Production capacity measurement manual

1.1 INTRODUCTION

Production/operations are the process, which combines and transforms various resources used in
the production/operations subsystem of the organization into value added product/services in a
controlled manner as per the policies of the organization. Therefore, it is that part of an
organization, which is concerned with the transformation of a range of inputs into the required
(products/services) having the requisite quality level.

1.2CONCEPT OF PRODUCTION

Production function is that part of an organization, which is concerned with the transformation of
a range of inputs into the required outputs (products) having the requisite quality level.
Production is defined as “the step-by-step conversion of one form of material into another form
through chemical or mechanical process to create or enhance the utility of the product to the
user.” Thus production is a value addition process. At each stage of processing, there will be
value addition. Edwood Buffa defines production as „a process by which goods and services are
created‟. Some examples of production are: manufacturing custom-made products like, boilers
with a specific capacity, constructing flats, some structural fabrication works for selected
customers, etc., and manufacturing standardized products like, car, bus, motor cycle, radio,
television, etc.
Fig. 1.1 Schematic production system

1.3 PRODUCTION SYSTEM

The production system of an organization is that part, which produces products of an

organization. It is that activity whereby resources, flowing within a defined system, are
combined and transformed in a controlled manner to add value in accordance with the policies
communicated by management. A simplified production system is shown above.

The production system has the following characteristics: 1. Production is an organized activity,
so every production system has an objective. 2. The system transforms the various inputs to
useful outputs.3. It does not operate in isolation from the other organization system. 4. There
exists a feedback about the activities, which is essential to control and improve system
performance.

1.3.1 Classification of Production System

Production systems can be classified as Job Shop, Batch, Mass and Continuous Production
systems.
JOB SHOP PRODUCTION: Job shop production is characterized by manufacturing of one or
few quantity of products designed and produced as per the specification of customers within
prefixed time and cost. The distinguishing feature of this is low volume and high variety of
products. A job shop comprises of general purpose machines arranged into different departments.
Each job demands unique technological requirements, demands processing on machines in a
certain sequence. Characteristics

The Job-shop production system is followed when there is:

1. High variety of products and low volume.

2. Use of general purpose machines and facilities.

3. Highly skilled operators who can take up each job as a challenge because of uniqueness.

4. Large inventory of materials, tools, parts.

5. Detailed planning is essential for sequencing the requirements of each product, capacities for
each work centre and order priorities.

Advantages Following are the advantages of job shop production: 1. Because of general purpose
machines and facilities variety of products can be produced. 2. Operators will become more
skilled and competent, as each job gives them learning opportunities. 3. Full potential of
operators can be utilized. 4. Opportunity exists for creative methods and innovative ideas.

Limitations Following are the limitations of job shop production: 1. higher cost due to frequent
set up changes. 2. Higher level of inventory at all levels and hence higher inventory cost. 3.
Production planning is complicated. 4. Larger space requirements.

BATCH PRODUCTION: Batch production is defined by American Production and Inventory

Control Society (APICS) “as a form of manufacturing in which the job passes through the
functional departments in lots or batches and each lot may have a different routing.” It is
characterized by the manufacture of limited number of products produced at regular intervals and
stocked awaiting sales. Characteristics Batch production system is used under the following
circumstances: 1. when there is shorter production runs. 2. When plant and machinery are
flexible. 3. When plant and machinery set up is used for the production of item in a batch and
change of set up is required for processing the next batch. 4. When manufacturing lead time and
cost are lower as compared to job order production.

Advantages Following are the advantages of batch production: 1. Better utilization of plant and
machinery. 2. Promotes functional specialization. 3. Cost per unit is lower as compared to job
order production. 4. Lower investment in plant and machinery. 5. Flexibility to accommodate
and process number of products. 6. Job satisfaction exists for operators. Limitations Following
are the limitations of batch production: 1. Material handling is complex because of irregular and
longer flows. 2. Production planning and control is complex.

3. Work in process inventory is higher compared to continuous production. 4. Higher set up costs
due to frequent changes in set up.

MASS PRODUCTION Manufacture of discrete parts or assemblies using a continuous process

are called mass production. This production system is justified by very large volume of
production. The machines are arranged in a line or product layout. Product and process
standardization exists and all outputs follow the same path. Characteristics Mass production is
used under the following circumstances: 1. Standardization of product and process sequence. 2.
Dedicated special purpose machines having higher production capacities and output rates. 3.
Large volume of products. 4. Shorter cycle time of production. 5. Lower in process inventory. 6.
Perfectly balanced production lines. 7. Flow of materials, components and parts is continuous
and without any back tracking. 8. Production planning and control is easy. 9. Material handling
can be completely automatic. Advantages Following are the advantages of mass production: 1.
higher rate of production with reduced cycle time. 2. Higher capacity utilization due to line
balancing. 3. Less skilled operators are required. 4. Low process inventory. 5. Manufacturing
cost per unit is low. Limitations Following are the limitations of mass production: 1. Breakdown
of one machine will stop an entire production line. 2. Line layout needs major change with the
changes in the product design. 3. High investment in production facilities. 4. The cycle time is
determined by the slowest operation.
CONTINUOUS PRODUCTION

Production facilities are arranged as per the sequence of production operations from the first
operations to the finished product. The items are made to flow through the sequence of
operations through material handling devices such as conveyors, transfer devices, etc.
Characteristics Continuous production is used under the following circumstances: 1. Dedicated
plant and equipment with zero flexibility

SCOPE OF PRODUCTION

1. Material handling is fully automated. 3. Process follows a predetermined sequence of

operations. 4. Component materials cannot be readily identified with final product. 5. Planning
and scheduling is a routine action. Advantages Following are the advantages of continuous
production: 1. Standardization of product and process sequence. 2. Higher rate of production
with reduced cycle time. 3. Higher capacity utilization due to line balancing. 4. Manpower is not
required for material handling as it is completely automatic. 5. Person with limited skills can be
used on the production line. 6. Unit cost is lower due to high volume of production. Limitations
Following are the limitations of continuous production: 1. Flexibility to accommodate and
process number of products does not exist. 2. Very high investment for setting flow lines. 3.
Product differentiation is limited.

PLANT LAYOUT AND MATERIAL HANDLING

Plant layout refers to the physical arrangement of facilities. It is the configuration of

departments, work centers and equipment in the conversion process. The overall objective of the
plant layout is to design a physical arrangement that meets the required output quality and
quantity most economically. According to James Moore, “Plant layout is a plan of an optimum
arrangement of facilities including personnel, operating equipment, storage space, material
handling equipment‟s and all other supporting services along with the design of best structure to
contain all these facilities”. „Material Handling‟ refers to the „moving of materials from the store
room to the machine and from one machine to the next during the process of manufacture‟. It is
also defined as the „art and science of moving, packing and storing of products in any form‟. It is
a specialized activity for a modern manufacturing concern, with 50 to 75% of the cost of
production. This cost can be reduced by proper section, operation and maintenance of material
handling devices. Material handling devices increases the output, improves quality, speeds up the
deliveries and decreases the cost of production. Hence, material handling is a prime
consideration in the designing new plant and several existing plants.

PRODUCT DESIGN

Product design deals with conversion of ideas into reality. Every business organization has to
design, develop and introduce new products as a survival and growth strategy. Developing the
new products and launching them in the market is the biggest challenge faced by the
organizations. The entire process of need identification to physical manufactures of product
involves three functions: marketing, product development, and manufacturing.

Product development translates the needs of customers given by marketing into technical
specifications and designing the various features into the product to these specifications.
Manufacturing has the responsibility of selecting the processes by which the product can be
manufactured. Product design and development provides link between marketing, customer
needs and expectations and the activities required to manufacture the product.

PROCESS DESIGN Process design is a macroscopic decision-making of an overall process

route for converting the raw material into finished goods. These decisions encompass the
selection of a process, choice of technology, process flow analysis and layout of the facilities.
Hence, the important decisions in process design are to analyses the workflow for converting raw
material into finished product and to select the workstation for each included in the workflow.

PRODUCTION PLANNING AND CONTROL

Production planning and control can be defined as the process of planning the production in
advance, setting the exact route of each item, fixing the starting and finishing dates for each item,
to give production orders to shops and to follow up the progress of products according to orders.

The principle of production planning and control lies in the statement „First Plan Your Work and
then Work on Your Plan‟. Main functions of production planning and control includes planning,
routing, scheduling, dispatching and follow-up. Planning is deciding in advance what to do, how
to do it, when to do it and who is to do it. Planning bridges the gap from where we are, to where
we want to go. It makes it possible for things to occur which would not otherwise happen.
Routing may be defined as the selection of path which each part of the product will follow,
which being transformed from raw material to finished products. Routing determines the most
advantageous path to be followed from department to department and machine to machine till
raw material gets its final shape. Scheduling determines the programmer for the operations.
Scheduling may be defined as „the fixation of time and date for each operation‟ as well as it
determines the sequence of operations to be followed.

Capacity Strategies

Within supply chain optimization and manufacturing and production management, there are
three basic capacity strategies used by different organizations when they consider increased
demand:

1. The lead capacity strategy

2. The lag capacity strategy
3. The match capacity strategy

Lead Capacity Strategy

As the name suggests, the lead capacity strategy adds capacity before the demand actually
occurs. Companies often use this capacity strategy, as it allows a company to ramp up production
at a time when the demands on the manufacturing plant are not so great.

If any issues occur during the ramp-up process, these can be dealt with so that when the demand
occurs, the manufacturing plant will be ready.

Companies like this approach as it minimizes risk. As customer satisfaction becomes

increasingly important, businesses do not want to fail to meet delivery dates due to the lack of
capacity.
Another advantage of the lead capacity strategy is that it gives companies a competitive
advantage. For example, if a toy manufacturer believes a certain item will be a popular seller for
the Christmas period, it will increase capacity prior to the anticipated demand so that it has the
product in stock while other manufacturers would be playing “catch up.”

However, the lead capacity strategy does carry some risks. If the demand does not materialize,
the company could quickly find itself with unwanted inventory as well as the expenditure of
ramping up capacity unnecessarily.

Lag Capacity Strategy

This is the opposite of the lead capacity strategy. With the lag capacity strategy, the company
will ramp up capacity only after the demand has occurred.

Although many companies follow this strategy, success is not always guaranteed. However,
there are some advantages to this method.

Initially, it reduces a company‟s risks. By not investing at a time of lesser demand and delaying
any significant capital expenditure, the company will enjoy a more stable relationship with its
bank and investors.

Secondly, the company will continue to be more profitable than companies who have made the
investment in increased capacity.

Of course, the downside is that the company would have a period where the product is
unavailable until the capacity is finally increased.

Match Capacity Strategy

The match capacity strategy is one in which a company tries to increase capacity in smaller
increments to coincide with the increases in volume.

Although this method tries to minimize the overcapacity and under-capacity of the other two
methods, companies also get the worst of the two, as they can find themselves over capacity and
under capacity at different periods.
To optimize your supply chain, you need to be able to supply your customers with what they
want, when they want it—and accomplish that by spending as little money as possible. By
understanding and taking advantage of your facility's actual manufacturing and
production capacity, you can accomplish this all-important supply chain optimization goal.

Choosing the Right Strategy for Your Operation

Choosing the right strategy to follow when increasing the capacity of your operation is essential
to achieving sustainable, reliable growth. Unfortunately, there is no single “correct” answer as to
which strategy you should follow; recommendations and guidance will depend upon the specifics
of your operation, industry, and business cycle.

That being said, many of the most popular and innovative of today‟s order fulfillment
technologies have embraced the concept of modularity, giving operations increased flexibility as
to how they choose to deploy and invest their capital. Instead of requiring a complete warehouse
redesign or system overhaul, many operations can now add technologies like goods-to-
person, AGVs, AMRs, and other technologies piece by piece, preventing the need of putting in
too great of an investment.

Capacity is the maximum output rate of a facility.

Capacity planning is the process of establishing the output rate that can be achieved at a facility
Organizations involved in capacity planning for various reasons
 Changes in demand
 Changes in technology
 Changes in environment
 Perceived threats or opportunity

The main factors that affect production capacity

 Utilization of plant, equipment and machinery.

 Basic nature of manufacturing processes employed.

 Efficiency of plant.
  Volume, capacity, and uniformity of production

 Production factors: The production of all departments should be properly planned,

coordinated and controlled. The right quality of raw-materials should be used for
production. The production process should be simplified and standardized. If
everything is well it will increase the productiveness

 Technical factors, Technical factors are the most important ones. These include
proper location, layout and size of the plant and machinery, correct design of machines
and equipment, research and development, automation and computerization, etc. If the
organization uses the latest technology, then its productiveness will be high.

These are factors that provide the physically immersive qualities of an experience. They generally are
the parameters which lead us to label an experience belonging to a particular medium, and within that
medium, the degree of sensorial details. Of course, for some media, the values of some factors will be
at the zero end of the spectrum—i.e., not all media are interactive, or physically immersive.

 Multimodalities: the number of sensorial modalities presented to the participant;

 Latency: the response time of the content to user input;
 Resolution: the precision of the stimuli in any given sensory modality;
 Sensorial richness: the details within a sensory modality;
 Number of participants: the degree to which the experience is shared with other
participants;
 Interaction capabilities: the degree to which the user can alter the world (at least their
place in the world); and

 Organization factor: production is directly proportional to organizational factor. A
simple type of organization should be used. Authority and responsibility of every
individual and department should be defined properly. The line and staff relationships
should also be clearly defined so, conflicts between line and staff should be avoided.
There should be a division of labor and specialization as far as possible. This will
increase organization‟s productiveness.
 Personnel factors: Production of organization is directly related to personnel factors. The right
individual should be selected for suitable posts. After selection, they should be given proper
 training and development. They should be given better working conditions and work-
environment. They should be properly motivated; financially, non-financially and with positive
incentives. Incentive wage policies should be introduced. Job security should also be given.
Opinion or suggestions of workers should be given importance. There should be proper
transfer, promotion and other personnel policies. All this will increase the productiveness of the
organization.
 Finance factors: Finance is the life-blood of modem business. There should be a
better control over both fixed capital and working capital. There should be proper
Financial Planning. Capital expenditure should be properly controlled. Both over and
under utilization of capital should be avoided. The management should see that they
get proper returns on the capital which is invested in the business. If the finance is
managed properly the productiveness of the organization will increase

 Management factors, organization rests on the management factors. The management of

organization should be scientific, professional, future-oriented, sincere and competent.
Managers should possess imagination, judgment skills and willingness to take risks. They
should make optimum use of the available resources to get maximum output at the lowest cost.
They should use the recent techniques of production. They should develop better relations with
employees and trade unions. They should encourage the employees to give suggestions. They
should provide a good working environment, and should motivate employees to increase their
output. Efficient management is the most significant factor for increasing productiveness and
decreasing cost
 Government factors (rules and regulations) the management should have a proper
knowledge about the government rules and regulations. They should also maintain
good relations with the government.

 Location factors : Production also depends on location factors such as Law and order
situation, infrastructure facilities, nearness to market, nearness to sources of raw-
materials, skilled workforce, etc
  Product capacity measurements

Defining Capacity

Capacity is defined under 3 categories; design capacity, effective capacity and actual capacity.
The operations utilization of resources and the efficiency of its processes can then be calculated
using these.

Design Capacity

This is a theoretical number and not one that is applied to the daily production of an operation.
Design capacity is the output that an operation can produce continuously, at maximum rate
without stopping for any shift changeovers, maintenance or any other delays. What the process is
capable of producing under perfect conditions. In some cases this might be interpreted as
maximum capacity.

Effective Capacity

This considers how the operation will run on a long term basis, how it will be staffed and how it
will be maintained. All planned stoppages under the normal working time frame are taken into
consideration. This can also be known as available capacity. These stoppages may include shift
changeovers, lunch breaks, set up times and many other operational factors.

Actual capacity

This is the same as effective capacity but contains unplanned losses as well as planned ones.
These could include poor work rate, absenteeism or new staff training for example.

Figure 3.2 the proportions of capacity measures

Actual output plus unplanned losses is the same as effective capacity. Therefore the operation
which is working its assets efficiently is minimizing unplanned losses.

The three production capacity is mathematically expressed as follows.

 Design capacity:
Maximum output rate under ideal conditions
𝒘𝒐𝒓𝒌𝒊𝒏𝒈 𝒉𝒐𝒖𝒓𝒔 𝒑𝒆𝒓 𝒅𝒂𝒚∗𝒘𝒐𝒓𝒌 𝒅𝒂𝒚𝒔 𝒊𝒏 𝒂 𝒘𝒆𝒆𝒌∗𝒂𝒎𝒐𝒖𝒏𝒕 𝒐𝒇 𝒘𝒐𝒓𝒌𝒆𝒓
Design capacity = 𝒘𝒐𝒓𝒌𝒆𝒓 𝒔𝒑𝒆𝒏𝒅 𝒕𝒊𝒎𝒆 𝒑𝒆𝒓 𝒑𝒊𝒄𝒆𝒔 𝒐𝒇 𝒘𝒐𝒓𝒌

 Effective capacity:
Maximum output rate under normal (realistic) conditions
Design capacity minus allowances such as personal time (e.g. coffee break), maintenance, and
scrap
𝐰𝐨𝐫𝐤𝐢𝐧𝐠 𝒉𝒐𝒖𝒓𝒔 𝒑𝒆𝒓 𝒅𝒂𝒚 𝒎𝒊𝒏𝒖𝒔 𝒕𝒉𝒆 𝒍𝒐𝒔𝒕 𝒕𝒊𝒎𝒆∗𝒘𝒐𝒓𝒌 𝒅𝒂𝒚𝒔 𝒊𝒏 𝒂 𝒘𝒆𝒆𝒌∗𝒂𝒎𝒐𝒖𝒏𝒕 𝒐𝒇 𝒘𝒐𝒓𝒌𝒆𝒓
Effective capacity= 𝒘𝒐𝒓𝒌𝒆𝒓 𝒔𝒑𝒆𝒏𝒅 𝒕𝒊𝒎𝒆 𝒑𝒆𝒓 𝒖𝒏𝒊𝒕 𝒐𝒇 𝒘𝒐𝒓𝒌

 Actual output capacity

rate of output actually achieved-cannot exceed effective capacity due to machine breakdown,
absenteeism, shortage of materials

𝐰𝐨𝐫𝐤𝐢𝐧𝐠 𝒉𝒐𝒖𝒓𝒔 𝒑𝒆𝒓 𝒅𝒂𝒚 𝒎𝒊𝒏𝒖𝒔 𝒕𝒉𝒆 𝒂𝒗𝒆𝒓𝒂𝒈𝒆 𝒍𝒐𝒔𝒕 𝒕𝒊𝒎𝒆∗𝒘𝒐𝒓𝒌 𝒅𝒂𝒚𝒔 𝒊𝒏 𝒂 𝒘𝒆𝒆𝒌∗𝒂𝒎𝒐𝒖𝒏𝒕 𝒐𝒇 𝒘𝒐𝒓𝒌𝒆𝒓
Actual output capacity =
𝒘𝒐𝒓𝒌𝒆𝒓 𝒔𝒑𝒆𝒏𝒅 𝒕𝒊𝒎𝒆 𝒑𝒆𝒓 𝒖𝒏𝒊𝒕 𝒐𝒇 𝒘𝒐𝒓𝒌

 Design Capacity > Effective Capacity > Actual Output capacity

Measuring Effectiveness of Capacity Use
Measures how much of the available capacity is actually being used:
𝑎𝑐𝑡𝑢𝑎𝑙 𝑜𝑢𝑡𝑝𝑢𝑡 𝑐𝑎𝑝𝑎𝑐𝑖𝑡𝑦
Efficiency = *100%
𝑒𝑓𝑓𝑒𝑐𝑡𝑖𝑣𝑒 𝑐𝑎𝑝𝑎𝑐𝑖𝑡𝑦

𝑎𝑐𝑡𝑢𝑎𝑙 𝑜𝑢𝑡𝑝𝑢𝑡 𝑐𝑎𝑝𝑎𝑐𝑖𝑡𝑦

Capacity utilization = *100%
𝑑𝑒𝑠𝑖𝑔𝑛 𝑐𝑎𝑝𝑎𝑐𝑖𝑡𝑦

Efficiency is the percent of effective capacity achieved

Capacity Utilization is the percent of design capacity achieved

Example in the agro stone production technology only the output capacity measurement
system is used. The output measures count the finished units from the process such as a
production of 6 boards per day per labor. To measure capacity the agro stone industry use
the formula such as

In the organization 15 workers work in 0ne shift an eight hour per day for six work days in
a week. They take to fifteen minute’s tea breaks and have a half hour lunch break. The
time available for work is seven hours per day per worker. Each worker spends 70 minutes
with each board. How many boards could the workers process during a six day in a week?

Design Capacity

(ዲዛይን ካፓሲቲ ለሁሉም ማሽኖች መለካት ላያስፈልግ ይችላል፡ ምክንያቱም ማሽኑ

ማንዋል ላይ ያለውን ወስዶ ዩቲላይዜሽን መለካት ይቻላል፣ ዲዛይን ካፓሲቲ የሌላቸው
ማሽኖች ካሉ ደግሞ ከዚህ በታች በተቀመጠው ፎርሙላ መስራት ይቻላል፡፡ )

Design capacity is the output that an operation can produce continuously, at maximum rate
without stopping for any shift changeovers, maintenance or any other delays. What the
process is capable of producing under perfect conditions. In some cases this might be
interpreted as maximum capacity.

From the above information design capacity of agro stone production technology is
calculated as

𝟕 𝒉𝒐𝒖𝒓𝒔 𝒑𝒆𝒓 𝒅𝒂𝒚∗𝟔𝟎𝒎𝒊𝒏𝒖𝒕𝒆𝒔∗𝟔 𝒅𝒂𝒚∗𝟏𝟓 𝒘𝒐𝒓𝒌𝒆𝒓

Design capacity = 𝟕𝟎𝒎𝒊𝒏𝒖𝒕𝒆𝒔 𝒑𝒆𝒓 𝒃𝒐𝒂𝒓𝒅
= 540 boards in a week

Effective capacity

This considers how the operation will run on a long term basis, how it will be staffed and
how it will be maintained. All planned stoppages under the normal working time frame are
taken into consideration. This can also be known as available capacity. These stoppages
may include shift changeovers, lunch breaks, set up times and many other operational
factors.

From the above information in addition to one hour lost in tea break and lunch the agro
stone production technology panned 30 minutes or 0.5hours lost per day considering this
the effective capacity of the company is calculated as

Effective

𝟔.𝟓𝒉𝒐𝒖𝒓𝒔 𝒑𝒆𝒓 𝒅𝒂𝒚∗𝟔𝟎 𝒎𝒊𝒏𝒖𝒕𝒆𝒔∗𝟔 𝒅𝒂𝒚𝒔∗𝟏𝟓 𝒘𝒐𝒓𝒌𝒆𝒓

Production capacity = 𝟕𝟎 𝒎𝒊𝒏𝒖𝒕𝒆𝒔 𝒑𝒆𝒓 𝒅𝒂𝒚

= 501.4 which is 502 boards per week

o Actual capacity

This is the same as effective capacity but contains unplanned losses as well as planned ones.
These could include poor work rate, absenteeism or new staff training for example.

From the calculation in addition to the existing information the operational manager tell us
that due to poor work rate and absenteeism an average of 20 minutes or 0.33 hours lost per
day by considering this the actual capacity of the agro stone production technology is
calculated as

𝟔.𝟏𝟕𝒉𝒐𝒖𝒓𝒔∗𝟔𝟎𝒎𝒊𝒏𝒖𝒕𝒆𝒔∗𝟔 𝒅𝒂𝒚𝒔∗𝟏𝟓𝒘𝒐𝒓𝒌𝒆𝒓𝒔
Actual capacity=
𝟕𝟎𝒎𝒊𝒏𝒖𝒕𝒆𝒔

= 476 boards per week

Efficiency and utilization calculation

 𝑎𝑐𝑡𝑢𝑎𝑙 𝑜𝑢𝑡𝑝𝑢𝑡 𝑐𝑎𝑝𝑎𝑐𝑖𝑡𝑦 476
Efficiency = = ∗ 100 = 94.8%
𝑒𝑓𝑓𝑒𝑐𝑡𝑖𝑣𝑒 𝑐𝑎𝑝𝑎𝑐𝑖𝑡𝑦 502

The efficiency of the agro stone production technology is 94.8%

Utilization
𝒂𝒄𝒕𝒖𝒂𝒍 𝒐𝒖𝒕 𝒑𝒖𝒕
Utilization =𝒅𝒆𝒔𝒊𝒈𝒏 𝒄𝒂𝒑𝒂𝒄𝒊𝒕𝒚 ∗ 100, from the above calculation actual output of the company is

540 boards per week and design capacity of the company is 680 so
476 𝑏𝑜𝑎𝑟𝑑𝑠
Utilization= ∗ 100% which is equal to 88.1%
540

Remark

To measure production capacity in our case we choose only capacity utilization formula
(ለእኛ በዋናነት የምንጠቀመው በመጨረሻ ካፓሲቲ ዩቲላይዜሽንን ነው፡፡)

 The labor must be direct contact to the work

 Minimum 30% of our industries per year should be considered in capacity
utilization measurement
Reference

1. Production and operational management (N.suresh)

2. file:///F:/BOYDELL_2011_pub_Ch7_Capacity_planning_and_management.pdf
3. Plant capacity analysis in a dairy company, applying montecarlo simulation
4. https://www.google.com/search?q=how to%20%20determining%20plant%20capacity
5. Industrial management and resources utilization
6. giz/neep, 2012: baseline study of selected sector industries to assess the potentials for
more efficient use of energy.
7. Central bureau of statistics (cbs), 2007: census of manufacturing establishments carried
out in the fiscal year 2006/07.