If the best operating level of a piece of equipment is at a rate of 1000 units per hour and the actual output during an hour is 600 units, which of the following is the capacity cushion? Group of answer choices400 units per hour1000 units per hour167 percent60 percent600 units per hour
Question
If the best operating level of a piece of equipment is at a rate of 1000 units per hour and the actual output during an hour is 600 units, which of the following is the capacity cushion? Group of answer choices400 units per hour1000 units per hour167 percent60 percent600 units per hour
Solution
400 units per hour
Explanation:
The capacity cushion is the amount of reserve capacity a process uses to handle sudden increases in demand or temporary losses of production capacity. It measures the amount by which the maximum possible output rate exceeds the actual output rate.
In this case, the best operating level of the equipment is 1000 units per hour, and the actual output is 600 units per hour. Therefore, the capacity cushion is 1000 units per hour (maximum possible output) minus 600 units per hour (actual output), which equals 400 units per hour.
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