OPMT 303 CH 5 Concepts – Flashcards
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Design capacity refers to the maximum output that can possibly be attained.
T/F ?
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True
( Design capacity is only reachable under ideal conditions. )
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Increasing productivity and also quality will result in increased capacity.
T/F ?
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True
( Effective capacity can be increased over time by these and similar factors. )
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The ratio of actual output to effective capacity is:
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efficiency
( Efficiency measures the usage of effective capacity. )
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The impact that a significant change in capacity will have on a key vendor is a:
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supply chain factor.
( Vendors and their performance can be critical factors with respect to effective capacity. )
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The maximum possible output given a product mix, scheduling difficulties, quality factors, and so on is:
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effective capacity
( Effective capacity reflects the realities of the production environment. )
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Which of these factors would not be subtracted from design capacity when calculating effective capacity?
changing the mix of products
personal time
all of the choices
equipment maintenance
scheduling problems
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all of the choices
( Effective capacity reflects all of the above issues, including required personal time, maintenance issues, scrap, and the length of a given workday. )
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Capacity increases are usually acquired in fairly large "chunks" rather than in smooth increments.
T/F ?
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True
( Hotels and hospitals are among many examples of circumstances in which capacity cannot be added in very small increments. )
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Capacity decisions often involve a long-term commitment of resources which, when implemented, are difficult or impossible to modify without major added costs.
True
False
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True
( The cost to modify capacity decisions, once they've been made, is what makes capacity decisions so consequential. )
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When the output is less than the optimal rate of output, the average unit cost will be:
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higher
( At too low a volume, fixed costs are too burdensome. )
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Capacity in excess of expected demand that is intended to offset uncertainty is a:
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capacity cushion
( A capacity cushion reduces short-term imbalances. )
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The method of financial analysis which focuses on the length of time it takes to recover the initial cost of an investment is:
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payback
( The payback period does not take into account the time value of money. )
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Cost and competitive priorities reduce effective capacities.
True
False
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False
( Changes in competitive priorities can actually increase effective capacity. )
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An example of an external factor that influences effective capacity is government safety regulations.
True
False
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True
( Stricter safety regulations can reduce effective capacity. )
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The ratio of actual output to design capacity is:
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utilization
( Utilization measures the usage of design capacity. )
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The decision to outsource opens the firm up to certain risks, among them _________ and ________.
higher marketing costs; small orders
loss of direct control over operations; need to disclose proprietary information
greater capacity rigidity; tight knowledge control
lower costs; fewer task-specific investments
access to greater expertise; greater demand variability
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loss of direct control over operations; need to disclose proprietary information
( Loss of direct control over operations, knowledge sharing, and the possible need to disclose proprietary information are three risks that accompany outsourcing. )
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Everything else being equal, a firm considering outsourcing can be reasonably certain that:
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its supplier probably has more expertise in whatever is being outsourced
( Firms that specialize can usually offer higher quality than an organization can attain itself. )
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Capacity decisions are usually one-time decisions; once they have been made, we know the limits of our operations.
True
False
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False
( A number of factors can either increase or reduce a unit's capacity over time. )