In the context of business and operations management, the four primary types of capacity are Design Capacity, Effective Capacity, Actual Output, and Potential Capacity. Design Capacity is the maximum theoretical output that a system is capable of producing under ideal conditions with no interruptions (e.g., a factory designed to make 1,000 units a day). Effective Capacity is a more realistic measure, representing the maximum output given current constraints like maintenance, staff breaks, and product mix (usually around 80-90% of design capacity). Actual Output is the rate of output actually achieved—it cannot exceed effective capacity and is often lower due to unplanned breakdowns or quality issues. Finally, Potential Capacity refers to the long-term "big picture" capability, looking at what the system could achieve with future expansions, new technology, or additional shifts. Understanding these four types allows managers to calculate "Capacity Utilization" (Actual Output / Design Capacity) and "Efficiency" (Actual Output / Effective Capacity), which are vital metrics for identifying bottlenecks and planning for future growth within any production or service-oriented environment.