Capacity utilisation and outsourcing

Learning objectives

Calculate capacity utilisation as current output ÷ maximum possible output × 100 and interpret the result.

Analyse the effects on unit costs, employees and customers of operating well below full capacity or at full capacity.

Evaluate ways of improving capacity utilisation, such as raising demand, rationalising capacity or taking on subcontracted work.

Assess the impact of outsourcing on a business's costs, quality, flexibility and control.