Question

ABC company is capable of producing 10 tons of product per day when it runs four shifts with no breakdowns. The company has produced an average of 8.7 tons per day over the past week. The capacity of the company is calculated as the ratio of actual output to design capacity. Given this information, what is the capacity utilization of ABC company over the past week?

a. 0.87 tons/day
b. 0.87 tons/day
c. 0.87 tons/day
d. 0.87 tons/day

Answer 1

The capacity utilization of ABC company over the past week is 87%.

Step-by-step explanation:

The capacity utilization of ABC company over the past week can be calculated as the ratio of actual output to design capacity. The design capacity is 10 tons per day when running four shifts with no breakdowns. The company has produced an average of 8.7 tons per day over the past week. To calculate the capacity utilization, divide the actual output (8.7 tons/day) by the design capacity (10 tons/day) and multiply by 100%.

So, the capacity utilization of ABC company over the past week is (8.7/10) * 100% = 87%.