Question 1

________ is the amount a facility can hold, store, receive, or produce in a period of time.

Accepted Answer

Throughput

Question 2

Distinguish between utilization and efficiency.

Accepted Answer

Both are ratios, not item counts. Both u

Question 3

Fabricators, Inc. wants to increase capacity by adding a new machine. The fixed costs for machine A are $90,000, and its variable cost is $15 per unit. The revenue is $21 per unit. The break-even point for machine A is

Accepted Answer

A)  $90,000 dollars. 
B)  90,000 units. 
C)  $15,000 dollars. 
D)  15,000 units. 
E)  cannot be calculated from the information provided. 
A)  $90,000 dollars. 
B)  90,000 units. 
C)  $15,000 dollars. 
D)  15,000 units. 
E)  cannot be calculated from the information provided.

Question 4

Basic break-even analysis typically assumes that

Accepted Answer

A)  revenues increase in direct proportion to the volume of production, while costs increase at a decreasing rate as production volume increases. 
B)  variable costs and revenues increase in direct proportion to the volume of production. 
C)  both costs and revenues are made up of fixed and variable portions. 
D)  costs increase in direct proportion to the volume of production, while revenues increase at a decreasing rate as production volume increases because of the need to give quantity discounts. 
E)  All of the above are assumptions in the basic break-even model. 
A)  revenues increase in direct proportion to the volume of production, while costs increase at a decreasing rate as production volume increases. 
B)  variable costs and revenues increase in direct proportion to the volume of production. 
C)  both costs and revenues are made up of fixed and variable portions. 
D)  costs increase in direct proportion to the volume of production, while revenues increase at a decreasing rate as production volume increases because of the need to give quantity discounts. 
E)  All of the above are assumptions in the basic break-even model.

Question 5

An executive conference centre has the physical ability to handle 1,200 participants. However, conference management personnel believe that only 1,050 participants can be handled effectively for most events. The last event, although forecasted to have 1,000 participants, resulted in the attendance of only 980 participants. What are the utilization and efficiency of the conference facility?

Accepted Answer

Design Capacity = 1,200 partic

Question 6

The process time of a system is equivalent to the

Accepted Answer

A)  process time of the bottleneck. 
B)  sum of all workstation times. 
C)  shortest workstation time. 
D)  mean workstation time. 
E)  median workstation time. 
A)  process time of the bottleneck. 
B)  sum of all workstation times. 
C)  shortest workstation time. 
D)  mean workstation time. 
E)  median workstation time.

Question 7

Which of the following represents an aggressive approach to demand management in the service sector when demand and capacity are not particularly well matched?

Accepted Answer

A)  inexpensive rates for weekend phone calls 
B)  appointments 
C)  reservations 
D)  first-come, first-served 
E)  self-serve 
A)  inexpensive rates for weekend phone calls 
B)  appointments 
C)  reservations 
D)  first-come, first-served 
E)  self-serve

Question 8

________ is actual output as a percent of design capacity.

Accepted Answer

The answer of ________ is actual output as a percent...

Question 9

How is break-even analysis useful in the study of the capacity decision? What limitations does this analytical tool have in this application?

Accepted Answer

Breakeven is defined as the volume for w

Question 10

Break-even analysis can be used by a firm that produces more than one product, but

Accepted Answer

A)  the results are estimates, not exact values. 
B)  the firm must allocate some fixed cost to each of the products. 
C)  each product has its own break-even point. 
D)  the break-even point depends upon the proportion of sales generated by each of the products. 
E)  the results are never accurate. 
A)  the results are estimates, not exact values. 
B)  the firm must allocate some fixed cost to each of the products. 
C)  each product has its own break-even point. 
D)  the break-even point depends upon the proportion of sales generated by each of the products. 
E)  the results are never accurate.

Question 11

Utilization will always be lower than efficiency because

Accepted Answer

A)  effective capacity is less than design capacity. 
B)  effective capacity is greater than design capacity. 
C)  effective capacity equals design capacity. 
D)  utilization and efficiency are equal in value. 
E)  utilization is normally greater than efficiency. 
A)  effective capacity is less than design capacity. 
B)  effective capacity is greater than design capacity. 
C)  effective capacity equals design capacity. 
D)  utilization and efficiency are equal in value. 
E)  utilization is normally greater than efficiency.

Question 12

Which of the following represents a common way to manage capacity in the service sector?

Accepted Answer

A)  appointments 
B)  reservations 
C)  changes in staffing levels 
D)  first-come, first served service rule 
E)  "early bird" specials in restaurants 
A)  appointments 
B)  reservations 
C)  changes in staffing levels 
D)  first-come, first served service rule 
E)  "early bird" specials in restaurants

Question 13

To find the process cycle time with simultaneous processes, compute the time over all paths and choose the shortest path through the system.

Accepted Answer

A) True 
 B)False

Question 14

The local convenience store makes personal pan pizzas. Currently, their oven can produce 60 pizzas per hour. It has a fixed cost of $2,500, and a variable cost of $0.28 per pizza. The owner is considering a bigger oven that can make 85 pizzas per hour. It has a fixed cost of $3,200, but a variable cost of $0.21 per pizza.
a. At what quantity do the two ovens have equal costs?
b. If the owner expects to sell 9,000 pizzas, should he get the new oven?

Accepted Answer

(a) The crossover is where $2,

Question 15

The staff training centre at a large regional hospital provides training sessions in CPR to all employees. Assume that the capacity of this training system was designed to be 1200 employees per year. Since the training centre was first put in use, the program has become more complex, so that 1050 now represents the most employees that can be trained per year. In the past year, 950 employees were trained. The efficiency of this system is approximately ________ and its utilization is approximately ________.

Accepted Answer

A)  79.2%; 90.5% 
B)  90.5%; 79.2% 
C)  87.5%; 950 employees 
D)  950 employees; 1050 employees 
E)  110.5%; 114.3% 
A)  79.2%; 90.5% 
B)  90.5%; 79.2% 
C)  87.5%; 950 employees 
D)  950 employees; 1050 employees 
E)  110.5%; 114.3%

Question 16

Explain the importance of a bottleneck operation in a production sequence.

Accepted Answer

A bottleneck operation is one

Question 17

A useful tactic for increasing capacity is to redesign a product in order to get more throughput.

Accepted Answer

A) True 
 B)False

Exam 27: Capacity and Constraint Management

________ is the amount a facility can hold, store, receive, or produce in a period of time.

Distinguish between utilization and efficiency.

Fabricators, Inc. wants to increase capacity by adding a new machine. The fixed costs for machine A are $90,000, and its variable cost is $15 per unit. The revenue is $21 per unit. The break-even point for machine A is

Basic break-even analysis typically assumes that

The process time of a system is equivalent to the

Which of the following represents an aggressive approach to demand management in the service sector when demand and capacity are not particularly well matched?

________ is actual output as a percent of design capacity.

How is break-even analysis useful in the study of the capacity decision? What limitations does this analytical tool have in this application?

Break-even analysis can be used by a firm that produces more than one product, but

Utilization will always be lower than efficiency because

Which of the following represents a common way to manage capacity in the service sector?

To find the process cycle time with simultaneous processes, compute the time over all paths and choose the shortest path through the system.

Explain the importance of a bottleneck operation in a production sequence.

A useful tactic for increasing capacity is to redesign a product in order to get more throughput.

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