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capacity utilisation - Coggle Diagram
capacity utilisation
implications of under utilisation
higher fixed costs per unit
unmotivated staff standing around, not busy
impact on brand image
businesses may need to rationalise
can mean redundancies
sale of assets
hiring temporary staff instead of full time permanent
reduction in overtime hours for workers
partial shutdown
increases flexibility of business
able to accept a non-standard order
have time to maintain the machinery or update technology
have time to train staff
implications of over-utilisation
can damage reputation of the business
in manufacturing it can put too much strain on resources
staff may do too much overtime and so have accidents when tired
means there is no time to maintain machinery or train staff
quality suffers as mistakes are made in production
why would running at 80% be ok?
100% capacity is often not possible, this means the business can be flexible and can provide some times a rush order for a particular client.
measures how close the company is to achieving maximum possible output
actual level of output / maximum possible output x 100