Question 1

Long-term capacity plans deal with:

Accepted Answer

A) investments in new facilities. 
B) workforce size. 
C) inventories. 
D) overtime budgets. 
A) investments in new facilities. 
B) workforce size. 
C) inventories. 
D) overtime budgets.

Question 2

George P.Burdell owns a hot tub store that is experiencing significant growth.Burdell is trying to decide whether to expand the store's capacity,which currently is at $750,000 in sales per quarter.He is thinking about expanding to the $850,000 level.The before-tax profit from additional sales is 20 percent.Sales are seasonal,with peaks in the spring and summer quarters.Forecasts of capacity requirements,expressed in ($000)sales per quarter,for next year (year 2)are:   Demand in year 3 and beyond is expected to exceed $850,000 per quarter.Burdell is considering expansion at the end of the fourth quarter of this year (year 1).How much would before-tax profits in year 2 increase because of this expansion?

Accepted Answer

A) less than $28,000 
B) more than $28,000 but less than $32,000 
C) more than $32,000 but less than $36,000 
D) more than $36,000 
A) less than $28,000 
B) more than $28,000 but less than $32,000 
C) more than $32,000 but less than $36,000 
D) more than $36,000

Question 3

Utilization is the degree to which equipment,space,or labor is currently being used.

Accepted Answer

A) True 
 B)False

Question 4

A process's capacity requirement states the future process capacity needed to meet projected customer demands,and includes an allowance for the desired capacity cushion.

Accepted Answer

A) True 
 B)False

Question 5

The ________ is the act of doing nothing and losing orders from any demand that exceeds capacity,or incurs costs because capacity is too large.

Accepted Answer

The answer of The ________ is the act of doing...

Question 6

Capacity decisions should be linked closely to ________ and ________ throughout the organization.

Accepted Answer

processes,

Question 7

Which one of the following statements concerning capacity cushions is best?

Accepted Answer

A) Large capacity cushions are used more often when future demand is level and known. 
B) Small capacity cushions are used extensively in capital intensive firms. 
C) Capacity cushions are used primarily in manufacturing organizations,not in service organizations. 
D) Small cushions are used in organizations where the products and services produced often change. 
A) Large capacity cushions are used more often when future demand is level and known. 
B) Small capacity cushions are used extensively in capital intensive firms. 
C) Capacity cushions are used primarily in manufacturing organizations,not in service organizations. 
D) Small cushions are used in organizations where the products and services produced often change.

Question 8

Input measures include such metrics as:

Accepted Answer

A) the number of customers served per hour. 
B) the number of trucks produced per day. 
C) the number of machine hours available. 
D) the number of bills processed in a week. 
A) the number of customers served per hour. 
B) the number of trucks produced per day. 
C) the number of machine hours available. 
D) the number of bills processed in a week.

Question 9

What information would managers use to choose the best cost-effective capacity to balance customer service with the cost of adding capacity?

Accepted Answer

A) decision trees 
B) economies of scale 
C) capacity cushion 
D) waiting line models 
A) decision trees 
B) economies of scale 
C) capacity cushion 
D) waiting line models

Question 10

A company's production facility,consisting of two identical machines,currently caters only to product A.The annual demand for the product is 4000 units.Management has now decided to introduce another product,B,which uses the same facilities as that of product A.Product B has an annual demand of 2000 units.In view of the uncertainties involved in producing two products,management desires to have an overall 10 percent capacity cushion.Given the following additional information,how many more machines are required? (Assume 8 hours/shift,2 shifts/day,250 days/year,and that no overtime is allowed).

Accepted Answer

A) No additional machines are necessary. 
B) One additional machine is necessary. 
C) Two additional machines are necessary. 
D) More than two additional machines are necessary. 
A) No additional machines are necessary. 
B) One additional machine is necessary. 
C) Two additional machines are necessary. 
D) More than two additional machines are necessary.

Question 11

Expand Work Center A at the end of year 0 to 12,500 units per year,matching Work Center B,at a cost of $100,000,then expanding both Work Centers to 15,000 units per year at the end of year 3,at an additional cost at that time of $200,000.
The King Company will not consider projects that don't show a 5th year positive net present value using a discount rate of 15%.What are the pre-tax cash flows for the two alternatives compared to the base case of doing nothing for the next five years,and what action,if any,should the company take?

Accepted Answer

The following table summarizes demand an

Question 12

A wait-and-see capacity strategy:

Accepted Answer

A) involves small,frequent jumps in capacity. 
B) minimizes the chance of lost sales due to insufficient capacity. 
C) can result in economies of scale and a fast rate of learning,yielding reduced manufacturing costs. 
D) stays ahead of demand. 
A) involves small,frequent jumps in capacity. 
B) minimizes the chance of lost sales due to insufficient capacity. 
C) can result in economies of scale and a fast rate of learning,yielding reduced manufacturing costs. 
D) stays ahead of demand.

Question 13

Table 6.7
The B.Sharp Company has a rapidly growing product line that requires two work centers,X and Y for manufacture.Work Center X has a current capacity of 50,000 units per year,and Work Center Y is capable of 55,000 units per year.This year (year 0),sales of the product line are expected to reach 50,000 units.Growth is projected at an additional 3,000 units each year through year 3.Pre-tax profits are expected to be $60 per unit throughout the 3-year planning period.Two alternatives are being considered:
-Expand both Work Centers X and Y at the end of year 0 to a capacity of 60,000 units per year,at a total cost for both Work Centers of $500,000;

Accepted Answer

The B.Sharp Company is considering two a

Question 14

Define each of the following capacity strategies: expansionist,wait-and-see,and follow-the-leader.

Accepted Answer

Expansionist means large,infre

Question 15

Large,infrequent jumps in capacity are characteristic of companies that:

Accepted Answer

A) have an expansionist strategy. 
B) have a wait-and-see strategy. 
C) have low utilization. 
D) have high utilization. 
A) have an expansionist strategy. 
B) have a wait-and-see strategy. 
C) have low utilization. 
D) have high utilization.

Question 16

Table 6.2
High Tech,Inc.is producing two types of products: A and B.Both are produced at the same sawing operation.Because of demand uncertainties,the operations manager obtained three demand forecasts (pessimistic,expected,and optimistic).The demand forecasts,batch sizes (units/batch),processing times (hr/unit),and setup times (hr/batch)follow.   The sawing machines operate on two 8-hour shifts,5 days per week,and 50 weeks per year.The manager wants to maintain a 10 percent capacity cushion.
-Using the information from Table 6.2,what is the maximum number of machines needed (assuming no reliance on short-term option)?

Accepted Answer

A) fewer than or equal to 25 
B) more than 25 but fewer than or equal to 28 
C) more than 28 but fewer than or equal to 31 
D) more than 31 
A) fewer than or equal to 25 
B) more than 25 but fewer than or equal to 28 
C) more than 28 but fewer than or equal to 31 
D) more than 31

Question 17

A planning horizon is defined as the period beyond which the company does not have customer orders.

Accepted Answer

A) True 
 B)False

Question 18

Table 6.2
High Tech,Inc.is producing two types of products: A and B.Both are produced at the same sawing operation.Because of demand uncertainties,the operations manager obtained three demand forecasts (pessimistic,expected,and optimistic).The demand forecasts,batch sizes (units/batch),processing times (hr/unit),and setup times (hr/batch)follow.   The sawing machines operate on two 8-hour shifts,5 days per week,and 50 weeks per year.The manager wants to maintain a 10 percent capacity cushion.
-Using the information from Table 6.2,how many hours of capacity can the company expect from each of its sawing machines?

Accepted Answer

A) fewer than 3500 hours 
B) more than 3500 hours but fewer than 3700 hours 
C) more than 3700 hours but fewer than 3900 hours 
D) more than 3900 hours 
A) fewer than 3500 hours 
B) more than 3500 hours but fewer than 3700 hours 
C) more than 3700 hours but fewer than 3900 hours 
D) more than 3900 hours

Question 19

Cash flow is the difference between the flows of funds into and out of an organization over a period of time.

Accepted Answer

A) True 
 B)False

Question 20

Lucy's Pancake House,a no-frills diner along a major interstate,has discovered that if precious employee time is not wasted on frivolous duties such as cleaning work surfaces,properly storing ingredients,and pest control,they can achieve an average output rate of 25 customers per hour.If the diner was designed to accommodate a maximum of 30 customers per hour,what is the utilization?

Accepted Answer

Utilization = @#IMG-DLM& × 100

Long-term capacity plans deal with:

Utilization is the degree to which equipment,space,or labor is currently being used.

A process's capacity requirement states the future process capacity needed to meet projected customer demands,and includes an allowance for the desired capacity cushion.

The ________ is the act of doing nothing and losing orders from any demand that exceeds capacity,or incurs costs because capacity is too large.

Capacity decisions should be linked closely to and throughout the organization.

Which one of the following statements concerning capacity cushions is best?

Input measures include such metrics as:

What information would managers use to choose the best cost-effective capacity to balance customer service with the cost of adding capacity?

A wait-and-see capacity strategy:

Define each of the following capacity strategies: expansionist,wait-and-see,and follow-the-leader.

Large,infrequent jumps in capacity are characteristic of companies that:

A planning horizon is defined as the period beyond which the company does not have customer orders.

Cash flow is the difference between the flows of funds into and out of an organization over a period of time.

Using Operations to Compete

Project Management

Process Strategy

Process Analysis

Quality and Performance

Constraint Management

Lean Systems

Supply Chain Inventory Management

Supply Chain Design

Supply Chain Location Decisions

Supply Chain Integration

Supply Chain Sustainability and Humanitarian Logistics

Forecasting

Operations Planning and Scheduling

Resource Planning

Decision Making

Waiting Line

Special Inventory Models

Linear Programming

Simulation

Financial Analysis

Acceptance Sampling Plans

Measuring Output Rates

Learning Curve Analysis

Operations Scheduling

Filters

Exam 6: Capacity Planning

Long-term capacity plans deal with:

Utilization is the degree to which equipment,space,or labor is currently being used.

A process's capacity requirement states the future process capacity needed to meet projected customer demands,and includes an allowance for the desired capacity cushion.

The ________ is the act of doing nothing and losing orders from any demand that exceeds capacity,or incurs costs because capacity is too large.

Capacity decisions should be linked closely to ________ and ________ throughout the organization.

Which one of the following statements concerning capacity cushions is best?

Input measures include such metrics as:

What information would managers use to choose the best cost-effective capacity to balance customer service with the cost of adding capacity?

A wait-and-see capacity strategy:

Define each of the following capacity strategies: expansionist,wait-and-see,and follow-the-leader.

Large,infrequent jumps in capacity are characteristic of companies that:

A planning horizon is defined as the period beyond which the company does not have customer orders.

Cash flow is the difference between the flows of funds into and out of an organization over a period of time.

Using Operations to Compete

Project Management

Process Strategy

Process Analysis

Quality and Performance

Constraint Management

Lean Systems

Supply Chain Inventory Management

Supply Chain Design

Supply Chain Location Decisions

Supply Chain Integration

Supply Chain Sustainability and Humanitarian Logistics

Forecasting

Operations Planning and Scheduling

Resource Planning

Decision Making

Waiting Line

Special Inventory Models

Linear Programming

Simulation

Financial Analysis

Acceptance Sampling Plans

Measuring Output Rates

Learning Curve Analysis

Operations Scheduling

Filters

Capacity decisions should be linked closely to and throughout the organization.