OPMA 3306 CHAPTER 4
CONCEPTUAL QUESTIONS FROM
HOMEWORK WITH CORRECT
ANSWERS
Overtime and personnel transfers are solutions to capacity problems in the intermediate
term. - Correct Answers -False
Capacity planning is generally viewed in three time durations: Immediate, Intermediate,
and Indeterminate. - Correct Answers -False
The problem of keeping demand sufficiently high to keep a large factory busy is a sales
issue and not a diseconomy of scale. - Correct Answers -False
If the best operating level of a piece of equipment is at a rate of 400 units per hour and
the actual output during an hour is 300 units, which of the following is the capacity
cushion? - Correct Answers -100 units per hour
Capacity Cushion = Potential Output - Actual Output = 400-300 = 100
A manufacturing shop is designed to operate most efficiently at an output of 860 units
per day. In the past month, the plant averaged 690 units per day.What was its capacity
utilization rate last month? - Correct Answers -80.2%
Capacity Utilization Rate = (Actual Output / Potential Output) X 100 = (690/860) X 100 =
80.2%
The ultimate in plant flexibility is a one-hour-changeover time plant. - Correct Answers -
False, zero-hour-changeover
Because services cannot be stored for later use, service managers consider time as
one of their supplies or resources. - Correct Answers -True
A company has a factory that is designed so that it is most efficient (average unit cost is
minimized) when producing 18,300 units of output each month. However, it has an
absolute maximum output capability of 22,000 units per month, and can produce as little
as 7,000 units per month without corporate headquarters shifting production to another
plant. If the factory produces 12,770 units in October, what is the capacity utilization rate
in October for this factory? - Correct Answers -69.8%
CONCEPTUAL QUESTIONS FROM
HOMEWORK WITH CORRECT
ANSWERS
Overtime and personnel transfers are solutions to capacity problems in the intermediate
term. - Correct Answers -False
Capacity planning is generally viewed in three time durations: Immediate, Intermediate,
and Indeterminate. - Correct Answers -False
The problem of keeping demand sufficiently high to keep a large factory busy is a sales
issue and not a diseconomy of scale. - Correct Answers -False
If the best operating level of a piece of equipment is at a rate of 400 units per hour and
the actual output during an hour is 300 units, which of the following is the capacity
cushion? - Correct Answers -100 units per hour
Capacity Cushion = Potential Output - Actual Output = 400-300 = 100
A manufacturing shop is designed to operate most efficiently at an output of 860 units
per day. In the past month, the plant averaged 690 units per day.What was its capacity
utilization rate last month? - Correct Answers -80.2%
Capacity Utilization Rate = (Actual Output / Potential Output) X 100 = (690/860) X 100 =
80.2%
The ultimate in plant flexibility is a one-hour-changeover time plant. - Correct Answers -
False, zero-hour-changeover
Because services cannot be stored for later use, service managers consider time as
one of their supplies or resources. - Correct Answers -True
A company has a factory that is designed so that it is most efficient (average unit cost is
minimized) when producing 18,300 units of output each month. However, it has an
absolute maximum output capability of 22,000 units per month, and can produce as little
as 7,000 units per month without corporate headquarters shifting production to another
plant. If the factory produces 12,770 units in October, what is the capacity utilization rate
in October for this factory? - Correct Answers -69.8%
