Question

Capacity affects efficiency, speed, service and quality.  Is there a “right capacity” for a hospital? a hotel? a factory? a classroom? A university? Explain your answer.

Answer 1

Yes, there is right capacity for every organization. It can be a hospital, factory, classroom or a university. Capacity is the capability of a firm to produce the output for a given period. The capability may change according to the resource capacity of the firm and the challenges and risks the firm needs to overcome. Right capacity means the firm’s capability to produce the quality output efficiently as per the demand within the promised time period without over utilizing or underutilizing the resources. When the firm is working at the right capacity, there will be proper utilization of the resources and provides maximum output. For example, if the hospital is having the right capacity it will be able to provide the services to the patients with the available resources and the staffs, buildings as well as equipments will not be overloaded or underutilized. It is the same case with other firms including factory, classroom or university. They would be able to perform the jobs without being stressed or idle when at right capacity. Underutilized and over utilized resources do not represent right capacity.