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Chapter 1: Q3OQ (page 124)

Hoosier Manufacturing operates a production shop that is designed to have the lowest unit production cost at an output rate of 100 units per hour. In the month of July, the company operated the production line for a total of 175 hours and produced 16,900 units of output. What was its capacity utilization rate for the month?

Short Answer

Expert verified

The capacity utilization rate for a month is 96.57%.

Step by step solution

01

Capacity utilization rate

The proportion of a company's total output that may be realized is termed thecapacity utilization rate.

02

Calculation of capacity utilization rate for the month

The formula is given below:

Capacity utilization = (Actual output / Efficient possible output) x 100

Where,

Set up units to produce = 100 units

Actual output = 16900 units

Ideal output or efficient possible output = 175 x 100

= 17500

The capacity to manufacture properly is not utilized.

As a result,

Capacity utilization = (16900 / 17500) x 100

Capacity utilization = 0.9657 x 100

= 96.57%.

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Most popular questions from this chapter

A project structured where a self-contained team works full time on the project.

Which characteristics must a project have for critical path scheduling to be applicable? What types of projects have been subjected to critical path analysis?

Consider the EVM charts in Exhibit 4.12. Are there any other measures you might want to use in the management of a project? What are some controllable variables that may affect the costs being tracked?

The home office billing department of a chain of department stores prepares monthly inventory reports for use by the stores’ 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

Discuss design-based incrementalism, which is frequent product redesign throughout the product’s life. What are the pros and cons of this idea?
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