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CMA Intermediate · Operations Management and Strategic Management · Operations Planning

Sundaram Auto Parts has a design capacity of 1,200 units per week and an effective capacity of 1,000 units per week. Actual output last week was 850 units. What are the efficiency and utilisation respectively?

Efficiency is actual output divided by effective capacity, 850/1,000 = 85%. Utilisation is actual output divided by design capacity, 850/1,200 = 70.83%. Using the wrong base for each measure gives the swapped distractor answers.

  1. A85% and 70.83%Correct
  2. B70.83% and 85%
  3. C83.33% and 85%
  4. D85% and 83.33%

Explanation

Efficiency = actual output / effective capacity = 850/1,000 = 85%. Utilisation = actual output / design capacity = 850/1,200 = 70.83%. Option two swaps the two bases.

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