Effective capacity is design capacity minus personal and other allowances.
Determinants of Effective Capacity:
Facilities: the dimensions and provision for expansion are key in the design of facilities. Other facility factors include locational factors (transportation costs, distance to plug , labor supply, energy sources). The layout of the work area can determine how smoothly work are often performed.
Product and repair Factors: The more uniform the output, the more opportunities there are for standardization of methods and materials. This results in greater capacity.
Process Factors: Quantity capability is a crucial determinant of capacity, but so is output quality. If the standard does not meet standards, then output rate decreases due to need of inspection and rework activities. Process improvements that increase quality and productivity may result in increased capacity.
Human Factors: The tasks that are needed in certain jobs, the array of activities involved and therefore the training, skill, and knowledge required to perform a job all affect the potential and actual output. Employee motivation, absenteeism, and labor turnover all affect the output rate also.
Policy Factors: Management policy can affect capacity by allowing or not allowing capacity options like overtime or second or third shifts.
Operational Factors: Scheduling problems may occur when an organization has differences in equipment capabilities among different pieces of equipment or differences in job requirements.
External Factors: Minimum quality and performance standards can restrict management's options for increasing and using capacity.
Supply Chain Factors
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