Answer to Question #120236 in Microeconomics for lamesa

Question

8. The design capacity for Bakery Company is 1000 loafs of bread per day. The effective capacity is 800 loafs of bread per day and the actual output is 650 loafs of bread per day. The company goal is to produce 950 loafs of bread per day. Calculate the utilization and efficiency of the operation. If the efficiency for next month is expected to be 85%, what is the expected output?

Answer 1

$Utilizition=( actual output/design capacity)*100$

$Utilizition=( 650/1000)*100$

$Utilizition=65\%$

$Efficiency=( actual output/effective capacity)*100$

$Efficiency=( 650/800)*100$

$Efficiency=81.25\%$

Given expected efficiency of 85%

$Expected output=( Efficiency*effective capacity)$

$Expected output=( 0.85*950)$

$Expectedoutput=870$