1. What Is Capacity Utilisation?

Capacity Utilisation measures how effectively an organization uses its productive capacity. It compares actual output to maximum potential output, expressed as a percentage. This metric is crucial for assessing operational efficiency and identifying opportunities for improvement.

2. How Does The Calculator Work?

The calculator uses the Capacity Utilisation formula:

Where:

• \( CU \) — Capacity Utilisation (%)
• \( AO \) — Actual Output (units)
• \( MC \) — Maximum Capacity (units)

Explanation: The formula calculates what percentage of maximum production capacity is being utilized. A higher percentage indicates more efficient use of resources.

3. Importance Of Capacity Utilisation

Details: Monitoring capacity utilisation helps businesses optimize production, reduce costs, identify bottlenecks, and make informed decisions about expansion or contraction. It's a key performance indicator in manufacturing, services, and operations management.

4. Using The Calculator

Tips: Enter actual output and maximum capacity in the same units (e.g., units produced, hours worked, services delivered). Both values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: What is considered good capacity utilisation?
A: Optimal capacity utilisation varies by industry, but generally 85-90% is considered efficient. Too high (near 100%) may indicate overworked resources, while too low suggests underutilization.

Q2: How often should capacity utilisation be measured?
A: It depends on the business cycle, but typically measured monthly or quarterly to track trends and make timely operational adjustments.

Q3: Can capacity utilisation exceed 100%?
A: Yes, when actual output exceeds designed maximum capacity, often through overtime, efficiency improvements, or temporary measures. This is usually unsustainable long-term.

Q4: How does capacity utilisation affect costs?
A: Higher utilisation typically spreads fixed costs over more units, reducing per-unit cost. However, very high utilisation may increase maintenance costs and employee burnout.

Q5: What factors affect maximum capacity?
A: Equipment capabilities, workforce size and skills, available time, maintenance schedules, and supply chain constraints all influence maximum capacity.