Capacity Planning and Budgeting
As suggested multiple times previously, demand is one of the most important concepts in BDM. This is because optimal financial performance is achieved at the lowest cost (costC) to meet demand. If the organization carries too much capacity, its cashOUT will be higher than necessary leading to less cash profit (offset). On the other hand, having too little capacity may create lost opportunities (such as lost sales), may increase risk (work not being completed on time or properly), and in the case of labor and equipment capacity, may create stress on them leading to potential breakdowns or the need to spend in inefficient ways to make up the deficit.
Demand creates context for how efficient, effective, ...
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