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A manufacturing shop is designed to operate most efficiently at an output of 550 units per day. In the past month, the plant averaged 490 units per day. What was its capacity utilization rate last month? (Answer in Appendix D)

Step-by-step solution

  1. Step 1 of 2

    Capacity utilization rate is a measure of the performance of a company by judging how close it has been to the best operating level possible.

  2. Step 2 of 2

    The following are the specifications of the manufacturing shop:

    The capacity of the plant for the last month is given below:

    Substituting the specifications in the formula as shown below:

    Therefore, the capacity utilization rate for the last month is 89.09%

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