A work center's demonstrated capacity for the last week was 160 standard hours. Its demonstrated capacity for the last 6 weeks was 140 standard hours. Which of the following numbers would be best to use to determine the appropriate future load for the work center?
Using 140 standard hours is more reliable for determining the appropriate future load because it is based on a longer time frame, which includes more data points. This approach provides a more stable and comprehensive measure of the work center's capacity, accounting for fluctuations and ensuring a balanced assessment of its performance.
140 standard hours, because it is based on a greater number of periods. This choice is more conservative and is based on a longer period which might give a more stable and reliable measure of the work center's capacity. It takes into account more data points, which likely includes weeks of both higher and lower performance, thus giving a more rounded view of the work center's capacity.
The number that would be best to use to determine the appropriate future load for the work center is 150 standard hours, which is the average of the last two periods. While the demonstrated capacity for the last week was higher than the demonstrated capacity for the last 6 weeks, it is important to consider a longer time horizon to account for any potential variability or seasonality in the work center's capacity. By taking an average of the last two periods, businesses can gain a more accurate understanding of the work center's recent performance and make more informed decisions about future capacity planning.