LS Ch 5 - Strategic Capacity Planning for Products & Services

False

Globalization simplifies capacity decisions because there are more, cheaper options.

Effective Capacity

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

Flexibility

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

Design Capacity

Is the maximum output rate a process is designed for.

1. Closing brand facilities 2. Contracting an existing facility 3. Relocating existing operations 4. Expanding an existing facility 5. Opening branch facilities

Long-term capacity alternatives include which of the following?

Formula of the Break-Even Point

Q=FC/R-v

False

The more uniform production output is, the less effective capacity the operation has.

1. Design 2. Percent

Utilization is the ratio of actual output to ___ capacity. It is expressed as a ___.

1. The level of quality available/desired 2. The nature of demand 3. The available capacity

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

1. The fixed costs 2. Demand Patterns 3. The level of expertise available in-house

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

1. The fixed costs 2. Demand patterns 3. The level of expertise in-house

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

Amount of inventory required

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

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

1. Decide whether to use a following or leading strategy 2. Consider the overall impact on the system and enviroment

Capacity Planning Process Order

1. Estimate future capacity 2. Evaluate existing capacity 3. Identify alternatives for meeting requirements 4. Conduct financial analyses of each alternative 5. Asses key qualitative issues 6. Select, implement, and monitor the best alternative to purse

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

1. From whom should we purchase the capacity? 2. Why is the capacity needed?

What are the constraint issues in order?

1. Identify the constraint 2. Change the operation to achieve maximum benefit 3. Make sure all other parts support the constraint 4. Explore and evaluate alternatives 5. Repeat until acceptable

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

1. Should capacity be changed all at once? 2. How much will it cost? 3. What are the potential risks?

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

1. The revenue per unit is the same regardless of volume 2. Everything produced can be sold 3. The variable cost per unit is the same regardless of the volume 4. Revenue per unit exceeds variable cost per unit

1. Capacity 2. Lower

A bottleneck operation is the step whose ___ is ___ than that of other steps in the sequence of operations.

1. A hotel room must be in a location a customer would like to stay 2. There is high demand during certain times of the year 3. An empty room cannot be stored for future use

A hotel room illustrates several of the challenges associated with planning service capacity. Which of the following illustrates these?

Formula of efficiency

Efficiency = Actual output / Effective capacity X 100%

1. Leading 2. Following 3. Tracking

The three primary capacity strategies are:

1. Cash flow 2. Present Value

Two important terms in financial analysis are ____ and ____.

1. Service systems have considerable variability in service time, making capacity planning challenging. 2. Service systems have considerable variability in service requests, making capacity planning challenging.

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

1. Capacity decisions affect operating costs 2. Capacity decisions can affect competitiveness 3. Capacity decisions impact how well a firm can meet its demand

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

Diseconomies of scale

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