1
Q
capacity utilisation
A
The measure of current output compared with max possible output
2
Q
equation for capacity utilisation
A
(actual output / maximum possible output) x 100
3
Q
benefits of high capacity utilisation
A
- uses assets effectively (less wastage)
- more competitive
- lower unit costs
4
Q
reasons for low capacity utilisation
A
- low demand (seasonal)
- idle resources
- too much invested in the business (increase in capacity but not yet demand)
- loss of market share
- need for fixes or repairs of programmes
5
Q
dangers of low capacity utilisation
A
- higher unit costs (lacking competitiveness)
- Less likely to reach break even output
- money tied up in wasted assets
6
Q
problems of working at high capacity
A
- negative effect on quality
- employees suffer
- unable to meet big unexpected orders
7
Q
ways of improving capacity utilisation
A
- increasing workforce hours
- improving marketing
- cutting capacity of factory
