OPM 311 Ch 4 Homework – Flashcards
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Capacity can be defined as the ability to hold, receive, store, or accommodate.
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correct True False A dictionary definition of capacity is "the ability to hold, receive, store, or accommodate."
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Capacity can be defined as the amount of available resource inputs relative to requirements for output over a particular period of time.
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correct True False Capacity is a relative term; in an operations management context, it may be defined as the amount of resource inputs available relative to output requirements over a particular period of time.
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The capacity utilization rate is found by dividing best operating level by capacity used.
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True correct False The capacity utilization rate is found by dividing capacity used by best operating level.
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The objective of strategic capacity planning is to provide an approach for determining the overall capacity level of labor-intensive resources.
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True correct False The objective of strategic capacity planning is to provide an approach for determining the overall capacity level of capital-intensive resources—facilities, equipment, and overall labor force size—that best supports the company's long-range competitive strategy.
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Best operating level is the volume of output at which average unit cost is minimized.
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correct True False (Best operating level) is the level of capacity for which the process was designed and thus is the volume of output at which average unit cost is minimized.
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At some point, the size of a growing plant can become too large and diseconomies of scale become a capacity planning problem.
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correct True False At some point, the size of a plant becomes too large and diseconomies of scale become a problem.
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Long-range capacity planning requires top management participation.
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correct True False Where productive resources (such as buildings, equipment, or facilities) take a long time to acquire or dispose of, long-range capacity planning requires top management participation and approval.
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Overtime and personnel transfers are solutions to capacity problems in the intermediate term.
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True correct False Short range —less than one month. This is tied into the daily or weekly scheduling process and involves making adjustments to eliminate the variance between planned and actual output. This includes alternatives such as overtime, personnel transfers, and alternative production routings.
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Capacity planning is generally viewed in three time durations: Immediate, Intermediate and Indeterminate.
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True correct False The correct answer is long-range, intermediate-range and short-range.
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A piece of equipment with twice the capacity of another piece typically costs twice as much to purchase and to operate.
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True correct 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. This is partially due to lower operating and capital cost, because a piece of equipment with twice the capacity of another piece typically does not cost twice as much to purchase or operate.
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A production facility works best when it focuses on a fairly limited set of production objectives.
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correct True False The concept of a focused factory holds that a production facility works best when it focuses on a fairly limited set of production objectives.
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The ultimate in plant flexibility is a one-hour-changeover time plant.
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True correct False Perhaps the ultimate in plant flexibility is the zero-changeover-time plant.
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Capacity flexibility means having the ability to rapidly increase or decrease production levels, or to shift production capacity quickly from one product or service to another.
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correct True False Capacity flexibility means having the ability to rapidly increase or decrease production levels, or to shift production capacity quickly from one product or service to another.
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Outsourcing is a common source of external capacity.
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correct True False In some cases, it may be cheaper to not add capacity at all, but rather to use some existing external source of capacity. Two common strategies used by organizations are outsourcing and sharing capacity.
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A capacity cushion is the amount of capacity less than expected demand.
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True correct False A capacity cushion is the amount of capacity in excess of expected demand
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The smaller the capacity cushion the better.
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True correct False This is not necessarily true except in the instance of a firm whose competitive advantage is low cost or price. For a firm competing on speed of delivery or innovative ability, for example, a larger capacity cushion will allow more flexibility and enable an appropriate response to unplanned orders.
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When a firm's design capacity is less than the capacity required to meet its demand, it is said to have a negative capacity cushion.
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correct True False When a firm's design capacity is less than the capacity required to meet its demand, it is said to have a negative capacity cushion.
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Because services cannot be stored for later use, service managers consider time as one of their supplies or resources.
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correct True False Unlike goods, services cannot be stored for later use. As such, in services managers must consider time as one of their supplies.
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The ability to rapidly and inexpensively switch production from one product to another enables what are sometimes referred to as: Economies of shape Economies of shipping Economies of scope Economies of size Economies of scale Flexible manufacturing systems and simple easily set-up equipment permit rapid low-cost switching from one product to another, enabling what are sometimes referred to as economies of scope.
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Economies of shape Economies of shipping Correct Economies of scope Economies of size Economies of scale Flexible manufacturing systems and simple easily set-up equipment permit rapid low-cost switching from one product to another, enabling what are sometimes referred to as economies of scope.
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Capacity planning that involves hiring, layoffs, some new tooling, minor equipment purchases, and subcontracting is considered as which one of the following planning horizons? Upcoming Short range Current Long range Intermediate range
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Upcoming Short range Current Long range correct Intermediate range Intermediate range: monthly or quarterly plans for the next 6 to 18 months. Here, capacity may be varied by such alternatives as hiring, layoffs, new tools, minor equipment purchases, and subcontracting.
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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? Intermediate-range Long-range Current Upcoming Short-range
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Intermediate-range correct Long-range Current Upcoming Short-range Long range: greater than one year. Where productive resources (such as buildings, equipment, or facilities) take a long time to acquire or dispose of, long-range capacity planning requires top management participation and approval.
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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? 0.75 2.33 1.33 300 1.00 300 units of output divided by 400 units best operating level = 0.75
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correct 0.75 2.33 1.33 300 1.00 300 units of output divided by 400 units best operating level = 0.75
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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? 0.75 1.33 100 1.25 1.00
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0.75 1.33 100 correct 1.25 1.00 500 units of output divided by 400 units best operating level = 1.25
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The capacity focus concept can be put into practice through a mechanism called which of the following? Zero-changeover-time (ZXT) Best operating level (BOL) Plant within a plant (PWP) Capacity utilization rate (CUR) Total quality management (TQM)
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Zero-changeover-time (ZXT) Best operating level (BOL) correct Plant within a plant (PWP) Capacity utilization rate (CUR) Total quality management (TQM) The capacity focus concept can be operationalized through the mechanism of plant within a plant (PWP).
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When deciding to add capacity to a factory which of the following need not be considered? Use of external capacity Immediate product demand The frequency of capacity additions Maintaining system balance Availability of raw materials
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Use of external capacity correct Immediate product demand The frequency of capacity additions Maintaining system balance Availability of raw materials Many issues must be considered when adding or decreasing capacity. Three important ones are maintaining system balance, frequency of capacity additions or reductions, and the use of external capacity. In many cases, the size of a plant may be influenced by factors other than the internal equipment, labor, and other capital expenditures. A major factor may be the cost to transport raw materials
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Compared with a service operation, a manufacturing operation's capacity is which of the following? Utilization more directly impacts quality More dependent on time and location Subject to more volatile demand fluctuations More capable of reacting to demand fluctuations Demand can be smoothed by inventory policies
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Utilization more directly impacts quality More dependent on time and location Subject to more volatile demand fluctuations More capable of reacting to demand fluctuations correct Demand can be smoothed by inventory policies Service capacity is more time- and location-dependent, (than manufacturing capacity) it is subject to more volatile demand fluctuations, and utilization directly impacts service quality. Also, unlike goods, services cannot be stored for later use.
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Resource Planning is a top management planning activity owned by top management. It is typically prepared for them by others in the organization but reviewed and approved by top management.
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correct True False In manufacturing the Master Scheduler will often do the Resource Planning.
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RCCP (Rough Cut Capacity Planning) is a top management planning process.
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True correct False RCCP is not usually done by top management.
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Detailed Capacity Planning and CRP (Capacity Requirements Planning) are basically the same process.
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correct True False Both fall in the same place in the ERP business model.
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The levels of Capacity Planning as they line up with the ERP business model (top to bottom) are: Rough Cut Capacity Planning, Capacity Requirements Planning, Resource Planning, Detailed Capacity Planning Strategic Planning, Rough Cut Capacity Planning, Resource Planning, CRP Strategic Planning, Resource Planning, Rough Cut Capacity Planning, CRP Strategic Planning, Rough Cut Capacity Planning, Detailed Capacity Planning
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Rough Cut Capacity Planning, Capacity Requirements Planning, Resource Planning, Detailed Capacity Planning Strategic Planning, Rough Cut Capacity Planning, Resource Planning, CRP correct Strategic Planning, Resource Planning, Rough Cut Capacity Planning, CRP Strategic Planning, Rough Cut Capacity Planning, Detailed Capacity Planning
