What is capacity planning in operations?

Capacity planning in operations refers to the process of determining the production capacity that an organization requires to meet the expected demand for its products or services. This involves analyzing current capacity and future needs, taking into account factors such as market demand fluctuations, production lead times, workforce availability, and equipment capacity.

Effective capacity planning ensures that a company can produce enough goods or services to satisfy customer demand without overcommitting resources or incurring excess costs. It plays a crucial role in operational efficiency and customer satisfaction. By accurately forecasting demand and aligning production capacity accordingly, businesses can avoid issues like stockouts or excess inventory, optimize their workforce, and streamline operations, ultimately leading to improved financial performance.

The other options relate to different aspects of operations management. Estimating future market trends focuses on market analysis rather than production capacity. Controlling inventory levels is essential for supply chain management but is not directly linked to capacity planning. Managing supplier relationships pertains to procurement and supplier management rather than internal capacity requirements.