1. What is Capacity Utilisation?

Capacity utilisation measures how much of an organization's production capacity is actually being used. It's expressed as a percentage of potential output that is actually achieved.

2. How Does the Calculator Work?

The calculator uses the capacity utilisation formula:

Where:

• Actual Output — The real production achieved (units)
• Potential Output — The maximum possible production (units)

Explanation: The formula compares actual production to maximum possible production to determine what percentage of capacity is being utilized.

3. Importance of Capacity Utilisation

Details: Capacity utilisation is a key metric for businesses to assess operational efficiency, plan production, and make investment decisions. High utilisation indicates efficient use of resources, while low utilisation may suggest excess capacity.

4. Using the Calculator

Tips: Enter actual and potential output in the same units (e.g., widgets per day, tons per month). Both values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: What is considered good capacity utilisation?
A: Ideal levels vary by industry, but generally 85-90% is considered optimal, allowing for maintenance and fluctuations.

Q2: How is potential output determined?
A: Potential output is the maximum sustainable output under normal conditions, considering equipment, labor, and other constraints.

Q3: What causes low capacity utilisation?
A: Factors include reduced demand, equipment downtime, labor shortages, or overinvestment in capacity.

Q4: Can utilisation exceed 100%?
A: Temporarily yes (through overtime, etc.), but sustained >100% utilisation can lead to equipment wear and quality issues.

Q5: How often should capacity utilisation be measured?
A: Typically measured monthly or quarterly, but may be tracked more frequently in manufacturing environments.