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9609 · 4.3.1

Significance and measurement of capacity utilisation

9609 AS - capacity utilisation formula, under/over-utilisation effects, and improvement strategies.

Need to know

What you need to know

  • Formula: (Current output level / Maximum output level) × 100.
  • Measures the proportion of potential output currently being achieved.
  • A key indicator of productive efficiency.
  • Maximum output is the total potential output if all resources are fully engaged.

Explanation

Significance and measurement of capacity utilisation

  1. Formula: (Current output level / Maximum output level) × 100.
  2. Measures the proportion of potential output currently being achieved.
  3. A key indicator of productive efficiency.
  4. Maximum output is the total potential output if all resources are fully engaged.