Question 1

The throughput time for a specific item as it moves through a process includes

Accepted Answer

A)  operations time. 
B)  wait time. 
C)  movement time. 
D)  all of the above 
A)  operations time. 
B)  wait time. 
C)  movement time. 
D)  all of the above

Question 2

What is a decision tree?

Accepted Answer

A decision tree is a diagram o

Question 3

Short- term capacity plans focus on workforce size, overtime budgets, and inventories.

Accepted Answer

A) True 
 B)False

Question 4

Decision trees can be useful for evaluation capacity expansion alternatives.

Accepted Answer

A) True 
 B)False

Question 5

Economies of scale is a concept that states that the average unit cost of a good or service will increase with increasing output rate.

Accepted Answer

A) True 
 B)False

Question 6

John Owen owns a drugstore that is experiencing significant growth. Owen is trying to decide whether to expand its capacity, which currently is $200,000 in sales per quarter. Sales are seasonal. Forecasts of capacity requirements, expressed in sales per quarter for the next year, follow. 
 
Owen is considering expanding capacity to the $250,000 level in sales per quarter. The before- tax profit margin from additional sales is 15 percent. How much would before- tax profits increase next year because of this expansion?

Accepted Answer

A)  less than $15,000 
B)  more than $15,000 but less than $16,000 
C)  more than $16,000 but less than $17,000 
D)  more than $17,000 
A)  less than $15,000 
B)  more than $15,000 but less than $16,000 
C)  more than $16,000 but less than $17,000 
D)  more than $17,000

Question 7

Effective capacity is the maximum output that a process or facility can achieve under ideal conditions.

Accepted Answer

A) True 
 B)False

Question 8

Which one of the following statements about capacity is best?

Accepted Answer

A)  Short- term capacity plans deal with investments in new facilities and equipment. 
B)  Capacity is the average rate of output for a facility. 
C)  A line flow process usually measures its capacity in terms of output rates. 
D)  The utilization rate is expressed as the ratio of maximum output rate to capacity. 
A)  Short- term capacity plans deal with investments in new facilities and equipment. 
B)  Capacity is the average rate of output for a facility. 
C)  A line flow process usually measures its capacity in terms of output rates. 
D)  The utilization rate is expressed as the ratio of maximum output rate to capacity.

Question 9

Which one of the following factors usually motivates a SMALLER capacity cushion?

Accepted Answer

A)  unevenly distributed demands 
B)  high penalty costs for overtime usage 
C)  requests for quick customer services 
D)  high capital intensity 
A)  unevenly distributed demands 
B)  high penalty costs for overtime usage 
C)  requests for quick customer services 
D)  high capital intensity

Question 10

Table 5.2
High Tech, Inc. is producing two types of products: A and B. Both are produced at the same sawing operation. Because of demand uncertainties, the operations manager obtained three demand forecasts (pessimistic, expected, and optimistic). The demand forecasts, batch sizes (units/batch), processing times (hr/unit), and setup times (hr/batch) follow.

The sawing machines operate on two 8- hour shifts, 5 days per week, and 50 weeks per year. The manager wants to maintain a 10 percent capacity cushion.
-Using the information from Table 5.2, if the operation currently has 18 machines and the manager is willing to expand capacity by 20 percent through short- term options, what is the capacity gap (in terms of number of machines) if you assume the optimistic demand forecasts?

Accepted Answer

A)  less than or equal to 10 
B)  more than 10 but less than or equal to 12 
C)  more than 12 but less than or equal to 14 
D)  more than 14 
A)  less than or equal to 10 
B)  more than 10 but less than or equal to 12 
C)  more than 12 but less than or equal to 14 
D)  more than 14

Question 11

Define each of the following capacity strategies: expansionist, and wait- and- see.

Accepted Answer

Expansionist means large, infr

Question 12

Provided each measure is expressed in the appropriate units, Little's Law provides a mathematical expression that states capacity utilization equals the ratio of work- in- process inventory divided by the output rate of a process.

Accepted Answer

A) True 
 B)False

Question 13

Sleep Tight Motel has the opportunity to purchase an adjacent plot of land. Building on this land would increase their capacity from the current sales level of $515,000/year to $600,000/year. Sleep Tight experiences a 20 percent before- tax profit margin. It wishes to estimate the additional before- tax profits that the expansion will produce. Using the following information, how much more before- tax cash flow would be realized just in the year 10 alone? $$\begin{array} { | r | c | } 
\hline \text { Year } & \begin{array} { c } 
\text { Capacity } \
\text { Requirement } \
\text { (Annual Sales) }
\end{array} \
\hline 1 & \$ 515,000 \
2 & \$ 517,000 \
3 & \$ 520,000 \
4 & \$ 525,000 \
5 & \$ 540,000 \
6 & \$ 560,000 \
7 & \$ 565,000 \
8 & \$ 575,000 \
9 & \$ 600,000 \
\$ 620,000 \
\hline 10 & \
\hline
\end{array}$$

Accepted Answer

A)  less than or equal to $20,000 
B)  greater than $20,000 but less than or equal to $25,000 
C)  greater than $25,000 but less than or equal to $30,000 
D)  greater than 30,000 
A)  less than or equal to $20,000 
B)  greater than $20,000 but less than or equal to $25,000 
C)  greater than $25,000 but less than or equal to $30,000 
D)  greater than 30,000

Question 14

Equipment breakdowns are an example of an internal, random form of variability.

Accepted Answer

A) True 
 B)False

Question 15

What are the four steps involved in making capacity decisions?

Accepted Answer

The steps are estimate future capacity r

Question 16

Mr. Grant is considering a capacity expansion for his store. The annual sales projected for the next five years follow. The current capacity is equivalent to $200,000 sales. Assume a 20 percent pretax profit margin.  
 If Grant expands his capacity to $225,000 now, what would be the increase in his pretax cash flows for each of the next five years?

Accepted Answer

The answer of Mr. Grant is considering a capacity expansion...

Question 17

The maximum output that a process or facility can achieve under ideal conditions is referred to as the

Accepted Answer

A)  throughput time. 
B)  utilization. 
C)  effective capacity. 
D)  peak capacity. 
A)  throughput time. 
B)  utilization. 
C)  effective capacity. 
D)  peak capacity.

Question 18

A company's production facility, consisting of two identical machines, currently caters only to product A. The annual demand for the product is 4000 units. Management has now decided to introduce another product, B, which uses the same facilities as that of product A. Product B has an annual demand of 2000 units. In view of the uncertainties involved in producing two products, management desires to have an overall 10 percent capacity cushion. Given the following additional information, how many more machines are required? (Assume 8 hours/shift, 2 shifts/day, 250 days/year, and that no overtime is allowed.) $$\begin{array} { | c | c | c | c | } 
\hline \text { Product } & \begin{array} { c } 
\text { Processing } \
\text { Time perUnit } \
\text { (inhours) }
\end{array} & \begin{array} { c } 
\text { Setup Time } \
\text { per Batch } \
\text { (in hours) }
\end{array} & \begin{array} { c } 
\text { Batch Size } \
\text { (units) }
\end{array} \
\hline A & 2.0 & 8 & 100 \
\mathrm {~B} & 2.8 & 16 & 200 \
\hline
\end{array}$$

Accepted Answer

A)  One additional machine is necessary. 
B)  No additional machines are necessary. 
C)  More than two additional machines are necessary. 
D)  Two additional machines are necessary. 
A)  One additional machine is necessary. 
B)  No additional machines are necessary. 
C)  More than two additional machines are necessary. 
D)  Two additional machines are necessary.

Question 19

Table $5.4$
Mr. Lee is considering a capacity expansion for his supermarket. The annual sales projected for the next five years follow. The current capacity is equivalent to $\$ 300,000$ sales. Assume a 20 percent pretax profit margin.

-Using the information in Table 5.4, if Lee expands the capacity to an equivalent of $360,000 sales now (year 0), and then expands the capacity to an equivalent of $400,000 sales at the beginning of year 4, how much would pretax cash flow increase in total for all years (years 1 through 5)?

Accepted Answer

A)  less than $30,000 
B)  more than $30,000 but less than $40,000 
C)  more than $40,000 but less than $50,000 
D)  more than $50,000 
A)  less than $30,000 
B)  more than $30,000 but less than $40,000 
C)  more than $40,000 but less than $50,000 
D)  more than $50,000

Question 20

Which one of the following statements explaining some aspect of economies of scale is best?

Accepted Answer

A)  A larger facility usually has a smaller total fixed cost. 
B)  With higher volumes, the process shifts toward flexible flows, with resources dedicated to individual products. 
C)  A 100- bed hospital costs more to build than twice the cost of a 50- bed hospital. 
D)  Dedicating resources to individual products reduces changeovers and setups. 
A)  A larger facility usually has a smaller total fixed cost. 
B)  With higher volumes, the process shifts toward flexible flows, with resources dedicated to individual products. 
C)  A 100- bed hospital costs more to build than twice the cost of a 50- bed hospital. 
D)  Dedicating resources to individual products reduces changeovers and setups.

The throughput time for a specific item as it moves through a process includes

What is a decision tree?

Short- term capacity plans focus on workforce size, overtime budgets, and inventories.

Decision trees can be useful for evaluation capacity expansion alternatives.

Economies of scale is a concept that states that the average unit cost of a good or service will increase with increasing output rate.

Effective capacity is the maximum output that a process or facility can achieve under ideal conditions.

Which one of the following statements about capacity is best?

Which one of the following factors usually motivates a SMALLER capacity cushion?

Define each of the following capacity strategies: expansionist, and wait- and- see.

Provided each measure is expressed in the appropriate units, Little's Law provides a mathematical expression that states capacity utilization equals the ratio of work- in- process inventory divided by the output rate of a process.

Equipment breakdowns are an example of an internal, random form of variability.

What are the four steps involved in making capacity decisions?

The maximum output that a process or facility can achieve under ideal conditions is referred to as the

Which one of the following statements explaining some aspect of economies of scale is best?

Creating Customer Value

Supply Chain Management

Supply Chain Sustainability and Humanitarian Logistics

Process Configuration

Waiting Lines

Inventory Management

Quality and Process Improvement

Lean Systems

Location and Layout

Managing Demand and Forecasting

Operations Planning and Scheduling

Resource Planning

Filters

Exam 5: Capacity

The throughput time for a specific item as it moves through a process includes

What is a decision tree?

Short- term capacity plans focus on workforce size, overtime budgets, and inventories.

Decision trees can be useful for evaluation capacity expansion alternatives.

Economies of scale is a concept that states that the average unit cost of a good or service will increase with increasing output rate.

Effective capacity is the maximum output that a process or facility can achieve under ideal conditions.

Which one of the following statements about capacity is best?

Which one of the following factors usually motivates a SMALLER capacity cushion?

Define each of the following capacity strategies: expansionist, and wait- and- see.

Provided each measure is expressed in the appropriate units, Little's Law provides a mathematical expression that states capacity utilization equals the ratio of work- in- process inventory divided by the output rate of a process.

Equipment breakdowns are an example of an internal, random form of variability.

What are the four steps involved in making capacity decisions?

The maximum output that a process or facility can achieve under ideal conditions is referred to as the

Which one of the following statements explaining some aspect of economies of scale is best?

Creating Customer Value

Supply Chain Management

Supply Chain Sustainability and Humanitarian Logistics

Process Configuration

Waiting Lines

Inventory Management

Quality and Process Improvement

Lean Systems

Location and Layout

Managing Demand and Forecasting

Operations Planning and Scheduling

Resource Planning

Filters