Southeastern Oklahoma State University's business program has the facilities and faculty to handle an enrollment of 2,200 new students per semester. However, in an effort to limit class sizes to a "reasonable" level (under 200, generally), Southeastern's dean, Holly Lutze, placed a ceiling on enrollment of 1,600 new students. Although there was ample demand for business courses last semester, conflicting schedules allowed only 1,420 new students to take business courses.
What are the utilization and efficiency of this system?

a. Utilization rate is the ratio of the amount of installed capacity planned to be used relative to the total installed capacity. This can be stated as follows:

Utilization rate = ICP ÷ TC ......................................... (1)

ICP = Amount of installed capacity planned to be used

TC = Total installed capacity

From the question, ICP = 1,600 while TC = 2,200. Substituting this into equation (1), we have:

Utilization rate = 1,600 ÷ 2,200 = 0.7273 or 72.73%

Therefore, utilization rate is 0.7273 or 72.73%.

b. Efficiency rate is the ratio of the actual installed capacity used relative to the amount of installed capacity planned to be used. This can be stated as follows:

Efficiency rate = AIC ÷ ICP ......................................... (1)

AIC = Actual installed capacity used

ICP = Amount of installed capacity planned to be used

From the question, ICP = 1,420 while TC = 1,600. Substituting this into equation (1), we have:

Efficiency rate = 1,420 ÷ 1,600 = 0.8875 or 88.75%

Therefore, efficiency rate is 0.8875 or 88.75% .