Capacity Types

Maximum capacity

Maximum capacity or design capacity is the highest rate of output a process or activity can achieve. It specifies a theoretical upper limit above the usual rate of routine operations. The operation managers calculate the maximum capacity of a manufacturing process .It is based on the number and duration of available shifts, the number of available machines and employees per shift and the working days in a period of the calculation.

Effective capacity

Effective capacity identifies the output rate that managers expect for a given activity or process. It is the actual capacity to reflect current conditions and that could be less than or more than design capacity. They base production plans and schedules on this measure of output. Effective capacity normally falls short of maximum capacity by some amount.

Demonstrated capacity

Demonstrated or actual capacity deals with actual rather than planned production. It measures the actual level of output for a process or activity over a specified period of time. Planners calculate theoretical values for maximum and effective capacity to guide their arrangements for production purposes. Operation managers calculate demonstrated capacity simply by averaging recorded figures for actual output over a period of time.