Impact of capacity planning on inventory in a production system

Capacity and production planning, two major sub–functions of overall planning activity, are considered as two independent systems while being integrated, these under an integrated production planning and control system. Several schemes of finite loading systems have been designed where the elements of production planning and corresponding elements of capacity planning interact with each other without consideration of the side effects. In practice, overtime and undertime operation of the manufacturing facility affects the inventory holding time period and manufacturing leadtime significantly. This paper aims at analysing and formulating the impact of capacity planning functions on inventory holding time period.