CH 4 - Strategic Capacity

Question 1

Capacity Planning is generally viewed in three durations:

Answer 1

1. Long Range
2. Intermediate Range
3. Short Range

Question 2

Capacity planning time duration that is greater than 1 year is called?

Answer 2

Long Range

Question 3

Capacity planning time duration that is monthly or quarterly plans for the next 6 to 18 months is called?

Answer 3

Intermediate Range

Question 4

Capacity planning time duration of less than one month, usually tied to daily or weekly scheduling processes

Answer 4

Short Range

Question 5

The objective of ___ ___ ___ is to provide an approach for determining the overall capacity level of capital-intensive resources that best supports the company’s long-term competitive strategy

Answer 5

Strategic Capacity Planning

Question 6

An attainable rate of output

Answer 6

Capacity

Question 7

Level of capacity for which process was designed and thus is the volume of output at which average unit cost is minimized

Answer 7

Best operating level

Question 8

An important measure is the ____ _____ ___ which reveals how close a firm is to its best operating level

Answer 8

Capacity Utilization Rate

Question 9

Idea that as the plant gets larger and volume increases, the average cost per unit drops. At some point, the plant gets too large and and cost per unit increases. This is called?

Answer 9

Economies of Scale

Question 10

An area in a larger facility that is dedicated to a specific production objective. This can be used to operationalize the focused factory concept.

Answer 10

Plant within a Plant (PWP)

Question 11

Having the ability to rapidly increase or decrease production levels, or shift production capacity quickly from one product or service to another. This is known as?

Answer 11

Capacity Flexibility

Question 12

Flexible processes are epitomized by flexible manufacturing systems on the one hand and simple, easily set up equipment on the other. This permits rapid low cost switching from one product to another. This is referred to?

Answer 12

Economies of Scope

Question 13

What are the three issues to consider when adding or decreasing capacity?

Answer 13

1. System Balance
2. Frequency of Capacity additions or reductions
3. Use of external capacity

Question 14

1. Add capacity to stages that are bottlenecks.
2. Through the use of buffer inventories in front of the bottleneck stage to ensure that it always has something to work on
3. Duplicating or increasing the facilities of one department on which another is dependent.

What do these approaches help deal with?

Answer 14

They help reduce imbalances for supplier partners and customers (System Balance)

Question 15

In determining _____ _____, we must address the demands for individual product lines, individual plant capabilities, and allocation of production throughout the plant network.

Answer 15

Capacity Requirements

Question 16

Capacity in excess of expected demand. This is?

Answer 16

Capacity Cushion

Question 17

A convenient way to lay out the steps of a capacity problem is through the use of _____ _____

Answer 17

Decision Trees

Question 18

A schematic model of the sequence of steps in a problem and the conditions and consequences of each step. This is a?

Answer 18

A Decision Tree

Question 19

____ ____ is more time and location dependent, it is subject to more volatile demand fluctuations, and utilization directly impacts service quality

Answer 19

Service Capacity

Question 20

What are the three reasons why volatility of demand on a service delivery system is much higher than that on a manufacturing production system?

Answer 20

1. Service cannot be stored
2. Customers interact directly with the production system
3. Directly affected by customer behavior

Question 21

The best operating point is near ___ percent of the maximum capacity

Answer 21

70%