APT Initiatives
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Established in 1999

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The maximum level of output a business can produce within a particular period of time eg a week, month, quarter, or year, with its present resources, eg premises, plant, machinery, equipment, technology and labour. It is not a measure of a business’s current output, but a measure of what it is capable of producing or providing (in the case of a service). For a manufacturing business it might refer to how many products it can produce, for a restaurant it might refer to how many diners it can serve, for a hotel – how many guests it can accommodate, for a train company – how many passengers it can carry, for an airport – how many passengers and / or aircraft it can handle over a given period of time. This maximum level of output should take into account the time required to carry out essential maintenance, cleaning and re-setting of any machinery ie effective capacity as opposed to designed capacity. To clarify: designed capacity is the theoretical maximum output of a process or a plant over a specified time as it was designed; effective capacity is the potential output remaining after loss of output due to planned factors such as maintenance, cleaning and re-setting machinery between different batches of goods, as well as training. Note effective capacity makes allowance for planned factors which disrupt production, but does not take into account unplanned factors such as machine breakdowns due to power cuts, shortage of staff (eg due to sickness), or stockout in relation to materials (eg due to unanticipated traffic congestion). Operations managers should always make some allowance for unplanned factors such as equipment breakdowns and absenteeism. Capacity is also dependent on any legal constraints, for example, constraints regarding the number of people allowed on a premises at any given time (governed by the Office, Shops and Railway Premises Act 1963 and Fire Safety Regulations) in order to avoid situations of ‘overcrowding’, as well as any other legal constraints relating to the specific business in question. For instance, in the case of a childcare centre, capacity refers to the maximum number of children that can be accommodated at each childcare centre, each day, given the current size, facilities, equipment and materials of each centre and, in particular, levels of staffing.

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