Aggregate Capacity Management

AAA

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.

INVESTOPEDIA EXPLAINS '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. Output Gap

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

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

    In economics, the ability of groups, institutions, etc. to generate ...
  4. Capacity Utilization Rate

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

    The maximum level of output of goods and/or services that a given ...
  6. Marginal Rate of Technical Substitution

    The rate at which one factor has to be decreased in order to ...
Related Articles
  1. Fundamental Analysis

    Measuring Company Efficiency

  2. Fundamental Analysis

    Spotting Profitability With ROCE

  3. Fundamental Analysis

    Vital Link: Manufacturing And Economic ...

  4. Economics

    Where is cost of living lowest in the ...

Hot Definitions
  1. Capitulation

    When investors give up any previous gains in stock price by selling equities in an effort to get out of the market and into ...
  2. Turkey

    Slang for an investment that yields disappointing results or turns out worse than expected. Failed business deals, securities ...
  3. Conduit Issuer

    An organization, usually a government agency, that issues municipal securities to raise capital for revenue-generating projects ...
  4. Financing Entity

    The party in a financing arrangement that provides money, property, or another asset to an intermediate entity or financed ...
  5. Hyperinflation

    Extremely rapid or out of control inflation. There is no precise numerical definition to hyperinflation. Hyperinflation is ...
  6. Gross Rate Of Return

    The total rate of return on an investment before the deduction of any fees or expenses. The gross rate of return is quoted ...
Trading Center