Capacity utilisation

?
View mindmap
  • Capacity utilisation
    • (Current output/ maximum possible output) x 100
      • If utilisation is low, fixed cost per unit is high
    • Measures the proportion of potential economic output that is actually realized.
    • Ways of improving capacity utilisation
      • Increase demand
        • Extra promotional spending
        • Price cutting
        • Launch new products
      • Cut capacity
        • If demand is lower than capacity, businesses can make workers redundant
        • Reduce fixed cost
      • Rationalisation

Comments

No comments have yet been made

Similar Business Studies resources:

See all Business Studies resources »See all Capacity utilisation resources »