Attempt 1

Written: Jan 30, 2015 11:08 PM - Jan 30, 2015 11:15 PM

Submission View
Your quiz has been submitted successfully.

Quiz 6 T/F
Question 1
Capacity decisions should be made separately from strategic decisions.

True
False
Question 2
Output measures are used for estimating capacity requirements when product variety and process
divergence are high.

True
False
Question 3
Capacity is the maximum rate of output of a process.

True
False
Question 4
Capacity cushions may be lowered if companies smooth the output rate by raising prices when inventory is
low and decreasing prices when it is high.

True
False
Question 5
When a firm makes a long-term capacity decision, selecting the base case alternative means doing nothing
and losing orders from any demand that exceeds current capacity, or incurring costs due to excess capacity.

True
False
Question 6
One reason economies of scale drive down cost is the spreading of fixed costs.

True

False
Question 7
A larger capacity cushion can help firms uncover process inefficiencies, so they can find ways to correct
them.

True
False
Question 8
A smaller capacity cushion may be required if a process is highly capital intensive.

True
False
Question 9
Input measures of capacity are inherently more accurate than output measures of capacity.

True
False
Question 10
A process's capacity requirement states the future process capacity needed to meet projected customer
demands, and includes an allowance for the desired capacity cushion.

True
False
Question 11
A wait-and-see capacity strategy minimizes the chances of lost sales due to insufficient capacity.

True
False
Question 12
As the desired capacity cushion increases, the processing hours required for a year's demand decrease.

True
False
Question 13
An expansionist capacity strategy minimizes the risks of overexpansion due to overly optimistic demand
forecasts.

True

False
Question 14
A larger capacity cushion may be required due to variation in demand, changing product mix, or supply
uncertainty.

True
False
Quiz 6 Multiple Choices
Question 15
An expansionist capacity strategy:

lags behind demand.

reduces the risk of overexpansion based on overly optimistic
demand forecasts.
can preempt expansion by competitors by announcing a large
capacity expansion.
meets capacity shortfalls with overtime, temporary workers,
subcontracting, and stockouts.
Question 16
A wait-and-see capacity strategy:

involves small, frequent jumps in capacity.

minimizes the chance of lost sales due to insufficient capacity.
can result in economies of scale and a fast rate of learning, yielding
reduced manufacturing costs.
stays ahead of demand.
Question 17
The lock box department at Bank 21 handles the processing of monthly loan payments to the bank, monthly
and quarterly premium payments to a local insurance company, and bill payments for 85 of the bank's
largest commercial customers. The payments are processed by machine operators, with one operator per
machine. An operator can process one payment in 0.25 minute. Setup times are negligible in this situation.
A capacity cushion of 20 percent is needed for the operation. The average monthly (not annual) volume of
payments processed through the department currently is 400,000. However, it is expected to increase by 20
percent. The department operates eight hours per shift, two shifts per day, 260 days per year. How many
machines (not operators) are needed to satisfy the new total processing volume? (Round up to the next
whole integer.)

fewer than 7
7
8

more than 8
Question 18
The single milling machine at Stout Manufacturing was severely overloaded last year. The plant operates
eight hours per day, five days per week, and 50 weeks per year. Management prefers a capacity cushion of
15 percent. Two major types of products are routed through the milling machine. The annual demand for
product A is 3000 units and 2000 units for product B. The batch size for A is 20 units and 40 units for B. The
standard processing time for A is 0.5 hours/unit and 0.8 hours/unit for B. The standard setup time for
product A is 2 hours and 8 hours for product B. How many new milling machines are required if Stout does
not resort to any short-term capacity options?

no new machines
1 or 2 new machines
3 or 4 new machines
more than 4 new machines

Attempt 2
Written: Jan 30, 2015 11:16 PM - Jan 30, 2015 11:22 PM

Submission View
Your quiz has been submitted successfully.

Quiz 6 T/F
Question 1
Utilization is the degree to which equipment, space, or labor is currently being used.

True
False
Question 2
A capacity cushion is the amount of inventory that a firm maintains to handle sudden increases in demand
or temporary loss of production capacity.

True
False
Question 3
One advantage of a smaller capacity cushion is that it is less expensive than a larger cushion.

True
False
Question 4
Economies of scale drive down cost even though the cost of purchased materials can be expected to
increase.

True
False
Question 5
An expansionist capacity strategy involves large, infrequent jumps in capacity, where a wait-and-see
strategy involves smaller, more frequent jumps.

True
False
Question 6
Capacity can be expressed by output or input measures.

True
False
Question 7
The capacity requirement for a year's output is inversely proportional to the total number of hours per year
during which the process operates.

True
False
Question 8
Diseconomies of scale is a concept that states that the average unit cost of a service or good can be reduced
by increasing its output rate.

True
False
Question 9
One reason economies of scale drive down cost is the spreading of fixed costs.

True
False
Question 10
An expansionist capacity strategy minimizes the risks of overexpansion due to overly optimistic demand
forecasts.

True
False
Question 11
Capacity decisions should be made separately from strategic decisions.

True
False
Question 12
Capacity is the maximum rate of output of a process.

True
False
Question 13
Capacity cushions may be lowered if companies smooth the output rate by raising prices when inventory is
low and decreasing prices when it is high.

True
False
Question 14
A wait-and-see capacity strategy minimizes the chances of lost sales due to insufficient capacity.

True
False
Quiz 6 Multiple Choices
Question 15
The single milling machine at Stout Manufacturing was severely overloaded last year. The plant operates
eight hours per day, five days per week, and 50 weeks per year. Management prefers a capacity cushion of
15 percent. Two major types of products are routed through the milling machine. The annual demand for
product A is 3000 units and 2000 units for product B. The batch size for A is 20 units and 40 units for B. The
standard processing time for A is 0.5 hours/unit and 0.8 hours/unit for B. The standard setup time for
product A is 2 hours and 8 hours for product B. How many new milling machines are required if Stout does
not resort to any short-term capacity options?

no new machines
1 or 2 new machines
3 or 4 new machines
more than 4 new machines
Question 16
An expansionist capacity strategy:

lags behind demand.

reduces the risk of overexpansion based on overly optimistic
demand forecasts.
can preempt expansion by competitors by announcing a large

capacity expansion.
meets capacity shortfalls with overtime, temporary workers,
subcontracting, and stockouts.
Question 17
A wait-and-see capacity strategy:

involves small, frequent jumps in capacity.

minimizes the chance of lost sales due to insufficient capacity.
can result in economies of scale and a fast rate of learning, yielding
reduced manufacturing costs.
stays ahead of demand.
Question 18
The lock box department at Bank 21 handles the processing of monthly loan payments to the bank, monthly
and quarterly premium payments to a local insurance company, and bill payments for 85 of the bank's
largest commercial customers. The payments are processed by machine operators, with one operator per
machine. An operator can process one payment in 0.25 minute. Setup times are negligible in this situation.
A capacity cushion of 20 percent is needed for the operation. The average monthly (not annual) volume of
payments processed through the department currently is 400,000. However, it is expected to increase by 20
percent. The department operates eight hours per shift, two shifts per day, 260 days per year. How many
machines (not operators) are needed to satisfy the new total processing volume? (Round up to the next
whole integer.)

fewer than 7
7
8
more than 8

Attempt 3
Written: Jan 30, 2015 11:24 PM - Jan 30, 2015 11:29 PM

Submission View
Your quiz has been submitted successfully.

Quiz 6 T/F
Question 1
A larger capacity cushion can help firms uncover process inefficiencies, so they can find ways to correct
them.

True
False
Question 2
Economies of scale drive down cost even though the cost of purchased materials can be expected to
increase.

True
False
Question 3
Capacity can be expressed by output or input measures.

True
False
Question 4
Input measures of capacity are inherently more accurate than output measures of capacity.

True
False
Question 5
A larger capacity cushion may be required due to variation in demand, changing product mix, or supply
uncertainty.

True
False
Question 6
Utilization is the degree to which equipment, space, or labor is currently being used.

True
False
Question 7
An expansionist capacity strategy involves large, infrequent jumps in capacity, where a wait-and-see
strategy involves smaller, more frequent jumps.

True
False
Question 8
The capacity requirement for a year's output is inversely proportional to the total number of hours per year
during which the process operates.

True
False
Question 9
When a firm makes a long-term capacity decision, selecting the base case alternative means doing nothing
and losing orders from any demand that exceeds current capacity, or incurring costs due to excess capacity.

True
False
Question 10
Diseconomies of scale is a concept that states that the average unit cost of a service or good can be reduced
by increasing its output rate.

True
False
Question 11
A smaller capacity cushion may be required if a process is highly capital intensive.

True
False
Question 12
A process's capacity requirement states the future process capacity needed to meet projected customer
demands, and includes an allowance for the desired capacity cushion.

True
False
Question 13
As the desired capacity cushion increases, the processing hours required for a year's demand decrease.

True
False
Question 14
A capacity cushion is the amount of inventory that a firm maintains to handle sudden increases in demand
or temporary loss of production capacity.

True
False
Quiz 6 Multiple Choices
Question 15
The lock box department at Bank 21 handles the processing of monthly loan payments to the bank, monthly
and quarterly premium payments to a local insurance company, and bill payments for 85 of the bank's
largest commercial customers. The payments are processed by machine operators, with one operator per
machine. An operator can process one payment in 0.25 minute. Setup times are negligible in this situation.
A capacity cushion of 20 percent is needed for the operation. The average monthly (not annual) volume of
payments processed through the department currently is 400,000. However, it is expected to increase by 20
percent. The department operates eight hours per shift, two shifts per day, 260 days per year. How many
machines (not operators) are needed to satisfy the new total processing volume? (Round up to the next
whole integer.)

fewer than 7
7
8
more than 8
Question 16
An expansionist capacity strategy:

lags behind demand.

reduces the risk of overexpansion based on overly optimistic
demand forecasts.
can preempt expansion by competitors by announcing a large
capacity expansion.
meets capacity shortfalls with overtime, temporary workers,
subcontracting, and stockouts.
Question 17
A wait-and-see capacity strategy:

involves small, frequent jumps in capacity.

minimizes the chance of lost sales due to insufficient capacity.
can result in economies of scale and a fast rate of learning, yielding
reduced manufacturing costs.
stays ahead of demand.
Question 18
The single milling machine at Stout Manufacturing was severely overloaded last year. The plant operates
eight hours per day, five days per week, and 50 weeks per year. Management prefers a capacity cushion of
15 percent. Two major types of products are routed through the milling machine. The annual demand for
product A is 3000 units and 2000 units for product B. The batch size for A is 20 units and 40 units for B. The
standard processing time for A is 0.5 hours/unit and 0.8 hours/unit for B. The standard setup time for
product A is 2 hours and 8 hours for product B. How many new milling machines are required if Stout does
not resort to any short-term capacity options?

no new machines
1 or 2 new machines
3 or 4 new machines
more than 4 new machines