# Capacity Utilization – Two Methods

Capacity is a popular benchmark to measure and track performance. Capacity Utilization is similar to Variance Type KPI’s, wherein capacity is the denominator against actual value. Typically, the capacity utilization value is below 100%, but overshooting capacity is real possibility.

Capacity is always fixed and finite for a period of time but there are  two different perspectives when capacity is viewed. In both contexts, the capacity value and time are fixed, but it is the actual value (i.e transaction) behavior that switches the context.

 20 TPA (Tonnes Per Annum) 250 (Vehicles)

In the first scenario, a simple summation of actual values would suffice to calculate the KPI. If actual production is 95 widgets against capacity of 100, then utilization is 95% or if 105 widgets were produced in same period of time, then utilization 105%.

Second scenario is tricky because aggregating actual values will always overstate capacity utilization. Consider a scenario where 1000 automobiles used a mall parking structure during the day, which has 100 parking bays. Here, the transactions cannot be added, instead counted and the capacity utilization will always be more than 100% the moment actual value exceeds capacity. This is misleading because vehicles came at different hours during the day.

Right way to compute the KPI here is by finding maximum utilization during the time period over capacity. In the example above, assume 5 to 6 PM was the busiest and 75 cars were parked during that time.  Now the correct utilization is 75% for that particular day.

```Scenario 1: SUM()
Scenario 2: MAX(COUNT())```