capacity utilisation

Question 1

capacity utilisation

Answer 1

the use that a business makes of it’s resources

Question 2

how is it calculated

Answer 2

current output/maximum x 100

Question 3

reasons to under utilise

Answer 3

decrease of demand
increased competition
seasonal demand

Question 4

problems with under utilising

Answer 4

unit costs aren’t minimized

lowers motivation

Question 5

benefits of under utilising

Answer 5

can cater to increase in demand

less work related stress

Question 6

drawbacks of over utilisation

Answer 6

machines may be overworked
workers may be overworked
not able to respond to increase in demand
insufficient time for training and maintenance

Question 7

benefits of over utilization

Answer 7

lower average costs

higher staff motivation