Determining future capacity requirements can be a somewhat complicated process one based in large part on future demand. If demand for goods or services can be forecast with a reasonable degree of precision, then determining capacity requirements can be straightforward. The capacity of an operating unit is important for planning purposes. It enables managers to quantify production capability in terms of either inputs or outputs. You are required to prepare a report for the European Commission on what factors they would have to consider in determining effective capacity in setting up their chip manufacturing operations.