Deck 12: Capacity Planning

Question 1

Under a level strategy,variations in demand are managed by:

A)Varying the number of workers
B)Using advertising and price changes
C)Varying inventory levels
D)All of the above

Answer 1

Varying inventory levels

Question 2

Which of the following accurately describes a chase strategy?

A)The firm produces the same amount each day over the planning period and deals with the variations in demand with inventory or overtime.
B)The firm produces at the same level for half of the year,and then adjusts production to another level and produces at that level for the remainder of the year.
C)The firm produces exactly what is needed each month.
D)None of the above.

Answer 2

The firm produces exactly what is needed each month.

Question 3

Supply management variables include:

A)Inventory,subcontracting,and cooperative arrangements
B)Complementary offerings,inventory,and overtime
C)Subcontracting,hiring,and reservations
D)All of the above

Answer 3

Inventory,subcontracting,and cooperative arrangements

Question 4

Aggregate planning costs do NOT include:

A)Hiring and layoff costs
B)Part-time labor costs
C)Subcontracting costs
D)Inventory ordering costs

Question 5

The type of strategy used with respect to the amount of capacity cushion when "the cost or consequence of running out is approximately in balance with the cost of excess capacity" is called:

A)Small cushion
B)Large cushion
C)Moderate cushion
D)None of the above

Question 6

Aggregate planning differs from scheduling in that:

A)The former refers to the long-range and the latter refers to the short-range.
B)The former is concerned with allocating available resources and the latter with the acquisition of resources.
C)The former refers to the long-range and the latter refers to the medium-range.
D)The former is concerned with the acquisition of resources and the latter with allocating available resources.

Question 7

Demand management variables include:

A)Pricing,inventory,and advertising
B)Reservations,pricing,and advertising
C)Subcontracting,advertising,and pricing
D)Inventory,reservations,and pricing

Question 8

In aggregate planning:

A)The concern is over a long-range planning horizon.
B)Output levels are set in the face of certain demand.
C)"Aggregate" implies that planning is done for a single overall measure of output or at most a few products.
D)Firms should never consider overtime,hiring,firing,or subcontracting.

Question 9

The aggregate planning problem:

A)Should only consider supply management options
B)Only affects marketing and production,but human resources is not involved in decisions
C)Should only consider demand management options
D)Needs to consider multiple tradeoffs such as customer service level,inventory levels,labor force stability,and costs

Question 10

A large capacity cushion is appropriate when:

A)A make-to-stock process is used
B)A firm is attempting to capture market share in a growing industry
C)The market for its products or services is shrinking
D)A firm wants its capacity to match average demand

Question 11

The most popular type of facility used by Fortune 500 companies is:

A)Product-focused
B)Process-focused
C)Market-focused
D)General-purpose

Question 12

Which of the following statements regarding capacity is NOT true?

A)Capacity can be measured in several units such as hours of output,number of units produced,number of customers served,etc.
B)Effective capacity is generally less than the theoretical capacity.
C)Capacity is the maximum output that could be produced over a period of time.
D)The 'maximum output' of a process is not a meaningful measure.

Question 13

Which of the following functions is NOT affected directly by the facilities decision?

A)Operations
B)Marketing
C)Finance
D)None of the above

Question 14

Why is it dangerous to justify capacity expansion using economies of scale?

A)It is far too specific to use as a basis for capacity decisions
B)Because volume,capacity,and process considerations are looked at individually
C)Because the common notion that unit costs decline for larger facilities due to size is not always accurate
D)It requires consideration of quality,dependability,and flexibility

Question 15

Which of the following is NOT a factor affecting the elements of a facilities strategy?

A)Cost of facilities
B)Likely behavior of competitors
C)Business strategy
D)Whether the company uses make-to-stock or assemble-to-order

Question 16

One option for altering the pattern of demand through aggregate planning is:

A)Using overtime
B)Carrying inventory
C)Subcontracting
D)Pricing

Question 17

Which of the following statements is true about facilities decisions?

A)They are generally short-range in nature.
B)They are not critical as they only determine future availability of output.
C)They involve all organizational units and are often made at the highest corporate level.
D)They are simple and easy to analyze.

Question 18

Which of the following statement(s)correctly describes aggregate planning?

A)Aggregate planning is concerned with matching supply and demand of output.
B)Aggregate planning determines not only the output levels planned but also the appropriate resource mix to be used.
C)The aim of aggregate planning is to set overall output levels for the medium-range future.
D)All of the above

Question 19

Facilities decisions:

A)Are medium-range capacity decisions
B)Should consider one of the five crucial questions of how much,how large,when,where,and what type
C)Constrain all other capacity decisions
D)Require planning for one year only

Question 20

Which of the following is NOT true about aggregate planning in service organizations?

A)A time horizon of 12 months,on average,is used
B)Both supply and demand variables can be changed
C)Requires inventory and capacity tradeoffs
D)Facilities are considered fixed

Question 21

Capacity Utilization = Actual Output/Capacity x 100%.

Question 22

A firm produces 12 different services and has capacity to service 360,000 customers per year.A total of 24 service workers are employed.If 270,000 customers receive service during a particular year,what is the capacity cushion during that year?

A)25%
B)50%
C)75%
D)There is not enough information to determine the answer

Question 23

Aggregate Planning assumes that the facility decisions can be changed.

Question 24

It is possible in the short term for a firm to operate above 100% utilization.

Question 25

The ABC Cement Corporation produces a high quality cement that is supplied to construction companies.The potential demand and the probability of each potential demand quantity are given for the upcoming year. $$\begin{array} { | c | c | } \hline \text { Dernand in tons } & \text { Probability } \\\hline 500,000 & 0.3 \\\hline 250,000 & 0.4 \\\hline 300,000 & 0.3 \\\hline\end{array}$$ Assuming manufacturing capacity of 700,000 tons,the estimated capacity cushion is:

A)340,000 tons
B)360,000 tons
C)>1,000,000 tons
D)It cannot be computed from this information

Question 26

Describe the most important questions to be answered concerning decisions.Apply the questions to a fast food restaurant chain with expanding demand.

Question 27

Facilities Planning,Aggregate Planning,and Scheduling form a hierarchy of decisions extending from long-range to medium-range to short-range,respectively,concerning the capacity of operations.

Question 28

A wait-and-see facility approach uses a positive capacity cushion.

Question 29

Describe the types of short-range,the medium-range,and the long-range capacity decisions.

Question 30

One way of leveling a seasonal demand pattern is by developing complementary products or services.

Question 31

A small capacity cushion:

A)Maximized utilization
B)Is used when capacity is inexpensive
C)Means that the cushion is 0%
D)Is a competitive disadvantage