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I know difference between assignment units and Peak units , but can any one explain how max units and assignment units are related to each other ?

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Max. Units is set on a resource level - usually in the Resource Sheet view. When assigning a resource, Project will, by default, use the max units as the assignment units value. However, you can assign a resource at any value - below or above - the max units manually. If a resource's Peak Units exceed Max Units - the resource is overallocated.

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