BUSINESS: U2: CH 38: capacity utilization

0.0(0)
studied byStudied by 0 people
learnLearn
examPractice Test
spaced repetitionSpaced Repetition
heart puzzleMatch
flashcardsFlashcards
Card Sorting

1/6

encourage image

There's no tags or description

Looks like no tags are added yet.

Study Analytics
Name
Mastery
Learn
Test
Matching
Spaced

No study sessions yet.

7 Terms

1
New cards

capacity utilization

the extent to which a firm uses its available productive capacity

current output / maximum capacity possible x 100

2
New cards

under-utilization

producing less than maximum capacity

3
New cards

over-utilization

producing at maximum capacity but stretching resources to uncomfortable levels

4
New cards

adv lim of under utilization

+can handle increase in demand so customers don't go to other competitors

+less work related stress for workers

-increase average unit cost per item

-might make workers feel insecure in their jobs leading to turnover

-might be difficult to get workers to work harder in future

5
New cards

adv. and lim over -utilization

adv.

-average costs are lower which can lead to lower prices or higher profits

-lead to happy and motivated workers especially if more money is involved

lim.

-high worker stress

-stress on machines so they break-down quicker

-may not be able to respond to an increase in demand

6
New cards

how to handle under-utilization

-reduce capacity, get rid of resources not needed e.g. staff, selling fixed assets, move to smaller office

-increase sales

-outsourcing, e.g. many restaurants dont have their own delivery people so outsource Uber or Glovo

7
New cards

how to handle over-utilization

-raising prices

-outsourcing

-temporary resources

-expansion