capacity planning in operations management
d) overall level of capacity requirements Estimate future requirements c) 5 machines Variable Cots is $12 per unit, and revenue is $42 per unit. Efficiency is expressed as a percentage, while capacity utilization is not. There’s a lot of valuable and available industry-related information that you can use to estimate demand for your product. Capacity can be broken down in two categories: Design Capacity and Effective Capacity: refers to the maximum designed service capacity or output rate. 51) If the output rate is less than the optimal level, increasing the output rate results in decreasing average unit costs according to: c) 420 units b. affect operating costs A system’s potential for producing goods or delivering services over a specified time interval. a) The inability to store services in advance After you’ve identified a group of potential customers, your next step is finding out as much as you can about what they think of your product idea. b) 5300 cookies A. American Sports Data, for instance, provides demographic information on no fewer than twenty-eight fitness activities, including jogging.“Trends in U.S. b) Quality d) tracking d.) Capacity Cushion c) Something that attempts to smooth out capacity requirements. a.) a) Variable cost/unit exceeds revenue/unit a) 400 profit c) monitor results d) 3200 cookies 11) When would a company incorporate a capacity cushion? Answer is B found on page 204. In this step, a business breaks down work into categories; it also quantifies users’ expectations for how that work gets done. a) Larger This often means that the demand in the market for the product is below what the firm could potentially supply to the market. In operations, management capacity is referred as an amount of the input resources available to produce relative output over period of time. Identify alternatives for meeting requirements E. For “what if” analysis, 35) Decision theory is best used in which of the following? You have located a small storefront in a busy section of town. a) diseconomies of scale You’ll still want to talk with people in the industry, as well as potential customers, to hear their views on the demand for your product. Three key inputs to capacity planning: Chapter 4: Capacity Planning 4.1 Planning Long-Term Capacity 1) Capacity is the maximum rate of output of a process. e. none of the above, answer: (A) total cost and total revenue are equal (203), 15) Dis-economies of scale happen when… The objective of capacity management (i.e., planning and control of capacity) is to match the level of operations to the level of demand. a) continuous d) design capacity Answering this question means performing one of the hardest tasks in business: forecasting demand for your proposed product. Where do they buy them and in what quantity? b) economies of scale c) Current in-house capacity Being realistic (but having faith in an excellent product), you estimate that you’ll capture 2 percent of the market during your first year. The most important concept of capacity planning is to find a medium between long term supply and capabilities of an organization and the predicted level of long term demand. Mastering the challenge of capacity management December 1, 2014 ... the underlying root cause of much reluctance is one of mind-sets and a misunderstanding of the real power of workforce management. b. e) $7.80, Answer is C found on page 204.Profit = Q(R – v) – FC c) effective capacity Only then would you use your sales estimate to make financial projections and decide whether your proposed business is financially feasible. II and III b) Changes in technology e) 4 machines. View Capacity planning.ppt from BUSINESS A MISC at London School of Business and Finance. For short tem goals Read the chapter five summary. d. cash flow #5.The takeaway. Managers should recognize the broader effects capacity decisions have on the entire organization. Business Capacity Management The capacity of teams, business capabilities and processes. a) estimate future capacity requirements The capacity decisions within a company are very important because they help determine the limit of output and provide a major insight to determining operating costs. A technique used to identify and measure overall capacity of production is referred to as strategic capacity planning. a) availability of capacity B. 52) If: Design capacity= 60 trucks per day, effective capacity = 40 trucks per day, actual output = 36 trucks per day, compute the efficiency: Answer E (Efficiency=Actual output/effective capacity=36trucks per day/40 trucks per day=90%) (Page 188), a) Extra amount of capacity intended to offset uncertainty in demand d) Costs The lower limit or bottom on the load that an operating unit can handle. d. when the company sales are declining Capacity planning based on the timeline is classified into three main categories long range, medium range and short range. 1. His job, therefore, was to design a product that dealers would want to sell and enthusiasts would buy. 6. a) 3 machines d) Revenue per unit may change depending on volume d) The need for customer convenience d) Constant For … c) Large Facility So you do the math: 600,000 pairs of jogging shoes sold in Florida × 0.02 (a 2 percent share of the market) = 12,000, the estimated first-year demand for your proposed product. 35 trucks per day d) 4000 loss Capacity planning is the process of determining the production capacity needed by an organization to meet changing demand for its products. When Bob Montgomery asked himself these questions, he concluded that he had two groups of customers for the PowerSki Jetboard: (1) the dealerships that would sell the product and (2) the water-sports enthusiasts who would buy and use it. Excess capacity arises when actual production is less than what is achievable or optimal for a firm. What do you like about this product idea? c.) Make sure other portions of the process are supportive of the constraint. d) $6.50 You can obtain helpful information about product demand by talking with people in similar businesses and potential customers. e.) I and IV. After considering the forecast and long-term planning organization should undertake capacity planning. In order to perform the following … d) a&b both are correct There are several possible approaches to this task that can be used alone or in combination. c. the output rate is more than the optimal level 45. a) 2 machines b) conduct financial analysis Physical Fitness Behavior (1987–Present),”, Alan Scher Zagier, “Eyeing Competition, Florida Increases Efforts to Lure Retirees,”, Figure 10.5 “When to Develop and Market a New Product”, http://www.nsga.org/i4a/pages/index.cfm?pageid=1, http://www.letsrun.com/2010/recessionproofrunning0617.php, http://www.usatf.org/news/specialReports/2003LDRStateOfTheSport.asp, http://www.americansportsdata.com/phys_fitness_trends1.asp, http://www.boston.com/news/nation/articles/2003/12/26/eyeing_competition_florida_increases_efforts_to_lure_retirees, https://saylordotorg.github.io/text_exploring-business-v2.0/s14-05-forecasting-demand.html, CC BY-NC-SA: Attribution-NonCommercial-ShareAlike. c.) Bottleneck Operation The Web site also reports that the number of athletes who are at least forty and who participate in road events increased by more than 50 percent over a ten year period.“Long Distance Running: State of the Sport,” USA Track & Field, http://www.usatf.org/news/specialReports/2003LDRStateOfTheSport.asp (accessed October 29, 2011). a. system is flexible d) 22% The owner of Cookies Inc., Zoya, is contemplating adding a new line of cookies, which require leasing for a monthly payment of $4,000. a. the size of the facility vs the effectiveness of the facility e) None of the above. e) All of above are determinants of effective capacity. c) Degree of customization C. Long term analysis Organizations have capacities or limits that their system can handle. a. capacity decisions have a real impact on whether or not a company will meet future demands You will also deliver pizzas. Process factors must be efficient and must operate smoothly, if not the rate of output will dramatically decrease. In resolving constraint issues, all possible alternative solutions must be evaluated. e) None of the above. B. Chapter 5 focuses on capacity planning for products and services. c) Lowest a. when demand is certain (Round your answer to the whole number) 47. Effective capacity is design capacity minus personal and other allowances. These capacity management tools help infrastructure and operations management teams plan and optimize IT infrastructures and tools, and balance the use of external and cloud computing service … 3. b) In number of workers e) All of the above, 19) In dis-economies of scale, average unit costs after the optimal level are: Learn vocabulary, terms, and more with flashcards, games, and other study tools. Lead Strategy –. Chapter 5 Strategic Capacity Planning for Products and Services. After you’ve identified a group of potential customers, your next step is finding out as much as you can about what they think of your product idea. a. The firm is obtaining a profit A third approach is tracking capacity which adds incremental capacity over time to meet demand. 2. Short Term Capacity: The strategic planning undertaken by organization for a daily weekly or quarterly time frame is referred to as short term capacity planning. 4. Inventory e) 62%, Answer is E found on page The formula is Capacity cushion = 100% – Utilization, 43. Implement selected alternative Determine the break-even point for range (0 to 300). Q=FC/(R-v); 12,000/($42-$12)=400 units. b. stage of life cycle is taken into account c) 3000 cookies If projected annual demand is between 580 and 650 units, how many machines should the manager purchase. *Accurate forecasts are critical to the planning process. P = Q(R – v) – FC. All of the following are true of Capacity decisions except: e) None of the above, 30) What is the best way to measure capacity for a steel mill? What don’t you like? a. Facilitates the performance of a process or system in achieving its goal D. Consumer demand The capacity of your company to meet expected demand should be measured in both the short-term and the long-term. Answer is A found on page 205. a. c.) 45 trucks per day There are several possible approaches to this task that can be used alone or in combination. Capacity refers to a system’s potential for producing goods or delivering services over a specified time interval. Based on the information below answer the following Questions 44-47. E. Short term analysis. e) 54%, 25) Which of the following are steps in the capacity planning process?
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