1.

Capacity planning is the process of determining the production capacity needed

by an organization to meet changing demands for its products. In the context of
capacity planning, design capacity is the maximum amount of work that an
organization is capable of completing in a given period. Effective capacity is the
maximum amount of work that an organization is capable of completing in a given
period due to constraints such as quality problems, delays, material handling, etc.
The phrase is also used in business computing as a synonym for capacity
management.
Capacity
In the context of systems engineering, capacity planning is used during system
design and system performance monitoring.
Capacity planning is long-term decision that establishes a firm's overall level of
resources. It extends over time horizon long enough to obtain resources. Capacity
decisions affect the production lead time, customer responsiveness, operating cost
and company ability to compete. Inadequate capacity planning can lead to the loss
of the customer and business. Excess capacity can drain the company's resources
and prevent investments into more lucrative ventures. The question of when
capacity should be increased and by how much is the critical decisions. Failure to
make these decisions correctly can be especially damaging to the overall
performance when time delays are present in the system. D
DEFINE OR
1. Application of mathematical (quantitative) techniques to decision making. In OR,
a problem is first clearly defined and represented (modeled) as a set of
mathematical equations. It is then subjected to
rigorous computer analysis to yield a solution (or a better solution) which is tested
and re-tested against real-life situations until an optimum solution is found.
OR applies different approaches to different types of problems: dynamic
programming, linear programming, and critical path method are used
in handling complex information in allocation of resources, inventory control, and in
determining economic reorder quantity; forecasting and simulation techniques such
as Monte Carlo method are used in situations of high uncertainty such as market
trends, next period's sales revenue, and traffic patterns. Also called decision
science, management science, or operational research.
2. Linear programming (LP; also called linear optimization) is a method to achieve
the best outcome (such as maximum profit or lowest cost) in amathematical
model whose requirements are represented by linear relationships. Linear
programming is a special case of mathematical programming (mathematical
optimization).

More formally, linear programming is a technique for the optimization of

a linearobjective function, subject to linear equality and linear
inequality constraints. Itsfeasible region is a convex polytope, which is a set defined
as the intersectionof finitely many half spaces, each of which is defined by a linear
inequality. Its objective function is a real-valued affine function defined on this
polyhedron. A linear programming algorithm finds a point in the polyhedron where
this function has the smallest (or largest) value if such a point exists.
Linear programs are problems that can be expressed in canonical form:

where x represents the vector of variables (to be determined), c and b arevectors of (known) coefficients, A is a
(known) matrix of coefficients, and

is the matrix transpose. The expression to be maximized or minimized

is called the objective function (c x in this case). The inequalities Ax b and x 0 are the constraints which
T

specify a convex polytope over which the objective function is to be optimized. In this context, two vectors
are comparable when they have the same dimensions. If every entry in the first is less-than or equal-to the
corresponding entry in the second then we can say the first vector is less-than or equal-to the second vector.
Linear programming can be applied to various fields of study. It is used in business and economics, but can also
be utilized for some engineering problems. Industries that use linear programming models include transportation,
energy, telecommunications, and manufacturing. It has proved useful in modeling diverse types of problems in
planning, routing, scheduling,assignment, and design.
Linear programming is a considerable field of optimization for several reasons. Many practical problems
in operations research can be expressed as linear programming problems. Certain special cases of linear
programming, such asnetwork flow problems and multicommodity flow problems are considered important
enough to have generated much research on specialized algorithms for their solution. A number of algorithms for
other types of optimization problems work by solving LP problems as sub-problems. Historically, ideas from
linear programming have inspired many of the central concepts of optimization theory, such
as duality, decomposition, and the importance of convexity and its generalizations. Likewise, linear programming
is heavily used in microeconomics and company management, such as planning, production, transportation,
technology and other issues. Although the modern management issues are ever-changing, most companies
would like to maximize profits or minimize costs with limited resources. Therefore, many issues can be
characterized as linear programming problems.