CMA Intermediate · Operations Management and Strategic Management · Operations Planning
A plant in Pune has a design capacity of 1,000 units per day and an effective capacity of 800 units per day. Actual output is 640 units per day. What are its utilisation and efficiency respectively?
Utilisation is 64% because 640 divided by design capacity of 1,000 gives 0.64. Efficiency is 80% because 640 divided by effective capacity of 800 gives 0.80. The two measures use different denominators, design and effective capacity respectively.
- A64% and 80%Correct
- B80% and 64%
- C64% and 64%
- D80% and 100%
Explanation
Utilisation = actual/design = 640/1,000 = 64%. Efficiency = actual/effective = 640/800 = 80%. Option 80% and 64% swaps the two bases.
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