OP Management Ch 7S

Of the four approaches to capacity expansion, the approach that "straddles" demand:

Choices uses incremental expansion and at some times leads demand, and at other time lags are both correct

In manufacturing, excess capacity can be used to:

Do more setups, shorten production runs, and drive down inventory costs

Utilization will always be lower than efficiency because:

Effective capacity is less than design capacity

What does EMV stand for?

Expected monetary value

T/F: The bottleneck time is always at least as long as throughput time

False

Which approach may use subcontracting to accommodate excess demand?

Following demand with incremental expansion

The most aggressive and risky approach to capacity planning is:

Leading demand with a one-step expansion

Which approach makes new capacity a larger increase at the beginning of the period?

Leading demand with a one-step expansion

What represents an aggressive approach to demand management in the service sector when demand and capacity are not particularly well matched?

Lower resort hotel room prices on Wednesdays

TOC strives to reduce the effect of constraints by:

Offloading work from constrained workstations and increasing constrained workstation capability

What is requirement to be able to compute expected monetary value?

The probability of each state of nature is known

T/F: Expected output is sometimes referred to as rated capacity

True

T/F: Price changes are useful for matching the level of demand to the capacity of a facility

True

List the techniques for dealing with a bottleneck:

- Schedule throughput to match the capacity of the bottleneck - Develop alternate routings - Increase the capacity of the constraint - Have cross-trained employees available to keep the constraint at full operation

Fabricators, Inc. wants to increase capacity by adding a new machine. The fixed costs for machine A are $90,000, and its variable cost is $15 per unit. The revenue is $21 per unit. - What is the break-even point for machine A?

15,000 units

Christopher's Cranks uses a machine that can produce 100 cranks per hour. The firm operates 12 hours per day, 5 days per week. Due to regularly scheduled preventive maintenance, the firm expects the machine running during approximately 95% of the available time. Based on experience with other products, the firm expects to achieve an efficiency level for the cranks of 85%. - What is the expected weekly output of cranks for this company?

4845

What is not one of the four principles of bottleneck management?

Bottlenecks should be moved to the end of the system process

What costs would be incurred even if no units were produced?

Building rental costs