Initial Questions
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Capacity utilisation is calculated as used capacity/total capacity x 100
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13,000 capacity 11,500 produced (2020) 14,000 produced (2021)
11,500/13,000 x 100 = 88.46%
14,000/13,000 x 100 = 107.69%
Utilisation change = 19.23%
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Running at high capacity utilisation means high efficency, so you are maximising profits.
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Running at high utilisation does not protect against contingencies. So you are vulnerable to faults.
High utilisation
- No downtime, high defects
- Equipment wears out faster
- Increased stress for employees
- Unexpected demand increases can cause a loss of sales
Low utilisation
- High unit costs
- Wasted resources
- Difficult to compete effectively
- Reduced job security