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Exam 6: Strategic Capacity Planning

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Question 21

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Which of the following is not an important long-term capacity decision consideration?

A) matching capacity and demand
B) commitment of resources
C) level of capacity and operation costs
D) ensuring capacity always exceeds demand to allow for forecasting errors
E) capacity affects ease of management

F) B) and D)
G) B) and C)

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Question 22

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The owner of a greenhouse and nursery is considering whether to spend $12,000 to acquire the licensing rights to grow a new variety of rose bush,which she could then sell for $8 each.Variable costs would be $5 per rosebush. What would the profit be if she were to produce and sell 5,000 rose bushes?

A) $2000
B) $3,000
C) $5,000
D) $25,000
E) $40,000

F) B) and D)
G) A) and D)

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Question 23

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Efficiency is defined as the ratio of:

11eab92b_c4a6_0c49_99e6_d5b5c80f77a9 What is the break-even quantity (produced and sold)?

Supply chain factors are not usually taken into account in capacity planning if substantial capacity changes are involved.

The ratio of actual output to effective capacity is:

The term capacity is the upper limit on the workload an operating unit can handle.

Which of the following is not a common long-term demand pattern?

Efficiency is defined as the ratio of actual output to effective capacity.

Demand volatility tends to be higher for services than for goods,not only in timing of demand,but also in the amount of time required to service individual customers.

The utilization of an operation is .95 and it is .93 efficient.If the quality ratio is .95 what is the overall equipment effectiveness?

In break-even analysis with step fixed cost what must be considered when making the final decision?

Given the following information,the efficiency is: Effective capacity = 20 units per day Design capacity = 60 units per day Actual output = 15 units per day

A simple method for estimating the throughput capacity of a productive unit from its size is to divide the size by the average time a product spends in the productive unit (this is called Littlele method ):

When demand is variable,capacity is usually chosen above the average (forecast) demand.The excess of capacity over the average demand is called capacity cushion or _______.

If a company produces a variety of outputs,capacity has to be expressed as several partial measures; no overall measure of capacity is possible.

11eab92b_c4a5_e538_99e6_dd8bc67c481f What is the anticipated efficiency?

Which of the following is not an assumption of the break-even model?

Stating capacity in dollar amounts generally results in a consistent measure of capacity.

The owner of Firewood To Go is considering buying a hydraulic wood splitter which sells for $50,000.He figures it will cost an additional $150 per cord to purchase and split wood with this machine,while he can sell each cord of split wood for $200. What would the potential profit be if he were to split 4,000 cords of wood with this machine?