COB 300 OPERATIONS TEST 2
QUESTIONS WITH COMPLETE
SOLUTIONS
Improving Process Capability - Answer--Simplify
-Standardize
-Mistake-proof
-Upgrade equipment
-Automate
Centered Process - Answer--3 sigma: defects 2,700 parts per million
-6 sigma: defects 0.002 parts per million
Non-Centered Process - Answer--3 sigma: defects 67,000 parts per million
-6 sigma: defects 3.4 parts per million
Moment-of-truth analysis - Answer--experience enhancers
-standard expectations
-experience detractors
(order qualifier/order winner)
True or False: X-bar chart and R chart should be used together to find if a process is
under control. - Answer-True
True or False: If all observations are within UCL and LCL of control charts, we are sure
that the process is under control. - Answer-False
True or False: Process capability ratio can be used when a process is not centered. -
Answer-False
In order to track proportion of defectives, c-chart should be used. - Answer-False
Capacity - Answer--Ability to produce at a given volume in a specified amount of time
-Upper limit or ceiling on the load that an operating unit can handle
-Need a balance between too much and too less capacity
-Capacity planning is more difficult in service sector
Key questions for capacity planning - Answer--What kind of capacity is needed?
-How much is needed to match demand?
-When is it needed?
Capacity Decisions - Answer--impact the ability of the organization to meet future
demands
,-affect operating costs
-are a major determinant of initial cost
-often involve long-term commitment of resources
-can affect competitiveness
-affect the ease of management
-Have become more important and complex due to globalization
-need to be planned for in advance due to their consumption of financial and other
resources
Defining and measuring capacity - Answer--Measure capacity in units that do not
require updating
Design capacity - Answer-The maximum output rate or service capacity an operation,
process, or facility is designed for
-Maximum theoretical output in a given period
Effective capacity - Answer--Capacity the firm expects to achieve under current
operating conditions
-Design capacity minus allowances such as personal time and maintenance
True or False: Often effective capacity is lower than design capacity - Answer-True
Determinants of effective capacity - Answer-Facilities
Product and service factors
Process factors
Human factors
Policy factors
Operational factors
Supply chain factors
External factors
Capacity strategies - Answer-Strategies are typically based on assumptions and
predictions about: long-term demand patterns, technological change, competitor
behavior
Capacity Cushion - Answer-extra capacity used to offset demand uncertainty
Capacity cushion strategy - Answer--organizations that have greater demand
uncertainty typically have greater capacity cushion
-organizations that have standard products and services generally have smaller
capacity cushion
Long-term considerations - Answer-relate to overall level of capacity requirements;
require forecasting demand over a time horizon and converting those needs into
capacity requirements
, Short-term consideration - Answer-Relate to probable variations in capacity
requirements; less concerned with cycles and trends than with seasonal variations and
other variations from average
Calculating processing requirements requires - Answer--Demand forecast (reasonably
accurate)
-Standard processing time
-Available work time
Additional challenges of service capacity - Answer--Need to be near customers
-Inability to store services
-Degree of demand volatility
Leading - Answer-Build capacity in anticipation of future demand increases
Following - Answer-build capacity when demand exceeds current capacity
Tracking - Answer-Similar to the following strategy, but adds capacity in relatively small
increments to keep pace with increasing demand
Bottleneck operation - Answer-An operation in a sequence of operations whose
capacity is lower than that of the other operations
Economies of Scale - Answer-if the output rate is less than the optimal level, increasing
the output rate results in decreasing average unit costs
Reasons for economies of scale - Answer-Fixed costs are spread over a larger number
of units
Construction costs increase at a decreasing rate as facility size increases
Processing costs decrease due to standardization
Diseconomies of scale - Answer-if the output rate is more than the optimal level,
increasing the output rate results in increasing average unit costs
Reasons for diseconomies of scale - Answer-Distribution costs increase due to traffic
congestion and shipping from a centralized facility rather than multiple smaller facilities
Complexity increases costs
Inflexibility can be an issue
Additional levels of bureaucracy
Constraint - Answer-something that limits the performance of a process or system in
achieving its goals
Constraint categories - Answer-Market
Resource
Material
QUESTIONS WITH COMPLETE
SOLUTIONS
Improving Process Capability - Answer--Simplify
-Standardize
-Mistake-proof
-Upgrade equipment
-Automate
Centered Process - Answer--3 sigma: defects 2,700 parts per million
-6 sigma: defects 0.002 parts per million
Non-Centered Process - Answer--3 sigma: defects 67,000 parts per million
-6 sigma: defects 3.4 parts per million
Moment-of-truth analysis - Answer--experience enhancers
-standard expectations
-experience detractors
(order qualifier/order winner)
True or False: X-bar chart and R chart should be used together to find if a process is
under control. - Answer-True
True or False: If all observations are within UCL and LCL of control charts, we are sure
that the process is under control. - Answer-False
True or False: Process capability ratio can be used when a process is not centered. -
Answer-False
In order to track proportion of defectives, c-chart should be used. - Answer-False
Capacity - Answer--Ability to produce at a given volume in a specified amount of time
-Upper limit or ceiling on the load that an operating unit can handle
-Need a balance between too much and too less capacity
-Capacity planning is more difficult in service sector
Key questions for capacity planning - Answer--What kind of capacity is needed?
-How much is needed to match demand?
-When is it needed?
Capacity Decisions - Answer--impact the ability of the organization to meet future
demands
,-affect operating costs
-are a major determinant of initial cost
-often involve long-term commitment of resources
-can affect competitiveness
-affect the ease of management
-Have become more important and complex due to globalization
-need to be planned for in advance due to their consumption of financial and other
resources
Defining and measuring capacity - Answer--Measure capacity in units that do not
require updating
Design capacity - Answer-The maximum output rate or service capacity an operation,
process, or facility is designed for
-Maximum theoretical output in a given period
Effective capacity - Answer--Capacity the firm expects to achieve under current
operating conditions
-Design capacity minus allowances such as personal time and maintenance
True or False: Often effective capacity is lower than design capacity - Answer-True
Determinants of effective capacity - Answer-Facilities
Product and service factors
Process factors
Human factors
Policy factors
Operational factors
Supply chain factors
External factors
Capacity strategies - Answer-Strategies are typically based on assumptions and
predictions about: long-term demand patterns, technological change, competitor
behavior
Capacity Cushion - Answer-extra capacity used to offset demand uncertainty
Capacity cushion strategy - Answer--organizations that have greater demand
uncertainty typically have greater capacity cushion
-organizations that have standard products and services generally have smaller
capacity cushion
Long-term considerations - Answer-relate to overall level of capacity requirements;
require forecasting demand over a time horizon and converting those needs into
capacity requirements
, Short-term consideration - Answer-Relate to probable variations in capacity
requirements; less concerned with cycles and trends than with seasonal variations and
other variations from average
Calculating processing requirements requires - Answer--Demand forecast (reasonably
accurate)
-Standard processing time
-Available work time
Additional challenges of service capacity - Answer--Need to be near customers
-Inability to store services
-Degree of demand volatility
Leading - Answer-Build capacity in anticipation of future demand increases
Following - Answer-build capacity when demand exceeds current capacity
Tracking - Answer-Similar to the following strategy, but adds capacity in relatively small
increments to keep pace with increasing demand
Bottleneck operation - Answer-An operation in a sequence of operations whose
capacity is lower than that of the other operations
Economies of Scale - Answer-if the output rate is less than the optimal level, increasing
the output rate results in decreasing average unit costs
Reasons for economies of scale - Answer-Fixed costs are spread over a larger number
of units
Construction costs increase at a decreasing rate as facility size increases
Processing costs decrease due to standardization
Diseconomies of scale - Answer-if the output rate is more than the optimal level,
increasing the output rate results in increasing average unit costs
Reasons for diseconomies of scale - Answer-Distribution costs increase due to traffic
congestion and shipping from a centralized facility rather than multiple smaller facilities
Complexity increases costs
Inflexibility can be an issue
Additional levels of bureaucracy
Constraint - Answer-something that limits the performance of a process or system in
achieving its goals
Constraint categories - Answer-Market
Resource
Material
