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CMA Intermediate · Operations Management and Strategic Management · Designing of Operational Systems and Control

A plant in Coimbatore has a design capacity of 2,000 units per week and an effective capacity of 1,600 units per week. Its actual output last week was 1,280 units. What are its efficiency and utilisation respectively?

Efficiency is 80% because actual output of 1,280 divided by effective capacity of 1,600 equals 0.80. Utilisation is 64% because 1,280 divided by design capacity of 2,000 equals 0.64.

  1. AEfficiency 80%, utilisation 64%Correct
  2. BEfficiency 64%, utilisation 80%
  3. CEfficiency 80%, utilisation 80%
  4. DEfficiency 64%, utilisation 64%

Explanation

Efficiency = actual output / effective capacity = 1,280/1,600 = 80%. Utilisation = actual output / design capacity = 1,280/2,000 = 64%. Option 2 swaps the two bases.

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