New Perspectives on Capacity Utilization: From Moving Assembly Lines to Computer-Based Control Systems

Abstract

This paper investigates how our understanding of capacity utilization has changed over the last two centuries. By reviewing contemporary and historical literature, it argues that two perspectives on capacity utilization developed during this period — a "traditional" and a "modern" perspective. It finds that the "traditional" perspective was prevalent up until WWI and focused on mass production and managerial control as means to maintain a high level of capacity utilization, while the "modern" perception took form after WWI and could be described partially as reaction to and partially as an extension of the traditional perspective. The paper argues that the modern perspective made the concept of capacity utilization more relevant and useful — by demonstrating how it could be applied to other sectors of the economy than manufacturing and how computer-based technologies rather than managerial control could be used to improve capacity utilization.