Font size
WorksheetsOM_Strategic Capacity Management
Total questions: 60
Worksheet time: 10mins
Capacity planning refers to the act of ensuring a business maximizes its potential activities and production output at all times, under all conditions.
true
false
Implementing capacity management may entail working overtime, outsourcing business operations, purchasing additional equipment, and leasing or selling commercial property.
true
false
Companies that poorly execute capacity management may experience diminished revenues due to unfulfilled orders, customer attrition, and decreased market share.
true
false
Capacity management also means calculating the proportion of spatial capacity that is actually being used over a certain time period.
true
false
What is the primary goal of capacity management?
To reduce production costs
To minimize equipment usage
To align production capabilities with market demands
To increase employee satisfaction
Which of the following is essential for meeting production demands?
Limited technology use
Adequate equipment
High employee turnover
Minimal training programs
What is the impact of overcapacity on an organization?
Increased operating costs
Higher customer satisfaction
Enhanced employee morale
Improved profitability
What does effective capacity refer to?
The maximum output under perfect conditions
The realistic output level under actual conditions
The output level of outdated equipment
The output level achieved during peak hours
What does the utilization rate measure?
The percentage of actual output to effective capacity
The percentage of actual output to design capacity
The efficiency of equipment only
The total output of all employees
Which strategy involves building capacity in anticipation of future demand?
Following / Level Strategy
Tracking / Mixed Strategy
Leading / Chase Strategy
Reactive Strategy
What factor is crucial for determining capacity needs?
Market demand
Employee preferences
Company size
Equipment age
Which of the following can influence capacity requirements?
Customer feedback
Technology advances
Employee satisfaction surveys
Marketing strategies
What is a potential consequence of undercapacity?
Increased production efficiency
Delayed customer orders
Higher employee retention
Lower operating costs
Which of the following is NOT a determinant of effective capacity?
Facilities
Product design
Employee hobbies
Supply chain capabilities
What does the efficiency rate reflect?
The total number of employees
The average production time
The ratio of actual output to design capacity
The ratio of actual output to effective capacity
What is the theoretical maximum output of a facility called?
Effective Capacity
Utilization Capacity
Design Capacity
Operational Capacity
Which of the following factors can influence capacity decisions?
Brand loyalty
Employee preferences
Office layout
Market share
What is a consequence of having underutilized resources?
Improved employee morale
Higher operating costs
Enhanced customer satisfaction
Increased profitability
What is the risk associated with the Leading / Chase Strategy?
Increased employee turnover
Delayed production
Overcapacity
Underutilization of resources
What is the role of employee skills in capacity management?
They are essential for maximizing output
They are secondary to technology
They have no impact
They only affect equipment usage
What is the primary challenge of capacity planning?
Forecasting future demand accurately
Maintaining employee satisfaction
Reducing production costs
Improving product quality
Which of the following is a method to increase capacity?
Reducing workforce
Outsourcing production
Decreasing technology investment
Limiting product lines
What is a common indicator of capacity underutilization?
Increased customer orders
Excess inventory levels
Low operational costs
High employee productivity
Which of the following best describes the term 'design capacity'?
The maximum output achievable under ideal conditions
The output level that can be sustained over time
The output level achieved during peak demand
The average output expected during normal operations
What is a common method for assessing capacity utilization?
Comparing actual output to design capacity
Evaluating employee satisfaction
Analyzing market trends
Reviewing financial statements
Managing capacity is only a short-term consideration in operations strategy.
True
False
Effective capacity is usually lower than design capacity due to operating constraints.
True
False
Utilization is the percentage of effective capacity achieved.
True
False
Design capacity is the maximum theoretical output of a system, expressed as a rate.
True
False
Capacity decisions do not need to be integrated into the organization's mission and strategy.
True
False
Accurate forecasting in both short and long term is crucial for efficient capacity development.
True
False
Investing in technology that will soon become obsolete is a good strategy.
True
False
Finding the optimal operating size is important to avoid diseconomies of scale.
True
False
Seasonal promotions can help balance out demand fluctuations.
True
False
Cross-training staff can increase flexibility in managing demand changes.
True
False
What is a match strategy in capacity management?
Making small adjustments to capacity to meet demand
Expanding production rapidly in response to demand
Maintaining constant production regardless of demand
Storing large amounts of stock in advance
What does 'capacity' refer to in manufacturing?
The amount of products stored in a warehouse
The ability of available resources to meet demand
The number of employees in a company
All the above
Which of the following factors affects capacity in a restaurant?
The number of tables and chairs
The size of the kitchen
The number of staff
All of the above
What is the key risk of a lead capacity strategy?
Running out of stock too quickly
Holding excess inventory if demand does not increase
Delayed response to rising demand
Reduced flexibility in production
How does a lag strategy manage capacity?
By increasing capacity only after demand has been proven
By anticipating demand and increasing capacity in advance
By maintaining constant capacity regardless of demand
By reducing capacity as demand decreases
What is a match strategy in capacity management?
Making small adjustments to capacity to meet demand
Expanding production rapidly in response to demand
Maintaining constant production regardless of demand
Storing large amounts of stock in advance
What is a bottleneck in manufacturing?
a) A temporary shortage of raw materials
b) A stage in the process that slows down overall production
c) The final quality control step before shipping
d) All the below
How can bottlenecks be prevented?
Improving staff training
Upgrading equipment and machinery
Planning extra capacity in the system
All of the above
What is Manufacturing Resource Planning (MRP II) used for?
Only controlling inventory levels
Planning capacity, scheduling, and financial forecasting
Reducing product quality standards
Increasing warehouse storage space
Which of the following is NOT one of the conditions that fixed-capacity firms may face?
Excess capacity.
Demand exceeds desired capacity.
Demand and supply are well-balanced.
Ideal demand exceeds capacity.
Excess demand.
Which of the following is NOT one of the productive capacity forms in a service context?
Physical facilities designed to contain customers
Physical equipment used to process people, possessions, or information
Customers
Labor
Infrastructure
Which of the following is the correct action for a firm to take that wants to reduce demand and has insufficient capacity?
Take no action.
Consider override for most desirable segments.
Consider priority systems for most desirable segments.
Increase prices or encourage use in other time slots.
Lower prices selectively.
Which of the following is NOT one of the ways to change the overall level of capacity to match demand variations?
Use part-time employees.
Ask customers to share.
Invite customers to perform self-service.
Cross-train employees.
Share facilities with the supplier.
What is the main goal of break-even analysis?
To determine the best supplier for raw materials
To find the production level at which revenue equals costs
To calculate employee wages based on production output
To analyze the impact of inflation on pricing strategies
In capacity planning, which of the following time horizons deals with investment in new facilities?
Short-term (up to 3 months)
Medium-term (3-18 months)
Long-term (greater than 1 year)
Daily planning
A company decides to expand its capacity only after demand exceeds its current capacity. This is an example of which strategy?
Lead strategy
Lag strategy
Follow-the-leader strategy
Just-in-time strategy
Which of the following is an example of increasing capacity?
Reducing employee wages
Adding more machines to a production line
Implementing a new inventory system
Reducing production hours
What is capacity management?
The process of managing customer demand
The process of setting prices for products
The process of hiring new employees
The process of determining the production capacity needed by an organization
What does capacity planning involve?
Hiring new employees
Setting the effective capacity of the operation to respond to demand fluctuations
Managing customer complaints
Setting the prices for products
What is the purpose of managing bottlenecks and queues?
To reduce potential customer satisfaction
To design queues into the service
To ensure that only essential work passes through
To increase customer waiting time
In a restaurant, which factor does NOT influence capacity?
Number of tables and chairs
Size of the kitchen
Number of staff
Type of cuisine
What happens if a factory produces mountain bikes at full capacity all year but demand drops in winter?
The factory will increase production
There will be excess bikes to store
The factory will hire more workers
The factory will reduce prices
What is the role of capacity management in production?
To decrease production time
To ensure maximum production efficiency
To increase product prices
To reduce employee numbers
What is the result of aligning production capacity with demand?
Increased storage needs
Financial savings
Reduced product quality
Increased employee turnover
What is one of the benefits of capacity management in production?
Increases production costs
Plans production cycles ahead of time
Reduces inventory levels
Decreases production efficiency
