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Capacity is the ability often related to production. Undercapacity would mean that the organization can increase their output without adding on to their facility.
For example, an auto parts plant may have the capacity to produce 100 parts per hour, but currently only running 80 parts per hour. They could increase their capacity without any major changes to their plant.
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What is Sustainable Capacity?
Sustainable Capacity is the total output value of a product or service that is needed to fulfill or satisfy the demand of a given population and continue to do so. Sustainability theory says that once the sustainable capacity of a product or service is successfully quantified and preset, it must remain so and continue to serve the population at full capacity for as long as it is required. The sustainable capacity of essential goods and services such as food, cloths, footwear, transport and healthcare may be much easier to determine because of their frequency of use and demand. We can use, for example, sales figures to quickly estimate the sustainable capacities of the daily food and transport requirements in a given city. However, in other aspects of the human activities this can be problematic. For example, people may blindly go into business and start producing goods and services without realising that the sustainable capacities of those goods or services have already reached their ceilings or maximum limits. The maximum demand levels for them have been reached. For example, a town of 200 people will not buy and consume more bread than their total daily requirements. This is usually one of the major causes of business failures, and this problem is usually marginally avoided by researching the market thoroughly before commencing the business. In a well run economy, the sustainable capacity calculatied and regularly monitored on a sector-by-sector basis can inform good economic policy making, and may help identify and prevent a wide range of economic problems usually associated with undercapacity and overcapacity. Sector Analysis can not only help estimate the sustainable capacity of each sector but also it can help identify and predict undercapacity and overcapacity before they manifest to wreck havocs in the economy. But sustainable capacity is best maintained when the variable economic components such as prices and costs of production and services are kept at sustainable levels using sustainable economic principles (SEP).
