Question 1

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  False

Question 2

The larger the capacity cushion, the better.

Accepted Answer

A) True 
 B)False  False

Question 3

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

Accepted Answer

A) True 
 B)False  False

Question 4

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

Accepted Answer

A) True 
 B)False

Question 5

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 6

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

Question 7

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 8

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

Accepted Answer

A) True 
 B)False

Question 9

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 10

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

Accepted Answer

A) True 
 B)False

Question 11

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

Accepted Answer

A) True 
 B)False

Question 12

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%?

Accepted Answer

A) Machine A 
B) Machine B 
C) Machine C 
D) You would be indifferent between machines A and C. 
E) You would be indifferent between machines A and B. 
A) Machine A 
B) Machine B 
C) Machine C 
D) You would be indifferent between machines A and C. 
E) You would be indifferent between machines A and B.

Question 13

Long-range capacity planning requires top management participation.

Accepted Answer

A) True 
 B)False

Question 14

The basic notion of economies of scale is that as a plant gets larger and volume increases, the average cost per unit of output drops.

Accepted Answer

A) True 
 B)False

Question 15

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

Accepted Answer

A) True 
 B)False

Question 16

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

Accepted Answer

A) Time 
B) Location 
C) Demand volatility 
D) Utilization affects service 
E) All of these 
A) Time 
B) Location 
C) Demand volatility 
D) Utilization affects service 
E) All of these

Question 17

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 18

Sharing capacity is a common source of external capacity.

Accepted Answer

A) True 
 B)False

Question 19

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 20

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

Accepted Answer

A) Pay higher wages to motivate a willingness to do a variety to tasks. 
B) Provide a broader range of training. 
C) Provide a wide variety of technology to augment workers skills. 
D) Institute a "pay for skills" program. 
E) Use part-time employees with specialized skills as needed. 
A) Pay higher wages to motivate a willingness to do a variety to tasks. 
B) Provide a broader range of training. 
C) Provide a wide variety of technology to augment workers skills. 
D) Institute a "pay for skills" program. 
E) Use part-time employees with specialized skills as needed.

Exam 5: Strategic Capacity Management

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

The larger the capacity cushion, the better.

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

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?

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

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

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.

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.

Long-range capacity planning requires top management participation.

The basic notion of economies of scale is that as a plant gets larger and volume increases, the average cost per unit of output drops.

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

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

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

Sharing capacity is a common source of external capacity.

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

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

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