Chapter 11

Question 1

The proper sequence for capacity planning is:

Answer 1

1. Forecast sales for each product line
2. Forecast sales for individual products
3. Calculate labor and equipment requirements to meet product line forecasts.
4. Project labor and equipment availabilities over the planning horizon.

Question 2

As developed in our book, which of the following costs is not a “class of costs” that is considered in locating a facility?

Answer 2

Raw material or supply cost.

Question 3

Which of the following methods for selecting a new location utilizes statistical analysis?

Answer 3

Regression.

Question 4

Flexible workers:

Answer 4

have a broad range of skills.

Question 5

Which of the following is NOT a strategy for adding capacity:

Answer 5

positive

Question 6

The best operating level is:

Answer 6

the level of capacity for which average unit cost is minimized

Question 7

In recent years many large, inefficient American steel mills have closed down largely due to competition from smaller, more efficient Japanese mills. The American mills are experiencing:

Answer 7

Diseconomies of scale

Question 8

Selecting a manufacturing facility close to raw material supplies would be appropriate for products that:

Answer 8

decrease in weight and volume during the manufacturing process.

Question 9

Agile manufacturing has to do with:

Answer 9

The ability to react to changes in the marketplace.

Question 10

The capacity to deliver what the customer wants within a lead time shorter than the competitors is referred to as:

Answer 10

Capacity flexibility

Question 11

Which of the following regarding facility decisions is TRUE?

Answer 11

Front-of-the-house service facilities typically require larger capital investment compared to back-of-the-house service facilities.

Question 12

Barnum and Bailey Circus is cited as suggesting which of the following capacity-related concepts?

Answer 12

Flexible plants.

Question 13

Japanese bank in California are cited as an example of:

Answer 13

Subcontracting.

Question 14

The most appropriate or important goal for selecting a facility location for a service with direst customer contact is typically to seek

Answer 14

Maximum revenue generation

Question 15

Which of the following methods for selecting a new location focuses on minimizing distribution costs?

Answer 15

Center of gravity method.

Question 16

According to the authors, excessive capacity may result in:

Answer 16

Price reductions, work force underutilization, and additional product offerings.

Question 17

Long range capacity planning should be the responsibility of:

Answer 17

top management.

Question 18

Which of the following methods for selecting a new location is capable of incorporating qualitative factors?

Answer 18

factor-rating system.

Question 19

Capacity balance can be obtained by:

Answer 19

Buffer inventories, decoupling through backup equipment, and adding capacity to bottleneck stages.

Question 20

A firm with flexibility capacity is quicker to:

Answer 20

have a shorter lead time than the competition.

Question 21

In a perfectly balanced plant, stage 3 provides the exact requirements for:

Answer 21

Stage 4

Question 22

A GIS is all of the following:

Answer 22

a graphical display of some geographic area, a bird’s eye view, a regional map, and provides a variety of demographic data.

Question 23

Supply chain management:

Answer 23

The coordination of all supply chain activities involved in enhancing customer value.

Question 24

Make-or-buy decision:

Answer 24

A choice between producing a component or service in-house or purchasing it from an outside source.

Question 25

Outsourcing:

Answer 25

Transferring a firm’s activities that have traditionally been internal to external suppliers.

Question 26

Virtual companies:

Answer 26

companies that rely on a variety of supplier relationships to provide services on demand. also known as hollow corporations or network companies.

Question 27

vertical integration:

Answer 27

developing the ability to produce goods or services previously purchased or actually buying a supplier or a distributor

Question 28

Keiretsu:

Answer 28

A Japanese term that describes suppliers who become part of a company coalition.

Question 29

Cross-sourcing:

Answer 29

Using one supplier for a component and a second supplier for another component, where each supplier acts as a backup for the other.

Question 30

Bullwhip effect:

Answer 30

the increasing fluctuation in orders that often occurs as orders move through the supply chain.

Question 31

Pull data:

Answer 31

accurate sales data that initiate transactions to “pull” product through the supply chain.

Question 32

Single-stage control of replenishment:

Answer 32

Fixing responsibility for monitoring and managing inventory for the retailer.

Question 33

Vendor-managed inventory (VMI):

Answer 33

A system in which a supplier maintains material for the buyer, often delivering directly to the buyer’s using department.

Question 34

Collaborative planning, forecasting, and replenishment (CPFR):

Answer 34

A system in which members of a supply chain share information in a joint effort to reduce supply chain costs.

Question 35

Blanket order:

Answer 35

a long-term purchase commitment to a supplier for items that are to be delivered against short-term releases to ship

Question 36

Postponement:

Answer 36

Delaying any modifications or customization to a product as long as possible in the production process.

Question 37

Drop shipping:

Answer 37

Shipping directly from the supplier to the end consumer rather than from the seller, saving both time and reshipping costs.

Question 38

E-procurement:

Answer 38

Purchasing facilitated through the Internet.

Question 39

Logistics management:

Answer 39

An approach that seeks efficiency of operations through the integration of all material acquisition, movement, and storage activities.

Question 40

Channel assembly:

Answer 40

Postpones final assembly of a product so the distribution channel can assemble it.

Question 41

Reverse logistics:

Answer 41

The process of sending returned products back up the supply chain for value recovery or disposal.

Question 42

Closed-loop supply chain:

Answer 42

A supply chain designed to optimize both forward and reverse flows.

Question 43

Inventory turnover:

Answer 43

Cost of goods sold divided by average inventory.

Question 44

Supply Chain operations reference (SCOR) model:

Answer 44

a set of processes, metrics, and best practices developed by the supply chain council.

Question 45

All of the following are part of capacity flexibility:

Answer 45

Zero changeover time plant
Flexible manufacturing system
Multi-skill workforce
Subcontracting