Question

If the best operating level of a piece of equipment is at a rate of 400 units per hour and the expected demand is 300 units per hour, what is the capacity cushion?

1) 100 units per hour
2) 200 units per hour
3) 300 units per hour
4) 400 units per hour

Answer 1

The capacity cushion is the difference between the best operating level (400 units/hour) and the expected demand (300 units/hour), which amounts to 100 units per hour.

Step-by-step explanation:

The capacity cushion is the difference between the best operating level of a piece of equipment and the expected demand. In this scenario, the best operating level is at a rate of 400 units per hour while the expected demand is at 300 units per hour.

Therefore, the capacity cushion can be calculated by subtracting the expected demand from the best operating level:

• Best operating level = 400 units/hour
• Expected demand = 300 units/hour
• Capacity cushion = Best operating level - Expected demand
• Capacity cushion = 400 units/hour - 300 units/hour
• Capacity cushion = 100 units/hour

Hence, the answer is option 1) 100 units per hour.