Deck 12: Capacity Planning

Question 1

Supply management variables include:

A)Inventory,subcontracting,and cooperative arrangements
B)Complementary offerings,inventory,and overtime
C)Subcontracting,hiring,and reservations
D)b and c
E)a and c

Answer 1

A

Question 2

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

A)Hiring employees
B)Using overtime
C)Carrying inventory
D)Subcontracting
E)Pricing

Answer 2

E

Question 3

In aggregate planning:

A)The concern is over the long-time range.
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)Decisions should not consider overtime,hiring,firing,subcontracting,and inventory levels together.

Answer 3

C

Question 4

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

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

Question 5

The aggregate planning problem:

A)Is narrow in nature
B)Only affects marketing and production
C)Is solved using either (but not both)demand management variables or supply management variables
D)Needs to consider multiple tradeoffs such as customer service level,inventory levels,labor force stability,and costs

Question 6

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)The possibility of changing both supply and demand variables
C)A variety of management objectives
D)Requires inventory and capacity tradeoff
E)Facilities are fixed

Question 7

One way of leveling the demand during the off-peak season is by employing a differential pricing strategy.

Question 8

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
E)International considerations

Question 9

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 10

Aggregate Planning assumes that the facility decisions are made and cannot be changed for a given product.

Question 11

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 several months,and then adjusts production to another level and produces at that level for several more months.
C)The firm produces exactly what is needed each month.
D)All of the above could describe the strategy depending on the organization.
E)None of the above accurately describes it.

Question 12

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 13

Aggregate planning costs do NOT include:

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

Question 14

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 15

Aggregate Planning,Facilities 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 16

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

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

Question 17

Which of the following statements regarding capacity is incorrect?

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.
D)It does not make sense to define the term 'maximum capacity' of a process.
E)None of the above

Question 18

Which of the following statements is true about facilities decisions?

A)Facilities decisions do not consider the amount of capacity,size of units,the timing of capacity changes,and the types of facilities needed.
B)Facilities decisions are on the short-range end of a hierarchy of capacity decisions.
C)Facilities decisions are not critical as they only determine future availability of output.
D)Facilities decisions involve all organizational units and are often made at the highest corporate level.
E)Facilities decisions are simple and easy to analyze.

Question 19

Facilities decisions:

A)Are medium-range capacity decisions
B)Should consider the five crucial questions independently
C)Constrain all other capacity decisions
D)Require planning for one year only

Question 20

Why can justifying capacity expansion with economies of scale be dangerous?

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 will decline for larger facilities due to size is not necessarily accurate
D)It requires consideration of quality,dependability,and flexibility

Question 21

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

Question 22

Capacity Utilization = Actual Output/Capacity x 100%.

Question 23

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