Deck 10: Supply Chain Capacity Planning

Question 1

E,the efficiency,is a proportional factor used to convert units of throughput to standard time.

Answer 1

True

Question 2

PMC (productivities at maximum capacity) makes an excellent predictive measure of demand.

Answer 2

False

Question 3

Actual capacity is the greatest throughput rate that can be achieved with the existing configuration of resources and the accepted product or service mix plans.

Answer 3

True

Question 4

Operations capacity describes how many units can be supplied per unit of time.

Question 5

Backorders can be used to postpone satisfying demand when there is no inventory available.

Question 6

Unexplained fluctuations in capacity are unpleasant but profitable.

Question 7

Shutting down the production system for 2 hours of an 8-hour day does not effect the measure U,which remains at 100 percent.

Question 8

Two aspects of capacity requirements planning (CRP) are long-term planning and short-term tactical issues.Breakeven points and optimal allocation of resources exemplify the strategic thinking that characterizes long-term concepts.

Question 9

The ability to contain or store inventory is a well-received measure of capacity.

Question 10

When market demand falls below maximum supply capacity,an inventory buildup can be used to help meet that demand if backordering is prohibited.

Question 11

Robert Galvin,former chairman of Motorola,challenged the company to develop peak capability for quality production.

Question 12

Cnp stands for the cost of not having capacity to meet demands that are less than the average demand.

Question 13

The two kinds of capacity situations (extra- and under-) have a trade-off relationship.

Question 14

Capacity as measured by maximum output volume per unit of time (or max throughput rate) comes closest to capturing the P/OM concept.

Question 15

Cp is the symbol used in the text to indicate the amount of extra investment required to install peak capacity to meet peak demand when it occurs.

Question 16

A Weibull-type distribution,which reflects the high initial mortality of certain products (such as lightbulbs),looks like a normal unimodal distribution.

Question 17

Skillful management can decrease actual capacity.

Question 18

The use of robots is a wise choice for nuclear experimentation.

Question 19

Motorola set for itself a difficult quality goal of 3.4 defects per million parts.This is the numerical equivalent of six-sigma limits.

Question 20

E is the efficiency with which utilization U can be employed to make different kinds of products.

Question 21

Loss occurs to the left of the breakeven point (BEP).

Question 22

Floating bottlenecks can make the determination of maximum capacity very simple because you can wait them out and they will eventually become obvious.

Question 23

At breakeven,cost recovery is beginning.

Question 24

The learning effect for workers in job shops is pronounced because of the high degree of repetition.

Question 25

It is possible to forecast perfectly.

Question 26

Linear programming is a modeling technique used by P/OM to achieve optimal use of resources.

Question 27

The V-A-T classification associated with TOC and OPT reflects different possible definitions of maximum capacity.

Question 28

The three breakeven lines are fixed costs,total costs,variable costs.

Question 29

The experience curve is the rate of decrease in per unit costs for each doubling of production volume.The BCG has found this rate to be between 30 percent and 60 percent.

Question 30

The V-A-T categorization was first developed by the Sloan School at M.I.T.

Question 31

ABC and LA accounting provides process cost information to product designers for capacity-related decisions.

Question 32

Advertising and promotion strategies are expenditures that are usually assigned to variable costs such as material costs per unit.

Question 33

Total revenue is the volume (V) multiplied by the price per unit (p).

Question 34

The learning curve is a model for individuals or groups that describes how repeated practice decreases the time required to do a job.

Question 35

The Principle of Modularity is to design,develop,and produce the maximum number of parts that can be combined in the minimum number of ways to offer the greatest number of products or services.

Question 36

Linear programming (LP) is a modeling technique used by marketing to achieve optimal pricing for products.

Question 37

Breakeven analysis (BEA) model should be used for making capacity decisions.

Question 38

ABC and LA assign overhead in as correct a way as possible to make each product or service reflect its true cost to the company so that it is possible to determine its true contribution to company profits.

Question 39

Below breakeven,the production process is creating losses while above breakeven,the process is generating profit.

Question 40

Supply chains that encompass job shops are job-shop-oriented.This means that material flows are generally in batches with comparable cash/information flows.

Question 41

What type of distribution reflects the high initial mortality of certain products?

A)Weibull distribution
B)Poisson distribution
C)beta distribution
D)normal distribution

Question 42

A decision model can best be explained in terms of

A)strategies.
B)probabilities of states of nature.
C)expected values for outcomes.
D)states of nature.
E)all of the above

Question 43

If the maximum capacity of the process is _____ the peak demand,knowing how to assign priorities will influence real capacity levels achieved.

A)equal to
B)greater than
C)less than
D)much greater than

Question 44

The rule for putting peak versus non-peak capacity into place is to buy peak capacity when

A)Cp < Cnp.
B)Cp > Cnp.
C)Cnp < Cp.
D)Cnp > Cp.

Question 45

When the Japanese company Quasar purchased the TV division of Motorola,to what levels did the defect rate drop?

A)3 or 4 defects per 100 sets
B)2 or 3 defects per 100 sets
C)1 or 2 defects per 100 sets
D)none of the above

Question 46

Which company was the first firm to win the Baldrige Award for quality ability?

A)Ritz Carlton
B)Motorola
C)Boeing
D)3M

Question 47

Lack of orders or breakdowns of productive systems will diminish

A)T.
B)U.
C)E.
D)T × E.

Question 48

Capacity management relates to how the equipment,people,and materials of the existing system are used.

Question 49

The definition that best fits capacity is

A)the capacity to make goods and/or provide services.
B)the minimum sustained output of goods and/or services.
C)the capacity to contain or store inventory.
D)both a and c
E)both b and c

Question 50

There is a trade-off relationship between two kinds of capacity which are:

A)extra- and undercapacity.
B)temporary and installed capacity.
C)both a and b
D)neither a nor b

Question 51

Learning curves

A)describe how repeated practice decreases the time required to do a job.
B)captures the benefit of repetition and experience.
C)are expressed in quantitative terms for employees doing the same job routinely.
D)all of the above

Question 52

Capacity planning involves not only machinery and _____,but also _____.

A)labor;management
B)employees' motivation;materials
C)training;vendor management
D)all of the above

Question 53

_____ is applied as a proportional correction to standard time when there are supply chain disruptions.

A)T (real time available)
B)E (efficiency)
C)U (utilization)
D)C (actual capacity)

Question 54

The systems point of view includes cash as part of the firm's resources because cash can be converted into new machines,and also trained operators,which alters actual

A)time available.
B)efficiency.
C)capacity.
D)utilization.

Question 55

For services,a bank might compare the _____ number of people the bank teller can process per hour with the _____ number of people the ATM can process per hour.This is a supply chain service capacity comparison.

A)maximum;maximum
B)minimum;minimum
C)minimum;maximum
D)maximum;minimum
E)all of the above

Question 56

When determining capacity it is essential to consider what type(s) of bottlenecks?

A)synchronized
B)fixed
C)floating
D)all of the above
E)b and c only

Question 57

The probability that actual supply chain demand exceeds average demand is estimated to be 5 percent of the year (365 days) or 18.25 summer days.What total costs are associated with Cnp,when it is determined that the loss of goodwill in the community averages $30,000 per incident? The events provoking such costs include brownouts,power failures,etc.

A)$500,547
B)$547,500
C)$500,000
D)$365,000

Question 58

PMC (productivity at maximum capacity) is an excellent candidate for

A)demand prediction.
B)benchmarking measures.
C)performance measures.
D)utilization forecasting.

Question 59

The learning curve is a model for individuals only and not for teams or groups.

Question 60

Many companies prefer to have capacity in reserve and expect to operate effectively _____ the misleading ideal of _____ percent utilization.

A)below;100
B)above;75
C)below;75
D)above;100

Question 61

_____ are the result of multiplying the variable costs per unit by the number of units or (volume).

A)Total variable costs
B)Total revenues
C)Variable costs per unit
D)Total costs

Question 62

Slack is correctly calculated as:

A)(V/Vmax capacity) + (W/Wmax capacity)
B)(V/Vmax capacity) - (W/Wmax capacity)
C)1 - (V/Vmax capacity) - (W/Wmax capacity)
D)1 - (V/Vmax capacity) + (W/Wmax capacity)

Question 63

_____ are the inputs that tend to be fully chargeable and directly attributable to the product in the ABC accounting sense.

A)Total variable costs
B)Total revenues
C)Variable costs per unit
D)Total costs

Question 64

Which equipment type is used in jobs shops because it is designed for high variety in relatively low capacity volumes?

A)flexible-purpose equipment (FPE)
B)special-purpose equipment (SPE)
C)flexible manufacturing systems (FMS)
D)general-purpose equipment (GPE)

Question 65

What can be learned from playing the supply chain game?

A)The performance of a linked system is tied to the adequacy of forecasts about future demand.
B)There are measures that can be taken to improve communications and reduce information delays.
C)There are methods for improving forecasts.
D)all of the above

Question 66

Japanese industry specialized in flow shop capacity following the MacArthur initiative to rebuild the Japanese economy after

A)World War I.
B)World War II.
C)Desert Storm.
D)Cold War.

Question 67

Synchronized manufacturing occurs when

A)finite scheduling succeeds in fitting jobs to machines so that flows are continuous.
B)stations are unbalanced.
C)bottlenecks are fed without long queues forming.
D)both a and c
E)all of the above

Question 68

Stockless materials management systems are basically _____ managed inventory systems where a third party manages all or part of the supplies.

A)marketing
B)vendor
C)customer
D)accounting

Question 69

What is the best definition of breakeven point (BEP)?

A)the total costs of doing business exactly balance the revenues
B)the sales volume at which variable costs exactly equal fixed costs
C)the sales volume at which total costs exactly equal that volume
D)the sales volume at which fixed costs exactly equal revenues
E)the sales volume at which revenues exactly equal zero

Question 70

Percent capacity utilized can best be measured by:

A)FC + (vc)V
B)FC/(p - vc)
C)TR - TC
D)(100)*(Vactual/Vmaximum)
E)(p - vc)VBEP

Question 71

_____ developed breakeven charts in the _____.

A)Sloan School at M.I.T.;1920s
B)Walter Rautenstrauch;1930s
C)Eli Goldratt;1940s
D)Robert Galvin;1950s

Question 72

As throughput volume gets larger,what factors operate to make the process more efficient?

A)workers learn to do their jobs better
B)it takes less time
C)more work gets turned out in a time period
D)costs decrease
E)all of the above

Question 73

The T(n) in the equation T(n) = kn⁽¹⁻ˡ⁾ stands for

A)time required to make the first unit.
B)the earning coefficient.
C)the number of units to be made.
D)cumulative time to make n consecutive units.

Question 74

When starting up a new system,without the clear goal of achieving a flow shop,it is more likely that a job shop will result.Why?

A)It is easier to settle for a job shop that offers good profits than to persevere for a flow shop that has potential for even more profits,but with much investment and risk management.
B)Some goods and many services cannot be produced by a flow shop.
C)Modular product design is easy to achieve and the result is a job shop by default.
D)both a and b
E)both b and c

Question 75

In labor-intensive situations _____ concepts can be put to good use.

A)modular production
B)capacity
C)learning curve
D)supply chain

Question 76

The domains of cost concerns and responsibilities are listed.Which choice is wrong?

A)P/OM is accountable for variable costs per unit.
B)P/OM and finance are mutually involved in major determinants of fixed costs.
C)P/OM and marketing have to work out the price per unit that customers are to be charged and the demand volume that should result from the production process.
D)P/OM is solely responsible for decisions concerning the volume of output.

Question 77

_____ have to be paid whether one unit is made or thousands.

A)Total variable costs
B)Fixed costs
C)Total costs
D)Total revenue

Question 78

Supply chains are

A)all linkages connecting raw materials and finished products delivered into the hands of the customers.
B)strategic issues of CRP related to long-term planning for capacity including breakeven points and optimal allocation of resources.
C)a high level model of how businesses receive raw materials as input.
D)a multilevel model that adds value to the raw materials through various processes.

Question 79

_____ are the sum of the total fixed costs and the total variable costs.

A)Total variable costs
B)Fixed costs
C)Total costs
D)Total revenues

Question 80

Capacity decisions must have three elements in place:

A)managerial support,market rationalization,and P/OM knowledge.
B)P/OM knowledge,market rationalization,and financial support.
C)market rationalization,HRM support,and P/OM knowledge.
D)financial support,market rationalization,and managerial support.