Answer :
Idle plant capacity is a concept in business and manufacturing that refers to the unused production potential of a facility. It arises when a plant is not operating at its maximum capability. Understanding this concept is important for businesses as it helps in identifying inefficiencies and areas for potential cost reduction.
To determine idle plant capacity, various capacities are defined:
Maximum Capacity: This refers to the highest output a plant can achieve under optimal conditions without any breakdowns or downtime.
Practical Capacity: This is the maximum output level after considering inevitable disruptions such as maintenance, breakdowns, and other practical issues that can reduce production time.
Normal Capacity: This is the average expected production level based on regular demand and operating conditions.
Actual Capacity: The current production level a plant is achieving at a given time.
Given this context, the question about what idle plant capacity is defined as among the options:
- Practical capacity minus normal capacity
- Maximum capacity minus normal capacity
- Practical capacity minus actual capacity
- Maximum capacity minus practical capacity
The correct choice is: Practical capacity minus actual capacity.
This option represents the difference between what a plant could produce under realistic conditions (practical capacity) and what it is currently producing (actual capacity). Idle capacity is essentially the portion of practical capacity not being utilized in production.
