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Test Bank For Operations Management 5th Edition Canadian By William J. Stevenson

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Test Bank For Operations Management 5th Edition Canadian By William J. Stevenson

Chapter 05 Strategic Capacity Planning

1. The term capacity is the upper limit on the workload an operating unit can handle.

True    False

2. Capacity decisions are always long-term decisions.

True    False

3. If a company produces a variety of outputs, capacity has to be expressed as several partial measures; no overall measure of capacity is possible.

True    False

4. Capacity decisions often involve a long-term commitment of resources which, when implemented, are difficult or impossible to modify without major added costs.

True    False

5. Stating capacity in dollar amounts generally results in a consistent measure of capacity.

True    False

6. Design capacity refers to the maximum output rate under ideal conditions.

True    False

7. Design capacity refers to the maximum output rate possible given a product mix, operating hours, and machine maintenance.

True    False

8. Efficiency is defined as the ratio of actual output to effective capacity.

True    False

9. As utilization increases the number of jobs/people waiting in an operating system decreases.

True    False

10. Facilities are a major factor influencing effective capacity.

True    False

11. The more uniform the mix of products being produced, the more opportunity there is to increase the effective capacity of the system.

True    False

12. Evaluation of capacity alternatives involves economic calculations only.

True    False

13. As forecasts are usually only accurate for the short term, forecasts are not useful in long-term capacity decisions.

True    False

14. Capacity increases are usually acquired in fairly large “chunks” rather than smooth increments.

True    False

15. In break-even analysis, costs that vary directly with volume of output are referred to as fixed costs because they are fixed to the level of output.

True    False

16. The break-even quantity can be determined by dividing the fixed costs by the difference between the revenue per unit and the variable cost per unit.

True    False

17. Among the assumptions of break-even analysis is that the variable cost per unit remains the same regardless of quantity of output.

True    False

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