Question

One of your duties as the capacity manager for XYZ Company is to determine the best operating level. One way to help determine capacity is to measure the capacity utilization rate. Your facility is capable of producing 5200 widgets per day, but that doesn't include any down time for routine safety maintenance and also requires overtime pay for your team members. At 4700 widgets per day, your facility operates at a level where average cost per unit is minimized. Team 1 operates at a level of 4200 widgets per day and team 2 operates at a level of 3700 widgets per day. What is the capacity utilization rate of team 1 and team 2 (Please show calculation)? As the capacity manager; should you consider any changes to changing the capacity level? Explain.

Answer 1

Answer:

Capacity utilization rate of team 1=4200/4700=0,89

Capacity utilization rate of team 2=3700/4700=0,78

Explanation:

To get the maximum capacity of utilization capacity manager must consider the routine safety and the level where average cost per unit, so we use 4700 widgets per day to get the rate of team 1 and 2.  

Capacity utilization rate of team 1=4200/4700=0,89

Capacity utilization rate of team 2=3700/4700=0,78