In this video we use Premier Inn as a mini case study in the economic importance of spare capacity for a firm’s operating costs.
Capacity is a measure of how much output a business can produce over a given period e.g. customers per day, capacity of units from a production line.
Capacity utilisation measures the proportion (percentage) of a firm’s total capacity is used over a given time period. i.e. (actual output / capacity) x 100%
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