ISOM 351 EXAM 2 QUESTIONS &
CORRECT SOLUTIONS(RATED A+)
Which one of the following factors usually motivates a smaller capacity cushion? -
ANSWERhigh capital intensity
Cash flow is the difference between the flows of funds into and out of an organization
over a period of time. - ANSWERTrue
An expansionist capacity strategy involves large, infrequent jumps in capacity, where a
wait-and-see strategy involves smaller, more frequent jumps. - ANSWERTrue
When future demand is uncertain and sequential decisions are involved in capacity
planning, a manager should use a: - ANSWERdecision tree
A capacity cushion is the amount of inventory that a firm maintains to handle sudden
increases in demand or temporary loss of production capacity. - ANSWERFalse
A larger capacity cushion may be preferred if a process is highly capital intensive. -
ANSWERFalse
A larger capacity cushion can help firms uncover process inefficiencies, so they can find
ways to correct them. - ANSWERFalse
An expansionist capacity strategy: - ANSWERcan preempt expansion by competitors by
announcing a large capacity expansion.
Which one of the following statements about capacity cushions is best? -
ANSWERCompanies that have considerable customization tend to have larger capacity
cushions.
Output measures of capacity are best utilized for high volume processes such as car
manufacturing. - ANSWERTrue
Large, infrequent jumps in capacity are characteristic of companies that: -
ANSWERhave an expansionist strategy.
Larger capacity cushions are particularly vital for front office processes where
customers expect fast service times. - ANSWERTrue
The capacity requirement for a year's output is inversely proportional to the processing
hours required to cover the yearly demand. - ANSWERTrue
, Input measures of capacity are generally used for low-volume flexible processes. -
ANSWERTrue
A wait-and-see capacity strategy: - ANSWERinvolves small, frequent jumps in capacity.
The time required to change a machine from making one product or service to the next
is called: - ANSWERsetup time
Kristen made a batch of chocolate chip cookie dough and then had to clean the utensils
and mixing bowl before she made a batch of oatmeal raisin cookie dough. The time
spent cleaning the bowl and utensils is an example of setup time. - ANSWERTrue
A firm may preempt the expansion of competitive firms by using an expansionist
capacity strategy and announcing a large capacity expansion. - ANSWERTrue
Output measures are appropriate for estimating capacity requirements for high-volume
processes with little product variety or process divergence. - ANSWERFalse
Input measures of capacity are inherently more accurate than output measures of
capacity. - ANSWERFalse
The degree to which equipment, space, or labor is being used is commonly referred to
as: - ANSWERutilization
A planning horizon is defined as the set of consecutive time periods considered for
planning purposes. - ANSWERTrue
Input measures include such metrics as: - ANSWERthe number of machine hours
available.
If a system is well balanced, which one of the following changes usually calls for a
larger capacity cushion? - ANSWERrequests for fast delivery times
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. - ANSWERTrue
The transition from economies of scale to diseconomies of scale: - ANSWERcontains
the point at which average unit costs are at their lowest.
Long-term capacity decisions that confront managers include all of the following except:
- ANSWERworkforce size
An expansionist capacity, which stays ahead of demand, minimizes the chances of
sales lost to insufficient capacity. - ANSWERTrue
CORRECT SOLUTIONS(RATED A+)
Which one of the following factors usually motivates a smaller capacity cushion? -
ANSWERhigh capital intensity
Cash flow is the difference between the flows of funds into and out of an organization
over a period of time. - ANSWERTrue
An expansionist capacity strategy involves large, infrequent jumps in capacity, where a
wait-and-see strategy involves smaller, more frequent jumps. - ANSWERTrue
When future demand is uncertain and sequential decisions are involved in capacity
planning, a manager should use a: - ANSWERdecision tree
A capacity cushion is the amount of inventory that a firm maintains to handle sudden
increases in demand or temporary loss of production capacity. - ANSWERFalse
A larger capacity cushion may be preferred if a process is highly capital intensive. -
ANSWERFalse
A larger capacity cushion can help firms uncover process inefficiencies, so they can find
ways to correct them. - ANSWERFalse
An expansionist capacity strategy: - ANSWERcan preempt expansion by competitors by
announcing a large capacity expansion.
Which one of the following statements about capacity cushions is best? -
ANSWERCompanies that have considerable customization tend to have larger capacity
cushions.
Output measures of capacity are best utilized for high volume processes such as car
manufacturing. - ANSWERTrue
Large, infrequent jumps in capacity are characteristic of companies that: -
ANSWERhave an expansionist strategy.
Larger capacity cushions are particularly vital for front office processes where
customers expect fast service times. - ANSWERTrue
The capacity requirement for a year's output is inversely proportional to the processing
hours required to cover the yearly demand. - ANSWERTrue
, Input measures of capacity are generally used for low-volume flexible processes. -
ANSWERTrue
A wait-and-see capacity strategy: - ANSWERinvolves small, frequent jumps in capacity.
The time required to change a machine from making one product or service to the next
is called: - ANSWERsetup time
Kristen made a batch of chocolate chip cookie dough and then had to clean the utensils
and mixing bowl before she made a batch of oatmeal raisin cookie dough. The time
spent cleaning the bowl and utensils is an example of setup time. - ANSWERTrue
A firm may preempt the expansion of competitive firms by using an expansionist
capacity strategy and announcing a large capacity expansion. - ANSWERTrue
Output measures are appropriate for estimating capacity requirements for high-volume
processes with little product variety or process divergence. - ANSWERFalse
Input measures of capacity are inherently more accurate than output measures of
capacity. - ANSWERFalse
The degree to which equipment, space, or labor is being used is commonly referred to
as: - ANSWERutilization
A planning horizon is defined as the set of consecutive time periods considered for
planning purposes. - ANSWERTrue
Input measures include such metrics as: - ANSWERthe number of machine hours
available.
If a system is well balanced, which one of the following changes usually calls for a
larger capacity cushion? - ANSWERrequests for fast delivery times
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. - ANSWERTrue
The transition from economies of scale to diseconomies of scale: - ANSWERcontains
the point at which average unit costs are at their lowest.
Long-term capacity decisions that confront managers include all of the following except:
- ANSWERworkforce size
An expansionist capacity, which stays ahead of demand, minimizes the chances of
sales lost to insufficient capacity. - ANSWERTrue
