When selecting a measure of capacity, it is best to choose one that doesn’t need updating. When dealing with more than one product, it is best to measure capacity in terms of each product. For example, the capacity of a firm is to either produce 100 microwaves or 75 refrigerators. This is less confusing than just saying the capacity is 100 or 75. Another method of measuring capacity is by referring to the availability of inputs. Note that one specific measure of capacity can’t be used in all situations; it needs to tailored to the specific situation at hand.
Guidelines for calculating capacity
The operation managers need a methodology for evaluating capacity and the activities that determine it in specific situations. The steps in this analysis from a process for calculating capacity are as follows
- The first step is to describe the general flow of activities with in the process.
- Establish the time period.
- Establish a common unit of measurement for the entire process
- Identify the maximum capacity for the overall process
- Identify the effective capacity for the overall process
- Determine the demonstrated capacity
- Compare the demonstrated, effective and maximum capacities and take appropriate actions.
