In capacity requirements planning, the desirable capacity utilization is: a. abo

Question

In capacity requirements planning, the desirable capacity utilization is: a. above 100%. b. significantly below 100%, for example, 10% or 20%. c. either above 100% or significantly below 100%. d. all of the above. e. none of the above. In capacity requirements planning, the desirable capacity utilization is: above 100%. significantly below 100%, for example, 10% or 20%. either above 100% or significantly below 100%. all of the above. none of the above. a. above 100%. b. significantly below 100%, for example, 10% or 20%. c. either above 100% or significantly below 100%. d. all of the above. e. none of the above.

Explanation / Answer

b. significantly below 100%, for example, 10% or 20%.

In order to measure the potential economic output, which is realized, the actual output is divided by the potential output and is then divided by 100 since it has to be displayed in percentage form. Hence it can never be beyond 100%. Therefore it is significantly below 100% which helps in determining that in spite of no additional overheads, the plant has the capacity to increase its production.

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