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Find the Under Capacity Scheduling Level

A chemical company produces an average of 70 gallons of its cleaning solvent per hour around the clock (24 hours/day). A customer wants to sign a contract calling for daily delivery of 1,500 gallons of the solvent. If the chemical company decides to produce for this customer only, what will be its undercapacity scheduling level, expressed as a decimal fraction?

a. 2.14
b. 1.12
c. 0.89
d. 0.75

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Hello -

If I understand correctly, we need to find the 'capacity scheduling level breakpoint', which would be the fraction of capacity that would determine whether or not a project can be completed in the alotted time.

So, we know that the chemical company produces ...

Solution Summary

A solution is given that describes the process of finding the undercapacity scheduling level, and illustrates this concept with an example.