Final answer:
Joe's Tasty Burger is operating at 75% of its design capacity and 120% of its effective capacity, indicating that while the design capacity is underutilized, the effective capacity is being exceeded, which may not be sustainable in the long term.
Step-by-step explanation:
In the scenario of Joe's Tasty Burger, we have been presented with two figures: the design capacity and the effective capacity. The design capacity is the maximum output that could theoretically be achieved, which in this case is 400 hamburgers per day. The effective capacity, on the other hand, is the actual output that can be achieved under realistic conditions, and for Joe's Tasty Burger, this is 250 hamburgers per day.
Joe has observed that the output has been 300 hamburgers per day. To compute the design and effective capacity utilization measures, we use the following formulas:
Design Capacity Utilization = (Actual Output / Design Capacity) x 100 = (300 / 400) x 100 = 75%
Effective Capacity Utilization = (Actual Output / Effective Capacity) x 100 = (300 / 250) x 100 = 120%
The conclusion we can draw from these calculations is that Joe's Tasty Burger is operating at 75% of its design capacity, which is a reasonable utilization rate. However, it is operating above its effective capacity by 20%, which could indicate that the production facility is being overworked, which might not be sustainable in the long term and could potentially lead to issues such as increased wear and tear on equipment, employee fatigue, or a decrease in product quality.