Capacity Utilization

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What is Capacity Utilization? Meaning.

Capacity Utilization is the extent to which a firm or a plant or a machine actually uses its installed productive capacity. Thus, it refers to the relationship between actual output produced and potential output that could be produced with the installed equipment, if its capacity was fully used.

It is the degree to which a resource such as equipment, space, or the workforce is currently being used. Utilization is a percentage, measured as the ratio of average output rate to maximum capacity.

Always make sure the average output rate and the maximum capacity are both measured in the same entities: in either time, costs, units or currencies.

The utilization of capacity is one of the ten Cost Drivers described by Porter.

The capacity utilization at a point in time can be dependent on seasonal, cyclical or other demand fluctuations.

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Capacity Management: Planning Resource Capacity

Capacity Planning, Capacity Management, Capacity Utilization
This presentation provides a clear explanation of capacity planning and its related concepts, definitions and capacity s (...)

Capacity Management and Planning

Capacity Management, Capacity Planning, Capacity Utilization
Detailed presentation that focuses on capacity management and planning. The presentation includes the following sections (...)

Capacity Planning for Goods and Services

Capacity Planning, Services, Goods, Demand Management, Capacity Management
Extensive presentation about capacity planning for both goods and services. The presentation includes the following sect (...)

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Compare with: Cost Drivers  |  Cost Dynamics  |  Economies of Scale  |  Capacity Management  |  Capacity Planning  |  Working Capital

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