of the equipment is reduced by 25% on Day 6. If the efficiency remains unchanged at 110%, what would the output be on Day 6?

The demonstrated capacity of equipment in a process flow is $1,200 per day. Due to a malfunction in a feeder line, utilization

of the equipment is reduced by 25% on Day 6. If the efficiency remains unchanged at 110%, what would the output be on Day 6?
A . $300
B . $330
C . $900
D . $990

View Answer

Answer: D

Explanation:

The output of the equipment on Day 6 can be calculated by multiplying the demonstrated capacity, the utilization, and the efficiency. The demonstrated capacity is given as $1,200 per day. The utilization is the ratio of the actual time that the equipment is used to the available time that it could be used. Since the utilization is reduced by 25% on Day 6, it means that the equipment is used for 75% of the available time. Therefore, the utilization is 0.75. The efficiency is the ratio of the actual output to the standard output. It is given as 110%, which means that the equipment produces 10% more than the standard output. Therefore, the efficiency is 1.1.

The output on Day 6 can be found by multiplying these three factors:

Output = Demonstrated capacity x Utilization x Efficiency Output = $1,200 x 0.75 x 1.1 Output = $990 Therefore, the output on Day 6 is $990.

Reference: CPIM Part 2 Exam Content Manual, Version 7.0, Domain 6: Plan, Manage, and Execute Detailed Schedules, Section A: Detailed Capacity Planning and Scheduling, Subsection 2: Capacity Management Concepts and Calculations, p. 37-38.