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What is the primary goal of inventory management?
What is the primary goal of inventory management?
What defines physical inventory?
What defines physical inventory?
What happens when the rate of supply exceeds the rate of demand?
What happens when the rate of supply exceeds the rate of demand?
In terms of inventory, what is a queue of customers considered?
In terms of inventory, what is a queue of customers considered?
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What is the consequence of customers waiting too long in a queue?
What is the consequence of customers waiting too long in a queue?
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Which strategy can help to reduce inventory levels?
Which strategy can help to reduce inventory levels?
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What is the challenge most organizations face regarding supply and demand?
What is the challenge most organizations face regarding supply and demand?
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Why is it important to minimize inventory?
Why is it important to minimize inventory?
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What is the primary focus of capacity management?
What is the primary focus of capacity management?
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Which of the following describes a medium-term aspect of capacity management?
Which of the following describes a medium-term aspect of capacity management?
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What can result from capacity levels being in excess of demand?
What can result from capacity levels being in excess of demand?
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How might working capital be affected by a capacity plan?
How might working capital be affected by a capacity plan?
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What is one common challenge with forecasting in capacity management?
What is one common challenge with forecasting in capacity management?
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What is a potential consequence of large fluctuations in capacity levels?
What is a potential consequence of large fluctuations in capacity levels?
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What role does supplier capability play in capacity management?
What role does supplier capability play in capacity management?
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What is one aspect that short-term capacity management provides?
What is one aspect that short-term capacity management provides?
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Why might an organization choose to hire temporary staff?
Why might an organization choose to hire temporary staff?
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What is the impact of balancing demand with capacity levels?
What is the impact of balancing demand with capacity levels?
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What is the primary purpose of overall equipment effectiveness (OEE)?
What is the primary purpose of overall equipment effectiveness (OEE)?
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What would likely cause capacity leakage in an operation?
What would likely cause capacity leakage in an operation?
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What is meant by 'effective capacity planning'?
What is meant by 'effective capacity planning'?
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When utilizing a chase capacity plan, what is the main goal?
When utilizing a chase capacity plan, what is the main goal?
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How does variability affect the ability of an operation?
How does variability affect the ability of an operation?
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What should be a key consideration when setting the base capacity level?
What should be a key consideration when setting the base capacity level?
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In terms of perishability, what is required for setting base capacity?
In terms of perishability, what is required for setting base capacity?
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Which of the following is a disadvantage of a level capacity plan?
Which of the following is a disadvantage of a level capacity plan?
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The effect of high fixed costs on capacity levels is that it can lead to:
The effect of high fixed costs on capacity levels is that it can lead to:
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What is an example of reducing capacity due to predictability in losses?
What is an example of reducing capacity due to predictability in losses?
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Which of the following is true about the chase capacity plan?
Which of the following is true about the chase capacity plan?
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The approach that typically requires a higher base capacity is:
The approach that typically requires a higher base capacity is:
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To increase responsive customer service, an operation should ideally have:
To increase responsive customer service, an operation should ideally have:
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Which type of operations is least likely to use a pure chase plan?
Which type of operations is least likely to use a pure chase plan?
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What is a common issue with capacity management during periods of high demand?
What is a common issue with capacity management during periods of high demand?
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When does a chase capacity plan minimize finished goods inventory?
When does a chase capacity plan minimize finished goods inventory?
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Why is queuing theory important in capacity management decisions?
Why is queuing theory important in capacity management decisions?
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What principle suggests that unoccupied time feels longer to customers?
What principle suggests that unoccupied time feels longer to customers?
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How can companies best manage their capacity according to customer demand?
How can companies best manage their capacity according to customer demand?
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Which statement accurately reflects customer behaviors in a queuing system?
Which statement accurately reflects customer behaviors in a queuing system?
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What can lead to the perception that a service is of higher value?
What can lead to the perception that a service is of higher value?
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In managing capacity, what can be a consequence of having too few servers?
In managing capacity, what can be a consequence of having too few servers?
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Which factor does NOT typically influence capacity management decisions?
Which factor does NOT typically influence capacity management decisions?
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When demand is stable and predictable, what capacity management strategy is generally easiest to implement?
When demand is stable and predictable, what capacity management strategy is generally easiest to implement?
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What describes the cumulative production line in effective capacity management?
What describes the cumulative production line in effective capacity management?
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What strategy should be adopted when future demand is unpredictable?
What strategy should be adopted when future demand is unpredictable?
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What is the first step on the demand side in capacity management?
What is the first step on the demand side in capacity management?
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How does new staff impact operational routines according to capacity management principles?
How does new staff impact operational routines according to capacity management principles?
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Which method is best known for its structured approach to forecasting?
Which method is best known for its structured approach to forecasting?
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What is the focus of qualitative forecasting approaches?
What is the focus of qualitative forecasting approaches?
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Which forecasting technique modifies historical data to account for seasonality?
Which forecasting technique modifies historical data to account for seasonality?
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What is the primary aim of capacity management according to operational management?
What is the primary aim of capacity management according to operational management?
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Which of the following best describes trend-adjusted exponential smoothing?
Which of the following best describes trend-adjusted exponential smoothing?
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What is the role of forecast error in capacity management?
What is the role of forecast error in capacity management?
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What does managing supply involve in capacity management?
What does managing supply involve in capacity management?
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What challenge is faced when measuring capacity in a hospital?
What challenge is faced when measuring capacity in a hospital?
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Which step follows measuring demand for services in capacity management?
Which step follows measuring demand for services in capacity management?
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What does the level of accuracy in demand forecasting affect?
What does the level of accuracy in demand forecasting affect?
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Which of the following statements about seasonal patterns in demand is TRUE?
Which of the following statements about seasonal patterns in demand is TRUE?
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Study Notes
Capacity Management
- Capacity management is about understanding demand and supply (capacity).
- It aims to reconcile competing demands for customer satisfaction and resource efficiency.
- Capacity decisions have long-term and short-term aspects.
- Long-term decisions include strategic capacity planning, considering factors like buildings, technology, and long-term supply arrangements.
- Medium-term capacity decisions involve managing resources over quarters or months, considering aggregate staffing levels and subcontracting.
- Short-term decisions manage capacity within weeks, days, or hours, such as loading activities on individual processes.
- Capacity decisions impact costs (excess capacity leads to high costs and low utilization) and revenues (insufficient capacity leads to lost revenue).
- Demand forecasts are often inaccurate.
- Operations must respond to changes in demand quickly.
Demand Measurement
- The first task in capacity management is understanding demand patterns.
- Qualitative approaches to forecasting, like panel discussions and Delphi methods, gather diverse perspectives.
- Qualitative approaches aim for consensus (panel), or to reduce influence from face-to-face interactions with the Delphi process.
- Quantitative approaches, like time series analysis, examine past demand patterns to predict future behavior.
- Time series analysis considers patterns from past behaviors for future forecasts.
- Simple moving average and simple exponential smoothing (trend-adjusted exponential smoothing), are methods used to forecast demand.
Capacity Measurement
- Capacity refers to the maximum level of value-added activity over a period.
- Capacity measurement considers input levels and output levels.
- Businesses calculate capacity based on factors like the availability of resources (machine hours, staff) or the number of customers served per unit.
- An operation's ability to supply depends on the mix of activities.
Demand Side Management
- Demand management adjusts the demand pattern to match available capacity which can be done via price differentials, scheduling promotions, constraining customer access or service differentials.
Supply Side Management
- Capacity management decisions involve setting capacity levels and using level capacity plans or chase capacity plans.
- Base capacity level decisions depends on performance objectives, fixed costs, and flexibility.
- Perishable goods require higher capacity levels, while those with high fixed costs often require lower base capacity.
- Variability in demand or supply can effect capacity levels.
- Variability can cause high throughput times, queues and higher inventory levels.
- Varying capacity levels to match demand patterns may be needed.
Queue Management
- Queue discipline (rules for determining waiting customer order).
- Rejecting (when demand exceeds capacity).
- Balking (customers refusing to join the queue).
- Reneging (customers leaving the queue).
- Considerations include customer behaviour and capacity levels in relation to customer wait times and service quality.
Inventory Management
- Inventory is the accumulation of materials.
- Inventories arise when supply and demand rates are unequal.
- Inventory management involves minimizing costs while meeting customer demand and avoid shortages.
- Types of inventory include raw materials, components, work-in-progress, and finished goods
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Description
Explore the principles of capacity management, focusing on the reconciliation of demand and supply. This quiz covers long-term, medium-term, and short-term capacity decisions and their impact on costs and revenues. Understand the importance of accurate demand measurement in effective capacity planning.
