Capacity utilization, on the other hand, is a measure of how well an organization uses its productive capacity. While you can apply this ratio to any work center or piece of equipment in the factory, the result is meaningless unless you are looking at a bottleneck operation.
By definition, all other work centers are expected to have some idle time, which affects utilization. Improving processes to enable rapid changeovers can improve capacity utilization by eliminating lost time. Preventive maintenance can help by eliminating or reducing unplanned downtime.
Both of these are critical activities in a bottleneck operation to ensure smooth operation in the factory and to prevent build up of inventory and delays in shipping orders. Using rough cut capacity planning and master scheduling to smooth the operational plan will help by ensuring that the plant operates in a way that keeps the bottleneck operations running at peak performance.
The throughput ratio is closely aligned with capacity utilization. The throughput ratio metric compares actual throughput in either hours or units to the standard expected hours or units. The larger the ratio the better. Rent from DeepDyve. If you think you should have access to this content, click to contact our support team. Contact us. Please note you do not have access to teaching notes. Will they provide accurate feedback?
Are these metrics the most appropriate measurements? MRP systems plan production, efficiency and log output. Both yield data on what was produced and when but are of limited help in controlling costs and maximizing output from a fixed set of resources.
This is where efficiency, utilization and productivity measures come in. Efficiency is a ratio of input to output. Some processes are inherently inefficient though. Machining an aerospace bracket involves cutting away most of the metal, in effect, wasting it.
Is that efficient? Perhaps 3D printing would be more efficient, even though it might take longer and require more processing steps. How about utilization? To avoid confusion, it may be useful to think of resource utilization as a measure of the time a person is allocated to working on something, and productivity as the amount of completed work that gets done within that allocated time.
When thinking this way it is easy to see that high resource utilization does not equal high productivity. The challenges that need to be overcome to achieve high resource utilization and high productivity are also completely different.
Resource utilization is really about ensuring that your organization has the right amount of the right kinds of people, and that these people are always in the right places at the right times.
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