A process currently services an average of 43 customers per day. Observations in recent weeks show that its utilization is about 90 percent, allowing for just a 10 percent capacity cushion. If demand is expected to be 70 percent of the current level in five years and management wants to have a capacity cushion of just 8 percent, what capacity requirement should be planned?

Question

Joyce Solomon

Business

2 November, 06:12

A process currently services an average of 43 customers per day. Observations in recent weeks show that its utilization is about 90 percent, allowing for just a 10 percent capacity cushion. If demand is expected to be 70 percent of the current level in five years and management wants to have a capacity cushion of just 8 percent, what capacity requirement should be planned?

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Answers (1)

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Chum · Answer 1

The correct answer is 31 customers per day.

Explanation:

Consider the current capacity requirement as = x

Management wants to have a capacity cushion = 8%.

So the utilization is required = 100% - 8% = 92%

A process of currently services an average of 43 customers per day and utilization is 90%.

Expected Demand=70% = 70 : 100 = 0.70

Current utilization = 90% = 0.90

Let Capacity requirement = X

Capacity requirement : required utilization = Expected Demand rate * current service rate : current utilization rate

X : 0.92 = 0.70 * 43 : 0.90

X = 0.70 * 43 : 0.90 * 0.92

= 30.76 or 31

Needed capacity requirement is 31 customer per day.