Implications of production and capacity planning functions: impact analysis

Production planning and capacity planning are considered to be individual planning sub–functions for executing production plans within capacity. Several attempts have been taken to integrate these two planning sub–functions without consideration of their impacts on each other. Production planning and management elements, like worker flexibility and machine flexibility, have an impact on capacity planning. Capacity planning elements, like overtime and undertime, also have a significant impact on some elements of production planning, like inventory holding costs, manufacturing leadtime, etc., and vice versa. This paper aims to analyse and formulate those impacts.