14 Questions
What is the definition of design capacity?
The maximum output rate or service capacity an operation, process, or facility is designed for
What does effective capacity represent?
The maximum output rate minus allowances such as personal time, maintenance, and scrap
How does actual output differ from effective capacity?
Actual output is the rate of output actually achieved and cannot exceed effective capacity
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
What does globalization add to capacity planning?
Complexity
What is the major determinant of initial costs in capacity planning?
Design capacity
In capacity planning, what does actual output efficiency and utilization represent?
The ratio of actual output to effective capacity
What are the determinants of effective capacity in capacity planning?
Facilities and supply chain factors
Which key decision is NOT part of capacity planning?
Quality control procedures
What is the first step in the process of capacity planning?
Estimate future capacity requirements
What are the characteristics of economies of scale in capacity planning?
Decreasing average unit costs with increasing output rate up to an optimal level
In the given capacity planning problem, what is the annual fixed cost for producing internally?
$200,000
What is the variable cost per unit for the part if the manager anticipates an annual volume of 10,000 units?
$17
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
Test your knowledge on capacity planning for products and services in operations management, based on William J. Stevenson's 8th edition book. Explore the upper limits and questions related to capacity handling.
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