CPIM Practice Exam

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What is the utilization formula?

Available time/standard hours produced
Hours actually worked/available time
Standard hours produced/hours worked
Rated capacity/hours available

The correct answer is: Hours actually worked/available time

The utilization formula is used to measure the efficiency of a resource, typically expressed as a percentage. The correct formula is derived from the relationship between the actual hours worked and the available time. Utilization is calculated by taking the hours actually worked and dividing it by the available time. This reflects how effectively the available resources are being used. For example, if a machine has availability for 100 hours in a week but is only operated for 80 hours, the utilization would be 80%. This metric helps organizations assess their operational efficiency and identify areas for improvement. In contrast, while the other options reference different aspects of production metrics, they do not accurately represent the utilization calculation. Understanding the utilization formula is crucial for evaluating resource performance within supply chain management and for making informed decisions on resource allocation and capacity planning.