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practical capacity

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Definition of practical capacity

Practical Capacity Image 1

practical capacity

the physical production or service volume that a firm could achieve during normal working hours with consideration given to ongoing, expected operating interruptions



Related Terms:

Capacity

The maximum volume of products or services that can be produced given limitations of space,
people, equipment or financial resources.


capacity

a measure of production volume or some other activity base


Capacity utilization

The proportion of capacity that is able to be utilized to fulfil customer demand for products
or services.


Debt capacity

Ability to borrow. The amount a firm can borrow up to the point where the firm value no
longer increases.


Debt Capacity

An assessment of ability and willingness to repay a loan from anticipated future cash flow or other sources.



Excess Capacity

Unused production capacity.


expected capacity

a short-run concept that represents the
anticipated level of capacity to be used by a firm in the
upcoming period, based on projected product demand


Practical Capacity Image 2

ideal capacity

see theoretical capacity


normal capacity

the long-run (5–10 years) average production
or service volume of a firm; it takes into consideration
cyclical and seasonal fluctuations


practical standard

a standard that can be reached or slightly
exceeded with reasonable effort by workers; it allows for
normal, unavoidable time problems or delays and for
worker breaks; it is often believed to be most effective in
inducing the best performance from workers, since such
a standard represents an attainable challenge


productive capacity

the number of total units that could be
produced during a period based on available equipment time
productive processing time the proportion of total time that
is value-added time; also known as manufacturing cycle
efficiency


theoretical capacity

the estimated maximum production or
service volume that a firm could achieve during a period



 

 

 

 

 

 

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