Capacity Management Concept 8

Practical Capacity Management Concept

Practical capacity is the highest realistic amount of output that a factory can maintain over the long term. It is the maximum theoretical amount of output, minus the downtime needed for ongoing equipment maintenance, machine setup time, scheduled employee time off, and so forth. The amount of practical capacity should be incorporated into an organization's budget, so that production is not planned at a level so high that it cannot be sustained.