Capacity Planning in Operations Management
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Questions and Answers

What is the definition of design capacity?

  • The maximum output rate minus allowances such as personal time, maintenance, and scrap
  • The rate of output actually achieved
  • The maximum output rate or service capacity an operation, process, or facility is designed for (correct)
  • The maximum output rate an operation is actually designed for

What does effective capacity represent?

  • The maximum output rate or service capacity an operation, process, or facility is designed for
  • The maximum output rate an operation is actually designed for
  • The maximum output rate minus allowances such as personal time, maintenance, and scrap (correct)
  • The rate of output actually achieved

How does actual output differ from effective capacity?

  • Actual output represents the design capacity minus allowances such as personal time, maintenance, and scrap
  • Actual output is the maximum output rate or service capacity an operation, process, or facility is designed for
  • Actual output is the rate of output actually achieved and cannot exceed effective capacity (correct)
  • Actual output is the maximum output rate an operation is actually designed for

What are the basic questions in capacity planning according to the text?

<p>What kind of capacity is needed, how much is needed, and when it is needed (B)</p> Signup and view all the answers

What does globalization add to capacity planning?

<p>Complexity (C)</p> Signup and view all the answers

What is the major determinant of initial costs in capacity planning?

<p>Design capacity (A)</p> Signup and view all the answers

In capacity planning, what does actual output efficiency and utilization represent?

<p>The ratio of actual output to effective capacity (C)</p> Signup and view all the answers

What are the determinants of effective capacity in capacity planning?

<p>Facilities and supply chain factors (C)</p> Signup and view all the answers

Which key decision is NOT part of capacity planning?

<p>Quality control procedures (C)</p> Signup and view all the answers

What is the first step in the process of capacity planning?

<p>Estimate future capacity requirements (C)</p> Signup and view all the answers

What are the characteristics of economies of scale in capacity planning?

<p>Decreasing average unit costs with increasing output rate up to an optimal level (B)</p> Signup and view all the answers

In the given capacity planning problem, what is the annual fixed cost for producing internally?

<p>$200,000 (C)</p> Signup and view all the answers

What is the variable cost per unit for the part if the manager anticipates an annual volume of 10,000 units?

<p>$17 (C)</p> Signup and view all the answers

What alternative would be best from a cost standpoint if the manager anticipates an annual volume of 10,000 units?

<p>To produce the part internally (A)</p> Signup and view all the answers

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