CPIM Practice Exam

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Which of the following best describes the rated capacity formula?

  1. Available time + efficiency + utilization

  2. Available time x utilization x efficiency

  3. Efficiency - utilization

  4. Rated capacity/units produced

The correct answer is: Available time x utilization x efficiency

The rated capacity formula reflects the potential output of a production process, taking into account the various factors that can affect the actual performance. Specifically, it combines the available time for production with the utilization rate and the efficiency of the operation. In this context, available time represents the total hours available for production, utilization measures how much of that time is actually used for productive activity compared to total available time, and efficiency indicates how well the production process performs during the utilized time compared to its maximum possible output. By multiplying these three components—available time, utilization, and efficiency—you obtain a comprehensive measure of the rated capacity, representing the expected output under normal conditions. This quantifies the true productive capability of a system, making it essential for effective capacity planning and management.

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