Certified Supply Chain Professional (CSCP) Practice Exam

What does capacity planning involve?

1. Measuring current production output

2. Determining future capacity needs

3. Analyzing past production performance

4. Establishing inventory management strategies

The correct answer is: Determining future capacity needs

Capacity planning primarily involves determining future capacity needs to ensure that an organization can meet expected demand. This process requires assessing factors such as market forecasts, production rates, and resource availability to align manufacturing and operational capabilities with anticipated customer demand. Effective capacity planning helps businesses avoid overcapacity, which leads to wasted resources, or undercapacity, which can result in missed opportunities and dissatisfied customers. By accurately forecasting future needs, organizations can make informed decisions regarding investments in equipment, workforce requirements, and facility expansions. While measuring current production output, analyzing past performance, and establishing inventory management strategies are important aspects of operations management, they serve different purposes. They provide insight into how operations are currently performing and help optimize existing processes, but capacity planning specifically focuses on evaluating and preparing for future capacity requirements to align with growth objectives and market demands.