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 the output which can be achieved under the operating constraints.
  • Always lower then 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. 

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