Topic 38: Capacity Utilisation

Question 1

Under-utilisation -> drawbacks and benefits

Answer 1

Drawbacks:
. Waste of resources
. might be operating inefficiently as unit costs aren’t minimised
. Operating within too much spare capacity-> workers can be demotivated / loose morale as they thin business not going weak
. Difficult to adjust to intense production later on
Benefits:
. Flexibility
. Less stress
. Flexible for workers aswell
. Decreased mistakes

Question 2

Over- utilisation -> benefits and drawbacks

Answer 2

Drawbacks
. Pressure and demotivation of staff
. Machines overworked
. Not flexible
. Cost on stock
Benefits
. Decrease in cost per unit
. Motivating factors of labour

Question 3

Ways of improving capacity utilisation

Answer 3

. Rationalising
. Reduce capacity
. Increase sales
. Increase usage
. Outsourcing
. Redeployment