Strategies of Capacity Planning Flashcards
What are the four main capacity planning strategies?
Lead, Lag, Match, and Adjustment strategies.
What is the lead strategy?
Adding capacity in anticipation of an increase in demand.
What is an advantage of the lead strategy?
Ensures adequate capacity during periods of high growth and preempts competitors.
What is a disadvantage of the lead strategy?
It is risky when demand is unpredictable or technology changes rapidly.
Define lag strategy.
Adding capacity only after demand exceeds the current capacity.
What are the benefits of the lag strategy?
Reduced risk of overbuilding and higher productivity due to better resource utilization.
When is the lag strategy commonly used?
For mature, cost-sensitive products or services.
What is the match strategy?
Adding capacity incrementally in response to changing demand levels.
Explain adjustment strategy.
Adjusting capacity in response to major demand changes or product system architecture changes.
Which strategy suits high-growth environments?
Lead strategy, as it anticipates and prepares for increased demand.
