Capacity can be defined as the ability to hold, receive, store, or accommodate.
True
A dictionary definition of capacity is "the ability to hold, receive, store, or accommodate.
Capacity can be defined as the amount of available resource inputs relative to requirements for output over a particular period of time.
True
Capacity is a relative term; in an operations management context, it may be defined as the amount of resource inputs available relative to output requirements over a particular period of time.
The capacity utilization rate is found by dividing best operating level by capacity used.
False
The capacity utilization rate is found by dividing capacity used by best operating level.
The objective of strategic capacity planning is to provide an approach for determining the overall capacity level of labor-intensive resources.
False
The objective of strategic capacity planning is to provide an approach for determining the overall capacity level of capital-intensive resources�facilities, equipment, and overall labor force size�that best supports the company's long-range competit
Best operating level is the volume of output at which average unit cost is minimized.
True
(Best operating level) is the level of capacity for which the process was designed and thus is the volume of output at which average unit cost is minimized.
At some point, the size of a growing plant can become too large and diseconomies of scale become a capacity planning problem.
True
At some point, the size of a plant becomes too large and diseconomies of scale become a problem.
Long-range capacity planning requires top management participation.
True
Where productive resources (such as buildings, equipment, or facilities) take a long time to acquire or dispose of, long-range capacity planning requires top management participation and approval.
Overtime and personnel transfers are solutions to capacity problems in the intermediate term.
False
Short range �less than one month. This is tied into the daily or weekly scheduling process and involves making adjustments to eliminate the variance between planned and actual output. This includes alternatives such as overtime, personnel transfers,
Capacity planning is generally viewed in three time durations: Immediate, Intermediate and Indeterminate.
False
The correct answer is long-range, intermediate-range and short-range.
A piece of equipment with twice the capacity of another piece typically costs twice as much to purchase and to operate.
False
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. This is partially due to lower operating and capital cost, because a piece of equipment with twice the capacity of
A production facility works best when it focuses on a fairly limited set of production objectives.
True
The concept of a focused factory holds that a production facility works best when it focuses on a fairly limited set of production objectives.
The ultimate in plant flexibility is a one-hour-changeover time plant.
False
Perhaps the ultimate in plant flexibility is the zero-changeover-time plant.
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.
True
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.
Outsourcing is a common source of external capacity.
True
In some cases, it may be cheaper to not add capacity at all, but rather to use some existing external source of capacity. Two common strategies used by organizations are outsourcing and sharing capacity.
A capacity cushion is the amount of capacity less than expected demand.
False
A capacity cushion is the amount of capacity in excess of expected demand
The smaller the capacity cushion the better.
False
This is not necessarily true except in the instance of a firm whose competitive advantage is low cost or price. For a firm competing on speed of delivery or innovative ability, for example, a larger capacity cushion will allow more flexibility and e
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.
True
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.
Because services cannot be stored for later use, service managers consider time as one of their supplies or resources.
True
Unlike goods, services cannot be stored for later use. As such, in services managers must consider time as one of their supplies.
The ability to rapidly and inexpensively switch production from one product to another enables what are sometimes referred to as:
A. Economies of shape
B. Economies of shipping
C. Economies of scope
D. Economies of size
E. Economies of scale
C. Economies of scope
Flexible manufacturing systems and simple easily set-up equipment permit rapid low-cost switching from one product to another, enabling what are sometimes referred to as economies of scope.
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. Upcoming
B. Short range
C. Current
D. Long range
E. Intermediate range
E. Intermediate range
Intermediate range: monthly or quarterly plans for the next 6 to 18 months. Here, capacity may be varied by such alternatives as hiring, layoffs, new tools, minor equipment purchases, and subcontracting.
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. Current
D. Upcoming
E. Short-range
B. Long-range
Long range: greater than one year. Where productive resources (such as buildings, equipment, or facilities) take a long time to acquire or dispose of, long-range capacity planning requires top management participation and approval.
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. 2.33
C. 1.33
D. 300
E. 1.00
A.
300 units of output divided by 400 units best operating level = 0.75
If the actual output of a piece of equipment during an hour is 500 units and it's 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. 1.33
C. 100
D. 1.25
E. 1.00
D. 1.25
500 units of output divided by 400 units best operating level = 1.25
The capacity focus concept can be put into practice through a mechanism called which of the following?
A. Zero-changeover-time (ZXT)
B. Best operating level (BOL)
C. Plant within a plant (PWP)
D. Capacity utilization rate (CUR)
E. Total quality management
Zero-changeover-time (ZXT)
Best operating level (BOL)
correct Plant within a plant (PWP)
Capacity utilization rate (CUR)
Total quality management (TQM)
The capacity focus concept can be operationalized through the mechanism of plant within a plant (PWP).
When deciding to add capacity to a factory which of the following need not be considered?
A. Use of external capacity
B. Immediate product demand
C. The frequency of capacity additions
D. Maintaining system balance
E. Availability of raw materials
B Immediate product demand
Many issues must be considered when adding or decreasing capacity. Three important ones are maintaining system balance, frequency of capacity additions or reductions, and the use of external capacity. In many cases, the size of
Compared with a service operation, a manufacturing operation's capacity is which of the following?
A. Utilization more directly impacts quality
B. More dependent on time and location
C. Subject to more volatile demand fluctuations
D. More capable of react
E. Demand can be smoothed by inventory policies
Service capacity is more time- and location-dependent, (than manufacturing capacity) it is subject to more volatile demand fluctuations, and utilization directly impacts service quality. Also, unlike goods,
Resource Planning is a top management planning activity owned by top management. It is typically prepared for them by others in the organization but reviewed and approved by top management.
True
In manufacturing the Master Scheduler will often do the Resource Planning.
RCCP (Rough Cut Capacity Planning) is a top management planning process.
False
RCCP is not usually done by top management.
Detailed Capacity Planning and CRP (Capacity Requirements Planning) are basically the same process.
True
Both fall in the same place in the ERP business model.
The levels of Capacity Planning as they line up with the ERP business model (top to bottom) are:
A. Rough Cut Capacity Planning, Capacity Requirements Planning, Resource Planning, Detailed Capacity Planning
B. Strategic Planning, Rough Cut Capacity Planni
C. Strategic Planning, Resource Planning, Rough Cut Capacity Planning, CRP