Gnash Motor Cars, Inc., employs a robotic spray booth to paint automobile bodies in its Flintstone plant. The robotic spray booth is capable of painting five cars per hour. Thus, its weekly theoretical capacity is 840 cars. Company engineers have set the rated speed of the spray booth at four cars per hour to allow for unavoidable downtime for maintenance and process irregularities.
- Management intends to operate the spray booth for two eight-hour shifts, five days per week. The output sacrificed based on the planned utilization of this spray booth is termed:

Question

Quizplus · Accepted Answer

The output sacrificed due to the decision to operate the spray booth at a speed lower than its maximum capacity (four cars per hour instead of five) and for a specific number of shifts and days, despite its theoretical capacity to produce more, is a result of management's policy. This decision takes into account practical considerations like maintenance needs and process irregularities, thus it's termed "Management policy waste."