Exam 5: Strategic Capacity Management

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

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

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

Three important issues to be considered when adding or decreasing capacity are number of workers, the skill of those workers, and how fast workers can be added or reduced.

The idea that as the plant gets larger and volume increases, the average cost per unit drops.

Long-range capacity planning requires top management participation.

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

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.

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

With decision trees, squares represent chance events and circles represent decision points.

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

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

The larger the capacity cushion, the better.

Best operating level is usually a multiple of the level of capacity for which a process was designed.

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

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

Capacity planning that involves hiring, layoffs, some new tooling, minor equipment purchases, and subcontracting is considered as which one of the following planning horizons?

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

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

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 your customer or your competitor.