MGSC 395 Exam 2 Complete Exam Questions With Correct Detailed Answers.

Capacity - correct answer The max rate of output of a process or system What do long-term capacity plans involve? - correct answers Investments in new facilities and equip at the organizational level, and require top mgmt participation and approval bc they are not easily reversed When choosing a capacity strategy, what do managers need to consider? - correct answers How much of a cushion is needed for variable demand & should we expand capacity ahead of demand or wait until demand is more certain 2 ways capacity can be expressed - correct answers1. output measures 2. input measures When are output measures of capacity best utilized? - correct answersWhen applied to individual processes within the firm or when the firm provides a relatively small number of standardized services or products When are input measures of capacity best utilized? - correct answersLow volume, flexible processes What is the problem w/ input measures? - correct answersDemand is invariably expressed as an output rate Utilzation - correct answersThe degree to which a resource such as equipment, space, or the workforce is currently being used Utilization formula - correct answersU= Average output rate / Max capacity * 100% Deciding on the best level of capacity involves consideration for the __ of ___ - correct answersEfficiency of operations Economies of scale - correct answersStates that the average unit cost of a service or good can be reduced by increasing its output rate 4 reasons why economies of scale can drive costs down when output increases - correct answers1. fixed costs are spread over more units 2. construction costs are reduced 3. costs of purchased materials are cut 4. process advantages are found Diseconomies of scale - correct answersOccurs when the average cost per unit increases as the facility's size increases 3 dimensions of capacity strategy - correct answers1. sizing capacity cushions 2. timing and sizing expansion 3. linking process capacity and other operating decisions Capacity cushion - correct answersThe amount of reserve capacity a process uses to handle sudden increases in demand or temporary losses of production capacity Capacity cushion formula - correct answersCC= 100% - Average Utilization Rate % In a capital intensive industry, a capacity cushion of __ % is preferred - correct answers10% or under In less capital intensive industries, the capacity cushion should be around __ % - correct answers30-40% Businesses find large capacity cushions appropriate when ___ varies - correct answersdemand 2 extreme strategies for expanding capacity - correct answers1. expansionist strategy (large, infrequent jumps in capacity) 2. wait & see strategy (smaller. more frequent jumps) A ___ approach is needed for long term capacity decisions - correct answerssystematic 4 steps for a sound capacity decision (assuming mgmt already determined existing capacity & whether current capacity cushion is appropriate) - correct answers1. estimate future capacity requirements 2. identify gaps by comparing requirements w/ available capacity 3. develop alt plans for reducing the gaps 4. evaluate each alt, both quant and qual, and make a final choice Capacity requirements - correct answersWhat a process's capacity should be for some future time period to meet the demand of customers (ext or int) given the firm's desired capacity cushion 2 ways capacity requirements can be expressed - correct answers1. output measure 2. input measure 4 potential foundations for the estimate of capacity requirements - correct answers1. forecasts of demand 2. productivity 3. competition 4. technological change Planning horizon - correct answersThe set of consecutive time periods considered for planning purposes What is the simplest way to express capacity requirements? - correct answersan output rate 4 situations output measures might be insignificant - correct answers1. product variety and process divergence is high 2. the product or service mix is changing 3. productivity rates are expected to change 4. significant learning effects are expected 3 things using an input measure for cap req brings toether - correct answers1. demand forecasts 2. process time estimates 3. desired cap cushion setup time - correct answersThe time required to change a process or an op from making one service or product to making another Capacity gap - correct answersPositive or negative difference between projected demand and current capacity If one operation is more constrained than the others, total process capacity can be expanded only if __________ - correct answersthe capacity of the constrained operation is expanded Base case - correct answersThe act of doing nothing and losing orders from any demand that exceeds current capacity, or incur costs because capacity is too large When would qualitative factors tend to dominate? - correct answersWhen a business is trying to enter new markets or change the focus of its business strategy What to managers assess when they are looking at something qualitatively? - correct answersHow each alt fits the overall cap strategy and other aspects of the business not covered by the financial analysis What to managers assess when they are looking at something quantitatively? - correct answersThe mgr estimates the change in cash flows for each alt over the forecast time horizon compared to the base case Cash flow - correct answersThe difference between the flow of funds into and out of an org over a period of time, including revenues, costs, and changes in assets and liabilities Why do waiting lines form? - correct answersBecause of a temporary imbalance between the demand for service and the capacity of the system to provide the service 4 elements that exist in all situations where waiting lines may form - correct answers1. An input, or customer population, that generates potential customers 2. A waiting line of customers 3. The service facility, consisting of a person (or crew), a machine (or group of machines), or both necessary to perform the service for the customer 4. A priority rule, which selects the next customer to be served by the service facility Service system - correct answersDescribes the number of lines and t