Math Problem Statement
1. A process currently services an average of 50 customers per day. Observations in recent weeks show that its utilization is about 90 percent, allowing for just a 10 percent capacity cushion. If demand is expected to be 75 percent of the current level in 5 years and management wants to have a capacity cushion of just 5 percent, what capacity requirement should be planned?
Solution
To determine the required capacity for the process in 5 years, we need to calculate the planned capacity using the given information.
Step 1: Current capacity
- Current demand = 50 customers/day
- Current utilization = 90% (0.90)
- Capacity cushion = 10% (0.10)
The formula for calculating capacity using utilization is:
Using the given values:
Step 2: Future demand
It is stated that demand will be 75% of the current level in 5 years:
Step 3: Future capacity cushion
The desired capacity cushion is 5% (0.05). This means the future utilization will be 95% (1 - 0.05 = 0.95).
Step 4: Future capacity requirement
Now, using the future demand and desired utilization:
Conclusion:
The process should plan for a capacity requirement of approximately 39.47 customers per day in 5 years.
Would you like more details or clarifications on any part of this?
Here are 5 related questions:
- How does utilization affect capacity requirements?
- What is the role of a capacity cushion in operations management?
- How would an increase in future demand affect capacity planning?
- What other factors could influence capacity planning aside from utilization and demand?
- How can businesses ensure they are prepared for fluctuating future demand?
Tip: When planning for future capacity, consider both demand forecasts and potential efficiency improvements to ensure long-term sustainability.
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Math Problem Analysis
Mathematical Concepts
Operations Management
Capacity Planning
Utilization
Capacity Cushion
Formulas
Capacity = Demand / Utilization
Future demand = Current demand × Expected demand percentage
Future utilization = 1 - Capacity cushion
Theorems
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Suitable Grade Level
College/University Level (Operations Management or Business Studies)
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