Notes Ch 25 Capacity utilisation.notebook
A2 Chapter 25 Capacity utilisation
See case study US car makers & Deutsche Bank page 376
Capacity utilisation the proportion of maximum output capacity
being achieved at a given point in time.
Rate of cap.ut. = current output level x 100
maximum output level
• Measures operational efficiency.
• Often used to compare data within an industry and against
previous periods. See intro page 376, 377
• Impacts on average/unit fixed costs these reduce as cap. ut.
increases. 100% cap.ut theoretically returns the lowest average
costs, signifies popularity of the product or service and may give a
sense of job security to employees. However, pressure mounts on
staff and there is no downtime for repairs and maintenance of
machinery; an increase in customer orders will not be satisfied.
Thus 100% is not ideal. See Table 25.1 page 377
A2 Chapter 25 Capacity utilisation
See case study US car makers & Deutsche Bank page 376
Capacity utilisation the proportion of maximum output capacity
being achieved at a given point in time.
Rate of cap.ut. = current output level x 100
maximum output level
• Measures operational efficiency.
• Often used to compare data within an industry and against
previous periods. See intro page 376, 377
• Impacts on average/unit fixed costs these reduce as cap. ut.
increases. 100% cap.ut theoretically returns the lowest average
costs, signifies popularity of the product or service and may give a
sense of job security to employees. However, pressure mounts on
staff and there is no downtime for repairs and maintenance of
machinery; an increase in customer orders will not be satisfied.
Thus 100% is not ideal. See Table 25.1 page 377
