Question

Tangerine Company has nine engineers. Each engineer can process 12,000 orders in a year. Last year, 100,000 orders were processed. Determine the unused capacity in terms of the number of orders processed.

Answer 1

8,000 orders

Explanation:

At the given rates, 9 engineers should be able to process 12,000×9 = 108,000 orders. 8,000 more orders could have been processed.

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Comment on unused capacity

It is usually a good idea to try for 100% utilization of capacity only on the process constraining the rate at which money is being made. If there are constraints restricting the number of orders that can be filled, running Order Processing at full capacity can only result in unfilled orders and unhappy customers. It may have additional unwanted effects, too, such as increasing inventory of raw materials.