Aggregate Capacity Management


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.

  1. Capacity

    The maximum level of output of goods and/or services that a given ...
  2. Capacity Utilization Rate

    A metric used to measure the rate at which potential output levels ...
  3. Output Gap

    An economic measure of the difference between the actual output ...
  4. Excess Capacity

    A situation in which actual production is less than what is achievable ...
  5. Fiscal Capacity

    In economics, the ability of groups, institutions, etc. to generate ...
  6. Elastic

    A situation in which the supply and demand for a good or service ...
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