running we need to recognize the bottleneck in our production process that is the activity that takes the longest time and so it will limit our capacity so in the capacity planning process the first thing we do is forecast demand forward and we're looking at a medium or long term forecasting horizons we're making strategic or design decisions we're going to calculate what the current capacity requirements are based on that forecast demand we then measure our current capacity and we compare the two we decide if and how the gaps will be filled as part of that as we are looking at our current capacity and any changes we might make to increase capacity we need to recognize the bottleneck so let's assume that you have a Subway franchise and when it comes to making sandwiches at your subway you have to cut the meat cut the vegetables make the bread and then when the customer comes in you do assembly so we want to determine the capacity for our franchise how much can we actually produce and so as we look at capacity we have to take into consideration what is the bottleneck in this process so let's look at the amount we could produce in an hour so notice that we can cut 200 ounces of meat in an hour and let's assume there are 4 ounces of meat per sandwich so if we take those 200 ounces in an hour divide it by the 4 ounces per sandwich we find that in terms of meat cutting we can make 50 subs per hour now when it comes to cutting vegetables we can cut 25 sandwiches with per hour ok so we don't have to do a calculation there when it comes to making bread we can make 24 loaves in 4 hours which means that in 1 hour we can make six loaves and let's assume that there are there's one loaf of bread is one sandwich okay so we have six sandwiches in an hour now we have the assembly and let's assume that it's five minutes of assembly per customer so if there are 60 minutes in an hour and we divide that by five minutes per customer then we can service 12 customers in an hour and let's assume each customer is just ordering one sandwich so as we look at the capacity how many sandwiches we could produce in an hour we need to look at the bottleneck in the production process so meat cutting produces 50 sandwiches worth vegetables produce 25 sandwiches worth bread produces 6 sandwiches worth and the assembly is 12 sandwiches worth in a single hour so we can see that making the bread is the obvious bottleneck and so it is going to limit our capacity we can't make more than 6 sandwiches an hour because of the time it takes to make the bread so then we have to ask ourselves if the forecasted demand is more than our current capacity how could we bridge the gap well let's suppose there are changes we could make to our company that would increase bread making 30% we could increase assembly by 20% we could increase meat cutting by 15% so let's look at that if we increase bread making by 30% so that we take that six and multiply it times 1.3 then we can now make 7.8 sandwiches an hour with the meat we could cut 50 sandwiches worth per hour with our new methods we could increase that 15% we multiply that times 1.15 and that would mean that we could make 57 and a half sandwiches an hour for assembly if we use our new assembly method it would increase by 20% so we multiply that 12 per hour times 1.2 and we're now able to assemble over 14 sandwiches per hour but notice that the meat cutting any improvement in the meat cutting makes no difference to your capacity any improvements in the assembly time makes no difference to your capacity because of the bottleneck so when you're looking at dealing with the gap between forecasted demand and capacity where you need to focus is the bottleneck if you're not improving increasing the amount of production through the bottleneck it's not going to increase your capacity so if we had the choice between increasing our bread making by 30% assembly by 20% or meat cutting by 15% only the bread making would change our capacity