Using queuing models to examine some operating characteristics for systems in which various quantities of "work" arrive at various points in time. The "work" could be in the form of a customer arriving to the system and needing some sort of service. However, these concepts also apply to the situation where the "work" comes in the form of production requirements being placed on a manufacturing facility.

While we can think of various differences between manufacturing and service systems, let's examine for now a basic question that applies to both manufacturing and service delivery systems: When I am engaged in capacity planning for either type of system

Questions

A. Why would it be unwise to try to set capacity equal to my projected average workload? Stated another way, why would any manager want to establish a capacity level that purposely targets less than 100% utilization for the resources in question?

B. If 100% utilization is not the right target, what is? What should be considered when we choose a planned utilization level for resources we are putting in place?