Identify three factors that affect the estimation of capacity, and briefly describe each.

Economies of scalea positive result when large volumes of a product or service are produced together, allowing the producer to spread the fixed costs associated with preparing that product or service over all the units.

Experience curvesthe relationship between total direct labor per unit and the cumulative quantity of product or service produced.

Diseconomies of scaleinefficiencies that occur when an organization has grown so large that the cost of managing and tracking its activities outweighs the benefits associated with size.