The purpose of this article is to develop a method for short and medium term capacity setting decisions for providing a market oriented level of available capacity for the investigated machine groups. An MTO (make to order) production system is considered. The basic concept is that the cumulative available capacity of the machine group has to be greater than or equal to the cumulative needed capacity influenced by the customer orders. The cumulative needed capacity is corrected with an operation characteristic which defines the slack of the production system, in order to include enough capacity for short term orders.