Difference Between Effective Capacity and Actual Capacity

This is one of the most widely asked questions in Supply Chain Management. The difference between effective capacity and actual capacity;

Effective capacity:

Effective capacity is the maximum rate of output that can be achieved under operating constraints.
Always lower than design capacity.

Actual capacity:

The maximum output rate is actually achieved under the constraints of machine breakdowns, labor inefficiencies, and absenteeism.
Always lower than effective capacity.