Capacity utilisation
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?- Created by: Loren
- Created on: 26-04-13 14:14
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- Capacity utilisation
- The percentage of total capacity that is actually being achieved in a given period
- Actual level of output/ maxium possible output X 100
- Why is it important?
- Measure of productive efficiency
- Average production costs tend to fall if output rises
- Why do businesses operate at less than 100%
- Lower demand
- Loss of market share
- Seasonal
- Overall market demand falls
- Increase in technology not yet matched by increase in demand
- Inefficiency
- Poor quality
- Poor maintanance
- Employee diruption
- Lower demand
- How can a busines improve its capacity ultilisation
- Increase work hours
- Sale and lease back
- Reduce maintanance time
- Whats wrong with performing too high?
- Possiblity for negative effect on quality
- Less time for quality control
- Production is rushed
- Loss of sales
- Less able to ddeal with sudden changes in demand
- Reduce production machine repairing time
- Employees will suffer
- Demotivated
- added stress
- Possiblity for negative effect on quality
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