Operations Management Chapter 10

This is following data for Albert's fabricating production area: What is the annual capacity with a single eight-hour shift? Round your answer down to the nearest whole number.

19,200

The roller coaster at Treasure Island Amusement Park consists of 17 cars, each of which can carry up to three passengers. According to a time study, each run takes 5.0 minutes, and the time to unload and load riders is 7.0 minutes. What is the maximum effective capacity of the system in number of passengers per hour? Round your answer down to the nearest whole number.

255

Abbott Manufacturing produces plastic cases for solar photovoltaic panels and has decided to combine orders from customers to increase work order size, and thereby make one large production run per model type. Plastic injection molding machines are used to make these parts, and it is time consuming to clean the machines and set them up again between production runs. Each molding machine and operator works one 8-hour shift with a one-hour lunch break and one-half hour for operator breaks.

29.7

Abbott Manufacturing produces plastic cases for solar photovoltaic panels and has decided to combine orders from customers to increase work order size, and thereby make one large production run per model type. Plastic injection molding machines are used to make these parts, and it is time consuming to clean the machines and set them up again between production runs. Each molding machine and operator works one 9-hour shift with a one-hour lunch break and one-half hour for operator breaks. What is the total workload (demand) in hours for this work order mix? Round your answer to one decimal place.

30.6

Medical Solutions Inc. has the following claims it must complete in the next week. The jobs are as follows: Given process claim capacity of 40 hours of work, can the workload be completed this week? Round your answers to one decimal place.

41.5, no

Medical Solutions Inc. has the following claims it must complete in the next week. The jobs are as follows: Given process claim capacity of 40 hours of work, can the workload be completed this week? Round your answers to one decimal place.

46.4, no

Medical Solutions Inc. has the following claims it must complete in the next week. The jobs are as follows: Given process claim capacity of 40 hours of work, can the workload be completed this week? Round your answers to one decimal place.

49.6, no

Avexim Pharmaceutical Laboratories is an international group of companies that manufactures an antiepileptic prescription drug in huge volumes. The setup time for manufacturing the drug is 75 minutes, the processing time is 8 minutes, and the order size is 700 units. In this case, what is the total time required to meet the given production volume?

5675 minutes

What capacity is required if the setup time is 15 minutes and it takes 3 minutes to process a product, based on an order of 2,000 units?

6,015 minutes

A fast food restaurant operates 2 shifts per day. During each shift, 550 meals can be prepared. What is the weekly capacity if the restaurant is open 6 days a week?

6,600

Hickory Manufacturing Company forecasts the following demand for a product (in thousands of units) over the next 5 years: Currently the manufacturer has nine machines that operate on a two-shift (eight hours each) basis. Thirty days per year are available for scheduled maintenance of equipment with no process output. Assume there are 250 workdays in a year. Each manufactured good takes 30 minutes to produce. What is the capacity of the factory per year? Round your answer down to the nearest whole number.

63,360

Hickory Manufacturing Company forecasts the following demand for a product (in thousands of units) over the next 5 years: Currently the manufacturer has six machines that operate on a two-shift (eight hours each) basis. Twenty days per year are available for scheduled maintenance of equipment with no process output. Assume there are 250 workdays in a year. Each manufactured good takes 20 minutes to produce. What is the capacity of the factory per year? Round your answer down to the nearest whole number.

66,240

In which of the following strategies for expanding capacity will there be short periods of over- and underutilization of resources?

A capacity straddle strategy

A doctor's office charges no-show patients $30 if they do not cancel their appointment 24 hours prior to the appointment. In this scenario, what method can be used by the doctor's office to handle the risk of idle service capacity?

A revenue management system

Which statement is true of a work order?

A work order includes processing requirements for a type of work.

What action manages capacity by shifting and stimulating demand?

Adding peripheral goods and/or services

In the context of strategies for expanding capacity, which statement is true of one large capacity increase?

An advantage of using this strategy is that the fixed costs of construction and operating system setup need to be incurred only once.

_____ is the capability of a manufacturing or service system, such as a facility, process, workstation, or piece of equipment, to accomplish its purpose or to produce output in a period of time.

Capacity

_____ are often influenced by economies and diseconomies of scale.

Capacity decisions

Which of the following statements is true of capacity?

Capacity must be at least as large as the average demand to satisfy customers in the long run.

Which of the following formulas is used to compute the capacity required to meet a given production volume for one work order?

Capacity required = Setup time + [Processing time × Order size]

_____ are goods and services that can be produced or delivered using the same resources available to the firm, but whose seasonal demand patterns are out of phase with each other.

Complementary goods

Which of the following is an assumption made to illustrate capacity expansion decisions?

Demand is steadily increasing.

_____ occur when the average unit cost of a good or service begins to increase as the capacity and/or volume of throughput increases.

Diseconomies of scale

_____ are achieved when the average unit cost of a good or service decreases as the capacity and/or volume of throughput increases.

Economies of scale

Which statement is true of setup time?

It is independent of order size for manufacturing work orders.

Which of the following statements is true of safety capacity?

It is normally planned into a process or facility to deal with unanticipated events.

Which of the following statements is true of a revenue management system (RMS)?

It is often used to manage theater, stadium, and concert seats.

Safety capacity is defined as an amount of capacity reserved for unanticipated events. Which formula below represents safety capacity?

Planned capacity - effective capacity

_____ is a promise to provide a good or service at some future time and place.

Reservation

_____ management system consists of dynamic methods to forecast demand, allocate perishable assets across market segments, decide when to overbook and by how much, and determine what price to charge different customer (price) classes.

Revenue

What method manages capacity by adjusting short-term capacity levels?

Shifting work to slack periods

What does the variable Qi represent in the capacity required formula?

The size of the order i in number of units

Which of the following statements is true of complementary goods and services?

They are produced to balance seasonal demand cycles.

Which of the following statements is true of diseconomies of scale?

They arise when dissimilar product lines and processes exist in the same facility.

Planned capacity is calculated by

adding safety capacity and effective capacity

In a revenue management system (RMS), _____ involves segmenting perishable assets into target market categories.

allocation

Magnira Hotels is a leading chain of hotels. Its managers reserve 30% of the rooms available only to the members of its club. They also provide the rooms at subsidized prices to these members. In this scenario, which component of revenue management system is most likely used by Magnira Hotels?

allocation

Capacity requirements

are rarely static and change on an occasional basis.

Capacity decisions are:

both short term and long-term plans.

Learning curves are useful in computing capacity requirements in:

both the short- and long-term.

A _____ is a strategy for expanding capacity that waits until demand has increased to a point where additional capacity is necessary.

capacity lag strategy

Blyrie Inc., a sports goods manufacturing company, follows a policy that involves manufacturing only when the demand exceeds the amount of goods already manufactured. Given this information, Blyrie Inc. most likely uses a _____ to expand its capacity.

capacity lag strategy

A _____ matches capacity additions with demand as closely as possible.

capacity straddle strategy

Economies of scale occur when the average cost per unit _____ and the fixed cost per unit:

decreases; decreases.

The learning curve concept is that direct labor unit cost ____ in a predictable manner as the experience in producing the unit _____.

decreases; increases

Unlike a focused factory, an unfocused factory is characterized by:

dissimilar product lines.

The design and construction cost per room of building a hotel decreases as the facility gets larger because the fixed cost is allocated over more rooms. This is an example of _____.

economies of scale

_____ of scale occur when the average unit cost of a good or service decreases as the capacity and/or volume of throughput increases. Meanwhile, _____ of scale occur when the average unit cost of the good or service begins to increase as the capacity and/or volume of throughput increases.

economies; diseconomies

When capacity is above the demand curve there is _____; when it is below, there is ______.

excess demand; a shortage of capacity to meet demand

The _____ curve states that the cost of doing any repetitive task, work activity, or project decreases as the accumulated experience of doing the job increases.

experience

The _____ states that the cost of doing any repetitive task, work activity, or project decreases as the accumulated experience of doing the job increases.

experience curve

A _____ factory is a way to achieve economies of scale, without extensive investments in facilities and capacity, by focusing on a narrow range of goods or services, target market segments, and/or dedicated processes to maximize efficiency and effectiveness.

focused

Diseconomies of scale occur when the average cost per unit _____ and the fixed cost per unit _____.

increases; increases.

At Rues and West Bros., a spare parts manufacturing company, the most important competitive priority is quality. Only a few key spare parts are produced using similar process designs. In this scenario, Rues and West Bros.:

is a focused factory.

_____ is NOT one of the capacity expansion options.

large capacity increases the match demand

The _____ curve concept is that direct labor unit cost decreases in a predictable manner as the experience in producing the unit increases.

learning

Changing labor capacity and schedules is a way to:

make short-term adjustments to capacity.

In a revenue management system, forecasting, allocation, overbooking, and pricing must work in unison if the objective is to:

maximize the revenue generated by a perishable asset.

The earliest revenue management systems focused solely on:

overbooking.

A benefit of using _____ is that operations managers can better plan their equipment and workforce schedules and rely less on forecasts due to advanced knowledge of when customer demand will occur.

reservations

A _____ consists of dynamic methods to forecast demand, allocate perishable assets across market segments, decide when to overbook and by how much, and determine what price to charge different customer classes.

revenue management system

The four components of a _____ - forecasting, allocation, overbooking, and ______ - must work in unison if the objective is to maximize the revenue generated by a perishable asset.

risk management system; pricing

In the context of capacity plan, having too little capacity can:

squeeze profit margins of a firm.

Which of the following is NOT one of the short-term adjustments to capacity?

store unused capacity

The capacity cushion can be defined as:

the amount of capacity reserved for unanticipated events such as demand surges, material shortages, and equipment breakdowns.

Harlose Suits owns more equipment than required for manufacturing goods during periods of regular demand in order to tackle sudden demand surges. It also has a certain reserve of produced goods to tackle material shortages. In this case, the reserve of equipment and produced goods are examples of:

the capacity cushion.

_____ capacity can be determined by finding the amount of an output that can be produced in a short period of time and _____ the maximum rate of an output that can be produced over a longer period of time using simple logic.

theoretical; extrapolating

In service industries, capacity is often viewed as the:

units of resource availability.

Which of the following equations is used to calculate the capacity requirements over all work orders?

∑[Si + (Pi x Qi)]