Significance and measurement of capacity utilisation

1. Capacity utilisation is a measure of how much of a company's production capacity is being used.
2. It is important to measure capacity utilisation to ensure that a company is operating efficiently and effectively.
3. A high level of capacity utilisation can indicate that a company is meeting demand and generating revenue.
4. However, overutilisation can lead to quality issues and increased costs.
5. Low capacity utilisation can indicate that a company is not meeting demand and may be losing potential revenue.
6. Capacity utilisation can be measured by comparing actual output to maximum output.
7. It can also be measured by comparing actual output to planned output.
8. Capacity utilisation can vary by industry and seasonality.
9. Improving capacity utilisation can involve increasing production efficiency or investing in additional capacity.
10. Capacity utilisation is an important metric for businesses to monitor and manage in order to optimize their operations and profitability.