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 25,000 customer orders at the mill and the manager has a rebuilt Ford 9N in mind as a company car, so he hopes that there is an increase of 2% in customer orders for next year. If the manager hires twenty workers, what is the capacity cushion?
A) 3.8%
B) 3.1%
C) 5.1%
D) 4.3%

Question

Quizplus · Accepted Answer

Capacity cushion = (Actual capacity - Planned capacity) / Planned capacityActual capacity = 2,000 hours/worker * 20 workers = 40,000 hoursPlanned capacity = 25,000 orders * 1.5 hours/order * 1.02 = 37,950 hoursCapacity cushion = (40,000 - 37,950) / 37,950 = 3.8%

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