Factors Affecting Capacity Utilization In Manufacturing Companies: The Case Of Boez Food Share Company In Burayu

Abstract

The purpose of this study was to examine factors affecting capacity utilization on manufacturing companies the case of Boez Food Share Company. The target populations of the study were employees of Boez Food Share Company. For the purpose of this study, quantitative approach and an explanatory research design were used. The study was adopted the stratified random sampling technique to select respondents from Boez Food Share Company found in Burayu. Considering the population size was limited, sample size was determined using the formula of finite sample size and 194 individual employees’ respondents were selected for the purpose of data collection. Data were collected particularly, from employees through closed-ended questionnaire. Descriptive and inferential statistics were used to analyze the data. From descriptive statics the respondents’ perception on effect of power supply, exchange rate, interest rate and inflation rate on capacity utilization were measured with (mean=3.70, standard deviation=1.05, mean =3.67, standard deviation =1.08, mean=3.54, standard deviation =1.08, and mean=3.53 standard deviation =1.08) on a five-point Likert Scale respectively. The correlation analysis had shown that power supply, exchange rate, interest rate and inflation rate have direct correlation with capacity utilization at p-value 2-tailed. All variables jointly explained capacity utilization of Boez Food Share Company employees by 96.0%. The regression’s result showed that power supply, exchange rate and interest rate were found to be significantly and positively predicted capacity utilization. However, inflation rate was found to be significantly and negatively predicted capacity utilization. The results of the study also revealed that power supply, exchange rate, interest rate and inflation rate affect capacity utilization by the value of 70.5%, 29.3%, 0.8% and -2.7% respectively. In conclusion, power supply, exchange rate, interest rate and inflation rate had significant effect on capacity utilization. Based on the finding, the study recommended for Boez Food Share Company to give due emphasis to inflation rate and interest rate as one of its factors improving capacity utilization. Key words: Factors, capacity utilization, manufacturing companies