Week 2 PSA 1C - PowerPoint PPT Presentation

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Week 2 PSA 1C

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  1. Week 2 PSA 1C • Would you say that systems that have higher efficiency ratios than other systems will always have higher utilization ratios than those other systems? • Another way to put it: • If system A has a higher efficiency ratio than system B, it is always true that system A has a higher utilization ratio than system B? MIS 373: Basic Operations Management

  2. The answer is NO. • Here is a counterexample: system A has a higher efficiency ratio but a lower utilization ratio than system B • System A: • Design capacity: 1000 • Effective capacity: 500 • Output: 500 • System B: • Design capacity: 1000 • Effective capacity: 900 • Output: 600 Efficiency = 500/500 = 1 Utilization = 500/1000 = .5 Efficiency = 600/900 = .67 Utilization = 600/1000 = .6 MIS 373: Basic Operations Management