Utilization will always be lower than efficiency because
A) Effective capacity is less than design capacity.
B) Effective capacity is greater than design capacity.
C) Effective capacity equals design capacity.
D) False, Utilization and efficiency are equal in value.
E) False, Utilization is normally greater than efficiency.

Question

Quizplus · Accepted Answer

Utilization is the actual output divided by the potential output, while efficiency is the actual output divided by the effective capacity. Effective capacity takes into account factors such as machine maintenance and employee breaks that lower the actual capacity of a system. Therefore, since effective capacity is less than design capacity, utilization will always be lower than efficiency.

Utilization Will Always Be Lower Than Efficiency Because