Question

Suppose a company has a design maximum output of 200. Its actual output is 150 and its efficiency is 75%. Calculate its effective output and its capacity utilization.

Answer 1

Efficiency in percentage terms can be termed as :

Efficiency ( %) = (Effective output/ Maximum output) x 100

Therefore , in the given case :

75 =( Effective output / 200 ) x 100

Or, Effective output = 200 x 0.75

Or, Effective output = 150

Capacity utilization ( %) = Actual output / Maximum output x 100

Or, Capacity utilization ( %) = 150/ 200   x   100

Or, Capacity Utilization ( %) = 75 %

EFFECTIVE OUTPUT = 150

CAPACITY UTILIZATION = 75 %