CAPACITY AND LOCATION

PLANING
MEASURING CAPACITY
 Capacity of any plant is measured in different ways from
organization to organization.
 For Example

The capacity of an automobile plant is expressed as the

number of vehicles rolled out per month.
The capacity of mineral water plant is expressed as the
number of litres of water produced every month.
But for some organization the output can not be used as a
measure of capacity such as
Hotels, Hospitals and airlines etc
In such cases input quantities are seats, beds and rooms are
considered as capacity measures 1
SOME COMMON EXAMPLES OF CAPACITY
MEASURES ARE SHOWN IN THE TABLE
Organization Measure
OUTPUT

Automobile Manufactures Number cars

Milk dairy Litres of milk, tons of milk produced

Foundry Tons of casting

INPUT

Airline Number of seats

Restaurant Number of seats or tables

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CAPACITY MEASUREMENT
THE CAPACITY OF THE MANUFACTURING UNIT CAN BE EXPRESSED IN NUMBER OF
UNITS OF OUTPUT PER PERIOD. IN SOME SITUATIONS MEASURING CAPACITY IS
MORE COMPLICATED WHEN THEY MANUFACTURE MULTIPLE PRODUCTS. IN SUCH
SITUATIONS, THE CAPACITY IS EXPRESSED AS MAN-HOURS OR MACHINE HOURS.
THE RELATIONSHIP BETWEEN CAPACITY AND OUTPUT.

 Design capacity
 System capacity

 Licensed capacity

 Installed capacity

 Rated capacity

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CAPACITY MEASUREMENT
In case the previous capacities are not available then the
term rated capacity is estimated
Rated capacity=Number of machines x Machine hours x
Percentage of utilization x System efficiency

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DETERMINANTS OF EFFECTIVE CAPACITY
 Facilities
 Product and Service Factors

 Human Factors

 Process Factors

 Operational Factors

 Policy Factors

 Supply Chain Factors

 External Factors