A standard work year is 2,000 hours at the Luther Mill and it takes about an hour and a half to fill a customer order. Last year saw 15,000 customer orders at the mill and the manager has a new John Deere in mind as a company car, so he hopes that there is an increase of 15% in customer orders for next year. If the manager hires fourteen workers, what is the capacity cushion?
A) 7.6%
B) 8.2%
C) 6.9%
D) 8.8%

Question

Quizplus · Accepted Answer

The capacity cushion is the difference between the actual output and the potential output. The actual output is the number of customer orders filled last year, which is 15,000. The potential output is the number of customer orders that could be filled if the mill operated at full capacity, which is 2,000 hours / 1.5 hours per order * 14 workers = 18,666.67 orders. The capacity cushion is therefore (18,666.67 - 15,000) / 18,666.67 * 100% = 7.6%.

A Standard Work Year Is 2,000 Hours at the Luther