DEFINITION of 'Aggregate Capacity Management '

The process of planning and managing the overall capacity of an organization's resources. Aggregate capacity management aims to balance capacity and demand in a cost-effective manner. It is generally medium-term in nature, as opposed to day-to-day or weekly capacity management. The term "aggregate" denotes the fact that this form of capacity management considers a resource such as manpower or production capacity in total, without distinguishing between different types.

BREAKING DOWN 'Aggregate Capacity Management '

For example, in a plant that manufactures various types of computers, aggregate capacity management would take into account the total number of computers to be manufactured over a three-month period, without considering the composition of the product mix – desktop, laptop or notebook computers.


Aggregate capacity management is generally a three-step process – measuring aggregate demand and capacity levels for the planning period, identifying alternative capacity plans in case of demand fluctuations, and choosing an appropriate capacity plan.

RELATED TERMS
  1. Capacity Management

    The management of the limits of an organization's resources, ...
  2. Capacity Requirements Planning ...

    An accounting method used to determine the available production ...
  3. Capacity Utilization Rate

    A metric used to measure the rate at which potential output levels ...
  4. Fiscal Capacity

    In economics, the ability of groups, institutions, etc. to generate ...
  5. Excess Capacity

    A situation in which actual production is less than what is achievable ...
  6. Activity Capacity

    The degree to which a particular action is expected to perform. ...
Related Articles
  1. Investing

    Calculating the Capacity Utilization Rate

    Capacity utilization rate is a ratio used to compare a current usage level against a maximum potential level.
  2. Investing

    What is Capacity Utilization Rate?

    The capacity utilization rate shows how much a firm or economy is producing as a percentage of what it’s capable of producing.
  3. Insights

    Capacity Utilization: A Strike Against Rate Hikes

    Despite a recent jump in certain prices indices, capacity underutilization suggests inflation is not a threat, and a more dovish Fed should be welcomed.
  4. Investing

    Is It Time To Short This Industry Favorite?

    A combination of capacity growth, higher fuel prices and worries about the health of the global economy have sent airline stocks skidding this year. The US Global Jets ETF (NYSE:JETS) is down ...
  5. Investing

    Brexit Fallout: Delta Cuts Capacity on U.K. Routes

    Delta Air Lines (NYSE: DAL) reported better-than-expected second-quarter results on Thursday morning, sending the stock up close to 4% in early trading. Planned cost cuts from reducing the capacity ...
  6. Investing

    One Airline Ready To Fly Higher And One Not Cleared For Takeoff

    A combination of capacity growth, higher fuel prices and worries about the health of the global economy have sent airline stocks skidding this year. The US Global Jets ETF (NYSE:JETS) is down ...
  7. Financial Advisor

    Risk Tolerance Only Tells Half The Story

    Just because you're willing to accept a risk, doesn't mean you always should.
  8. Insights

    Explaining Aggregate Supply

    Aggregate supply is the total supply of goods and services an economy produces in a given time period.
  9. Insights

    What's Aggregate Demand?

    Aggregate demand is a macroeconomic term describing the total demand in an economy for all goods and services at any given price level in a given time period.
  10. Insights

    Cost-Push Inflation Versus Demand-Pull Inflation

    Gain a deeper understanding of aggregate supply and demand, forces which raise the price of goods and services.
RELATED FAQS
  1. How long should an expansionary economic policy be implemented?

    Finding the optimal time period to end expansionary economic policy is an urgent issue; the key is found with capacity utilization. Read Answer >>
  2. Does the law of diminishing marginal returns only apply to labor?

    Learn more about how the law of diminishing returns is used by economists and businesses. Find out more about the laws of ... Read Answer >>
  3. How can the federal reserve increase aggregate demand?

    Learn about the Federal Reserve's role in increasing aggregate demand. Fiscal policy tends to be more effective in increasing ... Read Answer >>
  4. What factors cause shifts in aggregate demand?

    Find out how aggregate demand is calculated in macroeconomic models. See what kinds of factors can cause the aggregate demand ... Read Answer >>
  5. How are aggregate demand and GDP related?

    See why aggregate demand and gross domestic product (GDP) are necessarily the same thing according to Keynesian macroeconomic ... Read Answer >>
Hot Definitions
  1. Magna Cum Laude

    An academic level of distinction used by educational institutions to signify an academic degree which was received "with ...
  2. Cover Letter

    A written document submitted with a job application explaining the applicant's credentials and interest in the open position. ...
  3. 403(b) Plan

    A retirement plan for certain employees of public schools, tax-exempt organizations and certain ministers. Generally, retirement ...
  4. Master Of Business Administration - MBA

    A graduate degree achieved at a university or college that provides theoretical and practical training to help graduates ...
  5. Liquidity Event

    An event that allows initial investors in a company to cash out some or all of their ownership shares and is considered an ...
  6. Job Market

    A market in which employers search for employees and employees search for jobs. The job market is not a physical place as ...
Trading Center