Exam 4: Strategic Capacity Management

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?

In decision tree analysis the time value of money is ignored because you are only concerned with cash costs.

Outsourcing is a common source of external capacity.

Sharing capacity is a common source of external capacity.

A piece of equipment with twice the capacity of another piece typically costs twice as much to purchase and to operate.

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?

Capacity planning involving consideration of production scheduling and inventory position is characterized by which one of the following time durations?

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?

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?

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

The ultimate in plant flexibility is a one-hour-changeover time plant.

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

A decision tree problem does not need probabilities or payoffs to generate a solution.

The objective of strategic capacity planning is to determine the overall capacity level of capital intensive resources (including facilities, equipment, and overall labor force size) that best supports the company's short-range competitive strategy.

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?

Long-range capacity planning requires top management participation.

Low rates of capacity utilization in service organizations are never appropriate.

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.

The problem of keeping demand sufficiently high to keep a large factory busy is a sales issue and not a diseconomy of scale.

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