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Why is capacity planning important? How is it done? Give examples to support your answer
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Answer
Capacity Planning
Capacity planning is used as a measure of productive efficiency and plays an important role in the management of a business. Firstly, it aids a business with scaling and budgeting, enabling easy identification a firm’s optimal levels of operations, which ensures efficiency. Secondly, capacity planning has budgeting benefits. It aids the management in determining how services are provided, employees needed to meet the current demands and cover all operational cost, and the appropriate time frames. In this regard, capacity planning capacity limits the rates of output as it helps in determining the ability of a firm to meet the future demand for not only its services but also products.
Moreover, capacity planning plays an integral role in influencing the operating costs. According to Safra et al. (2019), capacity is always determined based on the estimated demand. Safra et al., (2019) states that actual demand is usually distinct from estimated demand. In this regard, there often arises either under capacity or excess capacity. Under capacity leads to the loss of sale while idle or excess capacity raises the cost per unit of output. Capacity decisions or planning also leads to long term commitment of capital; with such long term decisions not being a subject of reversals except at major cost.
Most importantly, capacity planning ensures availability through showing a business what scope it has to take in regard to new projects or investments. Using the process of capacity planning, a business can make a decision on whether it is worth to delay the commencement of a project by a month to lessen overall resource cost (Safra et al., 2019). Besides, it lets one identify the least expensive method of attaining upcoming resource needs, therefore, reducing resource costs.
References
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Safra, I., Jebali, A., Jemai, Z., Bouchriha, H., & Ghaffari, A. (2019). Capacity planning in textile and apparel supply chains. IMA Journal of Management Mathematics, 30(2), 209-233.
Appendix
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Appendix A:
Communication Plan for an Inpatient Unit to Evaluate the Impact of Transformational Leadership Style Compared to Other Leader Styles such as Bureaucratic and Laissez-Faire Leadership in Nurse Engagement, Retention, and Team Member Satisfaction Over the Course of One Year
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