ACC640 Week 3 Discussion Forum 1 Capacity Levels

The four possible capacities are:

·         Theoretical capacity

·         Practical Capacity

·         Normal Capacity

·         Budget capacity

Advantage of Theoretical capacity:

Efficiency;

Cost-Effectiveness Ratio;

Probability of Breakeven Analysis 

The disadvantage of Theoretical capacity:

·         Impact on the quality of the product.

·         Demand might not be achieved. Employees suffer.

Potential impact: 

It’s possible, in theory, that profits will fall.

Advantage of Practical capacity:

There will be no downtime due to mechanical issues and no delays in production.

The disadvantage of Practical capacity:

·         The cost of production will be increased.

·         The ideal time would arise.

Potential impact:

 Profitability may decrease in a practical capacity. 

Advantage of Normal capacity:

There is a lower price for the product, and it can be produced quickly if there is an unexpected surge in demand.

The disadvantage of Normal capacity:

Assets sit unused. The strain of work on the staff.

Potential impact:

At total capacity, seasonal profit grows by multiple times.

Advantage of Budget Capacity:

There will be no rise in the price of the item.

Assists in succeeding in one’s endeavors.

The disadvantage of Budget capacity:

·         It’s tough to keep tabs on the rising price of repairs and deal with the stress of meeting unexpected demand.

Potential impact: 

There is no impact on the company’s profitability from a reduction in spending.