capacity


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Capacity

Credit grantors' measurement of a person's ability to repay loans.

Capacity

The theoretical maximum number of products a company can produce at a given time. For example, an oil pump may have a capacity of X barrels per day, meaning that it cannot produce more than X. Companies rarely operate at full capacity, both to allow themselves leeway in the event of increased demand and because capacity may not be possible at a given time because of worker illness, machinery maintenance, or other reasons.

capacity

the maximum amount of output that a firm is physically capable of producing, at a point in time, given the fullest and most efficient use of its existing plant or plants.

Over time, a firm may adjust its capacity to meet changes in demand and the competitive situation facing it, investing in new plant or extending existing plant to meet an increase in demand, or closing down plant, permanently or temporarily (‘MOTHBALLING’), to meet a situation of OVERCAPACITY.

When preparing a PRODUCTION BUDGET, it is necessary to ensure that the firm has sufficient production capacity to meet planned output levels. A firm's capacity or the capacity of industry in general may be limited by the availability of capital equipment and labour.

The maximum rate of output which the firm can produce will depend upon the capacity of its individual factories which in turn depends upon the capacity of various departments and work stations within each factory See INPUT-OUTPUT CONTROL, PRODUCTION SCHEDULING, PRODUCTION-LINE BALANCING. See CAPACITY UTILIZATION, LIMITING FACTOR, RATIONALIZATION, INDIVISIBILITIES, CAPACITY CONSTRAINED RESOURCE, CAPACITY CONTROL, CAPACITY CUSHION, CAPACITY PLANNING, CAPACITY REQUIREMENTS PLANNING.

capacity

  1. 1the maximum amount of output that a firm or industry is physically capable of producing given the fullest and most efficient use of its existing plant. In microeconomic theory, the concept of full capacity is specifically related to the cost structures of firms and industries. Industry output is maximized (i.e. full capacity is attained) when all firms produce at the minimum point on their long-run average total cost curves (see PERFECT COMPETITION). If firms fail to produce at this point, then the result is EXCESS CAPACITY.
  2. in macroeconomics, capacity refers to POTENTIAL GROSS NATIONAL PRODUCT. The percentage relationship of actual output in the economy to capacity (i.e. potential national income) shows capacity utilization. See also MONOPOLISTIC COMPETITION.

capacity

The legal ability of parties to enter into contracts.
• Full capacity. Having unlimited ability to enter into binding contracts of all types.
• Limited capacity. Having the ability to enter into binding contracts for certain things, such as a minor's contracts for necessities, but also having the ability to disaffirm other contracts upon reaching legal age, for example.
• No capacity. Having no ability to enter into contracts, such as one who has been adjudicat- ed as mentally incompetent.

References in periodicals archive ?
by Geographic Region - Percentage Breakdown of Capacity
The rise in energy prices creates a new problem for economic policymakers because the capacity constraints cannot be easily addressed over the next four years.
capacity increases since 2001 will be more than 500,000 tons.
Santella and colleagues at Columbia University in New York recently tested this hypothesis by analyzing DNA repair capacity in pairs of sisters, one of whom had breast cancer and one of whom did not.
These units can usually be field upgraded in response to increasing future capacity and performance requirements--a concept know as Capacity on Demand.
While the much ballyhooed new capacity coming on line is stirring much of the push to China, the West Coast exporter notes that a significant amount of old capacity, both in North America as well as overseas, is closing.
Therefore, it is illogical to seek growth (in capacity and/or sales volume) in such an environment.
Three factors can contribute to a service provider's need for more access tandem switch capacity in their network: continued growth in wireless voice traffic, the large base of Internet dial-up users staying online longer and long distance calls that must access their local network.
The development of functional assessment instruments to evaluate a person's decision making capacity represents the most recent approach for addressing issues concerning informed consent for persons with disabilities (Marlett, 1984; Tor & Sales, 1994).
The Federal Reserve will publish revisions of its measures of industrial production (IP), capacity, capacity utilization, and industrial use of electric power on January 7, 1997.
Box 245 Tallapoosa, GA 30176 (404) 574-2321 or 800-277-8231 Fax: (404) 574-5315 Jimmy Digs, Sales Manager Equipment #11 mixers, lab mixers, calenders, extruders Mixing capabilities: SBR, NR, NBR, CR, ECO, CSM, EPDM, IIR, CIIR, FKM, CPE Capacity.

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