Practice Questions-Operations Management Stevenson 11th Edition-Chapter 5 - Strategic Capacity Planning for Products and Services
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Course
Operations Management
Institution
Far Eastern University
Book
Operations Management
This file includes practice questions for Chapter 5 Strategic Capacity Planning for Products and Services inclusive of True or False and Multiple Choice Questions.
Chapter 5 - Strategic Capacity Planning for Products and Services
True/False
1. The term capacity refers to the maximum quantity an operating unit can process.
Answer: True
2. Capacity decisions are usually one-time decisions, once they have been made,
we know the limits of our operations.
Answer: False
3. Stating capacity in dollar amounts generally results in a consistent measure of
capacity regardless of the actual units of measure.
Answer: False
4. Design capacity refers to the maximum output that can possibly be attained.
Answer: True
5. 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.
Answer: False
6. Increasing productivity and also quality will result in increased capacity.
Answer: True
7. Utilization is defined as the ratio of effective capacity to design capacity.
Answer: False
8. Increasing capacity just before a bottleneck operation will improve the output of
the process.
Answer: False
9. An example of an external factor that influences effective capacity is government
safety regulations.
Answer: True
10. Cost and competitive priorities reduce effective capacities.
Answer: False
11. Capacity increases are usually acquired in fairly large "chunks" rather than
smooth increments.
1
,Answer: True
12. 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.
Answer: False
13. 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.
Answer: True
14. According to the reading on restaurant sourcing practices, only fast-food
restaurants are able to ‘bring in’ outsourced foods.
Answer: False
15. The greater the gap between current and desired capacity the greater the
opportunity for profit.
Answer: False
16. The current trend toward global operations has made capacity decisions much
easier since we have the whole world in which to consider operations.
Answer: False
17. Capacity planning requires an analysis of needs; what kind, how much and
when.
Answer: True
18. Waiting line analysis can be useful for capacity design, especially for service
systems.
Answer: True
19. Capacity decisions often involve a long-term commitment of resources which,
when implemented, are difficult or impossible to modify without major added costs.
Answer: True
Multiple Choice
20. A basic question in capacity planning is:
A) what kind is needed
B) how much is needed
C) when is it needed
D) all of the above
2
, E) none of the above
Answer: D
21. Which of these factors wouldn't be subtracted from design capacity when
calculating effective capacity?
A) personal time
B) maintenance
C) scrap
D) operating hours per day
E) all of the above would be subtracted in the calculation
Answer: E
22. A reason for the importance of capacity decisions is that capacity:
A) limits the rate of output possible
B) affects operating costs
C) is a major determinant of initial costs
D) is a long-term commitment of resources
E) all of the above
Answer: E
23. Which of the following is the case where capacity is measured in terms of inputs?
A) hospital
B) theater
C) restaurant
D) all of the above
E) none of the above
Answer: D
24. Unbalanced systems are evidenced by …
A) Top heavy operations
B) Labor unrest
C) Bottleneck operations
D) Increasing capacities
E) Assembly lines
Answer: C
25. Maximum capacity refers to the upper limit of:
A) inventories
B) demand
C) supplies
D) rate of output
E) finances
Answer: D
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