WGU C720 Complete OA Prep
Guide with over 150
examinable points answered
Effective capacity
The maximum capacity given the product mix, equipment changeovers, and
scheduled downtime of the production schedule. Always less than design
capacity.
Actual Output
Total amount produced during a given time period.
Capacity Utilization
A metric, or measure, used to determine how much capacity is actually being
used on an average basis.
Capacity utilization = Actual Output / Design Capacity
Efficiency Rate
A metric, or measure, used to determine how much effective capacity is
actually being used to achieve output.
Efficiency = Actual Output / Effective Capacity
,Theory of Constraints (TOC)
5-step thinking process which helps a firm achieve optimal throughput in the
current system, by identifying the bottleneck and coordinating the system
around the bottleneck's capacity. Also helps identify ways of overcoming the
bottleneck.
Throughput
The maximum rate of output possible
The Theory of Constraints 5-step thinking process
1. Identify the system's constraint(s): Determine the bottleneck of
improvement opportunity
2. Exploit the system's constraint: Ensure the bottleneck is at 100% capacity
utilization or throughput.
3. Subordinate everything else to the above decision: Communicate the
bottleneck
4. Elevate the system's constraint: Determine how to increase the
bottleneck's capacity
5. If a constraint has been broken, go back to step 1. Do not allow inertia to
cause a system's constraint.
,As indicated in the 5th step of the thinking process, TOC is about continuous
improvement. Once one bottleneck has been identified and overcome,
another constraint will become a bottleneck to the system.
Facility location
The placement of a facility with regard to a company's customers, suppliers,
and other facilities with which the company interacts based on quantitative
and qualitative factors.
Quantitative factors are easily measurable and are usually assigned a
numerical value, while qualitative factors are more subjective and are usually
not enumerated.
Regional facility strategy
Requires that each production facility has a defined marketing area and each
facility produces a complete line of products for that area. This is often done
when customer convenience and access are important, or when outbound
transportation costs are very high.
Product facility strategy
Means that one facility is responsible for producing one product or product
line and shipping that product throughout the country and the world. This
approach is appropriate when the production process is complex and hard to
control, such as making ceramic heat shields for spacecraft.
Total Cost Formula
TC = VC(x) + FC
, o VC = variable cost
o x = number of units
o FC = fixed costs.
Total Cost = variable cost * number of units plus fixed costs.
Variable costs
Are those which change and can be adjusted as business conditions change
Assembly Line
Process selection most appropriate to produce high volume with little to no
variation.
Uses product facility layout (i.e. car manufacture)
Continuous Flow
Process selection most appropriate to produce high volume with no variation.
Uses product facility layout (i.e. oil refinery). Also called continuous inventory
flow
Batch Flow
Guide with over 150
examinable points answered
Effective capacity
The maximum capacity given the product mix, equipment changeovers, and
scheduled downtime of the production schedule. Always less than design
capacity.
Actual Output
Total amount produced during a given time period.
Capacity Utilization
A metric, or measure, used to determine how much capacity is actually being
used on an average basis.
Capacity utilization = Actual Output / Design Capacity
Efficiency Rate
A metric, or measure, used to determine how much effective capacity is
actually being used to achieve output.
Efficiency = Actual Output / Effective Capacity
,Theory of Constraints (TOC)
5-step thinking process which helps a firm achieve optimal throughput in the
current system, by identifying the bottleneck and coordinating the system
around the bottleneck's capacity. Also helps identify ways of overcoming the
bottleneck.
Throughput
The maximum rate of output possible
The Theory of Constraints 5-step thinking process
1. Identify the system's constraint(s): Determine the bottleneck of
improvement opportunity
2. Exploit the system's constraint: Ensure the bottleneck is at 100% capacity
utilization or throughput.
3. Subordinate everything else to the above decision: Communicate the
bottleneck
4. Elevate the system's constraint: Determine how to increase the
bottleneck's capacity
5. If a constraint has been broken, go back to step 1. Do not allow inertia to
cause a system's constraint.
,As indicated in the 5th step of the thinking process, TOC is about continuous
improvement. Once one bottleneck has been identified and overcome,
another constraint will become a bottleneck to the system.
Facility location
The placement of a facility with regard to a company's customers, suppliers,
and other facilities with which the company interacts based on quantitative
and qualitative factors.
Quantitative factors are easily measurable and are usually assigned a
numerical value, while qualitative factors are more subjective and are usually
not enumerated.
Regional facility strategy
Requires that each production facility has a defined marketing area and each
facility produces a complete line of products for that area. This is often done
when customer convenience and access are important, or when outbound
transportation costs are very high.
Product facility strategy
Means that one facility is responsible for producing one product or product
line and shipping that product throughout the country and the world. This
approach is appropriate when the production process is complex and hard to
control, such as making ceramic heat shields for spacecraft.
Total Cost Formula
TC = VC(x) + FC
, o VC = variable cost
o x = number of units
o FC = fixed costs.
Total Cost = variable cost * number of units plus fixed costs.
Variable costs
Are those which change and can be adjusted as business conditions change
Assembly Line
Process selection most appropriate to produce high volume with little to no
variation.
Uses product facility layout (i.e. car manufacture)
Continuous Flow
Process selection most appropriate to produce high volume with no variation.
Uses product facility layout (i.e. oil refinery). Also called continuous inventory
flow
Batch Flow
