Test Bank For Operations Management 6Th Canadian Edition By William

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Test Bank For Operations Management 6Th Canadian Edition By William

Chapter 05
Strategic Capacity Planning

True / False Questions

1. The term capacity is the upper limit on the workload an operating unit can handle.
TRUE
Accessibility: Keyboard Navigation
Difficulty: Easy
Learning Objective: 05-01 Define capacity; explain the importance of long-term capacity; know how to measure capacity; understand two related performance measures; know overall equipment effectiveness; and describe factors influencing effective capacity.
Topic: 05-01 Capacity, Measures, Efficiency, Utilization, and Effective Capacity

2. Capacity decisions are always long-term decisions.
FALSE
Accessibility: Keyboard Navigation
Difficulty: Easy
Learning Objective: 05-01 Define capacity; explain the importance of long-term capacity; know how to measure capacity; understand two related performance measures; know overall equipment effectiveness; and describe factors influencing effective capacity.
Topic: 05-01 Capacity, Measures, Efficiency, Utilization, and Effective Capacity

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.
FALSE
Accessibility: Keyboard Navigation
Difficulty: Medium
Learning Objective: 05-01 Define capacity; explain the importance of long-term capacity; know how to measure capacity; understand two related performance measures; know overall equipment effectiveness; and describe factors influencing effective capacity.
Topic: 05-03 Measuring Capacity and Some Related Performance Measures

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
Accessibility: Keyboard Navigation
Difficulty: Medium
Learning Objective: 05-01 Define capacity; explain the importance of long-term capacity; know how to measure capacity; understand two related performance measures; know overall equipment effectiveness; and describe factors influencing effective capacity.
Topic: 05-02 The Importance of Long-Term Capacity

5. Stating capacity in dollar amounts generally results in a consistent measure of capacity.
FALSE
Accessibility: Keyboard Navigation
Difficulty: Medium
Learning Objective: 05-01 Define capacity; explain the importance of long-term capacity; know how to measure capacity; understand two related performance measures; know overall equipment effectiveness; and describe factors influencing effective capacity.
Topic: 05-03 Measuring Capacity and Some Related Performance Measures

6. Design capacity refers to the maximum output rate under ideal conditions.
TRUE
Accessibility: Keyboard Navigation
Difficulty: Easy
Learning Objective: 05-01 Define capacity; explain the importance of long-term capacity; know how to measure capacity; understand two related performance measures; know overall equipment effectiveness; and describe factors influencing effective capacity.
Topic: 05-03 Measuring Capacity and Some Related Performance Measures

7. Design capacity refers to the maximum output rate possible given a product mix, operating hours, and machine maintenance.
FALSE
Accessibility: Keyboard Navigation
Difficulty: Hard
Learning Objective: 05-01 Define capacity; explain the importance of long-term capacity; know how to measure capacity; understand two related performance measures; know overall equipment effectiveness; and describe factors influencing effective capacity.
Topic: 05-03 Measuring Capacity and Some Related Performance Measures

8. Efficiency is defined as the ratio of actual output to effective capacity.
TRUE
Accessibility: Keyboard Navigation
Difficulty: Medium
Learning Objective: 05-01 Define capacity; explain the importance of long-term capacity; know how to measure capacity; understand two related performance measures; know overall equipment effectiveness; and describe factors influencing effective capacity.
Topic: 05-03 Measuring Capacity and Some Related Performance Measures

9. As utilization increases the number of jobs/people waiting in an operating system decreases.
FALSE
Accessibility: Keyboard Navigation
Difficulty: Medium
Learning Objective: 05-01 Define capacity; explain the importance of long-term capacity; know how to measure capacity; understand two related performance measures; know overall equipment effectiveness; and describe factors influencing effective capacity.
Topic: 05-03 Measuring Capacity and Some Related Performance Measures

10. Facilities are a major factor influencing effective capacity.
TRUE
Accessibility: Keyboard Navigation
Difficulty: Easy
Learning Objective: 05-01 Define capacity; explain the importance of long-term capacity; know how to measure capacity; understand two related performance measures; know overall equipment effectiveness; and describe factors influencing effective capacity.
Topic: 05-03 Measuring Capacity and Some Related Performance Measures

11. The more uniform the mix of products being produced, the more opportunity there is to increase the effective capacity of the system.
TRUE
Accessibility: Keyboard Navigation
Difficulty: Medium
Learning Objective: 05-01 Define capacity; explain the importance of long-term capacity; know how to measure capacity; understand two related performance measures; know overall equipment effectiveness; and describe factors influencing effective capacity.
Topic: 05-03 Measuring Capacity and Some Related Performance Measures

12. Evaluation of capacity alternatives involves economic calculations only.
FALSE
Accessibility: Keyboard Navigation
Difficulty: Medium
Learning Objective: 05-02 Describe the strategic capacity planning process in organizations; know long-term demand patterns and calculate capacity requirements; and discuss major considerations for developing capacity alternatives.
Topic: 05-07 Major Considerations for Developing Capacity Alternatives

13. As forecasts are usually only accurate for the short term, forecasts are not useful in long-term capacity decisions.
FALSE
Accessibility: Keyboard Navigation
Difficulty: Medium
Learning Objective: 05-02 Describe the strategic capacity planning process in organizations; know long-term demand patterns and calculate capacity requirements; and discuss major considerations for developing capacity alternatives.
Topic: 05-04 Strategic Capacity Planning Process in Organizations

14. Capacity increases are usually acquired in fairly large “chunks” rather than smooth increments.
TRUE
Accessibility: Keyboard Navigation
Difficulty: Medium
Learning Objective: 05-02 Describe the strategic capacity planning process in organizations; know long-term demand patterns and calculate capacity requirements; and discuss major considerations for developing capacity alternatives.
Topic: 05-07 Major Considerations for Developing Capacity Alternatives

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.
FALSE
Accessibility: Keyboard Navigation
Difficulty: Hard
Learning Objective: 05-03 Describe the break-even analysis approach for evaluating capacity alternatives; and use it to solve problems.
Topic: 05-09 Evaluating Alternatives