capacity utilisation Flashcards
1
Q
what does capacity utilisation measure
A
measures a firms output level as a % of maximum output
2
Q
what is the equation
A
actual output level/ maximum output level X 100
3
Q
what are the implications of under capacity utilisation
A
fixed costs become a burden
average total costs spread over fewer products
inefficient
however it can be useful for last minute orders
4
Q
what are the implications of over utilisation
A
have to turn away customers
hard to have time to service machinery
hard to retrain or train new staff
quality may suffer
5
Q
how can capacity utilisation be increased
A
increase demand cut capacity- dont over produce products diversify into new markets invest in more machinery staff can work more shifts motivate staff
