What is meant by Capacity?

• The capacity of a business is a measure of how much output it can potentially achieve in a given period

Examples of capacity:

• A fast-food outlet may be able to serve 1,000 customers per hour

• A call centre may be able to handle 10,000 calls per day

• A football stadium could seat no more than 45,000 fans at each match

• A car production line may be able to complete 50,000 cars per year

What is capacity utilisation?

• The proportion (percentage) of a business’ capacity that is actually being used over a specific period

Capacity utilisation formula:

Actual level of output (units)/Maximum possible output (units) x 100