unit44 operations management
In production and operations management, three types of capacity are often referred to: Potential Capacity The capacity that can be made available to influence the planning of senior management (e. g. in helping them to make decisions about overall business growth, investment etc). This is essentially a long-term decision that does not influence day-to-day production management Immediate Capacity The amount of production capacity that can be made available in the short-term. This is the maximum potential capacity - assuming that it is used productively Effective Capacity An important concept. Not all productive capacity is actually used or usable. It is important for production managers to understand what capacity is actually achievable. Measuring capacity Capacity, being the ability to produce work in a given time, must be measured in the unit of work. For example, consider a factory that has a capacity of 10,000 " machine hours" in each 40 hour week. This factory should be capable of producing 10,000 "standard hours of work" during a 40-hour week.