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Determine the utilization and efficiency for each of the following situations.

a. A loan processing operation that processes an average of 3 loans per day. The operation has a design capacity of 10 loans per day and an effective capacity of 7 loans per day.
b. A furnace repair team that services an average of 2 furnaces a day if the design capacity is 6 furnaces a day and the effective capacity is 5 furnaces a day.
c. Would you say that systems that have higher efficiency ratios than other systems will always have higher utilization ratios than those other systems

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Answer:

a. Utilization= 30%

Efficiency= 42.85%

b. Utilization= 33.33%

Efficiency=40%

c. . Based on the calculations , the utilization will tend to relied on the design capacity and it may vary accordingly.

Explanation:

a. Calculation to Determine the utilization and efficiency for each

Calculation for utilization

Using this formula

Utilization = (Actual Output/Design Capacity)*100

Let plug in the formula

Utilization= (3/10)*100

Utilization= 30%

Using this formula to calculate for efficiency

Let plug in the formula

Efficiency = (Actual Output/Effective Capacity)*100

Efficiency= (3/7)*100

Efficiency= 42.85%

b. Calculation for utilization

Using this formula

Utilization = (Actual Output/Design Capacity)*100

Let plug in the formula

Utilization= (2/6)*100

Utilization= 33.33%

Using this formula to calculate for efficiency

Let plug in the formula

Efficiency = (Actual Output/Effective Capacity)*100

Efficiency= (2/5)*100

Efficiency=40%

c. In a situation where the design capacity is High this means that there is likelyhood that the utilization could be lesser despite the efficiency was high.

Therefore based on the above calculations , the utilization will tend to relied on the design capacity and it may vary accordingly.

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