Question 1

________ is the maximum rate of output for a process.

Accepted Answer

Capacity

Question 2

Explain the distinction between effective capacity and peak capacity.

Accepted Answer

Effective Capacity is the maximum output that a process or firm can reasonably sustain under normal conditions is its effective capacity.
Peak Capacity is the maximum output that a process or facility can achieve under ideal conditions is called peak capacity.

Question 3

Define the following two terms: peak capacity and effective capacity.

Accepted Answer

Peak capacity is the maximum output achievable under ideal conditions.Effective capacity is the maximum output sustainable under normal conditions.

Question 4

Table 4.4
Mr. Lee is considering a capacity expansion for his supermarket. The annual sales projected for the next five years follow. The current capacity is equivalent to $300,000 sales. Assume a 20 percent pretax profit margin.
 $$\begin{array} { | c | c | } 
\hline \text { Year } & \begin{array} { c } 
\text { Annual Sales } \
( \$ 000 )
\end{array} \
\hline 1 & 310 \
2 & 320 \
3 & 340 \
4 & 370 \
5 & 400 \
\hline
\end{array}$$
-Using the information in Table 4.4,if Lee expands the capacity to an equivalent of $360,000 sales now (year 0),how much would pretax cash flow in year 1 increase because of this expansion?

Accepted Answer

A)  less than $3000 
B)  more than $3000 but less than $5000 
C)  more than $5000 but less than $7000 
D)  more than $7000 
A)  less than $3000 
B)  more than $3000 but less than $5000 
C)  more than $5000 but less than $7000 
D)  more than $7000

Question 5

An expansionist strategy in regard to capacity is best characterized by

Accepted Answer

A)  reducing the risks of overly optimistic demand forecasts. 
B)  expanding only when others do. 
C)  emphasizing flexibility and quality while foregoing the larger market share of the lowest-cost producers. 
D)  using capacity to increase a firm's market share or to act as a form of preemptive market. 
A)  reducing the risks of overly optimistic demand forecasts. 
B)  expanding only when others do. 
C)  emphasizing flexibility and quality while foregoing the larger market share of the lowest-cost producers. 
D)  using capacity to increase a firm's market share or to act as a form of preemptive market.

Question 6

________ is introduced by chance and results from small changes or differences in equipment operations,people's behaviour,or environmental conditions.

Accepted Answer

The answer of ________ is introduced by chance and results...

Question 7

Table 4.4
Mr. Lee is considering a capacity expansion for his supermarket. The annual sales projected for the next five years follow. The current capacity is equivalent to $300,000 sales. Assume a 20 percent pretax profit margin.
 $$\begin{array} { | c | c | } 
\hline \text { Year } & \begin{array} { c } 
\text { Annual Sales } \
( \$ 000 )
\end{array} \
\hline 1 & 310 \
2 & 320 \
3 & 340 \
4 & 370 \
5 & 400 \
\hline
\end{array}$$
-Using the information in Table 4.4,if Lee expands the capacity to an equivalent of $360,000 sales now (year 0),how much would pretax cash flow in year 5 increase because of this expansion?

Accepted Answer

A)  less than $7000 
B)  more than $7000 but less than $10,000 
C)  more than $10,000 but less than $13,000 
D)  more than $13,000 
A)  less than $7000 
B)  more than $7000 but less than $10,000 
C)  more than $10,000 but less than $13,000 
D)  more than $13,000

Question 8

More complex waiting-line problems must be analyzed with ________.

Accepted Answer

The answer of More complex waiting-line problems must be analyzed...

Question 9

Fixing time is the additional time needed to change over from one service or product to the next,which in turn increases the overload at the workstation being changed over.

Accepted Answer

A) True 
 B)False

Question 10

The single milling machine at Fred's Manufacturing was severely overloaded last year.The plant operates 8 hours per day,5 days per week,and 50 weeks per year.Management prefers a capacity cushion of 20 percent.Two major types of products are routed through the milling machine.The annual demand for product A is 4000 units and 3000 units for product B.The batch size for A is 20 units and 30 units for B.The standard processing time for A is 0.5 hours/unit and 0.8 for B.The standard setup time for product A is 2 hours and 8 hours for product B.How many new milling machines are required if Fred's does not resort to any short-term capacity options?

Accepted Answer

M = @#LAT-DLM& 
where M = number of machines requi

Question 11

Generally,work-in-process inventory will be greater in project and job processes than in continuous processes.

Accepted Answer

A) True 
 B)False

Question 12

Explain the relationship between throughput time and the level of work-in-process (WIP)inventory in a production process.

Accepted Answer

The average throughput time fo

Question 13

The theory of constraints is an approach to management that focuses on whatever impedes progress toward the goal of maximizing the flow of total value-added funds or sales less discounts and variable costs.

Accepted Answer

A) True 
 B)False

Question 14

Which one of the following statements about capacity expansion is best?

Accepted Answer

A)  The wait-and-see strategy involves small jumps in capacity compared to the expansionist strategy. 
B)  The expansionist strategy involves frequent jumps in capacity compared to the wait-and-see strategy. 
C)  The expansionist strategy minimizes risk. 
D)  The follow-the-leader strategy can help a firm gain a competitive advantage. 
A)  The wait-and-see strategy involves small jumps in capacity compared to the expansionist strategy. 
B)  The expansionist strategy involves frequent jumps in capacity compared to the wait-and-see strategy. 
C)  The expansionist strategy minimizes risk. 
D)  The follow-the-leader strategy can help a firm gain a competitive advantage.

Question 15

Table 4.2
High Tech, Inc. is producing two types of products: A and B. Both are produced at the same sawing operation. Because of demand uncertainties, the operations manager obtained three demand forecasts (pessimistic, expected, and optimistic). The demand forecasts, batch sizes (units/batch), processing times (hr/unit), and setup times (hr/batch) follow.
 
$\begin{array}{c}
\quad\quad\quad\quad\quad\text { Time Standard } \quad\quad \quad\quad\quad\quad\quad \text { Demand Forecasts (  000 units/yr) }\
\begin{array}{|l|l|l|l|l|l|l|}
\hline \text { Product } & \text { Processing } & \text { Setup } & \text { Batch Size } & \text { Pessimistic } & \text { Expected } & \text { Optimistic } \
\hline \text { A } & .20 & 2.0 & 40 & 200 & 240 & 300 \
\text { B } & .15 & 3.0 & 50 & 160 & 180 & 200 \
\hline
\end{array}\end{array}$ 
The sawing machines operate on two 8-hour shifts, 5 days per week, and 50 weeks per year. The manager wants to maintain a 10 percent capacity cushion.
-Using the information from Table 4.2,if the operation currently has 18 machines and the manager is willing to expand capacity by 20 percent through short-term options,what is the capacity gap (in terms of number of machines)if you assume the optimistic demand forecasts?

Accepted Answer

A)  less than or equal to 10 
B)  more than 10 but less than or equal to 12 
C)  more than 12 but less than or equal to 14 
D)  more than 14 
A)  less than or equal to 10 
B)  more than 10 but less than or equal to 12 
C)  more than 12 but less than or equal to 14 
D)  more than 14

Question 16

________ is the amount of reserve capacity that a firm maintains to handle a sudden increase in demand or temporary losses of production capacity.

Accepted Answer

The answer of ________ is the amount of reserve capacity...

Question 17

A decision tree is a schematic model of alternatives available to the decision maker,along with their possible consequences.

Accepted Answer

A) True 
 B)False

Question 18

The difference of 100 % - Utilization (%)provides a measure the capacity cushion.

Accepted Answer

A) True 
 B)False

Question 19

How is capacity utilization calculated?

Accepted Answer

Capacity utilization

Question 20

The maximum output that a process or facility can achieve under ideal conditions is referred to as the

Accepted Answer

A)  utilization. 
B)  effective capacity. 
C)  throughput time. 
D)  peak capacity. 
A)  utilization. 
B)  effective capacity. 
C)  throughput time. 
D)  peak capacity.

________ is the maximum rate of output for a process.

Explain the distinction between effective capacity and peak capacity.

Define the following two terms: peak capacity and effective capacity.

An expansionist strategy in regard to capacity is best characterized by

________ is introduced by chance and results from small changes or differences in equipment operations,people's behaviour,or environmental conditions.

More complex waiting-line problems must be analyzed with ________.

Fixing time is the additional time needed to change over from one service or product to the next,which in turn increases the overload at the workstation being changed over.

Generally,work-in-process inventory will be greater in project and job processes than in continuous processes.

Explain the relationship between throughput time and the level of work-in-process (WIP)inventory in a production process.

The theory of constraints is an approach to management that focuses on whatever impedes progress toward the goal of maximizing the flow of total value-added funds or sales less discounts and variable costs.

Which one of the following statements about capacity expansion is best?

________ is the amount of reserve capacity that a firm maintains to handle a sudden increase in demand or temporary losses of production capacity.

A decision tree is a schematic model of alternatives available to the decision maker,along with their possible consequences.

The difference of 100 % - Utilization (%)provides a measure the capacity cushion.

How is capacity utilization calculated?

The maximum output that a process or facility can achieve under ideal conditions is referred to as the

Creating Customer Value through Operations

Supply Chain Management

Process Configuration

Inventory Management

Quality and Process Improvement

Lean Systems

Managing Projects

Location and Layout

Managing Demand and Forecasting

Operations Planning and Scheduling

Resource Planning

Decision Making

Financial Analysis

Work Measurement

Learning Curve Analysis

Computer-Integrated Manufacturing

Acceptance Sampling Plans

Simulation

Special Inventory Models

Linear Programming

Waiting Lines

Filters

Exam 4: Capacity

________ is the maximum rate of output for a process.

Explain the distinction between effective capacity and peak capacity.

Define the following two terms: peak capacity and effective capacity.

An expansionist strategy in regard to capacity is best characterized by

________ is introduced by chance and results from small changes or differences in equipment operations,people's behaviour,or environmental conditions.

More complex waiting-line problems must be analyzed with ________.

Fixing time is the additional time needed to change over from one service or product to the next,which in turn increases the overload at the workstation being changed over.

Generally,work-in-process inventory will be greater in project and job processes than in continuous processes.

Explain the relationship between throughput time and the level of work-in-process (WIP)inventory in a production process.

The theory of constraints is an approach to management that focuses on whatever impedes progress toward the goal of maximizing the flow of total value-added funds or sales less discounts and variable costs.

Which one of the following statements about capacity expansion is best?

________ is the amount of reserve capacity that a firm maintains to handle a sudden increase in demand or temporary losses of production capacity.

A decision tree is a schematic model of alternatives available to the decision maker,along with their possible consequences.

The difference of 100 % - Utilization (%)provides a measure the capacity cushion.

How is capacity utilization calculated?

The maximum output that a process or facility can achieve under ideal conditions is referred to as the

Creating Customer Value through Operations

Supply Chain Management

Process Configuration

Inventory Management

Quality and Process Improvement

Lean Systems

Managing Projects

Location and Layout

Managing Demand and Forecasting

Operations Planning and Scheduling

Resource Planning

Decision Making

Financial Analysis

Work Measurement

Learning Curve Analysis

Computer-Integrated Manufacturing

Acceptance Sampling Plans

Simulation

Special Inventory Models

Linear Programming

Waiting Lines

Filters