Exam 4: Strategic Capacity Management

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

The capacity cushion is the ratio of capacity used to the best capacity level.

In practice, achieving a perfectly balanced plant is usually desirable but impossible.

When evaluating capacity, managers need to consider both resource inputs and product outputs.

What is a capacity cushion and why would a firm have one?

The smaller the capacity cushion the better.

If demand for product "A" were forecast at 1,000,000 units for the coming year and your factory has trained labor and equipment sufficient to produce 150,000 units per month, is the capacity cushion positive or negative?

Sharing capacity is a common source of external capacity.

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

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%?

In a decision tree, the only time probabilities are applied to a decision node is when the decision is being made by someone else such as you customer or your competitor.

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.

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

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, what is the capacity utilization rate?

A production facility develops virtuosity and works best when it focused on a widely varied set of production objectives.

Outsourcing is a common source of external capacity.

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?

If demand for product "A" were forecast at 1,000,000 units for the coming year and your factory has one machine capable of producing 4,500 units per week, how many similar machines might you plan to acquire?

The larger the capacity cushion the better.

A chance node on a decision tree has four possible outcomes worth $10,000, $20,000, $30,000 and minus