Question

A loan processing operation that processes an average of 7 loans per day. The operation has a design capacity of 10 loans per day and an effective capacity of 8 loans per day. A furnace repair team that services an average of 3 furnaces a day if the design capacity is 9 furnaces a day and the effective capacity is 8 furnaces a day.

a. Utilization ____________ %
b. Efficiency ____________ %

Would you say that systems that have higher efficiency ratios than other systems will always have higher utilization ratios than those other systems?

Answer 1

Efficiency = Actual Output / Effective Capacity * 100%

Utilization = Actual Output / Design Capacity * 100%

Loan processing operation

Actual output = 9 loans per day

Design capacity = 10 loans per day

Effective capacity = 8 loans per day

Utilization = 9/10 * 100

Utilization = 90.0%

Efficiency = 9/8 x 100

Efficiency = 112.5%

Furnace repair team

Actual output = 3 furnaces per day

Design capacity = 9 furnaces per day

Effective capacity = 8 furnaces per day

Utilization = 3/9 * 100

Utilization = 33.3%

Efficiency = 3/8 * 100

Efficiency = 37.5 %