CMA Intermediate · Operations Management and Strategic Management · Introduction to Operations Management
Sunrise Textiles in Surat has a loom shop whose effective capacity is 12,000 metres per month. Its design capacity is 15,000 metres per month and actual output last month was 9,600 metres. What are the capacity utilisation (actual/design) and the efficiency (actual/effective) respectively?
Utilisation is actual output divided by design capacity, 9,600/15,000 = 64%. Efficiency is actual output divided by effective capacity, 9,600/12,000 = 80%. So the correct pair is 64% utilisation and 80% efficiency.
- A64% and 80%Correct
- B80% and 64%
- C80% and 125%
- D64% and 125%
Explanation
Utilisation = actual/design = 9,600/15,000 = 64%. Efficiency = actual/effective = 9,600/12,000 = 80%. The second option swaps the two measures, which is the key mistake.
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