OPMA 3306-Chapter 4-Practice Questions

The ability to rapidly and inexpensively switch production from one product to another enables what are sometimes referred to as:

Economies of scope

Capacity planning that involves hiring, layoffs, some new tooling, minor equipment purchases, and subcontracting is considered as which one of the following planning horizons?

A. Intermediate range

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?

B. Long-range

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?

A. 0.75

300 units of output divided by 400 units best operating level = 0.75

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

C. 1.25

500 units of output divided by 400 units best operating level = 1.25

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?

B. 100 units per hour

A capacity cushion is an amount of capacity in excess of expected demand

The capacity focus concept can be put into practice through a mechanism called which of the following?

B. Plant within a plant (PWP)

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

B. Provide a broader range of training

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

D. Immediate product demand

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

B. Forecasting raw material usage

Which of the following models uses a schematic model of the sequence of steps in a problem and the conditions and consequences of each step?

C. Decision trees

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

D. Demand can be smoothed by inventory policies

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%?

C. Machine C

What is an important difference between capacity planning in services as contrasted to capacity planning in manufacturing operations?

A. Time

B. Location

C. Demand volatility

D. Utilization impacts service

E. All of the above

E. All of the above

Capacity planning involving consideration of production scheduling and inventory position is characterized by which one of the following time durations?

C. Short-range

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

TRUE

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

TRUE

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

TRUE

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

FALSE

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

FALSE

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.

FALSE

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.

TRUE

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

FALSE

Best operating level is the volume of output at which average unit cost is minimized.

TRUE

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

TRUE

Long-range capacity planning requires top management participation.

TRUE

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

FALSE

Capacity planning is generally viewed in three time durations: Immediate, Intermediate and Indeterminate.

FALSE

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.

TRUE

A piece of equipment with twice the capacity of another piece typically costs twice as much to purchase and to operate.

FALSE