Operations Management Unit 7

Question 1

What is capacity utilisation

Answer 1

Reaching the maximum possible output of a business. How best to use resources

Question 2

What are ways to improve capacity utilisation

Answer 2

Reduce sales price
ProMotion
Look at staffing (redundancy)
Sell assets
Balance seasonal demand production

Question 3

What is capacity management

Answer 3

Looking at the usage of resources .
Analyse performance
Capacity planning to introduce new products
Capacity planning for future plans

Question 4

What is the equation for capacity utilisation

Answer 4

(Actual output/max possible output) x100=%

Question 5

What does under-utilisation lead to

Answer 5

Higher costs per unit
Unmotivated staff standing round
Impact on brand image
Need for rationalising- e.g making redundancies, sale of assets
Hiring temp staff
BETTER FELXIBILITY- can provide a rush order for a particular important client

Question 6

What does over-utilisation lead to

Answer 6

Strain on resources
Tired staff
Damage rep
Quality suffers

Question 7

What are benefits of full capacity

Answer 7

Eos
Less wastage
Motivated staff
Each unit doesn’t need to contribute to fixed costs as much