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Exam 5: Strategic Capacity Management

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Question 31

True/False

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

A) True
B) False

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Question 32

Multiple Choice

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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%?

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.

F) A) and C)
G) B) and D)

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Question 33

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

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

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

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

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

Long-range capacity planning requires top management participation.

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

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

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

Outsourcing is a common source of external capacity.

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

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?

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.

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

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?

Sharing capacity is a common source of external capacity.

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