Exam 19: Capacity and Constraint Management

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

Fred's Fabrication,Inc.wants to increase capacity by adding a new machine.The firm is considering proposals from vendor A and vendor B.The fixed costs for machine A are $90,000 and for machine B,$70,000.The variable cost for A is $9.00 per unit and for B,$14.00.The revenue generated by the units processed on these machines is $20 per unit.The crossover between machine A and machine B is

One limitation of the net present value approach to investments is that investments with identical net present values may have very different cash flows.

Suppose that the market has a 70% chance of being favorable and a 30% chance of being unfavorable.A favorable market will yield a profit of $300,000,while an unfavorable market will yield a profit of $20,000.What is the expected monetary value (EMV)in this situation?

Capacity decisions are based on technological concerns,not demand forecasts.

________ is a means of determining the discounted value of a series of future cash receipts.

A work system has five stations that have process times of 5,9,4,9,and 8.What is the process cycle time of the system?

Describe how EMV might be used to analyse a capacity decision.

Advantage Milling Devices is preparing to buy a new machine for precision milling of special metal alloys.This device can earn $300 per hour,and can run 3,000 hours per year.The machine is expected to be this productive for four years.If the interest rate is 6%,what is the present value? What is the present value if the interest rate is not 6%,but 9%? Why does present value fall when interest rates rise?

The three main strategies for increasing capacity are

The local convenience store makes personal pan pizzas.Currently,their oven can produce 50 pizzas per hour.It has a fixed cost of $2,000,and a variable cost of $0.25 per pizza.The owner is considering a bigger oven that can make 75 pizzas per hour.It has a fixed cost of $3,000,but a variable cost of $0.20 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?

Define fixed costs.

A tortilla chip workstation produces 1,000 chips in 20 seconds.Its process time is

A good capacity decision requires that it be tightly integrated with the organization's strategy and investments.But there are other "considerations" to making a good capacity decision.Name them.Describe each in a sentence or two.

In "drum,buffer,rope," what provides the schedule,i.e.the pace of production?

What techniques exist for dealing with bottlenecks? Which of these leads to increased capacity? Which of these leads to more throughput without adding capacity? Do any of these techniques fail to increase throughput?

In the service sector,scheduling customers is ________,and scheduling the workforce is ________.

Changes in capacity may lead,lag,or straddle the demand.

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 ________.

Identify the tactics for matching capacity to demand.