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. Measuring Company Efficiency
    Fundamental Analysis

    Measuring Company Efficiency

  2. Spotting Profitability With ROCE
    Fundamental Analysis

    Spotting Profitability With ROCE

  3. Vital Link: Manufacturing And Economic ...
    Fundamental Analysis

    Vital Link: Manufacturing And Economic ...

  4. How Influential Economists Changed Our ...
    Fundamental Analysis

    How Influential Economists Changed Our ...

comments powered by Disqus
Hot Definitions
  1. Passive ETF

    One of two types of exchange-traded funds (ETFs) available for investors. Passive ETFs are index funds that track a specific ...
  2. Walras' Law

    An economics law that suggests that the existence of excess supply in one market must be matched by excess demand in another ...
  3. Market Segmentation

    A marketing term referring to the aggregating of prospective buyers into groups (segments) that have common needs and will ...
  4. Effective Annual Interest Rate

    An investment's annual rate of interest when compounding occurs more often than once a year. Calculated as the following: ...
  5. Debit Spread

    Two options with different market prices that an investor trades on the same underlying security. The higher priced option ...
  6. Odious Debt

    Money borrowed by one country from another country and then misappropriated by national rulers. A nation's debt becomes odious ...
Trading Center