8-9

Question 1

is the capability of a manufacturing or service resource such as a facility, process, workstation, or piece of equipment to be accomplished over a specified period.

Answer 1

Capacity

Question 2

are achieved when the average unit cost of a good or service decreases as the capacity and or value of throughput increases

Answer 2

Economies of Scale

Question 3

occur when the average unit cost of the good or service begins to increase as the capacity and/ or volume of throughput increase

Answer 3

Diseconomies of scale-

Question 4

is a way to achieve economies of scale, without extensive investments in facilities and capacity, by focusing on a narrow range of goods or services, target market segments, and/or dedicated processes to maximize efficiency and effectiveness

Answer 4

Focused factory-

Question 5

are used in many ways in long-term planning and short-term management activities

Answer 5

Capacity measures

Question 6

defined as an amount of capacity reserved for unanticipated events such as demand surges, material shortages, and equipment breakdowns, is normally planed into a process or facility

Answer 6

Safety Capacity/ Capacity Cushion

Question 7

is a specification of work to be performed for a customer or a client

Answer 7

A work order

Question 8

which are goods and services that can be produced or delivered using the same resources available to the firm, but whose seasonal demand patterns are out of phase with each other.

Answer 8

Complementary goods and services

Question 9

illustrates the strategy of matching capacity additions with demand as closely as possible

Answer 9

Capacity straddle strategy-(small capacity increases that match demand)

Question 10

shows a capacity-expansion strategy to maintain sufficient capacity to minimize the chances of not meeting demand. Capacity expansion leads or is ahead of demand

Answer 10

Capacity lead strategy- (small capacity increases that lead demand)

Question 11

that results in constant capacity shortages. Such a strategy waits until demand has increased to a point where additional capacity is necessary

Answer 11

Capacity lag strategy- (small capacity increases that lag demand)

Question 12

is a promise to provide a good or service at some future time and place

Answer 12

Reservation

Question 13

consists of dynamic methods to forecast demand, allocate perishable assets across market segments, decide when to overbook and by how much, and determine what price to charge different customer (price) classes.

Answer 13

Revenue Management System (RMS)

Question 14

is a set of principles that focuses an increasing total process throughout by maximizing the utilization of all bottleneck work activities and workstations.

Answer 14

Theory of constraints (TOC)

Question 15

is the amount of money generated per time period through actual sales.

Answer 15

Throughput

Question 16

is anything in an organization that limits it from moving toward or achieving its goal.

Answer 16

Constraint

Question 17

is associated with the capacity of a resource such as a machine, employee or workstation.

Answer 17

Physical constraint-

Question 18

is one that effectively limits the capacity of the entire process bottlenecks, the input exceeds the capacity, restricting the total output that is capable of being produced.

Answer 18

Bottleneck (BN) work activity

Question 19

is one in which idle capacity exists.

Answer 19

Nonbottleneck (BN) work activity

Question 20

is environmental or organizational, such as low product demand or an inefficient management policy or procedure.

Answer 20

Nonphysical constraint

Question 21

is any asset held for future use or sale.

Answer 21

Inventory

Question 22

involves planning, coordinating and controlling the acquisition, storage, handling, movement, distribution, and possible sale of raw materials, component parts and subassemblies, supplies and tools, replacement part, and other assets that are needed to meet customer wants and needs

Answer 22

Inventory Management-

Question 23

inputs to manufacturing and service-delivery processes.

Answer 23

Raw Materials, component parts, subassemblies, and supplies

Question 24

consist of partially finished products in various stages of completion that are awaiting further processing

Answer 24

Work in Process (WIP) inventory

Question 25

is completed products ready for distribution or sale to customers

Answer 25

Finished Goods Inventory

Question 26

is an additional amount that is kept over and above the average amount required to meet demand

Answer 26

Safety stock inventory

Question 27

is the price paid for purchased goods or the internal cost of producing them

Answer 27

Unit cost

Question 28

is a single item or asset stored at a particular location

Answer 28

single keeping unit (SKU)

Question 29

is demand for SKU that is unrelated to the demand for other or SKUs and needs to be forecasted

Answer 29

Independent Demand

Question 30

if their demand is directly related to the demand of other SKUs can be calculated without needing to be forecasted

Answer 30

Dependent Demand

Question 31

stable demand

Answer 31

Static Demand

Question 32

varies over time

Answer 32

Dynamic Demand

Question 33

is the time between placement of an order and its receipt

Answer 33

Lead time

Question 34

is the inability to satisfy the demand for an item

Answer 34

Stockout

Question 35

occurs when a customer is willing to wait for the item

Answer 35

Backorder

Question 36

occurs when the customer is unwilling to wait and purchases the item elsewhere.

Answer 36

Lost of Sale

Question 37

the order quantity or lot size is fixed, the same amount Q , is ordered every time

Answer 37

Fixed quantity system (FQS)

Question 38

is defined as the on hand quantity plus any orders placed but which have not arrived (called scheduled receipts, SR,) minus any backorder (BO)

Answer 38

Inventory Position

Question 39

is the value of the inventory position that triggers a new order

Answer 39

Reorder Point

Question 40

model is a classic economic model developed in the early 1900s that minimizes the total cost, which is the sum of the inventory-holding cost and the ordering cost.

Answer 40

Economic Order Point

Question 41

inventory that results from purchasing or producing in larger lots than are needed for immediate consumption or sale.

Answer 41

Cycle Inventory / order /lot size inventory

Question 42

additional, planned
on-hand inventory that acts as a buffer to reduce the risk of a stockout.

Answer 42

Safety Stock