Group 4

- 014201600071 Inanda Meitasari

- 014201600009 Made Satya Viharini
- 014201600027 Vincent Ignatius
- 014201600025 Dessy Adiasti H.
- 014201600118 Liu Thong
Class: MGT1_2016
Subject: Production and Organization Management

Capacity Planning
- Long Term Capacity: it is dependent on various other capacities like design capacity,
production capacity, sustainable capacity and effective capacity. Generally, this
capacity planning is greater than 3 years. The examples are:

a. Lego, the Danish manufacturer of childrens building bricks. It has recorded

double-digit growth globally for the last 10 years, is now the biggest toy company in
the world, and is counted among the top 10 most globally reputed brands. Legos
avowed purpose is to help the learning and growth of children by inspiring them with
creativity and structured thinking by putting colorful bricks in their hands. The
company stays on course by doing what is right to build long-term shareholder value
and does not compromise its principles and beliefs to meet quarterly numbers. It
eschews cutting investment in developing talent or building brands to meet quarterly
or annual guidance. Legos eyes are always on how to continue to be a great play
partner for children and their parents five to 10 years from now. But it does this by
focusing on the medium term. Consider that 60%70% of Legos revenue every year
comes from new products.
(source: https://hbr.org/2016/06/all-hail-medium-term-planning)
b. Nestl with its brand, Milo, is the worlds leading chocolate malt beverage that can
be prepared with hot or cold milk or water. It offers essential vitamins and minerals to
meet the nutrition and energy demands of young bodies and minds. Launched in
Australia in the early 1930s, the Milo brand takes kids' development seriously. It has
long been known as an energy beverage strongly associated with sports and good
health. By making Milo worldwide famous and almost there in every country. They
have produced Milo in many countries, such as Australia, Peru, Colombia, Malaysia,
Singapore, Canada, UK, Portugal, Brazil, etc. They also launch a global campaign
that support people who want to live a healthier lifestyle, such as in Colombia, Milo is
closely tied to football (soccer), and the slogan several generations have sung is Milo
te da energa, la meta la pones t ("Milo gives you the energy, you set the goal").
Industry-leading research and development drives innovation and supports the
constant renovation of our food and beverage portfolio. In addition, their researchers
are exploring the role of nutritional therapies to maintain or improve health and
investigating how they can help people look after their skin. By sharing our insights
on global Nutrition, Health and Wellness challenges, building partnerships and by
engaging with policymakers, stakeholders and key opinion leaders we strive to have a
positive impact on the societies in which its operate.
(source: http://www.nestle.com/brands/allbrands/milo)
c. Nowadays KFC (Kentucky Fried Chicken) is being the worlds largest chicken
restaurant chain and third largest fast-food chain, with over 9,000 in both franchise
and company-owned restaurants worldwide and was operating in 68 countries, simply
shows that KFC has the capacity to address the needs of its customers no matter how
old their facilities and product form was. However, KFCs significant service problem
will probably push their customers away from them, thus KFC must have to imply
ways on how to meet the customers expectations. KFC had the capacity to innovate
new products to fight other fast-food chains. As KFC entered 1980s, they faced some
issues especially on fried foods because consumers begun to demand healthier foods
so they limit on fried foods. KFC responded to consumer demands for greater variety
by introducing a variety of new products. New products introduction was not
important part of KFC strategy. However, the introduction of chicken sandwiches and
fried chicken by hamburger chains had changes the make-up of KFCs competitors. In
addition, an increased popularity of healthier foods and consumers increasing demand
for better variety led to number of changes in KFCs menu offering.
(source: https://hbr.org/2016/06/all-hail-medium-term-planning)

- Medium/Intermediate Term Capacity: The strategic capacity planning undertaken by

organization usually looks one to three years ahead of a time frame is referred to as
medium term capacity planning. The examples are:

a. PepsiCos Fritolay inaugurated its potato chips plant in Azov, Rostov region,
southern Russia in 2010. The plant has been designed for an initial annual production
capacity of 25,000t, which is expected to grow to 50,000t/y with the addition of two
production lines by 2013. This will double Frito-Lay's production capacity in Russia
to 90,000t/y. The factory is equipped with extruding technology for the production of
corn chips and crispy bread snacks. It is 30% more efficient, consumes fewer
resources and generates less waste. PepsiCo is also building a $140m beverage plant
at the site, bringing the total investment to $250m. It is expected to produce 500
million litres of iced tea and other soft drinks by spring 2013. The two plants will
employ about 1,000 people and pay an average salary of $930 per month. The
company is also planning to build a warehouse and another plant in Rostov by 2015.
(source: http://www.foodprocessing-technology.com/projects/fritolaypotatochipsp/)
b. Rp 21 billion that its issued capital grew from Rp 742 billion to Rp 763 billion. The
shareholders of ISM included Cab Holding Ltd (46.53%), other (9.6%) and the
public (43.78%). Its installed production capacity was 15 billion packets per year in
2008, up from 14.5 billion packets per year in the previous year. Its capacity utilization
was 80% in 2008. ISM is the largest producer of instant noodlest in Indonesia, even in
Southeast Asia. Currently ISM has 16 factories up from 14 units earlier located in Java,
Sumatra, Kalimantan and Sulawesi. The company also has production facilities for
spices to support its instant noodles industry. The factories, all located in Java are run
by PT. Indosentra Pelangi. In addition, ISM also has two wheat procesisng factories in
Jakarta and Surabaya- under PT ISM Bogasari and 1 factory to produce wheat flour
sacks in Citereup. Currently, the production capacity of Indofood with 8 units of
installed production machines is 3,500 carton boxes of 40 packets per machine per
shift. A day is made in three shifts that its daily production averages 3,360,000
packets. ISMs net sales of instant noodles in 2008 grew 29% to Rp 10.90
trillion from Rp 8.44 trillion in the previous year. Its sales volume grew 7.3% from
21.10 billion packets in 2007 to 12.98 billion packets in 2008. The company
exports around 2% of its instant noodles production to more than 50 countries in the
world. Indofood is always trying to reach the global market for noodle producing.
Indofood's annual output capacity of 16 billion meals accounts for about 15%
of global consumption in 2013. Indofood approach the global market by colaborating
with the company which exist to their destination country, such as in Japan, Indofood

works with Asahi Co., and so on.

(source:http://www.datacon.co.id/InstantNoodle1-2009.html)
c. Air Asia is a Malaysia-based company engaged in the provision of air
transportation services. The Company operates a fleet of 90 aircraft and flies to more
than 60 destinations from hubs in Malaysia, Thailand and Indonesia. It operates more
than 3,500 flights a week. The world leading low fare airline in the Asia, Air Asia has
been growing rapidly since 2001, to become an award winning and the major low cost
carrier in Asia. Air Asia was founded by a government-owned conglomerate
DRB-Hicom in 1993. On 2 December 2001, former Time Warner executive Tony
Fernandes's company Tune Air Sdn Bhd purchased the heavily-indebted airline for
the token sum of one ringgit. Fernandes advanced to engineer an outstanding spin,
turning a profit in 2002 and introducing new routes from its hub in Kuala Lumpur
International Airport. Air Asia believes in the no-frills, hassle-free, low fare business
idea and feels that keeping costs low needs high efficiency in every part of the
business. Efficiency generates savings which are then passed on to customers so that
inexpensive air travel can become a reality. Through its idea of 'Now Everyone Can
Fly', Air Asia has introduced a revolution in air travel with more and more people
around the region choosing Air Asia as their preferred choice of transport.
(source:https://www.ukessays.com/essays/marketing/the-strategic-planning-of-airasia-
airline-marketing-essay.php)

- Short Term Capacity: The strategic planning undertaken by organization for a daily
weekly or quarterly time frame is referred to as short term capacity planning (less than
a year). For instance:

a. Kate Spead & Co., the luxury handbag and fashion accessories company announced
fourth-quarter 2016 results and that the company is "reviewing strategic alternatives."
Quarterly revenue climbed 9.8% year over year (10.1% excluding sales for
wind-down operations in last year's fourth quarter), to $471 million, driven by 9.2%
growth in direct-to-consumer comparable sales. On the bottom line, net income grew
39.2%, to $85.5 million, while diluted earnings per share from continuing operations
were $0.67. Adjusted for using a normalized tax rate, diluted earnings were $0.41 per
share, up from $0.32 per share in the same year-ago period. Analysts, on average,
were expecting Kate Spade to report slightly higher fourth-quarter revenue of $472.8
million, but lower adjusted earnings of $0.35 per share. The first thing that comes to
mind in these cases is the potential for Kate Spade to put itself (or a portion of its
business) up for sale. But to be fair, Kate Spade reminded investors, "There can be no
assurance that this review process will result in a transaction or other strategic
alternative of any kind". In addition, Kate Spade noted there is no definitive timetable
for the completion of this process, instead promising it will "proceed in a timely
manner" and offer updates as it deems appropriate.
(source:https://www.fool.com/investing/2017/02/16/why-kate-spade-co-stock-jumped
-today.aspx)
b. Taco Bell is an American chain of fast-food restaurants based in Irvine, California.
A subsidiary of Yum! Brands, Inc., they serve a variety of Tex-Mex foods,
including tacos, burritos, quesadillas, nachos, other specialty items, and a variety of
"value menu" items. Taco Bell serves more than 2 billion customers each year in
7,000 restaurants, more than 80 percent of which are owned and operated by
independent franchisees and licensees. Once, Taco Bell makes program which is
This Week in Taco Bell where as to looking for the attentions from people who
would like to designing, as to reach intermediate range planning of Taco Bell which is
open 2,000 new Taco Bells by 2022, which bodes fairly well for humanity. With that
expansion in mind, the Mexican-inspired American fast food chain is renovating
restaurants in Orange County, Calif. to reflect four new Taco Bell design schemes that
will ultimately be customized and implemented for future Taco Bells across the
country and the world. where these new designs are Heritage, Modern Explorer,
California Sol, and Urban Edge.
(source:http://ftw.usatoday.com/2016/05/taco-bell-this-week-in-taco-bell-new-restaur
ant-designs-healthy-tacos)
c. Chatime is one of the largest and most recognizable bubble tea chains
worldwide. With their 5-year anniversary, here in Canada this year they plan on
releasing a limited series of teas at all Canadian locations starting Sept 8, 2016. Made
of all-natural Butterfly Pea Flower and Hibiscus Flower teas their 5-year anniversary
line of Twilight Teas is high in antioxidants with no added sugars, preservatives, or
artificial colors. The series of teas are aptly named Twilight as the beautiful red and
blue hues mix seamlessly with various flavor and color combinations that are
reminiscent of the colors of the sky from dusk til dawn. This limited as their
short-term planning as it will not be lasting in the menu for long time. Therefore,
people may curious to have a taste of it and the demand will be higher. (source:
http://theallonsy.com/chatime-twilight-series/)
Source of period time retrieved from:
http://learn-business-english.blogspot.co.id/2006/06/short-intermediate-and-long-rang
e.html