What is the primary objective of capacity planning?

• A. Balancing marketing budget with production goals.
• B. Determine production capacity needed to meet demand, balancing resources.
• C. Analyze customer satisfaction levels.
• D. Choose packaging materials.

Answer: (B)

The main idea is to size the production system so it can meet expected demand without wasting resources. The objective is to determine the production capacity needed to meet demand, balancing resources like facilities, equipment, labor, and materials. This involves forecasting demand, assessing current capacity, and deciding how to adjust—such as adding shifts, purchasing or upgrading equipment, outsourcing, or altering inventory policies—to avoid bottlenecks, reduce costs, and maintain good service levels.

Why this fits: capacity planning is about matching what you can produce with what customers will want, in the most efficient way possible. If demand grows, you check whether your current setup can handle it and plan changes accordingly. If demand falls, you scale back to avoid excess cost.

Why the other options don’t fit: staying within a marketing budget is more about marketing and financial planning than sizing the production system. analyzing customer satisfaction centers on quality and service feedback, not capacity. choosing packaging materials is a packaging decision, not determining how much you can or should produce.