2.4.2 Capacity utilisation Flashcards
1
Q
How do you calculate capacity utilisation (%)?
1
A
- Current output
Max possible output x 100
2
Q
What are the implications of under utilisation of capacity?
2
A
- ^Fixed cost per unit, >operating margins
- Fear for job security of staff, >motivation
3
Q
What are the implications of over utilisation of capacity?
2
A
- Demand^ = have to turn it away, comp benefits
- No time for maintenance on machines/train staff
4
Q
What is the ideal capacity utilisation?
1
A
- 90%
5
Q
What are the ways to improve capacity utilisation?
2
A
- ^Demand
- Cut capacity
6
Q
How may capacity be cut?
2
A
- Cut out night shift (make those workers redundant)
- Move to smaller premises
7
Q
What is a pro and con of moving to a smaller premises?
2
A
- Fixed costs cut (rent)
- Inflexibility, if demand recovers
