Production capacity is the maximum number of certain products, the usual assortment of appropriate quality, which the company produces in a certain period of time, provided that all the equipment has been used with maximum efficiency, and
labor resources are optimally. Let us explain the definition.
It should be noted that production capacity is an output not just of what products, but one that meets the standards established in the industry, enterprise or state (specifically for this product) and does not have any deviations or defects. In addition, it must be released according to proper production technology.
One more point. Production capacity is the release of a type of product that is characteristic of a given
type of enterprise. And no other.
Well and the last: production capacity is a product which is let out for a certain period of time. It can be anything - from an hour to a year. This will depend on the type of enterprise. For example, the production capacity of a shipyard will be pointless to measure in hours, but for an enterprise producing mineral water this approach will be acceptable.
The production capacity of equipment installed at the enterprise directly affects the work of the entire organization as a whole. After all, if one of the devices (electric welding machines, electric furnaces or other mechanisms) does not work, then production can slow down significantly, or even stop altogether. Changes in the work of even the most seemingly insignificant detail in the enterprise can be “felt” by the production capacity. This, in fact, resembles the work of our body, where each "detail" is responsible for something.
However, it is necessary to determine exactly what volume of products must be fulfilled. This figure will be determined by the requirements and requests provided by customers to a particular company. And also the demand for this type of product will influence the determination of the volume of production. This whole process is called “capacity utilization”. The amount of this load is determined by an incredible number of calculations so as not to produce unnecessary products or to avoid defects.
One of the most important indicators by which you can determine the economic efficiency of production capacity, as well as its work and success at the enterprise in general, has been, is and will be capital productivity. It is the ratio of commodity (or, as it is also called, gross) products to the average annual value of that part of the assets that an enterprise plans to use for a long period of time. These assets are also called the definition of "fixed assets". They take part in the production of goods more than once and transfer their value to them. In addition, they do not lose their consumer value and natural form during the production process. This is their economic essence.