Chapter 6 Study Questions

Flashcard maker : Lily Taylor
1. Capacity is the maximum rate of output of a process.
True
2. Capacity can be expressed by output or input measures.
True
3. Input measures of capacity are inherently more accurate than output measures of capacity.
False
4. Utilization is the degree to which equipment, space, or labor is currently being used.
True
5. Operating processes close to their capacity can result in low customer satisfaction and even losing money despite high sales levels.
True
6. A bottleneck is an operation that has the lowest effective capacity of any operation in the process.
True
7. The Theory of Constraints method is also referred to as the drum-beater-rope method.
False
8. Any work center or machine that has less capacity than other work centers in the same plant is referred to as a bottleneck.
True
9. A business school with plenty of classroom space that hires adjunct faculty for a semester to meet unusually high student demand for courses is an example of elevating a bottleneck.
True
10. One reason economies of scale drive down cost is the spreading of fixed costs.
True
11. A capacity cushion is the amount of inventory that a firm maintains to handle sudden increases in demand or temporary loss of production capacity.
False
12. Capacity decisions should be made separate from strategic decisions.
False
13. A process’s capacity requirement is what the process capacity should be for some future time period to meet customer demand, allowing for the desired capacity cushion.
True
14. Cash flow is the difference between the flows of funds into and out of an organization over a period of time.
True
15. Waiting line models are often used for capacity planning.
True
16. A time horizon is defined as the period beyond which the company does not have customer orders.
False
17. Long-term capacity plans deal with:
a. investments in new facilities.
b. workforce size.
c. inventories.
d. overtime budgets.
A
18. Short-term capacity decisions that confront managers include production factors such as:
a. capital equipment.
b. additional land.
c. buildings.
d. workforce size.
D
19. When a firm provides a relatively small number of standardized products and services:
a. capacity cannot be determined reliably.
b. input measures are typically used.
c. output measures are typically used.
d. utilization becomes equal to capacity.
C
20. Input measures include such metrics as:
a. the number of customers served per hour.
b. the number of trucks produced per day.
c. the number of machine hours available.
d. the number of bills processed in a week.
C
21. The degree to which equipment, space, or labor is being used is commonly referred to as:
a. capacity.
b. output.
c. utilization.
d. cushion.
C
22. A rendering plant is capable of producing 10 tons of product per day if run for three shifts with no breakdowns and plenty of raw materials. Over the past week, the plant has rendered an average of 7.3 tons per day because the third shift has devoted much of their time to preventive maintenance. What is the utilization of the plant?
a. 10 tons/day
b. 7.3 tons/day
c. 73%
d. 137%
C
23. A rendering plant is capable of producing 10 tons of product per day if run for three shifts with no breakdowns and plenty of raw materials. Over the past week, the plant has rendered an average of 7.3 tons per day since the third shift has devoted much of their time to preventive maintenance. What is the capacity of the plant?
a. 10 tons/day
b. 7.3 tons/day
c. 73%
d. 137%
A
24. A lumber mill is capable of producing 10,000 board feet of lumber per day if run for ten hours with minimal breaks. Over the past year, forestry legislation has reduced the availability of raw materials, so the mill has produced an average of 4,575 board feet per day. What is the capacity of the plant?
a. 4,575 board feet/day
b. 10,000 board feet/day
c. 45.75%
d. 219%
B
25. A lumber mill is capable of producing 10,000 board feet of lumber per day if run for ten hours with minimal breaks. Over the past year, forestry legislation has reduced the availability of raw materials, so the mill has produced an average of 4,575 board feet per day. What is the utilization of the plant?
a. 4,575 board feet/day
b. 10,000 board feet/day
c. 219%
d. 45.75%
D
26. Which one of the following factors usually motivates a smaller capacity cushion?
a. Unevenly distributed demands
b. High capital intensity
c. High penalty costs for overtime usage
d. Requests for quick customer services
B
27. Which one of the following factors usually calls for a larger capacity cushion?
a. Uncertain demand
b. High capital intensity
c. More reliable equipment
d. High worker flexibility
A
28. There are three consecutive steps in a customer service process. The first two steps are each capable of serving 25 customers per hour while the third step can process only 20 customers per hour. Which of the following statements regarding this system is true?
a. The entire system is capable of processing 25 customers per hour.
b. There are floating bottlenecks in the system.
c. If the first two steps are run at full capacity, then the third step has a waiting line.
d. The first and second steps are bottlenecks for the system.
C
29. The fifth step in Theory of Constraints application, “do not let inertia set in,” means that:
a. the analyst should create a schedule that maximizes the throughput of the bottlenecks.
b. the analyst should repeat the analysis process to look for other bottlenecks.
c. the analyst should consider increasing capacity of the bottleneck.
d. the analyst should schedule non-bottleneck resources to support the bottleneck.
B
30. Which one of the following statements about capacity is best?
a. Companies with flexible flow processes tend to have small-capacity cushions.
b. Companies with high capital costs tend to have large-capacity cushions.
c. Companies that have considerable customization tend to have larger-capacity cushions.
d. Constant demand rates require larger-capacity cushions.
C
31. Which one of the following statements concerning capacity cushions is best?
a. Large-capacity cushions are used more often when future demand is level and known.
b. Small-capacity cushions are used extensively in capital-intensive firms.
c. Capacity cushions are used primarily in manufacturing organizations, not in service organizations.
d. Small cushions are used in organizations where the products and services produced often c
B
32. If a system is well balanced, which one of the following changes usually calls for a larger-capacity cushion?
a. Higher capital intensity
b. Higher worker flexibility
c. Higher inventories
d. Requests for fast delivery times
D
33. If a system is well balanced, which one of the following changes usually calls for a smaller-capacity cushion?
a. Higher customization
b. More of a flexible-flow strategy
c. Higher yield losses
d. Higher capital intensity
D
34. The fourth step in Theory of Constraints application, “elevate the bottlenecks,” means that:
a. the analyst should create a schedule that maximizes the throughput of the bottlenecks.
b. the analyst should repeat the analysis process to look for other bottlenecks.
c. the analyst should consider increasing capacity of the bottleneck.
d. the analyst should schedule non-bottleneck resources to support the bottleneck.
C
35. The second step in Theory of Constraints application, “exploit the bottlenecks,” means that:
a. the analyst should create a schedule that maximizes the throughput of the bottlenecks.
b. the analyst should repeat the analysis process to look for other bottlenecks.
c. the analyst should consider increasing capacity of the bottleneck.
d. the analyst should schedule non-bottleneck resources to support the bottleneck.
A
36. Bal Seal discovered that it was okay for some workers to have nothing to do at times. The reason for this is that:
a. these workers must be pure production workers.
b. these workers must work at bottleneck processes.
c. these workers must be analyzing processes.
d. these workers must work at non-bottleneck processes.
D
37. The transition from economies of scale to diseconomies of scale:
a. is more likely to occur in a service operation.
b. is more likely to occur in a manufacturing operation.
c. is more likely to occur when utilization is low.
d. contains the point at which unit operating costs are at their lowest.
D
38. At higher output rates, processes tend to:
a. reduce bottlenecks, which results in cost savings.
b. increase bottlenecks, which results in cost savings.
c. shift to line processes, which results in cost savings.
d. shift to batch processes, which results in cost savings.
C
39. Large, infrequent jumps in capacity are characteristic of companies that:
a. have an expansionist strategy.
b. have a wait-and-see strategy.
c. have low utilization.
d. have high utilization.
A
40. The time required to change a machine from making one product or service to the next is called:
a. take time.
b. setup time.
c. queue time.
d. hold time.
B
41. Which of the following statements regarding setups is TRUE?
a. Unusually high setup times result in higher utilization.
b. Processes are generating output throughout the entire setup process.
c. A machine used in a line process would probably have fewer setups than a batch process.
d. A TOC analyst would not be concerned with setup times on non-bottleneck machines.
D
42. When future demand is uncertain and sequential decisions are involved, a manager should use a:
a. waiting line model.
b. cash flow analysis.
c. decision tree.
d. gap analysis.
C
43. Which of the following descriptions about waiting line models is best?
a. They account for major events such as competitor actions.
b. They account for the random, independent behavior of many customers.
c. They assume that each branch can give the highest expected payoff.
d. They deal with the certainty and stability in demand.
B
44. What information would managers use to choose the best cost-effective capacity to balance customer service with the cost of adding capacity?
a. Decision trees
b. Economies of scale
c. Capacity cushion
d. Waiting line models
D

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