Theoretical capacity: what the equipment could produce if it never stopped, never failed, and always ran at design speed. Effective capacity: theoretical minus planned losses (changeovers, maintenance, breaks). Actual capacity: what the process really delivers, after unplanned losses (breakdowns, quality issues, minor stops). The gap between theoretical and actual is where OEE lives.
Available time × ideal cycle rate = theoretical capacity. Available time excludes planned downtime; ideal cycle rate is design speed at 100% quality. From there, subtract realistic losses to get effective and actual figures. Planning against theoretical capacity is a common mistake that produces schedules the factory cannot possibly meet.
System capacity is not the sum of station capacities, it is the capacity of the bottleneck. A factory with ten stations at 100 units/hour and one station at 60 units/hour has a total capacity of 60 units/hour. Understanding this stops teams from investing in capacity where it won't help and focuses investment on the constraint.
Capacity is only useful when it is measured honestly. Use effective or actual capacity for planning, not theoretical. Track the bottleneck's capacity as the system's capacity. And measure the losses between theoretical and actual, because that gap is where OEE improvement lives.
