Question 1

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

Accepted Answer

A) True 
 B)False

Question 2

The smaller the capacity cushion, the better.

Accepted Answer

A) True 
 B)False

Question 3

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

Accepted Answer

A) True 
 B)False

Question 4

A production facility works best when it focuses on a fairly limited set of production objectives.

Accepted Answer

A) True 
 B)False

Question 5

Which of the following is not a step used in determining production capacity requirements?

Accepted Answer

A) Forecasting to predict product sales 
B) Forecasting raw material usage 
C) Projecting availability of labor 
D) Calculating equipment and labor needs 
E) Projecting equipment availability 
A) Forecasting to predict product sales 
B) Forecasting raw material usage 
C) Projecting availability of labor 
D) Calculating equipment and labor needs 
E) Projecting equipment availability

Question 6

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 long-range competitive strategy.

Accepted Answer

A) True 
 B)False

Question 7

Capacity planning involving acquisition or disposal of fixed assets such as buildings, equipment or facilities is considered as which one of the following planning horizons?

Accepted Answer

A) Intermediate range 
B) Long range 
C) Short range 
D) Current 
E) Upcoming 
A) Intermediate range 
B) Long range 
C) Short range 
D) Current 
E) Upcoming

Question 8

In decision tree analysis, the time value of money is ignored because the only concern is with cash costs.

Accepted Answer

A) True 
 B)False

Question 9

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

Accepted Answer

A) True 
 B)False

Question 10

The larger the capacity cushion, the better.

Accepted Answer

A) True 
 B)False

Question 11

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.

Accepted Answer

A) True 
 B)False

Question 12

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

Accepted Answer

A) True 
 B)False

Question 13

Capacity can be defined as the amount of available resource inputs relative to requirements for output over a particular period of time.

Accepted Answer

A) True 
 B)False

Question 14

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

Accepted Answer

A) True 
 B)False

Question 15

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

Accepted Answer

A) More dependent on time and location 
B) Subject to more volatile demand fluctuations 
C) Utilization more directly impacts quality 
D) Demand can be smoothed by inventory policies 
E) More capable of reacting to demand fluctuations 
A) More dependent on time and location 
B) Subject to more volatile demand fluctuations 
C) Utilization more directly impacts quality 
D) Demand can be smoothed by inventory policies 
E) More capable of reacting to demand fluctuations

Question 16

Why does volatility of demand have a higher effect on a service delivery system than on a manufacturing system?

Accepted Answer

The impact of demand volatility on servi

Question 17

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? ___________________

Accepted Answer

4 (four
Explanation: Current one-machine

Question 18

When a firm's design capacity is less than the capacity required to meet its demand, it is said to have a negative capacity cushion.

Accepted Answer

A) True 
 B)False

Question 19

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? ____________________

Accepted Answer

positive
Explanation

Question 20

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, which of the following is the capacity utilization rate?

Accepted Answer

A) 0.75 
B) 1.00 
C) 1.33 
D) 2.33 
E) 300 
A) 0.75 
B) 1.00 
C) 1.33 
D) 2.33 
E) 300

Exam 5: Strategic Capacity Management

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

The smaller the capacity cushion, the better.

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

A production facility works best when it focuses on a fairly limited set of production objectives.

Which of the following is not a step used in determining production capacity requirements?

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 long-range competitive strategy.

Capacity planning involving acquisition or disposal of fixed assets such as buildings, equipment or facilities is considered as which one of the following planning horizons?

In decision tree analysis, the time value of money is ignored because the only concern is with cash costs.

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

The larger the capacity cushion, the better.

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.

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

Capacity can be defined as the amount of available resource inputs relative to requirements for output over a particular period of time.

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

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

Why does volatility of demand have a higher effect on a service delivery system than on a manufacturing system?

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? ___________________

When a firm's design capacity is less than the capacity required to meet its demand, it is said to have a negative capacity cushion.

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? ____________________

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, which of the following is the capacity utilization rate?

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