Actual output as percentage of the design capacity

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Reference no: EM131145891

Utilization is defined as the actual output as a percentage of the design capacity. The design capacity is the theoretical; maximum output of a system in a given period under ideal conditions. Efficiency is defined as the actual output as a percentage of the effective capacity. That is the capacity a firm can expect to achieve, given it's product mix, methods of scheduling,maintenance, and standards of quality. I think both would be equally important to an operations manager as to give them the total picture. Knowing where you stand in regards to the projected outcome, or theoretical maximum, is needed to know where you need to make changes along the program, or ride the same course for the long term outcome. Knowing where you stand versus the current mix, labor, and quality also tells you where you are and where you need to be. Knowing that your controllable s are allowing you to produce at a rate and level of quantity and quality that is acceptable, versus seeing a need to make changes. You can never have enough information as a manager or leader.

would one be easier to increase than another?

Reference no: EM131145891

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