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Exam 27: Capacity and Constraint Management

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Question 61

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________ is actual output as a percent of design capacity.

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Question 62

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Utilization will always be lower than efficiency because

A) effective capacity is less than design capacity.
B) effective capacity is greater than design capacity.
C) effective capacity equals design capacity.
D) utilization and efficiency are equal in value.
E) utilization is normally greater than efficiency.

F) C) and D)
G) A) and D)

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Question 63

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How is break-even analysis useful in the study of the capacity decision? What limitations does this analytical tool have in this application?

The process time of a system is equivalent to the

To find the process cycle time with simultaneous processes, compute the time over all paths and choose the shortest path through the system.

Which of the following represents a common way to manage capacity in the service sector?

An executive conference centre has the physical ability to handle 1,200 participants. However, conference management personnel believe that only 1,050 participants can be handled effectively for most events. The last event, although forecasted to have 1,000 participants, resulted in the attendance of only 980 participants. What are the utilization and efficiency of the conference facility?

Distinguish between utilization and efficiency.

Fabricators, Inc. wants to increase capacity by adding a new machine. The fixed costs for machine A are $90,000, and its variable cost is $15 per unit. The revenue is $21 per unit. The break-even point for machine A is

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 useful tactic for increasing capacity is to redesign a product in order to get more throughput.

Explain the importance of a bottleneck operation in a production sequence.

Basic break-even analysis typically assumes that

Break-even analysis can be used by a firm that produces more than one product, but

________ is the amount a facility can hold, store, receive, or produce in a period of time.

The local convenience store makes personal pan pizzas. Currently, their oven can produce 60 pizzas per hour. It has a fixed cost of $2,500, and a variable cost of $0.28 per pizza. The owner is considering a bigger oven that can make 85 pizzas per hour. It has a fixed cost of $3,200, but a variable cost of $0.21 per pizza. a. At what quantity do the two ovens have equal costs? b. If the owner expects to sell 9,000 pizzas, should he get the new oven?

The staff training centre at a large regional hospital provides training sessions in CPR to all employees. Assume that the capacity of this training system was designed to be 1200 employees per year. Since the training centre was first put in use, the program has become more complex, so that 1050 now represents the most employees that can be trained per year. In the past year, 950 employees were trained. The efficiency of this system is approximately ________ and its utilization is approximately ________.