A firm produces 12 different services and has capacity to service 360,000 customers per year. A total of 24 service workers are employed. If 270,000 customers receive service during a particular year, what is the capacity cushion during that year?

= 25%

Explanation:

Capacity cushion is the excess of the of the available capacity over and above the utilized capacity .This then can be expressed as a percentage by multiplying by 100.

Available capacity = 360,000 customers per year

Utilized capacity = 270,000 customers per year

Spare capacity = (available - utilized)/available × 100

                   = (360,000 - 270,000)/360,000 × 100

                    = 25%

25%

Explanation:

The capacity cushion is basically the spare operating capacity that a company has, and it includes all the different services that the company might offer, e.g. spare capacity of a factory, spare capacity of hotel rooms, spare capacity of web hosting, etc.

The capacity cushion is generally measured as a percentage of total operating capacity = [total operating capacity - total amount of services provided) / total operating capacity] x 100 = [(360,000 - 270,000) / 360,000] x 100 = (90,000 / 360,000) x 100 = 25%

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