What term defines the maximum output rate that a operational facility, process, or system can achieve under ideal operating conditions?
AEffective Capacity
BDesign Capacity
CActual Output
DUtilization Rate
Explanation
• Design Capacity is the maximum theoretical output rate an operational system can produce under ideal operating conditions.
• Effective Capacity is the capacity a firm expects to achieve given operational constraints, maintenance, and product mix.
• Utilization is the percentage of design capacity actually achieved.
Exam Relevance
- Topic: Operations Management
- Subtopic: Capacity Planning

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