Capacity Utilisation

• Capacity utilisation is a measure of the percentage of potential output being achieved
• Capacity utilisation = actual output / maximum output X 100
• High capacity utilisation is good, however if it is at 100% there is no scope for meeting any additional demand
• Businesses will introduce strategies and tactics to try and boost capacity if capacity utilisation is low
• Capacity utilisation

  • are resources being used effectively or are assets being underutilized?
  • is there sufficient spare capacity to meet targets of flexibility?
  • can the business take on new customers ?
  • are resources being stretched too much?