Bohr's Model of Atom
In 1913, Niels Bohr, a student of Rutherford proposed a model to account for the shortcomings of Rutherford's model. Bohr's model can be understood in terms of two postulates proposed by him.
Postulate 1
The electrons move in definite circular paths of fixed energy around a central nucleus; just like solar system in which different planets revolve around the Sun in definite trajectory. Similar to the planets, only certain circular paths around the nucleus are allowed for the electrons to move. These paths are called orbits, or energy levels.
The electron moving in the orbit does not radiate. In other words, it does not lose energy; therefore, these orbits are called stationary orbits or stationary states. The bold concept of stationary state could answer the problem of stability of atom faced by Rutherford's model.

It was later realised that the concept of circular orbit as proposed by Bohr was not adequate and it was modified to energy shells with definite energy. While a circular orbit is two dimensional, a shell is a three dimensional region. The shells of definite energy are represented by letters (K, L, M, N) or by positive integers (1, 2, 3). The energies of the shells increase with the number n; n = 1, level is of the lowest energy.
Further, the maximum number of electrons that can be accommodated in each shell is given by 2n2, where n is the number of the level. Thus, the first shell (n = 1) can have a maximum of two electrons whereas the second shell can have 8 electrons and so on. Each shell is further divided into various sublevels called subshells.
Postulate 2
The electron can change its shells or energy level by absorbing or releasing energy. An electron at a lower state of energy Ei can go to a final higher state of energy Ef by absorbing a single photon of energy given by:
E = hν = Ef – Ei

Similarly, when electron changes its shell from a higher initial level of energy Ei to a lower final level of energy Ef, a single photon of energy hν is released.
Conclusion
Thus, the Bohr's model of atom removes two of the limitations of Rutherford’s model. These are related to the stability of atom and the distribution of electrons around the nucleus. The third limitation of Rutherford’s model was its inability to explain the relationship between the atomic mass, and the atomic number (the number of protons) of an atom. This problem was solved with the discovery of neutron.