Deck 10: Capacity Management

Question 1

A pharmacy lab is used for only two high volume prescriptions, A and B. The time per setup (in minutes), processing time (in seconds), and order size (in units) is given below. Using the information, determine the total capacity required for this lab (i.e., how much work in minutes do these two jobs require) in minutes. One setup is incurred per order.
$$\begin{array} { | c | c | c | c | } \hline \text { Prescription } & \begin{array} { c } \text { SETUP TIME } \\\text { (MINUTES) }\end{array} & \begin{array} { c } \text { PROCESSING } \\\text { TIME } \\\text { (SECONDS) }\end{array} & \begin{array} { c } \text { ORDER } \\\text { SIZE } \\\text { (UNITS) }\end{array} \\\hline \mathbf { A } & \mathbf { 7 5 } & \mathbf { 8 4 } & 1,000 \\\hline \mathbf { B } & \mathbf { 8 5 } & \mathbf { 5 4 } & 1,500 \\\hline\end{array}$$

A) Less than 2000 minutes
B) Equal to or greater than 2000 but less than 2200 minutes
C) Equal to or greater than 2200 but less than 2400 minutes
D) Greater than 2400 minutes

Answer 1

Greater than 2400 minutes

Question 2

Average safety capacity or a capacity cushion for a factory is computed:

A) over a year.
B) over a month.
C) twice a year.
D) twice a month.

Answer 2

A

Question 3

Perform a capacity analysis of the process given below and answer questions #16, #17, and #18 to help fix the process. The numbers in parenthesis (#) are the time in minutes to complete one unit of work. Demand on the process averages 27 units per hour and each unit must be worked on by all five stages. Administrative clerks do Stages A and B. The assistant manager does Stages D and E. The coding specialist does Stage C.
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How many administrative clerks should be hired assuming a target utilization of 90 percent?

A) One
B) Two
C) Three
D) Four

Answer 3

D

Question 4

A focused factory is least likely to focus on a:

A) few key products.
B) specific technology.
C) certain process design and capability.
D) seasonal demand good.

Question 5

Perform a capacity analysis of the process given below. The numbers in parenthesis (#) are the time in minutes to complete one unit of work. Demand on the process averages 20 units per hour and each unit must be worked on by all four stages. Administrative clerk(s) do Stage A work. The assistant manager(s) do Stages C and D work and are cross-trained to do both jobs. The coding specialist(s) do Stage B work.
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How many administrative clerks should be hired to do Stage A work, assuming a target utilization of 85 percent?

A) One
B) Two
C) Three
D) Four

Question 6

Steve, an operations manager at Clan Corp. is promoted to manage the process defined by the four stages A to D below. This process could be human resource management, marketing, accounting, finance, or engineering process, and Steve is the manager. This is his chance to impress his boss and get promoted again. After three months on the job, Steve realizes something is not right with the process. His employees experience big pile up of work, things take too long to be processed, the opportunity for error is increasing, and the entire process is almost chaotic. Do a process and capacity analysis of this process. The numbers in parenthesis (#) are the time in minutes to complete one unit of work. Demand on the process averages 30 units per hour and each unit must be worked on by all four stages. Administrative clerk(s) do Stage A work. The assistant manager(s) are cross-trained to do both Stages C and D work. The coding specialist(s) do Stage B work.
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How many administrative clerks should be hired to do Stage A work, assuming a target utilization of 85 percent?

A) One
B) Two
C) Three
D) Four

Question 7

Perform a capacity analysis of the process given below. The numbers in parenthesis (#) are the time in minutes to complete one unit of work. Demand on the process averages 20 units per hour and each unit must be worked on by all four stages. Administrative clerk(s) do Stage A work. The assistant manager(s) do Stages C and D work and are cross-trained to do both jobs. The coding specialist(s) do Stage B work.
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What is the current labor utilization of the coders at Stage B if two coding specialists are currently on duty?

A) Less than 90 percent
B) More than 90% but less than or equal to 95%
C) More than 95% but less than or equal to 100%
D) More than 100% but less than or equal to 105%

Question 8

Steve, an operations manager at Clan Corp. is promoted to manage the process defined by the four stages A to D below. This process could be human resource management, marketing, accounting, finance, or engineering process, and Steve is the manager. This is his chance to impress his boss and get promoted again. After three months on the job, Steve realizes something is not right with the process. His employees experience big pile up of work, things take too long to be processed, the opportunity for error is increasing, and the entire process is almost chaotic. Do a process and capacity analysis of this process. The numbers in parenthesis (#) are the time in minutes to complete one unit of work. Demand on the process averages 30 units per hour and each unit must be worked on by all four stages. Administrative clerk(s) do Stage A work. The assistant manager(s) are cross-trained to do both Stages C and D work. The coding specialist(s) do Stage B work.
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What is the current labor utilization of the coders at Stage B if two coding specialists are currently on duty?

A) Less than 90 percent
B) More than 90% but less than or equal to 95%
C) More than 95% but less than or equal to 100%
D) More than 105 percent

Question 9

A pharmacy lab is used for only two high volume prescriptions, A and B. The time per setup (in minutes), processing time (in seconds), and order size (in units) is given below. Using the information, determine the total capacity required for this lab (i.e., how much work in minutes do these two jobs require) in minutes. One setup is incurred per order. $\begin{array}{|l|l|l|l|}\hline\text { Prescription } & \begin{array}{c}\text { SETUP TIME } \\\text { (MINUTES) }\end{array} & \begin{array}{c}\text { PROCESSING } \\\text { TIME } \\\text { (SECONDS) }\end{array} & \begin{array}{c}\text { ORDER } \\\text { SIZE } \\\text { (UNITS) }\end{array} \\\hline \mathrm{A} & 75 & 84 & 700 \\\hline \mathrm{B} & 60 & 54 & 1,500 \\\hline\end{array}$

A) Less than 2000 minutes
B) Equal to or greater than 2000 but less than 2200 minutes
C) Equal to or greater than 2200 but less than 2400 minutes
D) Greater than 2400 minutes

Question 10

Average safety capacity (%) is computed as:

A) Average resource utilization (%) − 100%.
B) 100% − Average resource utilization (%).
C) [maximum safety capacity (%) + minimum safety capacity (%)]/2.
D) 100% − maximum resource utilization (%).

Question 11

In service organizations, capacity is more often viewed as _____.

A) the minimum rate of output per unit time
B) the units of resource availability
C) the ability to meet any customer demand
D) the amount of overtime scheduled

Question 12

A pharmacy lab is used for only two high volume prescriptions, A and B. The time per setup (in minutes), processing time (in seconds), and order size (in units) is given below.
Using the information, determine the total capacity required for this lab in minutes.
$\begin{array}{|l|l|l|l|}\hline\text { Prescription } & \begin{array}{c}\text { SETUP TIME } \\\text { (MINUTES) }\end{array} & \begin{array}{c}\text { PROCESSING } \\\text { TIME } \\\text { (SECONDS) }\end{array} & \begin{array}{c}\text { ORDER } \\\text { SIZE } \\\text { (UNITS) }\end{array} \\\hline \mathrm{A} & 80 & 84 & 700 \\\hline \mathrm{B} & 50 & 54 & 500 \\\hline\end{array}$

A) Less than 2000 minutes
B) Equal to or greater than 2000 but less than 2200 minutes
C) Equal to or greater than 2200 but less than 2400 minutes
D) Greater than 2400 minutes

Question 13

_____ occur when the average unit cost of the good or service begins to increase as the capacity and/or volume of throughput increases.

A) Economies of scale
B) Diseconomies of scale
C) Costs of cushioning
D) Capacity cushions

Question 14

When the average unit cost of a good or service decreases as the capacity and/or volume of throughput increases, it is known as _____.

A) economies of scale
B) diseconomies of scale
C) cost cushioning
D) capacity cushion

Question 15

Safety capacity or a capacity cushion is _____.

A) needed for processes with little demand variability
B) the amount of capacity reserved for anticipated events
C) the amount of capacity reserved for unanticipated events
D) not appropriate for service organizations

Question 16

Perform a capacity analysis of the process given below and answer questions #16, #17, and #18 to help fix the process. The numbers in parenthesis (#) are the time in minutes to complete one unit of work. Demand on the process averages 27 units per hour and each unit must be worked on by all five stages. Administrative clerks do Stages A and B. The assistant manager does Stages D and E. The coding specialist does Stage C.
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What is the current labor utilization of the coders, if two coding specialists are currently on duty?

A) Less than 90 percent
B) More than 90% but less than or equal to 95%
C) More than 95% but less than or equal to 100%
D) More than 100%

Question 17

Steve, an operations manager at Clan Corp. is promoted to manage the process defined by the four stages A to D below. This process could be human resource management, marketing, accounting, finance, or engineering process, and Steve is the manager. This is his chance to impress his boss and get promoted again. After three months on the job, Steve realizes something is not right with the process. His employees experience big pile up of work, things take too long to be processed, the opportunity for error is increasing, and the entire process is almost chaotic. Do a process and capacity analysis of this process. The numbers in parenthesis (#) are the time in minutes to complete one unit of work. Demand on the process averages 30 units per hour and each unit must be worked on by all four stages. Administrative clerk(s) do Stage A work. The assistant manager(s) are cross-trained to do both Stages C and D work. The coding specialist(s) do Stage B work.
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The total process (throughput) capacity in units per hour for the four-stage process A to D assuming 3 administrative clerks, 3 coding specialist, and 3 assistant managers on duty is:

A) less than 10 units per hour.
B) more than 10 units but less than or equal to 20 units.
C) more than 20 units but less than or equal to 30 units.
D) more than 30 units but less than or equal to 40 units.

Question 18

Safety capacity is most closely related to _____.

A) bottlenecks
B) economies of scale
C) unanticipated events
D) focused factory

Question 19

C&M Machining is developing plans for a dedicated production line and needs to determine how many drill presses will be needed. Engineering estimates are that one drill press will be able to process 120 parts per hour. Daily demand is 2,400 parts. C&M operates one 8-hour shift per day. How many drill presses are needed to meet the capacity requirements?

A) 2 drills
B) 3 drills
C) 4 drills
D) 5 drills

Question 20

Perform a capacity analysis of the process given below and answer questions #16, #17, and #18 to help fix the process. The numbers in parenthesis (#) are the time in minutes to complete one unit of work. Demand on the process averages 27 units per hour and each unit must be worked on by all five stages. Administrative clerks do Stages A and B. The assistant manager does Stages D and E. The coding specialist does Stage C.
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The total process (throughput) capacity in units per hour for the five stage process, A to D, assuming 3 administrative clerks, 2 coding specialist, and 4 assistant managers on duty is:

A) less than 10 units per hour.
B) more than 10 units but less than or equal to 20 units.
C) more than 20 units but less than or equal to 30 units.
D) more than 30 units but less than or equal to 40 units.

Question 21

A medical equipment testing and calibration service is depicted in Figure 1. The customer usually brings the equipment to the service center. The service process requires service technicians to perform three process steps #1 to #3. Each technician is cross-trained so they can perform any of the three steps. The inspector does Step # 4 alone. After step #4, two parallel work activities are performed. That is, a shipping clerk packs the work (step 7) while a billing clerk prepares the invoice (step 5) simultaneously, and the customer is contacted by phone for pick-up (step 6). The average throughput is 3 equipment units per hour. Figure 1 Flow chart of the medical equipment testing and calibration service process
The table below shows the work content of the process steps, activity times in minutes per unit, shared and non-shared work activities, and the type of resource required. There are 3 service technicians on duty: 1 inspector, 1 billing clerk, and 1 shipping clerk.
$$\begin{array} { | c | c | c | } \hline \text { Activity } & \begin{array} { c } \text { Activity } \\\text { Time } \\\text { (minutes) }\end{array} & \text { Activity Performed By } \\\hline \text { Start } & - - & \\\hline 1 & 8 & \text { Service technician } \\\hline 2 & 17 & \text { Service technician } \\\hline 3 & 25 & \text { Service technician } \\\hline 4 & 12 & \text { Inspector } \\\hline 5 & 3 & \text { Billing clerk } \\\hline 6 & 7 & \text { Billing clerk } \\\hline 7 & 25 & \text { Shipping clerk } \\\hline \text { End } & - - & \\\hline\end{array}$$

-An order fulfillment process normally operates two shifts a day, six days per week. Under normal conditions, 380 orders can be processed per shift. The weekly capacity is _____.

A) less than 1,000 orders per week
B) more than 1,000 orders but less than or equal to 2,000 order per week
C) more than 2,000 orders but less than or equal to 3,000 orders per week
D) more than 3,000 orders per week.

Question 22

The job that represents the bottleneck in this process is that of the _____.

A) service technician
B) inspector
C) billing clerk
D) shipping clerk

Question 23

_____ strategy matches the capacity additions with the demand as closely as possible.

A) Capacity lag
B) Capacity straddle
C) Capacity lead
D) Capacity reduction

Question 24

_____ is a strategy that waits until demand has increased to a point where additional capacity is necessary.

A) Capacity lag
B) Capacity lead
C) Capacity reduction
D) Capacity match

Question 25

A firm will encounter short periods of over- and underutilization of resources with the _____ strategy.

A) capacity lag
B) capacity straddle
C) capacity lead
D) capacity reduction

Question 26

All the following are means to adjust short-term capacity EXCEPT:

A) adding peripheral goods and/or services.
B) adding or sharing equipment.
C) selling unused capacity.
D) changing labor skill mix.

Question 27

Which of the following is a short-term capacity decision?

A) Expanding the capacity and the number of beds in a hospital
B) Determining the amount of warehouse space to rent for a new promotional item
C) Closing down a distribution center
D) Changing the cooking technology in a chain of fast-food restaurants

Question 28

A medical equipment testing and calibration service is depicted in Figure 1. The customer usually brings the equipment to the service center. The service process requires service technicians to perform three process steps #1 to #3. Each technician is cross-trained so they can perform any of the three steps. The inspector does Step # 4 alone. After step #4, two parallel work activities are performed. That is, a shipping clerk packs the work (step 7) while a billing clerk prepares the invoice (step 5) simultaneously, and the customer is contacted by phone for pick-up (step 6). The average throughput is 3 equipment units per hour. Figure 1 Flow chart of the medical equipment testing and calibration service process
The table below shows the work content of the process steps, activity times in minutes per unit, shared and non-shared work activities, and the type of resource required. There are 3 service technicians on duty: 1 inspector, 1 billing clerk, and 1 shipping clerk.
$$\begin{array} { | c | c | c | } \hline \text { Activity } & \begin{array} { c } \text { Activity } \\\text { Time } \\\text { (minutes) }\end{array} & \text { Activity Performed By } \\\hline \text { Start } & - - & \\\hline 1 & 8 & \text { Service technician } \\\hline 2 & 17 & \text { Service technician } \\\hline 3 & 25 & \text { Service technician } \\\hline 4 & 12 & \text { Inspector } \\\hline 5 & 3 & \text { Billing clerk } \\\hline 6 & 7 & \text { Billing clerk } \\\hline 7 & 25 & \text { Shipping clerk } \\\hline \text { End } & - - & \\\hline\end{array}$$

-The labor utilization rate (%) for the billing clerk is _____.

A) 25%
B) 50%
C) 75%
D) 100%

Question 29

A medical equipment testing and calibration service is depicted in Figure 1. The customer usually brings the equipment to the service center. The service process requires service technicians to perform three process steps #1 to #3. Each technician is cross-trained so they can perform any of the three steps. The inspector does Step # 4 alone. After step #4, two parallel work activities are performed. That is, a shipping clerk packs the work (step 7) while a billing clerk prepares the invoice (step 5) simultaneously, and the customer is contacted by phone for pick-up (step 6). The average throughput is 3 equipment units per hour. Figure 1 Flow chart of the medical equipment testing and calibration service process
The table below shows the work content of the process steps, activity times in minutes per unit, shared and non-shared work activities, and the type of resource required. There are 3 service technicians on duty: 1 inspector, 1 billing clerk, and 1 shipping clerk.
$$\begin{array} { | c | c | c | } \hline \text { Activity } & \begin{array} { c } \text { Activity } \\\text { Time } \\\text { (minutes) }\end{array} & \text { Activity Performed By } \\\hline \text { Start } & - - & \\\hline 1 & 8 & \text { Service technician } \\\hline 2 & 17 & \text { Service technician } \\\hline 3 & 25 & \text { Service technician } \\\hline 4 & 12 & \text { Inspector } \\\hline 5 & 3 & \text { Billing clerk } \\\hline 6 & 7 & \text { Billing clerk } \\\hline 7 & 25 & \text { Shipping clerk } \\\hline \text { End } & - - & \\\hline\end{array}$$

-The labor utilization rate (%) for the service technician is closest to _____.

A) 20%
B) 40%
C) 60%
D) 80%

Question 30

Revenue management system (RMS) consists of all of the following EXCEPT:

A) forecasting demand.
B) allocating perishable assets.
C) deciding when to overbook and by how much.
D) adding peripheral goods.

Question 31

Revenue management systems (RMS):

A) consist of standard and static methods to forecast demand.
B) rely solely on overbooking.
C) are cost minimization models.
D) maximize the revenue generated by a perishable asset.

Question 32

Perform a capacity analysis of the process given below. The numbers in parenthesis (#) are the time in minutes to complete one unit of work. Demand on the process averages 20 units per hour and each unit must be worked on by all four stages. Administrative clerk(s) do Stage A work. The assistant manager(s) do Stages C and D work and are cross-trained to do both jobs. The coding specialist(s) do Stage B work.
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-A hospital lab is used for three types of cancer tests, A, B, and C. The time per setup, processing time, and batch size (in units) is given below. Using the information, determine the total demand in minutes for this lab. $\begin{array}{|c|c|c|c|}\hline \text { Job Type } & \begin{array}{c}\text { SETUP TIME } \\\text { (MINUTES) }\end{array} & \begin{array}{c}\text { PROCESSING } \\\text { TIME } \\\text { (MINUTES) }\end{array} & \begin{array}{c}\text { BATCH (JOB) } \\\text { SIZE (UNITS) }\end{array} \\\hline \text { A } & 25 & 4.5 & 50 \\\hline \text { B } & 60 & 6.0 & 80 \\\hline \text { C } & 30 & 5.0 & 40 \\\hline\end{array}$

A) Less than 500 minutes
B) Equal to or greater than 500 but less than 1000 minutes
C) Equal to or greater than 1000 but less than 2000 minutes
D) Greater than 2000 minutes

Question 33

All the following are means to manage capacity by changing or stimulating demand EXCEPT:

A) varying price of goods or services.
B) adding peripheral goods and/or services.
C) providing reservations.
D) shifting work to slack periods.

Question 34

Which of the following is NOT a component of revenue management system (RMS)?

A) Marketing
B) Forecasting
C) Pricing
D) Allocating

Question 35

A work order includes all of the following EXCEPT:

A) the quantity to be produced.
B) the processing requirements.
C) resources needed.
D) worker's health status.

Question 36

Perform a capacity analysis of the process given below. The numbers in parenthesis (#) are the time in minutes to complete one unit of work. Demand on the process averages 20 units per hour and each unit must be worked on by all four stages. Administrative clerk(s) do Stage A work. The assistant manager(s) do Stages C and D work and are cross-trained to do both jobs. The coding specialist(s) do Stage B work.
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Given the base case information and resource levels in question #21, which process improvement option given below is best to maximize (increase) process (throughput) capacity? (Each option is independent of any other option; that is, consider each option below as the base case plus the one option.)

A) Add one clerk to help do the work at Stage A.
B) Add one assistant manager to help do the work at Stages C and D.
C) Transfer one coder from coding to an assistant manager job.
D) Speed up the service time for coders (Stage B) from 6 minutes/unit to 5 minutes/unit.

Question 37

_____ is a capacity-expansion strategy with the goal of maintaining sufficient capacity to minimize the chances of not meeting demand.

A) Capacity lag
B) Capacity straddle
C) Capacity lead
D) Capacity reduction

Question 38

Perform a capacity analysis of the process given below. The numbers in parenthesis (#) are the time in minutes to complete one unit of work. Demand on the process averages 20 units per hour and each unit must be worked on by all four stages. Administrative clerk(s) do Stage A work. The assistant manager(s) do Stages C and D work and are cross-trained to do both jobs. The coding specialist(s) do Stage B work.
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Given the results in Question #22 and a capacity of 900 minutes, the best short-term capacity option for the lab is:

A) to buy extra equipment and hire one more lab technician.
B) to sell unused capacity.
C) to add an extra shift of two technicians and related equipment.
D) to work overtime to finish the job.

Question 39

A medical equipment testing and calibration service is depicted in Figure 1. The customer usually brings the equipment to the service center. The service process requires service technicians to perform three process steps #1 to #3. Each technician is cross-trained so they can perform any of the three steps. The inspector does Step # 4 alone. After step #4, two parallel work activities are performed. That is, a shipping clerk packs the work (step 7) while a billing clerk prepares the invoice (step 5) simultaneously, and the customer is contacted by phone for pick-up (step 6). The average throughput is 3 equipment units per hour. Figure 1 Flow chart of the medical equipment testing and calibration service process
The table below shows the work content of the process steps, activity times in minutes per unit, shared and non-shared work activities, and the type of resource required. There are 3 service technicians on duty: 1 inspector, 1 billing clerk, and 1 shipping clerk.
$$\begin{array} { | c | c | c | } \hline \text { Activity } & \begin{array} { c } \text { Activity } \\\text { Time } \\\text { (minutes) }\end{array} & \text { Activity Performed By } \\\hline \text { Start } & - - & \\\hline 1 & 8 & \text { Service technician } \\\hline 2 & 17 & \text { Service technician } \\\hline 3 & 25 & \text { Service technician } \\\hline 4 & 12 & \text { Inspector } \\\hline 5 & 3 & \text { Billing clerk } \\\hline 6 & 7 & \text { Billing clerk } \\\hline 7 & 25 & \text { Shipping clerk } \\\hline \text { End } & - - & \\\hline\end{array}$$

-The service rate in units per hour for the service technician is _____ units per hour.

A) 1.2
B) 2.4
C) 3.6
D) 7.5

Question 40

Perform a capacity analysis of the process given below. The numbers in parenthesis (#) are the time in minutes to complete one unit of work. Demand on the process averages 20 units per hour and each unit must be worked on by all four stages. Administrative clerk(s) do Stage A work. The assistant manager(s) do Stages C and D work and are cross-trained to do both jobs. The coding specialist(s) do Stage B work.
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The process (throughput) capacity in units per hour for the four stage process, A to D, assuming 2 administrative clerks, 3 coding specialists, and 3 assistant managers on duty is _____.

A) less than 10 units per hour
B) more than 10 units but less than or equal to 20 units
C) more than 20 units but less than or equal to 30 units
D) more than 30 units but less than or equal to 40 units

Question 41

Diseconomies of scale is also known as capacity cushion.

Question 42

It is never appropriate to expand capacity in advance of growing demand because the excess capacity will always be underutilized.

Question 43

Offering complementary goods or services is an example of a short-term capacity strategy.

Question 44

Economies of scale occur when the average unit cost of a good or service begins to increase as the capacity and/or volume of throughput increases.

Question 45

Capacity costs depend primarily on annual operating and maintenance costs.

Question 46

The strategy of matching capacity additions with demand as closely as possible is often called a capacity straddle strategy.

Question 47

Idle capacity exists in a _____ activity.

A) bottleneck work
B) booking
C) nonbottleneck work
D) nonphysical

Question 48

For a nonbottleneck activity:

A) utilization must be near 100%.
B) an hour lost has no effect on total process or factory output.
C) use large order sizes to minimize setups.
D) work-in-process buffer inventory should be placed in front of nonbottleneck workstations.

Question 49

Short-term capacity decisions usually involve adjusting schedules or staffing levels.

Question 50

A measure of capacity is the number of seats in an airplane per flight.

Question 51

An organization that would typically use a revenue management system (RMS) is a:

A) computer manufacturer.
B) fast-food restaurant.
C) car rental company.
D) package delivery service.

Question 52

A doctor's office charges no-show patients $30 if they do not cancel their appointment 24 hours ahead of the appointment because:

A) insurance will pay the no-show fee anyway.
B) the appointment time and associated revenue is perishable, and the doctor may lose revenue.
C) the doctor's office does a poor job of forecasting demand.
D) the no-show price of $30 can be added to medical fees for reimbursement.

Question 53

Which of the following is NOT a correct statement about bottleneck resources?

A) Work at all times to maximize throughput and resource utilization.
B) An hour lost is an hour lost for the entire process or factory output.
C) Use small order sizes.
D) Work-in-process buffer inventory is placed in front of workstations to maximize resource utilization.

Question 54

Focused factories are often devoted to a specific technology or particular market segments or customers.

Question 55

Average rate of output per unit of time is a formal definition of capacity.

Question 56

Complementary goods or services balance seasonal demand cycles and therefore use excess capacity available.

Question 57

Capacity lag strategy results in constant capacity shortages.

Question 58

Long-term capacity planning must be closely tied to the strategic direction of an organization.

Question 59

An example of safety capacity would be planning additional capacity to account for employee summer vacations.

Question 60

According to the Theory of Constraints, _____ is the amount of money generated per time period through actual sales.

A) throughput
B) nonbottleneck (NBN) work activity
C) nonphysical constraint
D) utilization

Question 61

An assembly line normally operates two shifts a day, five days per week. Each shift can produce 475 assemblies. What is the weekly capacity?

Question 62

The Theory of Constraints is focused on eliminating all bottlenecks in a process.

Question 63

Define economies of scale and diseconomies of scale. Explain how they relate to capacity decisions.

Question 64

According to the David Christopher, Orthopedic Surgeon, case study, which of the following statements is TRUE?

A) Total setup and changeover time for both surgeons was 15 percent of total workload time.
B) The best option to fix the demand-capacity shortage is to eliminate hip and shoulder replacement surgeries.
C) The surgery mix is analogous to a product mix.
D) The best option to fix the demand-capacity shortage is to hire a third surgeon.

Question 65

Which of the following statements based on the David Christopher, Orthopedic Surgeon, case study is TRUE?

A) Hiring a third surgeon allowed all three surgeons to barely meet demand for the surgery mix.
B) The workload of surgeons A and B could be rebalanced and equalized by moving three surgery procedures from surgeon B to A.
C) To fix the surgeon demand-capacity shortage, one option is to increase the surgeon's workday from five to six hours.
D) Setup/changeover time represented 48 percent of the two surgeon's total surgery time and workload.

Question 66

Explain the concept of a focused factory. Include different ways a factory can be focused.

Question 67

An unsold broadcast advertising space is an example of a perishable asset.

Question 68

Constraints determine the throughput of a facility.

Question 69

Define capacity including the two ways it can be viewed. Provide an example of each way.

Question 70

Reservations reduce the uncertainty for both the good or service provider and the customer.

Question 71

Large capacity increases help to spread fixed costs of construction and operating system setup over one large project.

Question 72

What is safety capacity? Discuss reasons for using it.

Question 73

The ideas and methods surrounding nonbottleneck work activity are often called yield management.

Question 74

Varying the price of goods or services is a way of influencing demand patterns.

Question 75

An order fulfillment process normally operates two shifts a day, five days per week. Under normal conditions, 380 orders can be processed per shift. What is the daily capacity?

Question 76

Complementary goods and services are those that require different resources than the organization's other goods and services.

Question 77

A physical constraint is associated with the capacity of a resource.

Question 78

The earliest revenue management systems focused solely on overbooking.

Question 79

Revenue management systems allocate nonperishable assets across market segments.

Question 80

Changing labor skill mix is a means to adjust short-term capacity.