What Is Productive Capacity?

Production capacity is a technical parameter that reflects the processing capacity owned by an enterprise, and it can also reflect the production scale of an enterprise. In short, production capacity is an important indicator of the production possibilities of an enterprise.

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Production capacity reflects the processing capacity owned by the enterprise

There are many different expressions of production capacity in actual use, including: design production capacity, check production capacity and planned production capacity.

Design production capacity

It is the production capacity stipulated in the capital construction task book and technical documents when the enterprise is established. It is stipulated in the plant design documents.

There are many factors that can be used by enterprises to regulate and control production capacity. From a planning point of view, these factors can be divided into long-term, medium-term and short-term categories according to the length of time it takes to acquire capabilities.

1.Long-term factors

It takes longer than one year to obtain production capacity and can be attributed to long-term factors. They include: construction of new plants, expansion of old plants, purchase and installation of large complete sets of equipment, and technological transformation. These measures can fundamentally change the status of the production system and greatly increase production capacity, but at the same time require a large amount of capital investment. Applying these factors is a strategic decision.

2. Medium-term factors

Those factors that affect production capacity within six months to one year are medium-term factors. For example, the use of new technology and equipment, the addition of some general-purpose equipment that can be bought at any time, or small-scale transformation or innovation of equipment; the addition of workers, and the commission of certain production tasks to other factories, etc., including the use of inventory The role of regulating production. These factors are local expansions based on existing production facilities. They belong to middle management decisions. Generally considered in the formulation and implementation of annual production plans.

3. Short-term factors

Short-term factors can affect production capacity within half a year or even that month. There are many such factors, such as:

1) working overtime;

2) Temporarily increase workers and increase shifts;

3) Take measures to reduce the reject rate;

4) Improve the quality of raw materials;

5) Improve equipment maintenance system. This can reduce equipment failure time, improve equipment utilization and increase production capacity;

6) Adopt an appropriate wage reward system to stimulate workers' labor enthusiasm and increase production in a short time;

7) Reasonably select batches. The difference in batch selection will affect the change of equipment adjustment time. Reasonable selection of batches can reduce unnecessary equipment adjustment time and increase equipment utilization, which increases equipment production capacity;

The short-term adjustment factor of production capacity is the improvement of the use of existing production facilities, which are all decisions at the operating level.

In summary, the issue of production capacity involves a series of important decisions that will determine the total investment and operating costs of the plant. To sum up, these decisions include: the size of the production scale related to the sales level at different periods; determining the most economical shift system; determining how much surplus production capacity the factory reserves is economical. For a certain period of time, the financial situation of an enterprise often limits access to optimal production capacity. A company with limited funds must often make the right choices about the available funds: whether it is used for advertising or product development or equipment upgrades.