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 ?
* The actual level of production may be used if it approximates normal capacity; with abnormally high production, fixed overhead allocated to each unit produced is decreased so that inventories are not measured above cost.
This time last year was before the credit crunch and it was at about half above its normal capacity and it was over-heating."
With the shutdown Norway has lost nearly 11% of its normal capacity of some 3.2 million barrels per day, reports The Associated Press.
During each shaking, the tail artery constricted to about half its normal capacity. Also, many smooth muscle cells in the vessel's lining began to contort and squeeze their contents into a ballooning segment known as a vacuole, explains coauthor Danny Riley.
The normal capacity of its blending plant is 12 thousand metric tonnes per annum.
The pump will kick into "turbo mode" if the amount of water exceeds the pump's normal capacity. The controller also runs a daily self-diagnostics test, detects pump jams (and tries to clear them!) and sounds an alarm if problems persist.
The unit had been scaled down to 80pc of its normal capacity, but a large number of unexpected staff absences forced its temporary closure.
A spokesman at the hospital said his decision "was a personal matter" but confirmed he would still work at the hospital in his normal capacity.
- Configure advanced boot image file options, such as whether the files have extended or normal capacity.
Symptoms related to kidney failure usually occur only in late stages of the disease, when kidney function has diminished to less than 25 percent of normal capacity. For many years before that point, kidney disease of diabetes exists as a silent process.
All of the units of the refinery will be operational at normal capacity once the maintenance details are fully taken care of.