Installed Capacity Concept
Installed capacity represents the production potential or production maximum volumes that a certain company, unit, department, or section, can achieve during a certain time extent, taking into consideration all the resources that they have available, whether they are productive equipments, facilities, human resources, technologies, experiences / know-how, etc. It’s important to refer that the fact of being close to the installed capacity doesn’t necessarily mean that all resources are close to its capacity maximum limit. In fact there can be equipments, for example, being almost 100% used and other equipments, in the same or another step of the productive process, that are being use much under its capacity. It’s part of the management goal to try and avoid this kind of situations, resorting to outsourcing in areas where existed over-use of resources or rent/cession to others in areas where existed under-use.
Installed capacity concept is also frequently used in economy to characterize a whole activity sector or even all region. When the production volume is under the installed capacity, it’s said that there is factors unemployment. When the production volume is close to the installed capacity, it’s said that there full employment.
