Output/capacity, or the utilization of the operation, is determined by the balance of demand on the…

➤ When should an operation increase capacity to maintain healthy utilization?
Increase capacity when utilization consistently nears target levels—often above 80–90%—or when backlogs, longer lead times, or quality problems appear. Evaluate demand forecasts, variable costs, and ROI. Start with phased investments, cross-training, or process improvements before major capital outlays.