Capacity Utalisation

• What is the concept of capacity in business?

  Measure of output a business can achieve
• Why is capacity important for businesses?

  It measures how much can be produced or sold
• How can capacity be measured in a fast food outlet?

  By the number of customers served per hour
• How might a call center measure its capacity?

  By the number of customer calls handled daily
• What is the fixed capacity of a sports stadium?

  Number of fans that can be seated
• How is capacity defined in a cinema chain?

  By the number of seats in each screen
• What does manufacturing capacity refer to?

  Output of products like cars over time
• Why is capacity considered a dynamic concept?

  It can change due to maintenance or demand
• How can capacity be affected by employee attendance?

  Fewer employees can reduce production capacity
• Why must capacity be flexible for businesses?

  To adapt to unexpected changes in demand
• What is capacity utilization?

  How much capacity is used over time
• How is capacity utilization calculated?

  Actual output divided by maximum capacity
• What is the formula for calculating capacity utilization percentage?

  Actual output / capacity * 100
• If a factory has a capacity of 500,000 and an output of 340,000, what is the capacity utilization?

  68%
• Why is capacity utilization important for businesses?

  It relates to productive efficiency and competitiveness
• What does low capacity utilization suggest about a business?

  It may indicate inefficiency or excess investment
• How does low capacity utilization affect unit costs?

  It tends to result in higher unit costs
• Why is high capacity utilization crucial for businesses with high fixed costs?

  To minimize unit costs and reach breakeven
• What costs are associated with capacity in a business?

  Production equipment, facilities, and labor
• Why might a business not operate at full capacity?

  Due to lower than expected market demand
• How can seasonal variations affect capacity utilization?

  They can cause fluctuations in demand over time
• What happens when there is an increase in capacity without demand?

  Utilization may drop below 100%
• Why is maintenance necessary for capacity?

  To ensure production equipment remains functional
• What are the risks of operating at low capacity utilization?

  Higher unit costs and reduced competitiveness
• How does low capacity utilization affect breakeven output?

  It makes reaching breakeven more difficult
• What is a consequence of high capacity utilization on quality?

  Quality may suffer due to rushed production
• What can happen to employees at high capacity utilization?

  They may experience increased stress and demotivation
• How does high capacity utilization affect a business's ability to respond to demand changes?

  It limits flexibility to handle sudden increases
• What are the key points about capacity in business?

  • Capacity measures output of a business
  • Capacity utilization indicates how much is used
  • Capacity is a dynamic and flexible concept