A process currently services an average of 65 customers per

A process currently services an average of 65 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 60 percent of the current level in five years and management wants to have a capacity cushion of just 3 percent, what capacity requirement should be planned? The needed capacity requirement iscustomers per day. (Enteryour response rounded up to the next whole number.)

Solution

It is to be noted that :

Capacity utilization ( %) = 100 – Capacity cushion ( %)

Thus , Capacity utilization at 10 percent capacity cushion = 100 - 10 = 90 %

Also,

Capacity utilization ( %) = Number of customers served/ Capacity x 100

Therefore ,

When number of customers served = 65 customers/ day

Capacity utilization = 90 percent

Then,

90 = 65/ Capacity x 100

Or, 65/capacity = 0.9

Or, Capacity = 65/0.9 = 72.22

Current capacity = 72.22

5 years down the line :

Demand = 60 percent of current level of 65 = 0.60 x 65 = 39 customers / day

Corresponding capacity utilization at capacity cushion of 3 percent = 97 percent

Therefore,

97 = 39/Capacity x 100

Or, 39 / Capacity = 0.97

Or, Capacity = 39/0.97 = 40.206 ( 41 rounded to next whole number )

THE NEDED CUSTOMER REQUIREMENT IS 41 CUSTOMERS PER DAY

THE NEDED CUSTOMER REQUIREMENT IS 41 CUSTOMERS PER DAY