Strategic Capacity Planning For Products And Services

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Question 1

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The term capacity refers to the maximum quantity an operating unit can process over a given period of time.

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Question 2

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Capacity decisions are usually one-time decisions; once they have been made, we know the limits of our operations.

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Question 3

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Stating capacity in dollar amounts generally results in a consistent measure of capacity regardless of the actual units of measure.

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Question 4

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Design capacity refers to the maximum output rate that can be achieved under ideal conditions.

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Question 5

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If the unit cost to buy something is less than the variable cost to make it, the decision to make or buy is based solely on the fixed costs.

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Question 6

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Increasing productivity and also quality will result in increased effective capacity.

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Question 7

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Utilization is defined as the ratio of effective capacity to design capacity.

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Question 8

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Increasing capacity just before a bottleneck operation will improve the output of the process.

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Question 9

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An example of an external factor that influences effective capacity is government safety regulations.

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Question 10

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Having excess capacity tends to keep operating costs low.

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Question 11

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Capacity increases are usually acquired in fairly large "chunks" rather than in smooth increments.

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Question 12

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In cost-volume analysis, costs that vary directly with volume of output are referred to as fixed costs because they are a fixed percentage of output levels.

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Question 13

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The break-even quantity can be determined by dividing the fixed costs by the difference between the revenue per unit and the variable cost per unit.

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Question 14

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According to the reading on restaurant sourcing practices, only fast-food restaurants are able to bring in outsourced foods.

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Question 15

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The more current capacity exceeds desired capacity, the greater the opportunity for profit.

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Question 16

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The current trend toward global operations has made capacity decisions much easier since we have the whole world in which to consider operations.

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Question 17

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Capacity planning requires an analysis of needs: what kind, how much, and when.

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Question 18

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Waiting line analysis can be useful for capacity design, especially for service systems.

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Question 19

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Capacity decisions often involve a long-term commitment of resources which, when implemented, are difficult or impossible to modify without major added costs.

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Question 20

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Outsourcing some production is a means of supporting a constraint.

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