CAPACITY PLANNING * Capacity means an ability to do work or the maximum output that can be produced ina given system. * Capacity planning is the process of determining the production capacity needed by an organization to meet changing demands for its product. * Capacity planning involves the identification and evaluation of the long term and short term capacity requirements of an organization and the development of plans to satisfy them.Capacity Evaluation Capacity = ( Number of machines or workers) * (Number of shifts) * (Utilization) * (Efficiency) aClasses of Capacity Planning + Lead Strategy:- It is to add a capacity in anticipation of an increase in demand. . Lag Strategy:- It refers to add capacity only affer the organization is running at full capacity or beyond due to increase in demand. + Match Strategy:- It is to add capacity in small amounts in response to changing demand in the market.