more than one year. This requires the suggestion and approval of the top-level management. External environment conditions such as economic, political, technological, social condition, etc affect the decision regarding long-term capacity planning.

The manager should evaluate the number of factors while making long-term capacity planning. Some of the factors are : 

1.) Availability of the funds for future growth.

2.) Acton taken by the competing firms.

3.) Requirements of innovation in the technology or process.

4.) Estimating the demand that can increase in the future.