Certified Production & Operations Manager (POM) Practice Exam

With a design capacity of 100 units and effective capacity of 72 units, what is the maximum possible utilization of operation Y?

1. 90%

2. 70%

3. 72%

4. 60%

The correct answer is: 72%

To determine the maximum possible utilization of operation Y, you need to understand the relationship between design capacity and effective capacity. Utilization is a measure of how much of the available capacity is actually being used. Design capacity represents the maximum output that an operation can potentially achieve under ideal conditions, which in this case is 100 units. Effective capacity, on the other hand, takes into account practical limitations such as downtime, maintenance, and operational inefficiencies, yielding a maximum achievable output of 72 units. Utilization is calculated using the formula: Utilization = (Actual Output / Design Capacity) x 100% In the case of maximum utilization, you would use effective capacity as the actual output because that reflects the best realistic performance of the operation. Thus, the formula becomes: Utilization = (Effective Capacity / Design Capacity) x 100% Utilization = (72 units / 100 units) x 100% = 72% This shows that the maximum possible utilization of operation Y, based on the effective capacity relative to the design capacity, is indeed 72%.