Podcast
Questions and Answers
How do capacity decisions influence a company's operational efficiency?
How do capacity decisions influence a company's operational efficiency?
- They solely decrease the number of products offered.
- They can lead to increases in operating costs. (correct)
- They necessitate frequent changes in management.
- They remove the need for inventory management.
What is one significant reason capacity decisions are considered strategic for organizations?
What is one significant reason capacity decisions are considered strategic for organizations?
- They impact the ability to meet future demands. (correct)
- They determine the location of the organization.
- They automatically increase revenue.
- They influence employee satisfaction directly.
Which of the following best describes the impact of capacity decisions on future demands?
Which of the following best describes the impact of capacity decisions on future demands?
- They are irrelevant to customer needs.
- They enhance the forecasting accuracy for future outputs. (correct)
- They provide insights on marketing strategies.
- They do not significantly influence future sales projections.
What might be a consequence of poor capacity decision-making?
What might be a consequence of poor capacity decision-making?
What is one of the key strategic considerations in making capacity decisions?
What is one of the key strategic considerations in making capacity decisions?
What is the first step in evaluating alternatives in decision making?
What is the first step in evaluating alternatives in decision making?
Which factor is crucial when determining the best alternative to pursue for the long term?
Which factor is crucial when determining the best alternative to pursue for the long term?
After selecting the best alternative based on analysis, what is the subsequent step?
After selecting the best alternative based on analysis, what is the subsequent step?
What is an important consideration when conducting financial analyses of alternatives?
What is an important consideration when conducting financial analyses of alternatives?
Which of the following is NOT typically assessed when evaluating alternatives?
Which of the following is NOT typically assessed when evaluating alternatives?
What is a consequence of over capacity in operations?
What is a consequence of over capacity in operations?
How does under capacity affect a business's resources?
How does under capacity affect a business's resources?
What potential loss can occur due to under capacity in a business?
What potential loss can occur due to under capacity in a business?
Which of the following describes a risk associated with over capacity?
Which of the following describes a risk associated with over capacity?
How might a business mitigate the effects of operating under capacity?
How might a business mitigate the effects of operating under capacity?
What best defines design capacity?
What best defines design capacity?
Effective capacity is calculated by subtracting which of the following from design capacity?
Effective capacity is calculated by subtracting which of the following from design capacity?
Which of the following statements about capacity and cost is true?
Which of the following statements about capacity and cost is true?
If a facility has a design capacity of 100 units but has an effective capacity of 80 units, what might account for the difference?
If a facility has a design capacity of 100 units but has an effective capacity of 80 units, what might account for the difference?
What term describes the maximum output rate a facility is designed to produce?
What term describes the maximum output rate a facility is designed to produce?
Which of the following is NOT categorized as a type of constraint?
Which of the following is NOT categorized as a type of constraint?
What category of constraint is primarily concerned with the availability of raw materials?
What category of constraint is primarily concerned with the availability of raw materials?
Which category of constraint relates to a company's ability to operate in the marketplace?
Which category of constraint relates to a company's ability to operate in the marketplace?
Which of the following categories includes both financial limitations and human resources?
Which of the following categories includes both financial limitations and human resources?
What is the primary focus of the Knowledge or Competency category?
What is the primary focus of the Knowledge or Competency category?
Study Notes
Capacity Challenges
- Overcapacity leads to high operating costs.
- Undercapacity strains resources and risks customer loss.
Importance of Capacity Decisions
- Crucial for meeting future product and service demand.
- Directly influences operating costs.
- Major factor in determining initial investment costs.
Definitions of Capacity
- Design Capacity: Maximum output rate or service potential of an operation, process, or facility.
- Effective Capacity: Actual output capacity after accounting for allowances like personal time and maintenance.
Steps in Capacity Decision-Making
- Conduct financial analyses to evaluate each alternative capacity option.
- Assess key qualitative factors for every alternative.
- Choose the most beneficial long-term alternative.
- Implement the selected capacity decision.
Categories of Constraints
- Market Constraints: Demand fluctuations and customer preferences.
- Resource Constraints: Availability of production inputs.
- Material Constraints: Supply chain limitations for necessary materials.
- Financial Constraints: Budgetary limitations impacting capacity expansion.
- Supplier Constraints: Reliability and capacity of suppliers.
- Knowledge or Competency Constraints: Skill gaps affecting operational efficiency.
Studying That Suits You
Use AI to generate personalized quizzes and flashcards to suit your learning preferences.
Description
This quiz covers important concepts related to capacity challenges and decision-making in operations management. It includes definitions of design and effective capacity, as well as the processes involved in evaluating capacity options. Understand how capacity impacts costs and customer satisfaction to enhance your operational strategies.
