Capacity Utilisation Flashcards
How do you calculate capacity utilisation?
output/ capacity x 100
What is the ideal value?
90-955
Why is utilisation important?
Lowers unit costs, helps reach break even
What must some capacity be reserved for?
maintenance and repair
What is under utilisation
A low value
Increases unit cost
How to increase capacity utilisation?
prioritise promotion or price in MM
Do subcontracting work for other firms
Reduce capacity by downsizing or selling equipment
How to increase capacity
Increase working hours and overtime
Increase machines and staff
Sub-contract
May stress staff
How does capacity change
In the short term must be flexible and able to respond to seasonal changes in demand
In the long term must research and predict trends, if this is a CC and accurate unit costs will lower
