WGU C720 Competency 4 Process Design, Capacity Planning and Location Analysis exam |38 questions and answers

Capacity the measure of an organization's ability to sustainably provide customers with the demanded services or goods in the amount requested and in a timely manner, given current resources Capacity Planning is needed to support customer demand and maintain production capacity as demands for products change Capacity Planning Strategies - Lead - Lag - Match - Adjustment Capacity Planning - Lead adds capacity with the anticipation of an increase in demand. This strategy is considered aggressive and is primarily used in an effort to obtain customers from competitors by reducing the amount of lead time and improving service levels. Capacity Planning - Lag adds capacity only after an organization is running at full capacity or is beyond due to increase in demand. Capacity Planning - Match adds capacity in small incremental amounts in response to changing demands in the market Capacity Planning - Adjustment adds or reduce capacity in small or large amounts as consumer demand changes; triggered by major changes to process or system Product-Oriented Layout characterized by high demand for the same or similar products (sequential layout) Process-Oriented Layout characterized by the production of many different products with the same equipment and low volume of any individual product (functional layout) Design Capacity the maximum achievable output of a process or system 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 is a metric, or measure used to determine how much capacity is actually being used on an average basis Actual Output / Design Capacity = Capacity Utilization Efficiency Rate a metric, or measure used to determine how much effective capacity is actually being used to achieve output Actual Output / Effective Capacity = Efficiency Rate 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. 5 Steps of Theory of Constraints - Identify the system's constraint - Exploit the system's constraint - Subordinate everything else to the above decision - Elevate the system's constraint - If constraint has been broken, go back to step 1. Do not allow inertia to cause a system's constraint Which step in the Theory of Constraints is to determine the bottleneck of improvement opportunity? #1- identify the system's constraint Which step in the Theory of Constraints is the ensure the bottleneck is at 100% capacity utilization or throughput? #2- exploit the system's constraint Which step in the Theory of Constraints is to communicate the bottleneck? #3- subordinate everything else to the above decision Which step in the Theory of Constraints is to determine how to increase the bottleneck's capacity? #4- elevate the system's constraint 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 easily measurable and are usually assigned a numerical value 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 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. Total Cost Equation TC = VC(x) + FC VC = variable cost X = # of units FC = fixed costs Variable Costs those which change and can be adjusted as business conditions change Fixed Cost those which remain the same in all business conditions Total Cost consist of fixed costs and variable costs Process Selection is determining the most appropriate method of completing a task Economies of Scale the ability to produce more goods at a lower cost by better utilizing the same fixed costs Economies of Scope can be expressed as "economies of scale through product line diversification." It implies building volume necessary to cover fixed costs by producing a variety of products on the same equipment Process Selection with ... High Volume Very Little Variation Product Facility Layout Assembly Line Process Selection with ... High Volume No Variation Product Facility Layout Continuous Flow Process Selection with ... High Volume Some Variation Product Facility Layout Batch Flow Process Selection with ... Low Volume High Variation Process Facility Layout Job Shop