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Capacity Utilisation and Outsourcing
What is capacity utilization and why is it important for businesses?
Capacity utilization refers to the extent to which a business utilizes its production capacity. It is important for businesses as it affects their productivity, cost efficiency, and overall profitability.
How can businesses measure and calculate their capacity utilization?
Businesses can measure and calculate their capacity utilization by dividing the actual output or production achieved within a specific period by the maximum possible output or production capacity during the same period. The result is typically expressed as a percentage, representing the extent to which the available capacity is utilized.
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