Operations And Supply Chain Management The Core 4th Edition By Jacobs – Test Bank
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Sample Questions
1. Capacity
can be defined as the ability to hold, receive, store, or accommodate.
TRUE
A dictionary definition of capacity is “the ability to hold,
receive, store, or accommodate.”
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
Bloom’s: Remember
Difficulty: 1 Easy
Learning Objective: 04-01
Topic: Capacity Management in Operations and Supply Chain Management
2. When
evaluating capacity, managers need to consider both resource inputs and product
outputs.
TRUE
When looking at capacity, operations managers need to look at
both resource inputs and product outputs.
AACSB: Analytic
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
Bloom’s: Analyze
Bloom’s: Remember
Difficulty: 1 Easy
Learning Objective: 04-01
Topic: Capacity Management in Operations and Supply Chain
Management
3. Capacity
can be defined as the amount of available resource inputs relative to
requirements for output over a particular period of time.
TRUE
Capacity is a relative term; in an operations management
context, it may be defined as the amount of resource inputs available relative
to output requirements over a particular period of time.
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
Bloom’s: Remember
Difficulty: 1 Easy
Learning Objective: 04-01
Topic: Capacity Management in Operations and Supply Chain Management
4. The
capacity utilization rate is found by dividing best operating level by capacity
used.
FALSE
The capacity utilization rate is found by dividing capacity used
by best operating level.
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
Bloom’s: Remember
Difficulty: 1 Easy
Learning Objective: 04-01
Topic: Capacity Planning Concepts
5. The
objective of strategic capacity planning is to provide an approach for
determining the overall capacity level of labor-intensive resources.
FALSE
The objective of strategic capacity planning is to provide an
approach for determining the overall capacity level of capital-intensive
resources—facilities, equipment, and overall labor force size—that best
supports the company’s long-range competitive strategy.
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
Bloom’s: Remember
Difficulty: 1 Easy
Learning Objective: 04-01
Topic: Capacity Planning Concepts
6. The
objective of strategic capacity planning is to determine the overall capacity
level of capital intensive resources (including facilities,
equipment, and overall labor force size) that best supports the company’s
short-range competitive strategy.
FALSE
The objective of strategic capacity planning is to provide an
approach for determining the overall capacity level of capital-intensive
resources—facilities, equipment, and overall labor force size—that best
supports the company’s long-range competitive strategy.
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
Bloom’s: Remember
Difficulty: 1 Easy
Learning Objective: 04-01
Topic: Capacity Planning Concepts
7. The
objective of strategic capacity planning is to determine the overall capacity
level of capital intensive resources (including facilities, equipment, and
overall labor force size) that best supports the company’s long-range
competitive strategy.
TRUE
The objective of strategic capacity planning is to provide an
approach for determining the overall capacity level of capital-intensive
resources—facilities, equipment, and overall labor force size—that best
supports the company’s long-range competitive strategy.
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
Bloom’s: Remember
Difficulty: 1 Easy
Learning Objective: 04-01
Topic: Capacity Planning Concepts
8. Best
operating level is usually a multiple of the level of capacity for which a
process was designed.
FALSE
(Best operating level) is the level of capacity for which the
process was designed and thus is the volume of output at which average unit
cost is minimized.
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
Bloom’s: Remember
Difficulty: 1 Easy
Learning Objective: 04-01
Topic: Capacity Planning Concepts
9. Best
operating level is the volume of output at which average unit cost is
minimized.
TRUE
(Best operating level) is the level of capacity for which the
process was designed and thus is the volume of output at which average unit
cost is minimized.
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
Bloom’s: Remember
Difficulty: 1 Easy
Learning Objective: 04-01
Topic: Capacity Planning Concepts
10. At
some point, the size of a growing plant can become too large and diseconomies
of scale becomes a capacity planning problem.
TRUE
At some point, the size of a plant becomes too large and
diseconomies of scale becomes a problem.
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
Bloom’s: Remember
Difficulty: 1 Easy
Learning Objective: 04-02
Topic: Capacity Planning Concepts
11. Long-range
capacity planning requires top management participation.
TRUE
Where productive resources (such as buildings, equipment, or facilities)
take a long time to acquire or dispose of, long-range capacity planning
requires top management participation and approval.
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
Bloom’s: Remember
Difficulty: 1 Easy
Learning Objective: 04-01
Topic: Capacity Management in Operations and Supply Chain
Management
12. Overtime
and personnel transfers are solutions to capacity problems in the intermediate
term.
FALSE
Short range —less than one month. This is tied into the daily or
weekly scheduling process and involves making adjustments to eliminate the
variance between planned and actual output. This includes alternatives such as
overtime, personnel transfers, and alternative production routings.
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
Bloom’s: Remember
Difficulty: 1 Easy
Learning Objective: 04-01
Topic: Capacity Management in Operations and Supply Chain
Management
13. Capacity
planning is generally viewed in three time durations: Immediate, Intermediate,
and Indeterminate.
FALSE
The correct answer is long-range, intermediate-range and
short-range.
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
Bloom’s: Remember
Difficulty: 1 Easy
Learning Objective: 04-02
Topic: Capacity Planning Concepts
14. The
basic notion of economies of scale is that as a plant gets larger and volume
increases, the average cost per unit of output drops.
TRUE
The basic notion of economies of scale is that as a plant gets
larger and volume increases, the average cost per unit of output drops.
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
Bloom’s: Remember
Difficulty: 1 Easy
Learning Objective: 04-02
Topic: Capacity Planning Concepts
15. A
piece of equipment with twice the capacity of another piece typically costs
twice as much to purchase and to operate.
FALSE
The basic notion of economies of scale is that as a plant gets
larger and volume increases, the average cost per unit of output drops. This is
partially due to lower operating and capital cost, because a piece of equipment
with twice the capacity of another piece typically does not cost twice as much
to purchase or operate.
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
Bloom’s: Remember
Difficulty: 1 Easy
Learning Objective: 04-02
Topic: Capacity Planning Concepts
16. The
problem of keeping demand sufficiently high to keep a large factory busy is a
sales issue and not a diseconomy of scale.
FALSE
While this can be viewed as a sales issue, it is one brought on
by the large scale of operations and is thus also a diseconomy of scale.
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
Bloom’s: Remember
Difficulty: 1 Easy
Learning Objective: 04-02
Topic: Capacity Planning Concepts
17. A
production facility works best when it focuses on a fairly limited set of
production objectives.
TRUE
The concept of a focused factory holds that a production
facility works best when it focuses on a fairly limited set of production
objectives.
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
Bloom’s: Remember
Difficulty: 1 Easy
Learning Objective: 04-02
Topic: Capacity Planning Concepts
18. A
production facility develops virtuosity and works best when it focused on a
widely varied set of production objectives.
FALSE
A firm should not expect to excel in every aspect of
manufacturing performance: cost, quality, delivery speed and reliability,
changes in demand, and flexibility to adapt to new products. Rather, it should
select a limited set of tasks that contribute the most to corporate objectives.
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
Bloom’s: Remember
Difficulty: 1 Easy
Learning Objective: 04-02
Topic: Capacity Planning Concepts
19. Making
adjustments to eliminate the variance between planned and actual output is tied
into intermediate range capacity planning.
FALSE
Short range —less than one month. This is tied into the daily or
weekly scheduling process and involves making adjustments to eliminate the
variance between planned and actual output. This includes alternatives such as
overtime, personnel transfers, and alternative production routings.
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
Bloom’s: Remember
Difficulty: 1 Easy
Learning Objective: 04-01
Topic: Capacity Management in Operations and Supply Chain
Management
20. The
ultimate in plant flexibility is a one-hour-changeover time plant.
FALSE
Perhaps the ultimate in plant flexibility is the
zero-changeover-time plant.
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
Bloom’s: Remember
Difficulty: 1 Easy
Learning Objective: 04-01
Topic: Capacity Planning Concepts
21. Capacity
flexibility means having the ability to rapidly increase or decrease production
levels, or to shift production capacity quickly from one product or service to
another.
TRUE
Capacity flexibility means having the ability to rapidly
increase or decrease production levels, or to shift production capacity quickly
from one product or service to another.
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
Bloom’s: Remember
Difficulty: 1 Easy
Learning Objective: 04-01
Topic: Capacity Planning Concepts
22. Economies
of scope exist when multiple products can be produced at a lower cost in
combination than they can separately.
TRUE
Economies of scope exist when multiple products can be combined
and produced at one facility, at a lower cost than they can be produced
separately.
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
Bloom’s: Remember
Difficulty: 1 Easy
Learning Objective: 04-02
Topic: Capacity Planning Concepts
23. The
frequency of adding to productive capacity should balance the costs of
upgrading too frequently and the costs of upgrading too infrequently.
TRUE
See exhibit 4.2 and narrative on “Frequency of Capacity
additions.”
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
Bloom’s: Remember
Difficulty: 1 Easy
Learning Objective: 04-01
Topic: Capacity Planning
24. Outsourcing
is a common source of external capacity.
TRUE
In some cases, it may be cheaper to not add capacity at all, but
rather to use some existing external source of capacity. Two common strategies
used by organizations are outsourcing and sharing capacity.
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
Bloom’s: Remember
Difficulty: 1 Easy
Learning Objective: 04-01
Topic: Capacity Planning
25. Sharing
capacity is a common source of external capacity.
TRUE
In some cases, it may be cheaper to not add capacity at all, but
rather to use some existing external source of capacity. Two common strategies
used by organizations are outsourcing and sharing capacity.
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
Bloom’s: Remember
Difficulty: 1 Easy
Learning Objective: 04-01
Topic: Capacity Planning
26. A
capacity cushion is the amount of capacity less than expected demand.
FALSE
A capacity cushion is the amount of capacity in excess of
expected demand
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
Bloom’s: Remember
Difficulty: 1 Easy
Learning Objective: 04-01
Topic: Capacity Planning
27. A
decision tree problem does not need probabilities or payoffs to generate a
solution.
FALSE
See the decision tree examples in the text. Without probabilities
and payoffs a decision tree is not capable of generating a solution.
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
Bloom’s: Remember
Difficulty: 1 Easy
Learning Objective: 04-03
Topic: Using Decision Trees to Evaluate Capacity Alternatives
28. In
solving a decision tree problem, calculations start at the ends of the
“branches” of the tree and work backwards to the base of the tree.
TRUE
In solving a tree problem, we work from the end of the tree
backward to the start of the tree.
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
Bloom’s: Remember
Difficulty: 1 Easy
Learning Objective: 04-03
Topic: Using Decision Trees to Evaluate Capacity Alternatives
29. The probability
of each occurrence at a decision tree chance node is the reciprocal of the
number of possibilities at the chance node.
FALSE
See the decision tree example in the text. This is only true in
the unusual event that all the possibilities at each node have an equal chance
of occurring.
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
Bloom’s: Remember
Difficulty: 2 Medium
Learning Objective: 04-03
Topic: Using Decision Trees to Evaluate Capacity Alternatives
30. In a
decision tree, the only time probabilities are applied to a decision node is
when the decision is being made by someone else such as you customer or your
competitor.
FALSE
Decision trees are composed of decision nodes with branches to
and from them. Usually squares represent decision points and circles represent
chance events. Branches from decision points show the choices available to the
decision maker; branches from chance events show the probabilities for their
occurrence.
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
Bloom’s: Remember
Difficulty: 2 Medium
Learning Objective: 04-03
Topic: Using Decision Trees to Evaluate Capacity Alternatives
31. Low
rates of capacity utilization in service organizations are never appropriate.
FALSE
Hospital emergency rooms and fire departments should aim for low
utilization because of the high level of uncertainty and the life-or-death
nature of their activities.
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
Bloom’s: Remember
Difficulty: 1 Easy
Learning Objective: 04-04
Topic: Planning Service Capacity
32. The
smaller the capacity cushion the better.
FALSE
This is not necessarily true except in the instance of a firm
whose competitive advantage is low cost or price. For a firm competing on speed
of delivery or innovative ability, for example, a larger capacity cushion will
allow more flexibility and enable an appropriate response to unplanned orders.
AACSB: Analytic
Accessibility: Keyboard Navigation
Bloom’s: Apply
Difficulty: 2 Medium
Learning Objective: 04-01
Topic: Capacity Planning
33. The
larger the capacity cushion the better.
FALSE
This is false for the firm whose competitive advantage is low
cost or price. For a firm competing on speed of delivery or innovative ability,
for example, a larger capacity cushion will allow more flexibility and enable
an appropriate response to unplanned orders.
AACSB: Analytic
Accessibility: Keyboard Navigation
Bloom’s: Apply
Difficulty: 2 Medium
Learning Objective: 04-01
Topic: Capacity Planning
34. The
capacity cushion is the ratio of capacity used to the best capacity level.
FALSE
A capacity cushion is an amount of capacity in excess of
expected demand.
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
Bloom’s: Remember
Difficulty: 2 Medium
Learning Objective: 04-01
Topic: Capacity Planning
35. When
a firm’s design capacity is less than the capacity required to meet its demand,
it is said to have a negative capacity cushion.
TRUE
When a firm’s design capacity is less than the capacity required
to meet its demand, it is said to have a negative capacity cushion.
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
Bloom’s: Remember
Difficulty: 2 Medium
Learning Objective: 04-01
Topic: Capacity Planning
36. In
decision tree analysis the time value of money is ignored because you are only
concerned with cash costs.
FALSE
In solving decision tree problems, we work from the end of the
tree backward to the start of the tree. As we work back, we calculate the
expected values at each step. In calculation of the expected value, the time
value of money is important if the planning horizon is long.
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
Bloom’s: Remember
Difficulty: 2 Medium
Learning Objective: 04-03
Topic: Using Decision Trees to Evaluate Capacity Alternatives
37. In
practice, achieving a perfectly balanced plant is usually desirable but
impossible.
FALSE
In practice achieving such a “perfect” design is usually both
impossible and undesirable.
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
Bloom’s: Remember
Difficulty: 2 Medium
Learning Objective: 04-01
38. In
practice achieving a perfectly balanced plant is usually both impossible and
undesirable.
TRUE
In practice achieving such a “perfect” design is usually both
impossible and undesirable.
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
Bloom’s: Remember
Difficulty: 2 Medium
Learning Objective: 04-01
Topic: Capacity Planning
39. Because
services cannot be stored for later use, service managers consider time as one
of their supplies or resources.
TRUE
Unlike goods, services cannot be stored for later use. As such,
in services managers must consider time as one of their supplies.
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
Bloom’s: Remember
Difficulty: 2 Medium
Learning Objective: 04-01
Topic: Capacity Planning
40. The
ability to rapidly and inexpensively switch production from one product to
another enables what are sometimes referred to as:
1. Economies
of scale
1. Economies
of size
1. Economies
of shape
1. Economies
of scope
1. Economies
of shipping
Flexible manufacturing systems and simple easily set-up
equipment permit rapid low-cost switching from one product to another, enabling
what are sometimes referred to as economies of scope .
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
Bloom’s: Remember
Difficulty: 2 Medium
Learning Objective: 04-02
Topic: Capacity Planning Concepts
41. Capacity
planning that involves hiring, layoffs, some new tooling, minor equipment
purchases, and subcontracting is considered as which one of the following
planning horizons?
1. Intermediate
range
1. Long
range
1. Short
range
1. Current
1. Upcoming
Intermediate range: monthly or quarterly plans for the next 6 to
18 months. Here, capacity may be varied by such alternatives as hiring,
layoffs, new tools, minor equipment purchases, and subcontracting.
AACSB: Reflective Thinking
Accessibility: Keyboard Navigation
Bloom’s: Remember
Difficulty: 2 Medium
Learning Objective: 04-01
Topic: Capacity Management in Operations and Supply Chain
Management
42. Capacity
planning involving acquisition or disposal of fixed assets such as buildings,
equipment or facilities is considered as which one of the following planning
horizons?
1. Intermediate-range
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