Exam 4: Strategic Capacity Management

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 cushion?

Making adjustments to eliminate the variance between planned and actual output is tied into intermediate range capacity planning.

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

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

Long-range capacity planning requires top management participation.

The probability of each occurrence at a decision tree chance node is the reciprocal of the number of possibilities at the chance node.

Overtime and personnel transfers are solutions to capacity problems in the intermediate term.

A capacity cushion is the amount of capacity less than expected demand.

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

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

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

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 75,000 units per month, how much of product "A" might you plan to acquire through outsourcing?

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?

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

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

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

Best operating level is the volume of output at which average unit cost is minimized.

A chance node on a decision tree has four possible outcomes each worth $100,000.The probabilities of the outcomes occurring are assessed as 10%, 27%, 43% and 20%.What is the expected value of this chance node?

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

In practice achieving a perfectly balanced plant is usually both impossible and undesirable.