Importance of capacity Flashcards
1
Q
Advantages of high utilisation
A
More efficiency use of resources = lower unit costs
High profitability (assuming all units can be sold)
Motivational for workforce
2
Q
Disadvantages of high capacity utilisation
A
May not be able to respond to non-standard orders/ changes in demand
Lack of time on strategic planning time
Impact on quality
3
Q
IMPORTANCE OF CAPACITY:
A
Determines the limits of a company’s ability to match demand
Impacts corporate objectives / strategy
Influence unit costs (can reduce it)
Can affect worker motivation
Can effect brand image
Determines investment decisions
4
Q
A
