What is Capacity planning?
Capacity planning: Deciding how much output a business can handle.
Where Capacity planning fits
Capacity planning is part of Operations in Management. Operations turn inputs into outputs. Find the bottleneck, cut waste with lean methods, outsource non-core work and use economies of scale as volume grows.
Practical tip
Improve the slowest step first; speeding up others changes nothing.
Related terms
- Bottleneck
- The step that limits a whole process's speed.
- Outsourcing
- Hiring outside firms to do part of the work.
- Economies of scale
- Average cost per unit falls as output grows.
- Lean manufacturing
- Cutting waste in production while keeping quality and value.
- Standard operating procedure
- A step-by-step guide for routine tasks.
- Process mapping
- Drawing the steps of a workflow.
- Waste reduction
- Cutting activities that add no value.
Formulas you will use with it
Test yourself
Which term means: “Deciding how much output a business can handle.”?
Standard operating procedure · Bottleneck · Capacity planning
Answer: Capacity planning
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