Chap005 - Chapter 05 - Strategic Capacity Planning for...

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Unformatted text preview: Chapter 05 - Strategic Capacity Planning for Products and Services Chapter 05 Strategic Capacity Planning for Products and Services True / False Questions 1. The term capacity refers to the maximum quantity an operating unit can process. TRUE Difficulty: Easy TLO: 2 Taxonomy: Knowledge 2. Capacity decisions are usually one-time decisions; once they have been made, we know the limits of our operations. FALSE AACSB: RT Difficulty: Easy TLO: 1 Taxonomy: Knowledge 3. Stating capacity in dollar amounts generally results in a consistent measure of capacity regardless of the actual units of measure. FALSE Difficulty: Medium TLO: 2 Taxonomy: Knowledge 4. Design capacity refers to the maximum output that can possibly be attained. TRUE Difficulty: Easy TLO: 2 Taxonomy: Knowledge 5-1 Chapter 05 - Strategic Capacity Planning for Products and Services 5. If the unit cost to buy something is less than the variable cost to make it, the decision to make or buy is based solely on the fixed costs. FALSE Difficulty: Medium TLO: 4 Taxonomy: Knowledge 6. Increasing productivity and also quality will result in increased capacity. TRUE Difficulty: Easy TLO: 3 Taxonomy: Knowledge 7. Utilization is defined as the ratio of effective capacity to design capacity. FALSE Difficulty: Medium TLO: 2 Taxonomy: Knowledge 8. Increasing capacity just before a bottleneck operation will improve the output of the process. FALSE Difficulty: Medium TLO: 3 Taxonomy: Knowledge 9. An example of an external factor that influences effective capacity is government safety regulations. TRUE Difficulty: Easy TLO: 3 Taxonomy: Knowledge 5-2 Chapter 05 - Strategic Capacity Planning for Products and Services 10. Cost and competitive priorities reduce effective capacities. FALSE AACSB: RT Difficulty: Hard TLO: 3 Taxonomy: Synthesis 11. Capacity increases are usually acquired in fairly large "chunks" rather than smooth increments. TRUE AACSB: Ref Difficulty: Medium TLO: 4 Taxonomy: Knowledge 12. In cost-volume analysis, costs that vary directly with volume of output are referred to as fixed costs because they are a fixed percentage of output levels. FALSE Difficulty: Hard TLO: 5 Taxonomy: Knowledge 13. The break-even quantity can be determined by dividing the fixed costs by the difference between the revenue per unit and the variable cost per unit. TRUE Difficulty: Medium TLO: 5 Taxonomy: Knowledge 5-3 Chapter 05 - Strategic Capacity Planning for Products and Services 14. According to the reading on restaurant sourcing practices, only fast-food restaurants are able to bring in' outsourced foods. FALSE Difficulty: Easy TLO: 3 Taxonomy: Knowledge 15. The greater the gap between current and desired capacity the greater the opportunity for profit....
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This note was uploaded on 12/17/2011 for the course OPER 501 taught by Professor Fsafas during the Spring '11 term at Manor.

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Chap005 - Chapter 05 - Strategic Capacity Planning for...

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