SUPPLEMENT 7 - SUPPLEMENT 7: CAPACITY PLANNING TRUE/FALSE...

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SUPPLEMENT 7: CAPACITY PLANNING TRUE/FALSE 1. Utilization is the number of units a facility can hold, receive, store, or produce in a period of time. False (Capacity, easy) 2. Design capacity is the theoretical maximum output of a system in a given period under ideal conditions. True (Capacity, moderate) 3. Capacity decisions are based on technological concerns, not demand forecasts. False (Capacity, easy) 4. Expected output is sometimes referred to as rated capacity. True (Capacity, moderate) 5. Price changes are useful for matching the level of demand to the capacity of a facility. True (Capacity, moderate) 6. A useful tactic for increasing capacity is to redesign a product in order to get more throughput. True (Capacity, moderate) 7. Changes in capacity may lead, lag, or straddle the demand. True (Capacity planning, moderate) 8. Building an additional warehouse is an incremental expansion, not a one-step expansion. False (Capacity planning, moderate) 9. Fixed costs are those costs that continue even if no units are produced. True (Break-even analysis, moderate) 10. Break-even analysis identifies the volume at which fixed costs and revenue are equal. False (Break-even analysis, moderate) 11. Break-even analysis is a powerful analytical tool, but is useful only when the organization produces a single product. False (Break-even analysis, moderate) 12. A decision tree indicates at what quantity profit changes from negative to positive. False (Break-even analysis, moderate) 13. A decision tree for analyzing capacity would have future demands or market favorability as the decision alternatives. False (Applying decision trees to capacity decisions, moderate) 14. One limitation of the net present value approach to investments is that investments with identical net present values may have very different cash flows. True (Applying investment analysis to strategy-driven investments, moderate)
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15. The net present value of $10,000 to be received in exactly three years is considerably greater than $10,000 . False (Applying investment analysis to strategy-driven investments, easy) MULTIPLE CHOICE 16. What is sometimes referred to as rated capacity? a. efficiency b. utilization c. effective capacity d. expected output e. design capacity d (Capacity, moderate) 17. Effective capacity is the a. maximum output of a system in a given period b. capacity a firm expects to achieve given the current operating constraints c. average output that can be achieved under ideal conditions d. minimum usable capacity of a particular facility e. sum of all of the organization's inputs b (Capacity, moderate) 18. Which of the following represents an aggressive approach to demand management in the service sector when demand and capacity are not particularly well matched? a.
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This note was uploaded on 10/16/2011 for the course MARKETING 1234s taught by Professor Mohammed during the Spring '11 term at Abu Dhabi University.

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SUPPLEMENT 7 - SUPPLEMENT 7: CAPACITY PLANNING TRUE/FALSE...

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