Chapter 6

Question 1

The maximum rate of output of a process or a system

Answer 1

Capacity

Question 2

The amount of reserve capacity a process uses to handle sudden increases in demand or temporary losses of production capacity; it measures the amount by which the average utilization falls below 100 percent

Answer 2

Capacity Cushion

Question 3

Positive or negative difference between projected demand and current capacity

Answer 3

Capacity Gap

Question 4

What a process’s capacity should be for some future time period to meet the demand of customers (external or internal), given the firm’s desired capacity cushion

Answer 4

Capacity requirement

Question 5

Occurs when the average cost per unit increases as the facility’s size increases

Answer 5

Dis-economies of scale

Question 6

A concept that states that the average unit cost of a service or good can be reduced by increasing its output rate

Answer 6

Economies of scale