Exam 10: Supply Chain Capacity Planning

There is a trade-off relationship between two kinds of capacity which are:

_____ set for itself a robust and demanding quality goal of 3.4 defects per million parts.

_____ are the result of multiplying the variable costs per unit by the number of units or (volume).

The new manager of the electric utility notes that recent summers have been warmer than average.Consequently,for next year she revises upward the probability that actual demand will exceed average demand;this is estimated to occur 8 percent of the year or 29.2 summer days.She estimates that each power incident can cost far less than her predecessor had spent.Using different management techniques to deal with brownouts,she hopes to reduce the cost per incident to $10,000.Because the previous manager had not invested in additional capacity to cover maximum peak-load requirements,that option is still available.She faces the prospect that it will cost an extra $3,000,000 to increase capacity from average to peak.This amount is spread out over 10 years,or $300,000 per year.Should peak-load capacity be installed?

Below breakeven,the production process is creating losses while above breakeven,the process is generating profit.

What is actual capacity? How is it defined and altered?

Two aspects of capacity requirements planning (CRP) are long-term planning and short-term tactical issues.Breakeven points and optimal allocation of resources exemplify the strategic thinking that characterizes long-term concepts.

_____ are the sum of the total fixed costs and the total variable costs.

How did Global Concepts,Inc.(GCI) achieve rapid applications in logistics solutions?

The learning curve is a model for individuals or groups that describes how repeated practice decreases the time required to do a job.

Many companies prefer to have capacity in reserve and expect to operate effectively _____ the misleading ideal of _____ percent utilization.

Cp is the symbol used in the text to indicate the amount of extra investment required to install peak capacity to meet peak demand when it occurs.

The Principle of Modularity is to design,develop,and produce the maximum number of parts that can be combined in the minimum number of ways to offer the greatest number of products or services.

ABC and LA accounting provides process cost information to product designers for capacity-related decisions.

Machine 1 is being challenged by Machine 2,which has greater capacity,lower variable costs,and higher fixed costs,but Machine 2 requires a much larger investment.Should the organization buy Machine 1 or Machine 2? The sales department states that demand is larger than supply and that,if they matched demand,they could deliver 6,000 units per quarter.The organization uses a 3-month time period (T = 3) for its breakeven analysis.It could also be T = 1 quarter.

Synchronized manufacturing occurs when

Capacity as measured by maximum output volume per unit of time (or max throughput rate) comes closest to capturing the P/OM concept.

Company capacity is 1 million units per year for a new food product.The sales force can sell 5 million units over a 5-year period,but only 100,000 in the first year.The breakeven volume is VBEP = 50,000 units with p = 3,vc = 2,and FC = 50,000.What is the situation? What recommendations do you support?

Skillful _____ can increase the level of capacity that is achieved in an organization.

Supply chains are