What Is Capacity Utilization

Capacity Utilization is an economic indicator that gives a percentage of a company or country's production capacity over a period. The following paper will describe the capacity utilization of the motorcycle industry in the United States over several years. We will see if the capacity utilization of the motorcycle industry has an affect on the total capacity production of the United States.

The capacity utilization in the motorcycle industry has increased over the past five years, we were able to calculate this by taking the total motorcycle manufacturing capacity and then dividing it by the number of motorcycles produced in a given year. After calculating the capacity utilization of the motorcycle industry, we were able to compare the findings to the total industry's manufacturing capacity utilization in the United States to see if there was any type of correlation.

We did notice that there was a correlation between the number of motorcycles manufactured in the United States and the total industry's manufacturing, the calculations show an increase in the number of units produced in the motorcycle industry from the year 2001 through

2005. Compared to the total industry's manufacturing where there was also an increase from 2001 through

2005.

'Capacity utilization is a concept in economics which refers to the extent to which an enterprise or a nation actually uses its installed productive capacity. Thus, it refers to the relationship between actual output produced and potential output that could be produced with installed equipment, if capacity was fully used' (Wikipedia, 2006).