Capacity and Forecasting Research Paper Example | Topics and Well Written Essays - 1000 words

Capacity and Forecasting - Research Paper manakinToo much cleverness is just as bad as too little. According to Wikipedia (2011a), nimiety message can drain a firms resources and prevent investments in projects that are more(prenominal) profitable. Insufficient capacity on the other hand could scat to unsatisfied customer demands. Analysis of capacity utilization The information presented indicates that capacity utilization at EMC is 92% with varying accounts of utilization in different processes. The graph in Figure 1 below provides a visual illustration of the set forth of utilization rates for different processes. Figure 1 The graph indicates that plastic molding has the highest utilization rate and blanking machine the lowest. It is uncertain as to how the 92% was arrived at. However, it is a high utilization rate which suggests that an plus in demand by 10 to 15 percent whitethorn not be easily met on a 40 hour week shift. Only plastic molding and finishing processes a re in a higher place 80% capacity utilization machine, assembly and packaging is below that level. Before deciding on whether surplus capacity is required the capacity available should be determined. ... There seem to be a embarrass situation in molding and finishing. According to Goldman (n.d.) your bottleneck operation should never stop, it should be kept data track during coffee breaks and lunch breaks. The impact of imagines on future capacity needs According to Walonick (1993) a forecast is designed to assist in planning and making decisions in the present. However, regard little of the methods used there is no way to predict the future with certainty. Forecast could either suggest that we have more or less capacity than is required. If the forecast suggest that we need a higher level of capacity then this may mean that additional investments may have to be made in terms of space and equipment. It may also mean additional staff would have to be employed. However, there are a keep down of things that can be done in the short term until there is convincing information that an increase in demand is long term. Overtime work could be introduced on a regular basis, short-lived contract workers could be employed or another shift could be introduced. While the things that can be done to increase capacity in the short term are relatively inexpensive, increasing capacity by building additional space is very costly if it is not fully utilized. EMC should be cautious not to rush to permanently increase its capacity as there is a level of doubt in forecasting. Implications of incorrect forecasts There are two ways in which a forecast could mayhap be incorrect. A forecast may suggest that more space as well as machinery and labor are required or it could possibly state that less of these elements are required. Incorrect forecasts could lead to unnecessary investments. Making