Discuss the differences between utilization and efficiency as measures of system performance. Which (if any) is...

Discuss the differences between utilization and efficiency as measures of system performance. Which (if any) is the most useful measure for an operations manager? Why?

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Expert Solution

Utilization measures the effectiveness of operations of a product or service. It checks the level at which the product or service is able to serve its objective. Utilization= Actual output / designed capacity. Designed capacity is the target or objective that an ideal product/service will meet.

Efficiency is used to compare the difference between the actual performance and the ideal performance of a product or service. Efficiency = Actual output / Effective capacity. Effective capacity is the target or benchmark set for performance.

The most useful measure for an operations manager is the efficiency of an entity as it highlights the way in which the resource is getting used by the business process. Efficiency also helps in maintaining company’s competitive edge.

keosha answered 1 month ago

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