Define theoretical and rated capacity and name four factors that affect a company's capacity. Indicate how each factor impacts rated capacity

What will be an ideal response?

Answer: Theoretical capacity is the maximum output capability per time period, allowing for no adjustments for preventive maintenance, unplanned downtime, and the like. Rated capacity is the long-term, expected output capability of a resource or system; in other words, it takes into account unplanned downtime, preventive maintenance, and other typical disruptions to planned output. Rated capacity is affected by the number of shifts and lines being operated. As a plant moves from one to two or more shifts or lines, capacity increases. Product variations are another source of variation in capacity. Setups in between products reduce capacity and some products can be made with fewer resources than others, thereby increasing capacity. In general, conformance quality is directly related to rated capacity; as conformance quality increases, capacity increases and vice-versa. Other factors include the capacity of other members of the supply chain, especially if one is functioning as a constraint, and the status of temporary workers and their mix of skills.