Strategic Capacity Management Test Bank Answers Chapter.4 5e - Supply Chain Management Core 5e Complete Test Bank by F. Robert Jacobs. DOCX document preview.
Operations and Supply Chain Management: The Core, 5e (Jacobs)
Chapter 4 Strategic Capacity Management
1) Capacity can be defined as the ability to hold, receive, store, or accommodate.
Difficulty: 1 Easy
Topic: Capacity Management in Operations and Supply Chain Management
Learning Objective: 04-01 Explain what capacity management is and why it is strategically important.
Bloom's: Remember
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
2) When evaluating capacity, managers need to consider both resource inputs and product outputs.
Difficulty: 1 Easy
Topic: Capacity Management in Operations and Supply Chain Management
Learning Objective: 04-01 Explain what capacity management is and why it is strategically important.
Bloom's: Remember; Analyze
AACSB: Reflective Thinking; Analytical Thinking
Accessibility: Keyboard Navigation
3) Capacity can be defined as the amount of available resource inputs relative to requirements for output over a particular period of time.
Difficulty: 1 Easy
Topic: Capacity Management in Operations and Supply Chain Management
Learning Objective: 04-01 Explain what capacity management is and why it is strategically important.
Bloom's: Remember
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
4) The capacity utilization rate is found by dividing best operating level by capacity used.
Difficulty: 1 Easy
Topic: Capacity Planning Concepts
Learning Objective: 04-01 Explain what capacity management is and why it is strategically important.
Bloom's: Remember
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
5) The objective of strategic capacity planning is to provide an approach for determining the overall capacity level of labor-intensive resources.
Difficulty: 1 Easy
Topic: Capacity Planning Concepts
Learning Objective: 04-01 Explain what capacity management is and why it is strategically important.
Bloom's: Remember
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
6) The objective of strategic capacity planning is to determine the overall capacity level of capital intensive resources (including facilities, equipment, and overall labor force size) that best supports the company's short-range competitive strategy.
Difficulty: 1 Easy
Topic: Capacity Planning Concepts
Learning Objective: 04-01 Explain what capacity management is and why it is strategically important.
Bloom's: Remember
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
7) The objective of strategic capacity planning is to determine the overall capacity level of capital intensive resources (including facilities, equipment, and overall labor force size) that best supports the company's long-range competitive strategy.
Difficulty: 1 Easy
Topic: Capacity Planning Concepts
Learning Objective: 04-01 Explain what capacity management is and why it is strategically important.
Bloom's: Remember
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
8) Best operating level is usually a multiple of the level of capacity for which a process was designed.
Difficulty: 1 Easy
Topic: Capacity Planning Concepts
Learning Objective: 04-01 Explain what capacity management is and why it is strategically important.
Bloom's: Remember
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
9) Best operating level is the volume of output at which average unit cost is minimized.
Difficulty: 1 Easy
Topic: Capacity Planning Concepts
Learning Objective: 04-01 Explain what capacity management is and why it is strategically important.
Bloom's: Remember
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
10) At some point, the size of a growing plant can become too large and diseconomies of scale becomes a capacity planning problem.
Difficulty: 1 Easy
Topic: Capacity Planning Concepts
Learning Objective: 04-02 Exemplify how to plan capacity.
Bloom's: Remember
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
11) Long-range capacity planning requires top management participation.
Difficulty: 1 Easy
Topic: Capacity Management in Operations and Supply Chain Management
Learning Objective: 04-01 Explain what capacity management is and why it is strategically important.
Bloom's: Remember
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
12) Overtime and personnel transfers are solutions to capacity problems in the intermediate term.
Difficulty: 1 Easy
Topic: Capacity Management in Operations and Supply Chain Management
Learning Objective: 04-01 Explain what capacity management is and why it is strategically important.
Bloom's: Remember
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
13) Capacity planning is generally viewed in three time durations: Immediate, Intermediate, and Indeterminate.
Difficulty: 1 Easy
Topic: Capacity Planning Concepts
Learning Objective: 04-02 Exemplify how to plan capacity.
Bloom's: Remember
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
14) The basic notion of economies of scale is that as a plant gets larger and volume increases, the average cost per unit of output drops.
Difficulty: 1 Easy
Topic: Capacity Planning Concepts
Learning Objective: 04-02 Exemplify how to plan capacity.
Bloom's: Remember
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
15) A piece of equipment with twice the capacity of another piece typically costs twice as much to purchase and to operate.
Difficulty: 1 Easy
Topic: Capacity Planning Concepts
Learning Objective: 04-02 Exemplify how to plan capacity.
Bloom's: Remember
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
16) The problem of keeping demand sufficiently high to keep a large factory busy is a sales issue and not a diseconomy of scale.
Difficulty: 1 Easy
Topic: Capacity Planning Concepts
Learning Objective: 04-02 Exemplify how to plan capacity.
Bloom's: Remember
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
17) A production facility works best when it focuses on a fairly limited set of production objectives.
Difficulty: 1 Easy
Topic: Capacity Planning Concepts
Learning Objective: 04-02 Exemplify how to plan capacity.
Bloom's: Remember
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
18) A production facility develops virtuosity and works best when it focused on a widely varied set of production objectives.
Difficulty: 1 Easy
Topic: Capacity Planning Concepts
Learning Objective: 04-02 Exemplify how to plan capacity.
Bloom's: Remember
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
19) Making adjustments to eliminate the variance between planned and actual output is tied into intermediate range capacity planning.
Difficulty: 1 Easy
Topic: Capacity Management in Operations and Supply Chain Management
Learning Objective: 04-01 Explain what capacity management is and why it is strategically important.
Bloom's: Remember
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
20) The ultimate in plant flexibility is a one-hour-changeover time plant.
Difficulty: 1 Easy
Topic: Capacity Planning Concepts
Learning Objective: 04-01 Explain what capacity management is and why it is strategically important.
Bloom's: Remember
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
21) Capacity flexibility means having the ability to rapidly increase or decrease production levels, or to shift production capacity quickly from one product or service to another.
Difficulty: 1 Easy
Topic: Capacity Planning Concepts
Learning Objective: 04-01 Explain what capacity management is and why it is strategically important.
Bloom's: Remember
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
22) Economies of scope exist when multiple products can be produced at a lower cost in combination than they can separately.
Difficulty: 1 Easy
Topic: Capacity Planning Concepts
Learning Objective: 04-02 Exemplify how to plan capacity.
Bloom's: Remember
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
23) The frequency of adding to productive capacity should balance the costs of upgrading too frequently and the costs of upgrading too infrequently.
Difficulty: 1 Easy
Topic: Capacity Planning
Learning Objective: 04-01 Explain what capacity management is and why it is strategically important.
Bloom's: Remember
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
24) Outsourcing is a common source of external capacity.
Difficulty: 1 Easy
Topic: Capacity Planning
Learning Objective: 04-01 Explain what capacity management is and why it is strategically important.
Bloom's: Remember
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
25) Sharing capacity is a common source of external capacity.
Difficulty: 1 Easy
Topic: Capacity Planning
Learning Objective: 04-01 Explain what capacity management is and why it is strategically important.
Bloom's: Remember
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
26) A capacity cushion is the amount of capacity less than expected demand.
Difficulty: 1 Easy
Topic: Capacity Planning
Learning Objective: 04-01 Explain what capacity management is and why it is strategically important.
Bloom's: Remember
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
27) A decision tree problem does not need probabilities or payoffs to generate a solution.
Difficulty: 1 Easy
Topic: Using Decision Trees to Evaluate Capacity Alternatives
Learning Objective: 04-03 Evaluate capacity alternatives using decision trees.
Bloom's: Remember
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
28) In solving a decision tree problem, calculations start at the ends of the "branches" of the tree and work backwards to the base of the tree.
Difficulty: 1 Easy
Topic: Using Decision Trees to Evaluate Capacity Alternatives
Learning Objective: 04-03 Evaluate capacity alternatives using decision trees.
Bloom's: Remember
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
29) The probability of each occurrence at a decision tree chance node is the reciprocal of the number of possibilities at the chance node.
Difficulty: 2 Medium
Topic: Using Decision Trees to Evaluate Capacity Alternatives
Learning Objective: 04-03 Evaluate capacity alternatives using decision trees.
Bloom's: Remember
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
30) In a decision tree, the only time probabilities are applied to a decision node is when the decision is being made by someone else such as you customer or your competitor.
Difficulty: 2 Medium
Topic: Using Decision Trees to Evaluate Capacity Alternatives
Learning Objective: 04-03 Evaluate capacity alternatives using decision trees.
Bloom's: Remember
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
31) Low rates of capacity utilization in service organizations are never appropriate.
Difficulty: 1 Easy
Topic: Planning Service Capacity
Learning Objective: 04-04 Compare capacity planning in services to capacity planning in manufacturing.
Bloom's: Remember
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
32) The smaller the capacity cushion the better.
Difficulty: 2 Medium
Topic: Capacity Planning
Learning Objective: 04-01 Explain what capacity management is and why it is strategically important.
Bloom's: Apply
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
33) The larger the capacity cushion the better.
Difficulty: 2 Medium
Topic: Capacity Planning
Learning Objective: 04-01 Explain what capacity management is and why it is strategically important.
Bloom's: Apply
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
34) The capacity cushion is the ratio of capacity used to the best capacity level.
Difficulty: 2 Medium
Topic: Capacity Planning
Learning Objective: 04-01 Explain what capacity management is and why it is strategically important.
Bloom's: Remember
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
35) When a firm's design capacity is less than the capacity required to meet its demand, it is said to have a negative capacity cushion.
Difficulty: 2 Medium
Topic: Capacity Planning
Learning Objective: 04-01 Explain what capacity management is and why it is strategically important.
Bloom's: Remember
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
36) In decision tree analysis the time value of money is ignored because you are only concerned with cash costs.
Difficulty: 2 Medium
Topic: Using Decision Trees to Evaluate Capacity Alternatives
Learning Objective: 04-03 Evaluate capacity alternatives using decision trees.
Bloom's: Remember
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
37) In practice, achieving a perfectly balanced plant is usually desirable but impossible.
Difficulty: 2 Medium
Topic: Capacity Planning
Learning Objective: 04-01 Explain what capacity management is and why it is strategically important.
Bloom's: Remember
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
38) In practice achieving a perfectly balanced plant is usually both impossible and undesirable.
Difficulty: 2 Medium
Topic: Capacity Planning
Learning Objective: 04-01 Explain what capacity management is and why it is strategically important.
Bloom's: Remember
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
39) Because services cannot be stored for later use, service managers consider time as one of their supplies or resources.
Difficulty: 2 Medium
Topic: Capacity Planning
Learning Objective: 04-01 Explain what capacity management is and why it is strategically important.
Bloom's: Remember
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
40) The ability to rapidly and inexpensively switch production from one product to another enables what are sometimes referred to as:
A) economies of scale.
B) economies of size.
C) economies of shape.
D) economies of scope.
E) economies of shipping.
Difficulty: 2 Medium
Topic: Capacity Planning Concepts
Learning Objective: 04-02 Exemplify how to plan capacity.
Bloom's: Remember
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
41) Capacity planning that involves hiring, layoffs, some new tooling, minor equipment purchases, and subcontracting is considered as which one of the following planning horizons?
A) Intermediate range
B) Long range
C) Short range
D) Current
E) Upcoming
Difficulty: 2 Medium
Topic: Capacity Management in Operations and Supply Chain Management
Learning Objective: 04-01 Explain what capacity management is and why it is strategically important.
Bloom's: Remember
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
42) Capacity planning involving acquisition or disposal of fixed assets such as buildings, equipment or facilities is considered as which one of the following planning horizons?
A) Intermediate-range
B) Long-range
C) Short-range
D) Current
E) Upcoming
Difficulty: 2 Medium
Topic: Capacity Management in Operations and Supply Chain Management
Learning Objective: 04-01 Explain what capacity management is and why it is strategically important.
Bloom's: Remember
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
43) If the best operating level of a piece of equipment is at a rate of 400 units per hour and the actual output during an hour is 300 units, which of the following is the capacity utilization rate?
A) 0.75
B) 1.00
C) 1.33
D) 2.33
E) 300
Difficulty: 1 Easy
Topic: Capacity Planning Concepts
Learning Objective: 04-01 Explain what capacity management is and why it is strategically important.
Bloom's: Analyze
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
44) If the actual output of a piece of equipment during an hour is 500 units and its best operating level is at a rate of 400 units per hour, which of the following is the capacity utilization rate?
A) 0.75
B) 1.00
C) 1.25
D) 1.33
E) 100
Difficulty: 1 Easy
Topic: Capacity Planning Concepts
Learning Objective: 04-01 Explain what capacity management is and why it is strategically important.
Bloom's: Analyze
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
45) If the best operating level of a piece of equipment is at a rate of 400 units per hour and the actual output during an hour is 300 units, which of the following is the capacity cushion?
A) 25 percent
B) 100 units per hour
C) 75 percent
D) 125 percent
E) 133 percent
Difficulty: 1 Easy
Topic: Capacity Planning
Learning Objective: 04-01 Explain what capacity management is and why it is strategically important.
Bloom's: Analyze
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
46) The capacity focus concept can be put into practice through a mechanism called which of the following?
A) Best operating level (BOL)
B) Plant within a plant (PWP)
C) Total quality management (TQM)
D) Capacity utilization rate (CUR)
E) Zero-changeover-time (ZXT)
Difficulty: 1 Easy
Topic: Capacity Planning Concepts
Learning Objective: 04-01 Explain what capacity management is and why it is strategically important.
Bloom's: Remember
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
47) The way to build in greater flexibility in your workers is to do which of the following?
A) Pay higher wages to motivate a willingness to do a variety to tasks
B) Provide a broader range of training
C) Provide a wide variety of technology to augment workers skills
D) Institute a "pay for skills" program
E) Use part-time employees with specialized skills as needed
Difficulty: 1 Easy
Topic: Capacity Planning Concepts
Learning Objective: 04-01 Explain what capacity management is and why it is strategically important.
Bloom's: Remember
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
48) When deciding to add capacity to a factory which of the following need not be considered?
A) Maintaining system balance
B) The frequency of capacity additions
C) Use of external capacity
D) Immediate product demand
E) Availability of raw materials
Difficulty: 1 Easy
Topic: Capacity Planning
Learning Objective: 04-01 Explain what capacity management is and why it is strategically important.
Bloom's: Remember
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
49) Which of the following is not a step used in determining production capacity requirements?
A) Forecasting to predict product sales
B) Forecasting raw material usage
C) Projecting availability of labor
D) Calculating equipment and labor needs
E) Projecting equipment availability
Difficulty: 1 Easy
Topic: Capacity Planning
Learning Objective: 04-01 Explain what capacity management is and why it is strategically important.
Bloom's: Remember
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
50) Which of the following models uses a schematic model of the sequence of steps in a problem and the conditions and consequences of each step?
A) Probability indexing
B) Johnson's sequencing rule
C) Decision trees
D) Activity System Maps
E) Decision mapping
Difficulty: 1 Easy
Topic: Using Decision Trees to Evaluate Capacity Alternatives
Learning Objective: 04-03 Evaluate capacity alternatives using decision trees.
Bloom's: Remember
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
51) Compared with a service operation, a manufacturing operation's capacity is which of the following?
A) More dependent on time and location
B) Subject to more volatile demand fluctuations
C) Utilization more directly impacts quality
D) Demand can be smoothed by inventory policies
E) More capable of reacting to demand fluctuations
Difficulty: 1 Easy
Topic: Planning Service Capacity
Learning Objective: 04-04 Compare capacity planning in services to capacity planning in manufacturing.
Bloom's: Remember
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
52) At a decision point in a decision tree, which machine would you select when trying to maximize payoff when the anticipated benefit of selecting machine A is $45,000 with a probability of 90%; the expected benefit of selecting machine B is $80,000 with a probability of 50% and the expected benefit of selecting machine C is $60,000 with a probability of 75%?
A) Machine A
B) Machine B
C) Machine C
D) You would be indifferent between machines A and C
E) You would be indifferent between machines A and B
Difficulty: 2 Medium
Topic: Using Decision Trees to Evaluate Capacity Alternatives
Learning Objective: 04-03 Evaluate capacity alternatives using decision trees.
Bloom's: Analyze
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
53) What is an important difference between capacity planning in services as contrasted to capacity planning in manufacturing operations?
A) Time
B) Location
C) Demand volatility
D) Utilization impacts service quality
E) All of these
Difficulty: 1 Easy
Topic: Planning Service Capacity
Learning Objective: 04-04 Compare capacity planning in services to capacity planning in manufacturing.
Bloom's: Analyze
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
54) Capacity planning involving consideration of production scheduling and inventory position is characterized by which one of the following time durations?
A) Intermediate-range
B) Long-range
C) Short-range
D) Current
E) Upcoming
Difficulty: 1 Easy
Topic: Capacity Management in Operations and Supply Chain Management
Learning Objective: 04-01 Explain what capacity management is and why it is strategically important.
Bloom's: Remember
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
55) Planning service capacity involves consideration of the mean arrival rate and the mean service rate. When the mean arrival rate exceeds or gets too close to the mean service rate the quality of the service declines. The operating point is the ratio of mean service rate to mean arrival rate. According to the text, what is the best operating point for the typical service operation?
A) 120%
B) 100%
C) 90%
D) 70%
E) 57%
Difficulty: 2 Medium
Topic: Planning Service Capacity
Learning Objective: 04-04 Compare capacity planning in services to capacity planning in manufacturing.
Bloom's: Analyze
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
56) The optimal utilization rate of a service operation is context specific. Planning for low utilization rates is appropriate when both the degree of uncertainty and the stakes are high as in emergency response services. Which of the following services should plan for a high utilization rate?
A) The fire department
B) An expensive restaurant
C) A hospital ambulance service
D) A stage performance
E) A customer help line
Difficulty: 1 Easy
Topic: Planning Service Capacity
Learning Objective: 04-04 Compare capacity planning in services to capacity planning in manufacturing.
Bloom's: Analyze
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
57) In designing a general service facility, capacity should be such that the target rate of service utilization (ρ), in order to get the best general-purpose design, should be
A) less than 0.6 (or 60%), so that your system would be within the zone of service with maximum possible utilization within that.
B) more than 0.6 (or 60%) so that your system would have a good utilization.
C) about 0.7 (70%) so that your system would be in the zone of service with maximum possible utilization within that.
D) more than 1.0 (100%) so that the servers are fully utilized, even if the customers had to wait a little.
E) between 0.9 (90%) and 1.0 (100%) so that the utilization of the system is ideal.
Difficulty: 2 Medium
Topic: Planning Service Capacity
Learning Objective: 04-04 Compare capacity planning in services to capacity planning in manufacturing.
Bloom's: Analyze
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
58) Precise capacity design or the rate of service utilization (ρ), is application specific.
A) It could be close to 100% for a sports arena.
B) It could be as low as 0.5 for hospital emergency room.
C) As the degree of uncertainty in demand increases, higher ρ may be appropriate.
D) All of the above choices are correct.
E) Both it could be close to 100% for a sports arena and it could be as low as 0.5 for hospital emergency room.
Difficulty: 2 Medium
Topic: Planning Service Capacity
Learning Objective: 04-04 Compare capacity planning in services to capacity planning in manufacturing.
Bloom's: Analyze
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
59) In a decision tree problem involving capacity planning, there was a random outcome node with three random outcomes (A,B, and C) which followed a decision node. The probabilities for A, B and C: P(A)=0.4, P(B) = 0.6 and P(C) = 0.2. Payoff following A,B and C respectively are $10000, $5000 and $2000. Expected value of that random outcome node is:
A) $7400
B) $7000
C) $17000
D) Cannot be determined since there is something wrong with the data given.
E) $5666
Difficulty: 2 Medium
Topic: Using Decision Trees to Evaluate Capacity Alternatives
Learning Objective: 04-03 Evaluate capacity alternatives using decision trees.
Bloom's: Analyze
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
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Supply Chain Management Core 5e Complete Test Bank
By F. Robert Jacobs