Capacity Planning is best described as?

• A. Scheduling daily production sequences
• B. Determining the amount of capacity required to produce a good or service in the future
• C. Assigning tasks to workers
• D. Managing supplier contracts

Answer: (B)

Capacity planning focuses on determining the amount of capacity required to produce a good or service in the future. It looks ahead at forecasted demand and translates that into decisions about how many machines, how much facility space, and how many workers will be needed, including when to add or reduce capacity. The goal is to balance supply and demand so the system can meet demand without excessive idle capacity or bottlenecks, guiding choices about expanding facilities, purchasing equipment, or adjusting workforce levels. It uses ideas like design capacity versus effective capacity and capacity utilization to assess how well the plan will perform and when changes are needed.

Scheduling daily production sequences is about the short-term order and timing of production runs, not the overall capacity level. Assigning tasks to workers focuses on staffing and workload distribution, while managing supplier contracts deals with sourcing and procurement.