Operations Management: An Integrated Approach, 5th Edition

Chapter Highlights

Capacity planning is deciding on the maximum output rate of a facility.

Location analysis is deciding on the best location for a facility.

Capacity planning and location analysis decisions are often made simultaneously because the location of a facility is usually related to its capacity. When a business decides to expand, it usually also addresses the issue of where to locate. These decisions are very important because they require long-term investments in buildings and facilities, as well as a sizable financial outlay. Also, if capacity planning and location analysis are not done properly, a business will not be able to meet customer demands or may find that it is losing customers due to lack of proximity to the market.

In both capacity planning and location analysis, managers must follow a three-step process to make a good decision. The steps are assessing needs, developing alternatives, and evaluating alternatives.

To choose between capacity planning alternatives ...