Capacity Utilisation and Productivity

Flashcards covering definitions, calculations, implications, and additional factors related to capacity utilisation and productivity.

What is capacity utilisation?

It measures existing output as a percentage of the maximum possible output.

What is the formula for calculating capacity utilisation?

Capacity utilisation = (actual level of output / maximum possible output) x 100

If a hotel has 50 rooms occupied out of 150 total rooms, what is its capacity utilisation?

33.3%

Why is 100% capacity utilisation generally not desired?

It leaves no room for unexpected demand, maintenance, or growth.

What does a higher capacity utilisation percentage indicate?

It means resources are being utilised more efficiently.

What are the disadvantages of having low capacity utilisation?

It indicates a lack of demand for the service, results in a higher cost per unit, and makes it harder to pay off fixed costs.

What is another factor that should affect productivity, related to data?

How the growing amounts of information are used.