The term “production capacity” is often used in manufacturing to refer to the maximum amount of output that can be produced by a manufacturing process or plant. There are various ways to measure production capacity, and the most appropriate method will depend on the type of manufacturing process and the products being produced. In this blog post, we will explore some of the methods that can be used to measure manufacturing production capacity.
- Machine hour capacity = number of usable machines x hours employees can use machines.
- Hours to produce one product = number of products produced in a day / hours of operation.
- Production capacity = machine hour capacity / hours to produce one product.
Why is manufacturing production capacity important?
Manufacturing production capacity is important for many reasons, including:
Meeting demands
The amount of merchandise your employees should produce to sell depends on market demands. You can quickly give people the products they want by reaching a capacity that is roughly equal to the market demand from customers. Understanding your factory’s production capacity will help you adjust it as necessary since satisfying customer demands is essential to a business’ success.
Optimizing production
Knowing your production capacity can also aid in production optimization and more efficient resource use. Your employees may not have much work to do, and your equipment may go unused if your capacity is significantly greater than the demand for your products. By measuring your production capacity, you can avoid producing more than what the market will bear and make the best use of your resources and employees’ time.
Assigning duties fairly
Knowing your production capacity will also help you more fairly assign tasks to your staff because too much or too little work can negatively impact job satisfaction. Knowing the capacity of your units enables you to predict the amount of work that each employee can complete in a workday more accurately, enabling you to give them responsibilities that make sense within the parameters of your production. If workers have a consistent understanding of their responsibilities, they can more easily get ready for their workdays.
Exceeding expectations
You can exceed your customers’ expectations and make sure you only make promises you can keep when you know your manufacturing plant’s production capacity. Customers can be directly informed if you know your team can only produce a certain quantity of a product over a certain time period, which will help them understand what you can deliver. On the other hand, if your team completes the task faster than anticipated, this might increase customer satisfaction and your reputation.
Making improvements
You can determine when to make facility improvements by routinely calculating your production capacity and comparing it to market demand. You can better understand how to change your environment when you notice that your capacity is greater than or less than the demand, or that your employees are dissatisfied with their levels of work. When you become aware of problems with your capacity, you might increase the amount of equipment available or develop new positions for employees to fill.
Creating goals
Goal-setting for your team and plant can be made simpler by understanding production capacity. Setting realistic goals that motivate staff to produce high-quality work on time is easier when you are aware of how much they can produce in a given period of time. This is crucial when informing upper management about the productivity levels and potential of your facility.
Measuring performance
Because you can develop standardized metrics for how much work your employees should complete, determining the capacity of production in your workplace is beneficial for your employee review procedure as well. You can use this number to determine whether your team consistently works at, below, or above capacity because capacity determines the potential amount of work that employees can complete. With this knowledge, you can modify their instruction, work schedules, and job responsibilities to streamline the workflow and maintain the capacity as much as possible.
Adapting processes
It’s also advantageous to measure production capacity when your workplace or industry undergoes changes so you can modify your production process for more productive work. An illustration of this would be if seasonal trends increased demand for your products, causing you to calculate production capacity and discover that it was insufficient to meet the demand. Then, you can resolve this immediately by modifying your procedure, such as by hiring seasonal workers, to increase capacity while demand is high for a brief period of time.
What is manufacturing production capacity?
The number of goods your employees can produce in a certain amount of time, such as an hour, day, or week, is known as manufacturing production capacity. The maximum rate at which workers can produce goods using the tools, materials, and time allotted to them during the workday is known as the production capacity. It’s crucial for managers in this industry to regularly assess the production capacity for their production unit because in the manufacturing industry, production capacity frequently changes depending on a variety of factors.
For example, your factory may produce metal water bottles. Your workplace’s daily production capacity is 500 water bottles if your employees can consistently produce that many. Recalculating enables you to set realistic expectations as your production capacity could increase to 1000 water bottles per day if you acquire additional equipment and hire more personnel.
How to measure manufacturing production capacity
To determine your production limits for a single product or a range of products, follow these steps for measuring manufacturing production capacity:
1. Consider your purpose
Depending on how many different products you intend to produce, the goal of measuring production capacity may change. Knowing how many items you can produce in a specific amount of time is important if you want to produce a lot of one kind of product. You can determine your facility’s daily production capacity by using the formula for one product. This is especially helpful if your factory only produces a specific type of product.
This may differ if youre creating various types of products. While you can estimate each product’s individual capacity, it’s sometimes more useful to know how long it might take your team to complete a variety of products. For estimating how long it might take to fulfill orders involving various items, the formula for multiple product types is helpful.
2. Determine the machine hour capacity
Determine the machine hour capacity before you can calculate the capacity of a single product. This capacity level refers to the number of hours that workers can operate all of the equipment at your manufacturing facility. The number of usable machines and the hours of the workday that employees can use those machines determine the potential amount of time that employees can work on a product. The formula for machine hour capacity is as follows:
Machine hour capacity is determined by the quantity of usable machines and the number of working hours.
3. Calculate the production capacity for one product
You can determine the production capacity for one product once you know the machine hour capacity. You can determine how many of a particular type of product your team can produce in a day by understanding this type of capacity. This calculation uses the number of machine hours and the amount of time needed to make one item. Using data from previous production days, use this formula to determine how long it takes to produce one item:
Products produced in a day divided by operating hours equals the number of products produced in a day.
Then, you can add the time needed to produce one item to the following production capacity formula:
Production capacity is calculated as the ratio of machine hours per unit of production.
4. Figure out the production capacity for multiple products
Use the formula for production capacity for one product on each item you want to calculate the production capacity for a variety of products. Using this technique, you have the ability to produce each type of item on an individual basis. However, you can also calculate the number of machine hours needed to produce a variety of goods and estimate how long it might take to complete an order.
You need to know how many of each kind of product you want to produce and how long it takes to produce each one in order to use the following formula for multiple products:
Multi-product machine hour capacity is calculated as follows: (quantity of product A times production time) = (quantity of product B times production time).
Example calculations of manufacturing production capacity
To better comprehend how to apply capacity formulas to your facility, take a closer look at the example production capacity calculations below:
Example of production capacity for one product
You want to know how many custom-sized cardstock pieces your employees can produce each day because your business produces stationary. Your team uses 12 machines and puts in eight hours a day to cut the paper. One stack of paper costs thirty minutes to produce, and you sell them separately. First, you calculate the machine hour capacity:
96 = 12 x 8
Then you determine the output required to produce one stack of paper:
192 = 96 / 0.5
Your custom-sized cardstock has a daily production capacity of 192 stacks of paper.
Example of production capacity for multiple products
In your facility, your team creates multiple types of shoes. You want to know how long it might take to complete a client order for 50 pairs of sandals and 70 pairs of sneakers for their store. In your factory, it takes eight hours to create a pair of sandals and sixteen hours to create a pair of sneakers. You calculate the machine hour capacity for multiple products:
1,520 = (50 x 8) + (70 x 16)
The sandals and sneakers for your customer may require 1,520 working hours from your team to complete.
How to do Manufacturing Capacity Planning
FAQ
What is production capacity in manufacturing?
Production capacity is the highest level of output or production that can be achieved in a given business given the resources at hand. The capacity is calculated over days or weeks or months. The measurement is carried out so that we can modify our production capacity in response to market demand.
How the capacity of a manufacturing concern can be measured?
The maximum output that can be achieved when producing manufactured goods is known as production capacity. It is typically a part-based metric that determines how many goods can be produced with a given amount of resources (labor, materials, and time).
How do companies measure capacity?
The number of units of output per period can be used to express the manufacturing unit’s capacity. When a company manufactures multiple products, measuring capacity can be more difficult in some circumstances. In these circumstances, the capacity is expressed in terms of man- or machine-hours.
