Advanced capacity cost management models: making visible the structural limits of capacity

Ted Watts, C. J. McNair, Vicki Baard, Lidija Polutnik

Research output: Chapter in Book/Report/Conference proceedingOther chapter contribution


Purpose – This paper fills the gap between defining and measuring the productive limits of a machine or system, and the impact of various assumptions about the productive potential of the nature and informativeness of capacity cost management systems. The authors focused on the various ways in which multidimensional limits (for example, time, space, volume and/or value-creating ability) can be used to define productive capacity. Specifically, this research suggests that the limits used in establishing the capacity cost management system restricts the amount and nature of the information the system is capable of providing to management. Justification – Two reasons are identified for studying the impact of capacity measurements on organizations. First, firms which make the best use of their resources can be expected to outperform their competitors. The second arises from the potential structuration effect of capacity metrics. Such an investigation makes capacity a visible, and hence an actionable, construct. Design/Methodology – To explore these issues, a combination of analytics and qualitative field research methodology was used. The measurement dimensions were developed by analyzing the different reports, baseline measures, and metrics included in the various capacity models as suggested by the literature. These analytics were enriched with observations obtained from field research. Findings – Maximizing the value created within an organization starts with understanding the nature and capability of all the company’s resources. The outcome is the identification of capacity systems specifically suited for particular types of operations, both manufacturing and service. Practical implications - Such frameworks would allow organisations in developing economies, to make visible, the drivers of waste and productivity and to identify the primary assumptions and implications of various capacity limits.
Original languageEnglish
Title of host publicationGAOC 2008
Subtitle of host publicationproceedings of the 2008 Global Accounting and Organizational Change Conference
EditorsZahirul Hoque
Place of PublicationMelbourne
PublisherLa Trobe University
Number of pages31
ISBN (Print)9781921377402
Publication statusPublished - 2008
EventGlobal Accounting and Organisational Change Conference - Melbourne
Duration: 9 Jul 200811 Jul 2008


ConferenceGlobal Accounting and Organisational Change Conference


  • capacity management
  • cost management models
  • capacity limits


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