Demand and Capacity
To meet the market demand using the available resources in an organization requires reorganizing/ restructuring the production system. This involves reformulating the inventories, coordinating the resources and maximizing on resource usage. To ensure a required capacity is produced an organization may change the levels required in the inventory system (Hill 2005; Johnston & Clark 2005). The inventory can be simplified and specialized to specific units of productions. This reduces the time required to produce a product through reduced processes for handling, reduced storage space required.
The inventory can also be insured to ensure protection from any losses (Hill 2005; Johnston & Clark 2005). An organization can also vary workforce sizes depending on demands. More human resource can be hired during peak periods to cater for the increased demands. To meet the market demands, an organization may require varying of their production rates. A constant workforce number may be maintained under shifts or overtime working hours to cater for the increased demand. In some cases an organization may be required to outsource for workers to cater for increased demands.
This is temporary and the organization will be able to get back to normal workforce figures once the demand has gone to normal. Part
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First is chase strategy, which emphasizes on balancing between the demand rate and capacity. To balance the production and order rate, an organization has to control the size of the workforce by increasing or decreasing where necessary (Johnston & Clark 2005). Second an organization can use the stable workforce strategy where to meet customer and business needs, working hours has to be varied. Depending on the demands, the output has to be varied by varying working hours in an organization (Johnston & Clark 2005). For instance working hours can be prolonged or extended to meet high demands in a market.
Third an organization can also use level strategy where workforce has to be stable to ensure a constable value or unit of output. This can be achieved by using inventories to help make decisions hence be able to cater for any losses at any time. A forth strategy is the pure strategy where it is believed that production patterns meets the both buyer and business requirements hence no adjustments required for a specific period of time (Johnston & Clark 2005). Fifth a hybrid of the strategies can be applied. A chase and level strategies can be used together to meet both demand and supply.
Demand and capacity can also be adjusted using the following ways. First, order backlog or queues can be used by companies to help them deal with orders. Companies may deal with orders depending on their types hence when demand is too high they will experience long queues (Johnston & Clark 2005). This is a way to know when to increase or reduce workforce size or production rates. This is common with companies that produce goods and services that doesn’t consume large volumes and are standardized. Second, an organization may also consider adjusting demand and capacity levels depending on their final production.
This is commonly used by companies that deal with mass production then stocking of goods to be released upon customer demand. When a company predicts a rise in demand they will produce more to cater for the expected increase in demand. Thirdly two inventories can also be combined to help meet the business and buyer requirements. This is mostly used by companies that produce standardized goods. The company may produce according to orders made and again produce to meet any expected demands increases beyond the orders (Johnston & Clark 2005).