Test 2

A production facility works best when it focuses on a fairly limited set of production objectives

true

three time duration's of capacity planning

long-range, intermediate-range, short-range

intermediate range

monthly or quarterly plans for the next 6 to 18 months. Here, capacity may be varied by such alternatives as hiring, layoffs, new tools, minor equipment purchases, and subcontracting.

A project layout is characterized by a high degree of task ordering.

true

Using the assembly-line balancing procedure, which of the following is the theoretical minimum number of workstations if the task times for the six tasks that make up the job are 4, 6, 7, 2, 6, and 5 minutes, and the cycle time is 10 minutes?

(4 + 6 + 7 + 2 + 6 + 5) / 10 = 3

If the actual output of a piece of equipment during an hour is 500 units and its best operating level is at a rate of 400 units per hour, which of the following is the capacity utilization rate?

1.25

If the best operating level of a piece of equipment is at a rate of 400 units per hour and the actual output during an hour is 300 units, which of the following is the capacity cushion?

100 units per hour

If the best operating level of a piece of equipment is at a rate of 400 units per hour and the actual output during an hour is 300 units, which of the following is the capacity utilization rate?

300 units of output divided by 400 units best operating level = 0.75

Using the assembly-line balancing procedure, which of the following is the required cycle time in minutes per unit if the daily production time is 480 minutes and the required daily output is 50 units?

480 minutes / 50 units = 9.6 minutes per unit

The optimal utilization rate of a service operation is context specific. Planning for low utilization rates is appropriate when both the degree of uncertainty and the stakes are high as in emergency response services. Which of the following services should plan for a high utilization rate?

A stage performance

Little's Law

A. Inventory/Flow time = Throughput rate: B. Inventory/Throughput Rate = Flow time C. Inventory = Throughput rate × Flow time D. Throughput Rate/Inventory = 1/Flow Time

A firm will work with a customer to design the product, and then make it from purchased materials, parts, and components. This firm is called:

An assemble to order firm

Which of the following costs are relevant to aggregate operations planning?

Backordering costs

fixed-time period model

Counting takes place only at the end of the review period Has a larger average inventory Favors less expensive items Is sufficient for less-important items Requires less time to maintain Is less expensive to implement

In conducting aggregate operations planning there are a number of required inputs. Which of the following are considered inputs internal to the firm?

Current physical capacity and current workforce

Using the cut-and-try method for aggregate operations planning we can determine the production requirement in units of product. If the beginning inventory is 100 units, the demand forecast is 1,200, and the necessary safety stock is 20% of the demand forecast, which of the following is the production requirement?

Demand = 1,200; 20% of demand = 240; Inventory = 100; produce 1,200 + 240 - 100 = 1,340.

Compared with a service operation, a manufacturing operation's capacity is which of the following?

Demand can be smoothed by inventory policies

From an operational perspective yield management is least effective under which of the following circumstances?

Demand is stable and close to capacity

Which of the following is not one of the "number of interesting issues that arise in yield management?"

Designing yield management programs that cannot be imitated by a competitor

Which of the following is not a step in developing a manufacturing cell layout?

Disposing of left-over machinery and outsourcing ungrouped processes

At a decision point in a decision tree, which machine would you select when trying to maximize payoff when the anticipated benefit of selecting machine A is $45,000 with a probability of 90%; the expected benefit of selecting machine B is $80,000 with a probability of 50% and the expected benefit of selecting machine C is $60,000 with a probability of 75%?

EMV of Machine A = 0.9 x 45,000 = 40,500; EMV of Machine B = 0.5 x $80,000 = $40,000; and EMV of Machine C = 0.75 x 60,000 = $45,000. Since $45,000>$40,500>$40,000 you would select Machine C.

The Aggregate Operations Plan differs in virtually every aspect in service organizations as contrasted with manufacturing organizations.

FALSE

Which of the following is not considered a major work flow structure?

Fabrication there are five basic structures (project, workcenter, manufacturing cell, assembly line, and continuous process)

Which of the following is not a step used in determining production capacity requirements?

Forecasting raw material usage

When deciding to add capacity to a factory which of the following need not be considered?

Immediate product demand

According to Little's Law, which of the following ratios is used to find throughput rate?

Inventory /Flow time

short-range

Less than one month. This is tied into the daily or weekly scheduling process and involves making adjustments to eliminate the variance between planned and actual output. This includes alternatives such as overtime, personnel transfers, and alternative production routings.

A firm fills its customer's orders from finished goods inventory. It is a:

Make to stock firm

The capacity focus concept can be put into practice through a mechanism called which of the following?

Plant within a plant (PWP)

The way to build in greater flexibility in your workers is to do which of the following?

Provide a broader range of training

In conducting aggregate operations planning there are a number of required inputs. Which of the following are inputs considered external to the firm?

Raw material availability and competitor's behavior

When balancing an assembly line, which of the following is not a way to reduce the longest task time below the required workstation cycle time?

Speed up the assembly line transfer mechanism

Which of the following is considered a "pure" production planning strategy?

Stable workforce, variable work hours

Planning service capacity involves consideration of the mean arrival rate and the mean service rate. When the mean arrival rate exceeds or gets too close to the mean service rate the quality of the service declines. The operating point is the ratio of mean service rate to mean arrival rate. According to the text, what is the best operating point for the typical service operation?

The best operating point is near 70 percent of the maximum capacity. This is enough to keep servers busy but allows enough time to serve customers individually and keep enough capacity in reserve so as not to create too many managerial headaches

From an operational perspective yield management is least effective under which of the following circumstances?

The product can be kept to be sold when demand is stronger

A difference between project and continuous flow categories of process flow structures is which two of the following?

The size and bulk of the product

According to Little's Law, which of the following can be used to estimate work-in-process inventory?

Throughput rate times Flow time

What is an important difference between capacity planning in services as contrasted to capacity planning in manufacturing operations?

Time Location Demand volatility Utilization impacts service

The main purpose of aggregate operations planning is to specify the optimal combination of which of the following?

Workforce levels and inventory on hand

A high-level map or diagram of a supply chain process can be useful to understand how material flows and where inventory is held.

true

You have just determined the actual number of workstations that will be used on an assembly line to be 6 using the assembly-line balancing procedure. The cycle time of the line is 5 minutes and the sum of all that tasks required on the line is 25 minutes. Which of the following is the correct value for the resulting line's efficiency?

[25 / (6 x 5)] = 0.833

cycle counting

a physical inventory-taking technique in which inventory is counted on a frequent basis rather than once or twice a year

Which of the following basic types of process structures is one which equipment or work processes are arranged according to the progressive steps by which the product is made?

assembly line

Matching the production rate to the order rate by hiring and laying off employees as the order rate varies is which of the following pure production planning strategies?

chase

Which of the following models uses a schematic model of the sequence of steps in a problem and the conditions and consequences of each step?

decision trees

capacity utilization rate

dividing capacity used by best operating level

The ability to rapidly and inexpensively switch production from one product to another enables what are sometimes referred to as:

economies of scope

The placement of which of the following is not determined by production process organization decisions?

emergency exits determined by safety concerns

economies of scope

exist when multiple products can be produced at a lower cost in combination than they can separately.

small/large capacity cushion is better

false

long range

greater than one year. Where productive resources (such as buildings, equipment, or facilities) take a long time to acquire or dispose of, long-range capacity planning requires top management participation and approval.

capacity flexibility

having the ability to rapidly increase or decrease production levels, or to shift production capacity quickly from one product or service to another.

From an operational perspective yield management is most effective under which of the following circumstances?

inventory is perishable

Maintaining a stable workforce working at a constant output rate while shortages and surpluses are absorbed by fluctuating inventory levels, order backlogs, and allowing lost sales is which of the following production planning strategies?

level

In an overview of the major operations planning activities in a typical organization, which of the following activities precedes aggregate sales and operations planning?

process planning

strategic capacity planning

provide an approach for determining the overall capacity level of capital intensive resources—facilities, equipment, and overall labor force size—that best supports the company's long-range competitive strategy.

inventory accuracy

refers to how well the inventory records agree with physical count

capacity

the ability to hold, receive, store, or accommodate .When evaluating capacity, managers need to consider both resource inputs and product outputs. The amount of available resource inputs relative to requirements for output over a particular period of time.

capacity cushion

the amount of capacity in excess of expected demand

best operating level

the level of capacity for which the process was designed and thus is the volume of output at which average unit cost is minimized.

. In solving a decision tree problem, calculations start at the ends of the "branches" of the tree and work backwards to the base of the tree.

true

A capacity cushion is an amount of capacity in excess of expected demand.

true

A continuous process is similar to an assembly line in that production follows a predetermined sequence of steps, but the flow is continuous such as with liquids, rather than discrete.

true

A cut-and-try approach involves costing out various production planning alternatives and selecting the one that is best

true

A project layout is characterized by a relatively low number of units produced in comparison with process and product layout formats.

true

A rate fence is a logical justification for different prices for what is essentially the same service.

true

A work center layout, sometimes referred to as a job shop, is where similar equipment or functions are grouped together

true

Accurate medium-range planning increases the likelihood of (1) receiving the requested budget and (2) operating within the limits of the budget.

true

Aggregation on the supply side is done by product families, and on the demand side it is done by groups of customers.

true

Although a level strategy will maintain a stable workforce working at a constant output rate with shortages and surpluses are absorbed by fluctuating inventory levels, order backlogs, and lost sales, aggregate planning is necessary to establish the level at which the level strategy should be executed.

true

An example of an assemble-to-order firm is Dell Computer.

true

Assembling-to-order means moving the customer order decoupling point from finished goods to components.

true

At some point, the size of a growing plant can become too large and diseconomies of scale becomes a capacity planning problem.

true

Backordering costs incurred in producing a given product type in a given time period are relevant aggregate operations planning costs.

true

Because services cannot be stored for later use, service managers consider time as one of their supplies or resources.

true

Companies commonly use simple cut-and-try charting and graphic methods to develop aggregate plans.

true

Costs incurred in hiring, training and laying off personnel are considered relevant aggregate operations planning costs

true

Efficiency = Sum of task times / No. of workstations X Cycle time.

true

Engineer-to-order firms will work with the customer to design the product, and then make it from purchased materials, parts, and components.

true

Firms that make the customer's product from raw materials, parts, and components are make-to-order firms

true

Firms that match the production rate to the order rate by hiring and laying off employees as the order rate varies are following what is known as the chase strategy.

true

Fixed and variable costs incurred in producing a given product type in a given time period are relevant aggregate operations planning costs.

true

Four costs are relevant to the aggregate production plan. These relate to the production cost itself as well as the cost to hold inventory and to have unfilled orders. These costs are: 1. Basic production costs, 2. Costs associated with changes in the production rate, 3. Inventory holding costs and 4. Backordering costs.

true

From an operational perspective, yield management is most effective when (1) Demand can be segmented by customer; (2) Fixed costs are high and variable costs are low; (3) Inventory is perishable; (4) Product can be sold in advance and (5) Demand is highly variable.

true

Hospital emergency rooms and fire departments should aim for low utilization because of the high level of uncertainty and the life-or-death nature of their activities.

true

In a logistics organization vehicle dispatching immediately precedes vehicle loading

true

In a services organization strategic capacity planning follows process planning.

true

In aggregate operations planning the variable "production rate" refers to the number of units completed per unit of time.

true

In assembly-line balancing the theoretical minimum number of workstations is found by a ratio of the sum of all task times divided by the cycle time.

true

In designing a production layout a flexible line layout might have the shape of a "U"

true

In practice achieving such a "perfect" design is usually both impossible and undesirable.

true

In services, once the aggregate staffing level is determined, the focus is on short-term workforce and customer scheduling.

true

In solving decision tree problems, we work from the end of the tree backward to the start of the tree. As we work back, we calculate the expected values at each step. In calculation of the expected value, the time value of money is important if the planning horizon is long.

true

Little's law can be thought of as a relationship between units and time.

true

Long-range capacity planning requires top management participation.

true

One trade-off illustrated by the product-process matrix is between flexibility and cost.

true

Order scheduling is the step in the Aggregate Operations Planning process that immediately follows material requirements planning.

true

Outsourcing is a common source of external capacity.

true

Pricing also should relate to addressing specific capacity problems.

true

Process selection refers to the strategic decision of selecting which kind of production processes to use to produce a product or provide a service.

true

Sharing capacity is a common source of external capacity.

true

The Aggregate Operations Plan translates annual and quarterly business plans into broad labor and output plans for the intermediate term of 3 to 18 months.

true

The Aggregate Operations Plan variable "inventory on hand" refers to the balance of unused inventory carried over from the previous time period.

true

The basic notion of economies of scale is that as a plant gets larger and volume increases, the average cost per unit of output drops.

true

The closer the customer is to the customer order decoupling point the more quickly the customer receives the product.

true

The essence of yield management is the ability to manage demand.

true

The essential issue in satisfying customers in the make-to-stock environment is to balance the level of finished inventory against the level of service to the customer.

true

The first step in balancing an assembly line is to specify the precedence relationships among tasks to be performed on the line.

true

The focus in the make-to-stock environment is on providing finished goods where and when the customers want them.

true

The frequency of adding to productive capacity should balance the costs of upgrading too frequently and the costs of upgrading too infrequently.

true

The main purpose of the aggregate production plan is to specify the optimal combination of workforce level and inventory on hand.

true

The objective of the Aggregate Operations Plan is to minimize the cost of resources required to meet demand over that period.

true

The problem of keeping demand sufficiently high to keep a large factory busy is a diseconomy of scale.

true

The product-process matrix shows the relationship between process structures and product volume and variety characteristics

true

The sales and operations planning process consists of a series of meetings, finishing with a high-level meeting where key intermediate-term decisions are made.

true

The term "assembly line" refers to progressive assembly linked by some material handling device.

true

The time needed to respond to a customer order is called the lead time

true

The volume requirements for the product are one determinant of the choice of which process structure to select

true

There are essentially three production planning strategies. These are called level, chase and stable workforce— variable work hours.

true

When a firm's design capacity is less than the capacity required to meet its demand, it is said to have a negative capacity cushion.

true

Without probabilities and payoffs a decision tree is not capable of generating a solution.

true

Workforce level is the number of workers needed for production (Production = production rate x workforce level).

true

Workstation cycle time = (Production time per day/Required output per day in units)

true

Workstation cycle time is the time between successive units coming off the end of the assembly line.

true

Yield management is an important tool that can be used to shape demand patterns.

true

Yield management is the process of allocating the right type of capacity to the right type of customer at the right prices at the right time to maximize revenue or yield.

true

sales and operations planning occurs on a monthly cycle.

true

the ultimate in plant flexibility is the zero-changeover-time plant.

true

If the sum of the task times required to produce a product is 45 minutes and the cycle time for the same product is 10 minutes. Thus, the theoretical minimum number of workstations is 5 using the assembly-line balancing procedure.

true 45 minutes / 10 minutes = 4.5, round up to 5.

In an overview of the major operations planning activities in a typical logistics organization, which of the following activities most immediately follows aggregate sales and operations planning?

vehicle capacity planning

In an overview of the major operations planning activities in a typical logistics organization, which of the following activities follows aggregate sales and operations planning?

vehicle loading

Which of the following basic types of process structures is one which similar equipment or functions are grouped together?

workcenter

In an overview of the major operations planning activities in a typical service organization, which of the following activities follows aggregate sales and operations planning?

workforce scheduling