Understanding Capacity and Capacity Utilization in Business

The video tutorial explains the concept of capacity, using examples like a football stadium and a fish tank. It discusses capacity shortage and underutilization, highlighting their impact on businesses. The capacity utilization equation is introduced, with examples of how to calculate and rearrange it. The importance of balancing capacity to avoid resource wastage or burnout is emphasized. Trends in capacity utilization are analyzed, showing how they can affect business performance over time.

Explain the concept of capacity shortage and its implications for a business.

How can underutilization affect a business's revenue?

What is the definition of capacity in the context of a business?

What is the formula for calculating capacity utilization?

Calculate the capacity utilization if a business produces 600,000 units out of a maximum of 1,000,000 units.

What are the consequences of having a capacity utilization of only 45%?

Discuss the balancing act between underutilization and capacity shortage.