Introduction to capacity planningWhich of the following are the key questions to be answered when making capacity planning decisions?

Improving which of the following aspects of a firm's operations can increase its capacity?

Bottleneck management Efficiency Utilization

Long-term capacity alternatives include which of the following?

Contracting an existing facility Relocating existing operations Opening branch facilities Expanding an existing facility Closing branch facilities

Which of the following are ways to enhance the development of capacity strategies? Multiple select question.

Decide whether to use a following or leading strategy. Consider the overall impact on the system and environment.

Which of the following is not a reason for economies of scale?

Decision making becomes easier as output rates increase

Which of the following is not a reason for economies of scale?

Decision making becomes easier as output rates increase.

Which of the following are additional questions that should be asked in making capacity planning decisions, beyond the initial key questions?

How much will it cost? Should capacity be changed all at once? What are the potential risks?

Which of the following describes a tracking capacity strategy?

It adds capacity incrementally to keep pace with increasing demand

Which of the following describes a following capacity strategy?

It builds capacity when demand exceeds current capacity.

Which of the following are ways to enhance the development of capacity strategies?

Make provisions for possible future expansion. Take into account the acquisition of capacity chunks. Consider which life cycle stage the product is in.

Which of the following situations causes a misjudgment of a firm's capacity requirements?

Marketing personnel are overly optimistic in their predictions Predictions focus mainly on the potential revenue that will be earned

It is an assumption of cost-volume analysis that a comparison of capacity alternatives is made on _______.

One product

Which of the following are correct formulas for profit?

P = RQ - (FC + vQ) P = (R-v)Q - FC

Process improvements, batch production, and time to change equipment settings are ______ factors that influence effective capacity

Process

Which of the following is the correct formula for the break-even point?

Q= FC R−v

Which of the following are the key questions to be answered when making capacity planning decisions?

What kind of capacity is needed? How much capacity is needed? When is the capacity needed?

In which of the following cases can the emphasis on efficiency, over utilization, be misleading?

When the effective capacity is low compared to design capacity

With _____, increasing the output rate results in increasing the average unit cost, if the output rate is more than the optimal rate.

diseconomies of scale

With _____, increasing the output rate results in decreasing the average unit cost, if the output rate is less than the optimal rate.

economies of scale

Design capacity minus allowances such as personal time and maintenance is known as _____.

effective capacity

When two competing alternatives are equivalent in a cost-volume analysis, a decision-maker has reached a(n) ____

indifference point

Effective capacity is always ______ design capacity.

less than

It is an assumption of cost-volume analysis that a comparison of capacity alternatives is made on _______.

one product

Uniformity of output is a ______ factor in determining effective capacity. Multiple choice question.

product and service

Capacity often refers to an upper limit on the ______.

rate of output

Capacity often refers to an upper limit on the ______. Multiple choice question.

rate of output

Effective capacity is the capacity allowances such as maintenance.

Blank 1: design Blank 2: minus or less

Increasing allows the firm to be more responsive to changing market conditions.

Blank 1: flexibility or agility

Before increasing capacity, it is important to make sure an organization's can handle the ramp up.

Blank 1: supply Blank 2: chain

Which of the following is not a reason that makes service capacity more difficult to plan than manufacturing capacity?

Amount of inventory required.

_____ is the quantity at which two competing alternatives are equivalent.

An indifference point

When an organization faces seasonal variations in demand, which approach is most appropriate in making decisions about changing capacity?

Attempt to smooth out capacity requirements.

A capacity cushion is minus demand. It is used when there is uncertainty about future demand.

Blank 1: capacity Blank 2: expected

Which of the following statements accurately reflect the (strategic) importance of capacity decisions?

Capacity decisions affect operating costs. Capacity decisions can affect competitiveness. Capacity decisions impact how well a firm can meet its demand.

Which of the following is not a reason for diseconomies of scale?

Construction costs increase more quickly as the facility size increases.

Which of the following is the correct formula for efficiency? Multiple choice question.

Efficiency = Actualoutput Effectivecapacity ActualoutputEffectivecapacity x 100%

Which of the following factors are probable reasons for actual output being less than the effective capacity?

Employee absenteeism Machine breakdowns Inventory shortages

True or false: Globalization simplifies capacity decisions because there are more, cheaper options.

False

True or false: The more uniform production output is, the less effective capacity the operation has.

False

Which of the following statements about variability in capacity planning/forecasting is/are true?

Service systems have considerable variability in service time, making capacity planning challenging. Service systems have considerable variability in service requests, making capacity planning challenging.

Which of the following improvements will typically increase capacity?

Standardizing output Reducing changeover times Increasing productivity

Which of the following are points for consideration when deciding whether to outsource or produce in-house?

The available capacity The level of quality available/desired The nature of demand

Which of the following are points for consideration when deciding whether to outsource or produce in-house?

The fixed costs. The level of expertise available in-house. Demand patterns.

Which of the following are assumptions of cost-volume analysis?

The revenue per unit is the same regardless of volume. Everything produced can be sold. Revenue per unit exceeds variable cost per unit. The variable cost per unit is the same regardless of the volume.

Which of the following are assumptions for cost-volume analysis?

The variable cost per unit does not change. Per unit revenue exceeds per unit variable cost. There is only one product.

True or false: Capacity requirements are often closely linked to the stage of the life cycle that a product or service is in.

True

Which of the following is the correct formula for utilization? Multiple choice question.

Utilization = Actualoutput Designcapacity ActualoutputDesigncapacity x 100%

Which of the following are not the key questions to be answered when making capacity planning decisions?

Why is the capacity needed? From whom should we purchase the capacity?

The volume at which total cost and total revenue are equal is referred to as the ______. Multiple choice question.

break-even point

The amount of capacity in excess of expected demand, given uncertainty about expected demand, is an organization's ______.

capacity cushion