Business – 4.3 Capacity utilisation and outsourcing – Capacity utilisation | e-Consult
4.3 Capacity utilisation and outsourcing – Capacity utilisation (1 questions)
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When a firm exceeds its designed capacity, production processes are often rushed or extended beyond optimal operating conditions. This can lead to:
- Product quality deterioration: For example, a car assembly line that adds an extra shift may experience higher defect rates because workers have less time for inspections and machinery is run at higher speeds, increasing the likelihood of mis‑alignments.
- Employee morale decline: Continuous overtime and pressure to meet unrealistic targets can cause fatigue, stress, and absenteeism. In a textile factory, workers forced to operate 12‑hour shifts to meet demand reported higher turnover and lower job satisfaction.
- Increased rework and warranty costs: Poor quality outputs often require rework, which adds hidden costs and can damage the brand’s reputation.
Overall, the short‑term gain in output may be offset by long‑term losses in quality perception and workforce stability.