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Capacity Planning in Operations Management

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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?

What kind of capacity is needed, how much is needed, and when it is needed Signup and view all the answers

What does globalization add to capacity planning?

Complexity Signup and view all the answers

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

Design capacity Signup and view all the answers

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

The ratio of actual output to effective capacity Signup and view all the answers

What are the determinants of effective capacity in capacity planning?

Facilities and supply chain factors Signup and view all the answers

Which key decision is NOT part of capacity planning?

Quality control procedures Signup and view all the answers

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

Estimate future capacity requirements Signup and view all the answers

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

Decreasing average unit costs with increasing output rate up to an optimal level Signup and view all the answers

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

$200,000 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?

$17 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?

To produce the part internally Signup and view all the answers