Question 1

An expansionist capacity strategy does all of the following EXCEPT:

Accepted Answer

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

Question 2

One advantage of a smaller capacity cushion is that it is less expensive than a larger cushion.

Accepted Answer

A) True 
 B)False

Question 3

Discuss the relationship between setup time and utilization.

Accepted Answer

Setup time is the time required to adjus

Question 4

Table 6.8
The Summerville Vitamin Company manufactures bottles of animal-shaped chewable vitamins for children.This product line requires two work centers,tablet manufacturing and packaging.The tablet manufacturing work center has a current capacity of 140,000 bottles per month,and packaging is capable of 100,000 units per month.This year (year 0),monthly sales of the product line are expected to reach 100,000 units.Growth per month is projected at an additional 25,000 units through year 4 (i.e. ,125,000 per month in year #1,150,000 per month in year #2,etc. ).Pre-tax profits are expected to be $5 per unit throughout the 4-year planning period.Two alternatives are being considered:
-Use the information in Table 6.8.What is the pre-tax cash flow (net present value)for alternative #2 compared to the base case of doing nothing for the next four years?

Accepted Answer

A) less than or equal to $5.1 million 
B) more than $5.1 million but less than $5.3 million 
C) more than $5.3 million less than $5.5 million 
D) more than $5.5 million 
A) less than or equal to $5.1 million 
B) more than $5.1 million but less than $5.3 million 
C) more than $5.3 million less than $5.5 million 
D) more than $5.5 million

Question 5

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:
-Use the information in Table 6.7.What is the pre-tax cash flow (net present value)for alternative #1 compared to the base case of doing nothing for the next five years?

Accepted Answer

A) negative pre-tax cash flow 
B) more than $0 but less than $100,000 
C) more than $100,000 but less than $200,000 
D) more than $200,000 
A) negative pre-tax cash flow 
B) more than $0 but less than $100,000 
C) more than $100,000 but less than $200,000 
D) more than $200,000

Question 6

Economies of scale drive down cost even though the cost of purchased materials can be expected to increase.

Accepted Answer

A) True 
 B)False

Question 7

Input measures of capacity are inherently more accurate than output measures of capacity.

Accepted Answer

A) True 
 B)False

Question 8

A process's ________ is the length of time it takes to switch from making one type of product to another.

Accepted Answer

The answer of A process's ________ is the length of...

Question 9

________ occurs when the average cost per unit increases as the facility's size increases.

Accepted Answer

Diseconomi

Question 10

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,if the operation currently has 18 machines and the manager is willing to expand capacity by 20 percent through short-term options,what is the capacity gap (in terms of number of machines)if you assume the optimistic demand forecasts?

Accepted Answer

A) fewer than or equal to 10 
B) more than 10 but fewer than or equal to 12 
C) more than 12 but fewer than or equal to 14 
D) more than 14 
A) fewer than or equal to 10 
B) more than 10 but fewer than or equal to 12 
C) more than 12 but fewer than or equal to 14 
D) more than 14

Question 11

One reason economies of scale drive down cost is the spreading of fixed costs.

Accepted Answer

A) True 
 B)False

Question 12

A firm may preempt the expansion of competitive firms by using an expansionist capacity strategy and announcing a large capacity expansion.

Accepted Answer

A) True 
 B)False

Question 13

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 minimum total number of hours required of sawing equipment for the next year?

Accepted Answer

A) fewer than 85,000 hours 
B) more than 85,000 but fewer than 95,000 
C) more than 95,000 but fewer than 105,000 
D) more than 105,000 hours 
A) fewer than 85,000 hours 
B) more than 85,000 but fewer than 95,000 
C) more than 95,000 but fewer than 105,000 
D) more than 105,000 hours

Question 14

What is a capacity cushion? Provide examples of capacity cushions in a university setting and an automotive producer.

Accepted Answer

The term capacity cushion refers to the

Question 15

Output measures are used for estimating capacity requirements when product variety and process divergence are high.

Accepted Answer

A) True 
 B)False

Question 16

A process's ________ is what its capacity should be for some future time period to meet the demand of its customers,allowing for the desired capacity cushion.

Accepted Answer

capacity r

Question 17

The single milling machine at Stout Manufacturing was severely overloaded last year.The plant operates eight hours per day,five days per week,and 50 weeks per year.Management prefers a capacity cushion of 15 percent.Two major types of products are routed through the milling machine.The annual demand for product A is 3000 units and 2000 units for product B.The batch size for A is 20 units and 40 units for B.The standard processing time for A is 0.5 hours/unit and 0.8 hours/unit for B.The standard setup time for product A is 2 hours and 8 hours for product B.How many new milling machines are required if Stout does not resort to any short-term capacity options?

Accepted Answer

A) no new machines 
B) 1 or 2 new machines 
C) 3 or 4 new machines 
D) more than 4 new machines 
A) no new machines 
B) 1 or 2 new machines 
C) 3 or 4 new machines 
D) more than 4 new machines

Question 18

If a system is well balanced,which one of the following changes usually calls for a larger capacity cushion?

Accepted Answer

A) higher capital intensity 
B) higher worker flexibility 
C) requests for fast delivery times 
D) higher inventories 
A) higher capital intensity 
B) higher worker flexibility 
C) requests for fast delivery times 
D) higher inventories

Question 19

Table 6.6
Burdell Labs is a diagnostic laboratory that does various tests (blood tests,urine tests,etc. )for doctors' offices in the Indianapolis area.Test specimens are picked up at the doctors' offices and are transported to the testing facility,with uniform arrivals throughout the day.All tests go through two testing centers in the testing facility,Test Center A and Test Center B.A has a current capacity of 1,000 units per week,and B is capable of 1,500 units per week.The facility operates 50 weeks per year.This year (year 0),test volumes are expected to reach 1,000 units per week.Growth per week is projected at an additional 200 units through year 5 (i.e. ,1,200 per week in year #1,1,400 per week in year #2,etc. ).Pre-tax profits are expected to be $5 per test throughout the 5-year planning period.Two alternatives are being considered:
-Use the information in Table 6.6.What is the pre-tax cash flow (net present value)for alternative #1 compared to the base case of doing nothing for the next five years?

Accepted Answer

A) negative pre-tax cash flow 
B) more than $0 but less than $80,000 
C) more than $80,000 but less than $160,000 
D) more than $160,000 
A) negative pre-tax cash flow 
B) more than $0 but less than $80,000 
C) more than $80,000 but less than $160,000 
D) more than $160,000

Question 20

The degree to which equipment,space,or labor is being used is commonly referred to as:

Accepted Answer

A) capacity. 
B) output. 
C) utilization. 
D) cushion. 
A) capacity. 
B) output. 
C) utilization. 
D) cushion.

An expansionist capacity strategy does all of the following EXCEPT:

One advantage of a smaller capacity cushion is that it is less expensive than a larger cushion.

Discuss the relationship between setup time and utilization.

Economies of scale drive down cost even though the cost of purchased materials can be expected to increase.

Input measures of capacity are inherently more accurate than output measures of capacity.

A process's ________ is the length of time it takes to switch from making one type of product to another.

________ occurs when the average cost per unit increases as the facility's size increases.

One reason economies of scale drive down cost is the spreading of fixed costs.

A firm may preempt the expansion of competitive firms by using an expansionist capacity strategy and announcing a large capacity expansion.

What is a capacity cushion? Provide examples of capacity cushions in a university setting and an automotive producer.

Output measures are used for estimating capacity requirements when product variety and process divergence are high.

A process's ________ is what its capacity should be for some future time period to meet the demand of its customers,allowing for the desired capacity cushion.

If a system is well balanced,which one of the following changes usually calls for a larger capacity cushion?

The degree to which equipment,space,or labor is being used is commonly referred to as:

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

An expansionist capacity strategy does all of the following EXCEPT:

One advantage of a smaller capacity cushion is that it is less expensive than a larger cushion.

Discuss the relationship between setup time and utilization.

Economies of scale drive down cost even though the cost of purchased materials can be expected to increase.

Input measures of capacity are inherently more accurate than output measures of capacity.

A process's ________ is the length of time it takes to switch from making one type of product to another.

________ occurs when the average cost per unit increases as the facility's size increases.

One reason economies of scale drive down cost is the spreading of fixed costs.

A firm may preempt the expansion of competitive firms by using an expansionist capacity strategy and announcing a large capacity expansion.

What is a capacity cushion? Provide examples of capacity cushions in a university setting and an automotive producer.

Output measures are used for estimating capacity requirements when product variety and process divergence are high.

A process's ________ is what its capacity should be for some future time period to meet the demand of its customers,allowing for the desired capacity cushion.

If a system is well balanced,which one of the following changes usually calls for a larger capacity cushion?

The degree to which equipment,space,or labor is being used is commonly referred to as:

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