Capacity planning is the technique of figuring out the manufacturing capacity required by a business to fulfill shifting demands for its products. A disparity between the capacity of a firm and the demands of its consumers leads to inefficiency, either in under-utilized resources or unsatisfied buyers.
Lead Capacity Strategy
A lead capacity strategy (lead demand strategy) is a proactive approach which adds or subtracts capacity in expectation of future market demand. Lead strategy is an aggressive strategy with the objective of improving the service level and decreasing leadtime. Lead strategy is directed at lowering stockout costs. A large capacity does not necessarily mean high inventory levels, however it can imply in higher cycle stock costs. Manufacturers like this strategy as it minimizes risk.