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Chapter 1: Q. 5-2PE (page 128)

A facility has a maximum capacity of 4,000 units per day using overtime and skipping the daily maintenance routine. At 3,500 units per day, the facility operates at a level where the average cost per unit is minimized. Currently, the process is scheduled to operate at a level of 3,000 units per day. What is the capacity utilization rate?

Short Answer

Expert verified

The capacity utilization rate is 85.7%

Step by step solution

01

Capacity utilization rate

The percentage of an organization's total output that is realizedis defined by thecapacity utilization rate.

02

Calculation of Capacity utilization rate

The formula is given below,

Capacity utilization rate = Capacity used / Best operating level

Where Capacity used = 3000

Best operating level = 3500

As a result,

Capacity utilization rate = 3000/3500

= 85.71%

Thus the capacity utilization rate is 85.71%

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Most popular questions from this chapter

Match the following OSCM job titles with the appropriate duties and responsibilities.

Plant manager A. Plans and coordinates staff activities such as new product development and new facility location.

Supply chain manager B. Oversees the movement of goods throughout the supply chain.

Project manager C. Oversees the workforce and resources required to produce the firm鈥檚 products.

Business process improvement analyst D. Negotiates contracts with vendors and coordinates the flow of material inputs to the production process.

Logistics manager E. Applies the tools of lean production to reduce cycle time and eliminate waste in a process.

A philosophy that aggressively seeks to eliminate causes of production defects.

How often should a company develop and refine its operations and supply chain strategy?

Question: Two types of cars (Deluxe and Limited) were produced by a car manufacturer last year. Quantities sold, price per unit, and labor hours follow. What is the labor productivity for each car? Explain the problem(s) associated with the labor productivity.

Suppose that Always Rain Irrigation鈥檚 marketing department will undertake an intense ad campaign for the bronze sprinklers, which are more expensive but also more durable than the plastic ones. Forecast demand for the next four years is

Yearly Demand

1 (IN 000s)

2 (IN 000s)

3 (IN 000s)

4 (IN 000s)

Plastic 90

32

44

55

56

Plastic 180

15

16

17

18

Plastic 360

50

55

64

67

Bronze 90

11

15

18

23

Bronze 180

6

5

6

9

Bronze 360

15

16

17

20

What are the capacity implications of the marketing campaign (assume no learning)?
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