ENTREPRENEURIAL OPERATIONS
PRODUCTION PLANNING AND CONTROL
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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When employees are required to work overtime
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When there are sufficient resources to raise output
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During peak trading periods in the year
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During off-peak trading periods in the year
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Detailed explanation-1: -Some factors affecting capacity utilization are capital and labor. Both these are elements of unit production and hence largely affect the capacity utilization ratio. These are the basics of manufacturing units that cannot really operate without both of these.
Detailed explanation-2: -When capacity utilisation is 100% fixed costs will be spread over as many units as possible, meaning that fixed costs per unit are at their lowest possible level.
Detailed explanation-3: -Investment should go up when the capacity utilization rate is high. It indicates that an organization is producing as much as it can, based on the resources it has in place. If its leaders don’t anticipate greater demand in the future and invest accordingly, its competitors will fill the gap.