1. What is Capacity Utilisation?

Capacity utilisation measures how effectively an organization uses its production capacity. It's expressed as a percentage that compares actual output to maximum potential output.

2. How Does the Calculator Work?

The calculator uses the capacity utilisation formula:

Where:

• \( Actual \) — Actual production/output (units)
• \( Maximum Capacity \) — Maximum possible production capacity (units)

Explanation: The formula calculates the percentage of total capacity that is actually being used in production.

3. Importance of Capacity Utilisation

Details: Capacity utilisation is a key performance indicator that helps businesses optimize production, plan investments, and improve operational efficiency. High utilisation rates indicate efficient use of resources, while low rates may suggest underutilization or excess capacity.

4. Using the Calculator

Tips: Enter actual production/output and maximum capacity in the same units. Both values must be positive numbers, with maximum capacity greater than zero.

5. Frequently Asked Questions (FAQ)

Q1: What is considered a good capacity utilisation rate?
A: Typically, 85-90% is considered optimal as it allows for maintenance, repairs, and unexpected demand fluctuations while maximizing efficiency.

Q2: Can capacity utilisation exceed 100%?
A: Yes, but this usually indicates overtime work, extended shifts, or temporary measures that may not be sustainable long-term.

Q3: How often should capacity utilisation be measured?
A: It depends on the industry, but typically measured monthly or quarterly to track performance trends and make operational adjustments.

Q4: What factors affect capacity utilisation?
A: Demand fluctuations, equipment maintenance, workforce availability, supply chain issues, and production efficiency all impact utilisation rates.

Q5: How can businesses improve capacity utilisation?
A: Through better production planning, equipment upgrades, workforce training, demand forecasting, and optimizing production processes.