How to calculate production capacity: example

The production capacity formula

Production capacity is how much a work centre can make in a given period, measured in hours or in units. To get hours, multiply machines, working days, shifts and hours per shift, then subtract the time that won't go to orders. To get units, divide those hours by the time each unit takes.

Capacity in hours = machines × days × shifts × hours per shift − deductions

Capacity in units = capacity in hours × 3,600 ÷ seconds per unit

The deductions decide the answer. In the example below, the same four machines in the same month come out at either 2,880 h or 972 h, depending on what you take off.

Three capacities, three questions

Capacity	What it counts	The question it answers
Theoretical capacity (also called design capacity)	Every hour in the period, around the clock	What is the most we could do with more shifts and weekends?
Effective capacity	Shift plan hours minus breaks, planned maintenance, planned changeovers and the usual breakdowns	How many production hours can planning realistically schedule?
Planned capacity	Effective capacity minus a reserve you choose to keep free	How many hours do we release for orders?

Available capacity sits between theoretical and effective as a subtotal. It is the shift plan without the breaks when nobody runs the machine and without planned maintenance.

Effective capacity comes out of your data. The reserve is your own decision, and no standard sets it. It determines how much room is left for rush orders, longer breakdowns and standard times that turn out too tight. For why orders pile up in front of a fully scheduled machine, see the section on 100% in how to calculate capacity utilization.

The invented month: four injection moulding machines

The plant, the machines, the parts and every figure below are invented for this example. They are chosen so that you can check each one by hand.

A plastics moulder makes lids and housings on four machines. Here are the inputs for the month:

Input	Value
Machines	4
Calendar days	30
Working days	21
Shifts	2 a day, 8 h each
Unmanned break	0.5 h per shift
Planned maintenance	6 h per machine
Changeovers (tool changes)	40 at 2.5 h each
Usual breakdowns from machine data	56 h
Reserve	10% of effective capacity

Read the calculation from the top down:

Level	Calculation	Hours
Theoretical capacity	4 × 30 days × 24 h	2,880 h
Shift plan	4 × 21 days × 2 shifts × 8 h	1,344 h
less breaks	4 × 42 shifts × 0.5 h	84 h
less planned maintenance	4 × 6 h	24 h
Available capacity	1,344 h − 84 h − 24 h	1,236 h
less changeovers	40 × 2.5 h	100 h
less usual breakdowns	from machine data	56 h
Effective capacity	1,236 h − 100 h − 56 h	1,080 h
less reserve	10% of 1,080 h	108 h
Planned capacity	1,080 h − 108 h	972 h

Planning releases 972 of the 2,880 theoretical hours, or 33.8%. The shift plan itself is the largest deduction, with 1,536 h outside the two shifts. That gap shows what expansion could add. A third shift on all 21 working days would be 4 × 21 × 8 h = 672 h. After 42 h of breaks, that is 630 h more available capacity, provided you can staff it.

From hours to units

Units need a time per unit. On an injection moulding machine, that is the cycle time divided by the number of cavities, because each shot produces several parts.

Part	Cycle time	Cavities	Seconds per unit	Units per hour	Share of units
Lid	40 s	4	10 s	360	75%
Housing	36 s	2	18 s	200	25%

With this mix, the average unit takes:

Time per unit = 0.75 × 10 s + 0.25 × 18 s = 12 s

Units per hour = 3,600 s ÷ 12 s = 300

Average the seconds, never the units per hour. The weighted average of the hourly rates would be 0.75 × 360 + 0.25 × 200 = 320 units per hour, 6.7% too high. Over 972 h, that is 19,440 units you would promise and could not make.

In the example, 2% of output is scrap, which leaves 98% good parts:

Capacity	Hours	Units at 300 per hour	Good units (98%)
Theoretical	2,880 h	864,000	846,720
Available	1,236 h	370,800	363,384
Effective	1,080 h	324,000	317,520
Planned	972 h	291,600	285,768

To cross-check, go through the parts. The 291,600 planned units are 218,700 lids and 72,900 housings. 218,700 × 10 s is 607.5 h and 72,900 × 18 s is 364.5 h, which adds back up to 972 h. Good parts come to 214,326 lids and 71,442 housings.

The unit figure holds for this mix only. At 50% lids and 50% housings, the average unit takes 14 s, and the same 972 h yield 249,943 units instead of 291,600. If your parts change, plan in hours and convert to units only when you compare against orders.

Use the cycle time you have measured, too, and not the one on the data sheet. OEE shows how much slow running and scrap take out of the unit count.

Does the order book fit?

This month's orders are 225,000 lids and 70,000 housings, all good parts. With 2% scrap, more has to come off the machines than you ship.

Lids = 225,000 ÷ 0.98 × 10 s ÷ 3,600 = 637.8 h

Housings = 70,000 ÷ 0.98 × 18 s ÷ 3,600 = 357.1 h

Capacity required = 637.8 h + 357.1 h = 994.9 h

Changeovers are already out of the 1,080 h, so they don't go into the requirement a second time. The requirement is 22.9 h above the planned 972 h and 85.1 h below the effective 1,080 h. Without extra hours, the orders fit on the machines only with a smaller reserve. There are several ways to find the missing 22.9 h:

Action	Calculation	Planned capacity after	Against the requirement
Cut the reserve to 7.9%	(1,080 h − 994.9 h) ÷ 1,080 h	994.9 h	0 h
One Saturday shift on all four machines	4 × 7.5 h = 30 h, of which 90% = 27 h	999 h	4.1 h spare
Cut changeovers from 2.5 h to 2 h	40 × 0.5 h = 20 h, of which 90% = 18 h	990 h	4.9 h short

The smaller reserve costs nothing, but leaves 85.1 h rather than 108 h for whatever doesn't go to plan. The Saturday shift covers this month and costs overtime premiums. Shorter changeovers don't close the gap alone, though they pay back every month with a similar number of tool changes. The SMED article covers how to shorten them.

Capacity, utilization and takt

Capacity tells you what is possible in a period. Utilization tells you what share of it was occupied. In the example, 994.9 h of moulding and 100 h of changeovers would occupy 1,094.9 h, which is 88.6% of the available 1,236 h. That figure is a planned load. To measure real utilization from the hours of one week, see how to calculate capacity utilization.

Takt time starts from the customer and tells you how often they need a part. Capacity starts from the plant and tells you how much it can make. Both start from the same available time.

Frequently asked questions

How do you calculate the capacity of a single machine?

Take the hours in the shift plan and subtract unmanned breaks, planned maintenance, changeovers and the usual breakdowns. In the example, each of the four machines averages 1,080 h ÷ 4 = 270 h of effective capacity a month. At 300 units an hour, that is 81,000 units before scrap.

What is the difference between theoretical, effective and planned capacity?

Theoretical capacity counts every hour in the period, 2,880 h in the example. Effective capacity takes off the hours outside the shift plan, breaks, maintenance, changeovers and the usual breakdowns, which leaves 1,080 h. Planned capacity is the part of that you release for orders, here 972 h after a 10% reserve.

How do you calculate labour capacity?

Use people instead of machines. Suppose 6 people work 7.5 h on 21 days at a manual work centre, which is 945 h. Assuming 8% is lost to holidays and sickness, 869.4 h remain. If a work centre depends on both people and machines, the smaller figure applies.

How do you calculate the capacity of a whole line or plant?

You can add machines that do the same job in parallel, like the four in the example. Work centres in sequence don't add up, because a line makes only as much as its tightest station. If a printing unit downstream can print only 180,000 lids a month, it limits the 214,326 good lids from moulding. A value stream map shows where that bottleneck sits in the plant.

How does production capacity differ from capacity utilization?

Capacity is a quantity in hours or units. Utilization is a percentage, the occupied time divided by available capacity. You need capacity first, and then you can calculate capacity utilization.

Try it on one work centre

Pick one work centre and the current month. Write down machines, working days, shifts, breaks and maintenance, then pull changeovers and breakdowns from the machine data of recent months. Work out available, effective and planned capacity, and set the order book next to them in hours.

If the hours are enough and you still miss delivery dates, the cause is somewhere else in the workflow. Finding it is the scope of our process analysis.

How to Calculate Production Capacity: Four Injection Moulding Machines, One Month, Hours to Units