Operations Management: An Integrated Approach, 5th Edition

CAPACITY PLANNING AND FACILITY LOCATION ACROSS THE ORGANIZATION

By now it should be clear how capacity planning and location analysis affect operations management. However, these decisions are also important to many other functions in the company. In particular, finance and marketing have a great stake in capacity planning and location decisions.

Finance must be actively involved in the organization's capacity planning decisions. At the same time, operations managers need input from finance in order to finalize their capacity decisions. The reason should be clear. Capacity planning requires large financial expenditures. Building a large facility now would mean that funds would be tied up in excess capacity from which no financial return would be obtained for several years. At the same time, expanding capacity in increments could prove to be a greater financial drain due to poor planning. Location analysis, which is tied to the capacity planning decision, is basically a financial investment. Certain locations may be cheaper but may prove to be a poorer business investment. Finance needs to be an active participant in both the capacity planning and location analysis decisions.

Marketing ...