Capacity Utilization

When calculating the budget based on the total volume to be in production, it is mandatory to calculate the capacity utilization.

Here's a little explanation for calculating capacity utilization,

1. Machine Hour Required = Total Voume/Machine Speed

2. Machine Hour Available = Total Working Day x 3 Shift x 8 Hour

3. Man Hour Available = Total Working Day x Total Head Count x Shift Pattern x 8 Hour

4. Man Hour Required = Machine Hour Required x Total Head Count

Based on % machine utilization, Production manager can specify running shift pattern =

≤ 33% = machine running in 1 shift ≤ 66% = machine running 2 shift ≤ 100% = machine running 3 shifts > 100% then it should be overtime or decided to invest machine

Based on% manhour/labor utilization, Production manager can determine the addition of labor =

≤ 100% = head count is enough, If in every sub-department the percentage is uneven then the head count is allocated from > 100% to ≤ 100%

If the whole factory has reached> 100% then it should increase the head count number