Production capacity

From CEOpedia | Management online
Production capacity
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Capacity or production is measured by indicators such as production, productivity, capacity utilization, efficiency or effectiveness.

Performance of the production process, is the amount of the product which the company can produce in a given time. The company may use estimates of demand for certain good in order to establish the necessary production capacity, however, the amount of manufactured products during can significantly deviate from the planned amount of production. This depends on the disturbance of the process, quality level, efficiency of equipment, and many other factors related to the manufacturing process. Productivity is the volume of production in relation to the quantity of resources consumed.

One of the key measures of business performance is production capacity.

It indicates maximum quantity of product that may be produced in the specified time.

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