Exam 5: Strategic Capacity Management

Sharing capacity is a common source of external capacity.

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

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%?

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

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

The objective of strategic capacity planning is to provide an approach for determining the overall capacity level of labor-intensive resources.

The capacity utilization rate is found by dividing best operating level by capacity used.

Long-range capacity planning requires top management participation.

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

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 cushion?

Describe the relationship between capacity utilization and quality in a service operation.

The frequency of adding to productive capacity should balance the costs of upgrading too frequently and the costs of upgrading too infrequently.

What is an important difference between capacity planning in services and capacity planning in manufacturing operations?

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.

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

Capacity can be defined as the ability to hold, receive, store, or accommodate.

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

At some point, the size of a growing plant can become too large and diseconomies of scale become a capacity planning problem.

Outsourcing is a common source of external capacity.

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