Study notes

Capacity - Introduction

Capacity can be defined as:

The maximum output that a business can produce in a given period with the available resources

Capacity is usually measured in production units (e.g. 1,000 cars per month). Productive capacity can change e.g. when a machine is having maintenance, capacity is reduced

Capacity is linked to workforce planning: e.g. by working more production shifts, capacity can be increased

Capacity needs to take account of seasonal or unexpected changes in demand

E.g. Chocolate factories need capacity to make Easter Eggs in November and December before shipping them to shops after Christmas

E.g. Ice-cream factories in the UK needed to quickly increase capacity during a heat wave

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