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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

Your project to obtain charitable donations is now 30 days into a planned 40-day project. The project is divided into 3 activities. The first activity is designed to solicit individual donations. It is scheduled to run the first 25 days of the project and bring in \(25,000. Even though we are 30 days into the project, we still see that we have only 90 percent of this activity completed. The second activity relates to company donations and is scheduled to run for 30 days starting on day 5 and extending through day 35. We estimate that, even though we should have 83 percent (25y30) of this activity complete, it is only 50 percent complete. This part of the project was scheduled to bring in \)150,000 in donations. The final activity is for matching funds. This activity is scheduled to run for the last 10 days of the project and has not started. It is scheduled to bring in an additional \(50,000. So far \)175,000 has been brought in on the project. Calculate the schedule variance, schedule performance index, and cost (actually value in this case) performance index. How is the project going? Hint: Note that this problem is different since revenue rather than cost is the relevant measure. Use care in how the measures are interpreted.

The following CPM network has estimates of the normal time in weeks listed for the activities:

a. Identify the critical path.

b. What is the length of time to complete the project?

c. Which activities have slack, and how much?

d. Here is a table of normal and crash times and costs. Which activities would you shorten to cut two weeks from the schedule in a rational fashion? What would be the incremental cost? Is the critical path changed?

Activity

Normal Time

Crash time

Normal cost

Crash cost

A

7

6

\(7,000

\)8,000

B

2

1

5,000

7,000

C

4

3

9,000

10,200

D

5

4

3,000

4,500

E

2

1

2,000

3,000

F

4

2

4,000

7,000

G

5

4

5,000

8,000

United Research Associates (URA) had received a contract to produce two units of a new cruise missile guidance control. The first unit took 4,000 hours to complete and cost \(30,000 in materials and equipment usage. The second took 3,200 hours and cost \)21,000 in materials and equipment usage. Labor cost is charged at $18 per hour.

The prime contractor has now approached URA and asked to submit a bid for the cost of producing another 20 guidance controls.

a. What will the last unit cost to build?

b. What will be the average time for the 20 missile guidance controls?

c.What will the average cost be for guidance control for the 20 in the contract?

The home office billing department of a chain of department stores prepares monthly inventory reports for use by the stores鈥� purchasing agents. Given the following information, use the critical path method to determine:

a. How long the total process will take.

b. Which jobs can be delayed without delaying the early start of any subsequent activity?

Job and Description

Immediate Predecessors

Time (Hours)

A

Start

_

0

B

Get computer printouts of customer purchases

A

10

C

Get stock records for the month

A

20

D

Reconcile purchase printouts and stock records

B, C

30

E

Total stock records by department

B, C

20

F

Determine reorder quantities for coming period

E

40

G

Prepare stock reports for purchasing agents

D,F

20

H

Finish

G

0

Do the concepts of complexity and divergence apply to an online sales company such as Dell Computer?
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