OPMT 1100 Final Exam Ch.
7,10,11,13,16 with complete solutions
2025/2026
7.1 Capacity Planning - correct answer ✔✔- extends over a time horizon long enough to obtain
those resources—usually a year or more for building or expanding facilities or acquiring new
businesses
- Capacity decisions affect product lead times, customer responsiveness, operating costs, and a
firm's ability to compete
- Inadequate capacity can lose customers and limit growth
- Excess capacity can drain a company's resources and prevent investments in more lucrative
ventures
- When to increase capacity and how much to increase it are critical decisions
Capacity Planning & capacity - correct answer ✔✔- CP: strategic decision that establishes the
overall level of productive resources for a firm
- C: maximum capability to produce
Capacity Planning: three basic strategies for timing of capacity expansion in relation to steady
growth in demand - correct answer ✔✔- capacity lead strategy: Capacity is expanded in
anticipation of demand growth, this aggressive strategy is used to lure customers from
competitors who are capacity constrained or to gain a foothold in a rapidly expanding market (It
also allows companies to respond to unexpected surges in demand and to provide superior
levels of service during peak demand periods)
- average capacity strategy: Capacity is expanded to coincide with average expected demand,
this is a moderate strategy in which managers are certain they will be able to sell at least some
portion of expanded output, and endure some periods of unmet demand (Approximately half of
the time capacity leads demand, and half of the time capacity lags demand)
,- capacity lag strategy: Capacity is increased after an increase in demand has been documented,
this conservative strategy produces a higher return on investment but may lose customers in
the process - It is used in industries with standard products and cost-based or weak competition
(The strategy assumes that lost customers will return from competitors after capacity has
expanded)
Capacity Planning: best operating level - correct answer ✔✔- percent of capacity use that
minimizes unit costs
- Average capacity utilization differs by industry
Capacity Planning: capacity cushion - correct answer ✔✔- percent of capacity held in reserve for
unexpected occurrences
- Large-capacity cushions are common in industries in which demand is highly variable, resource
flexibility is low, and customer service is important
Capacity Planning: diseconomies of scale - correct answer ✔✔cost disadvantages that occur
when higher levels of output cost more per unit to produce
Capacity Planning: economies of scale - correct answer ✔✔- cost advantages that occur when it
costs less per unit to produce higher levels of output
- occur when it costs less per unit to produce or operate at high levels of output
Is true when...
- Fixed costs can be spread over a larger number of units
- Production or operating costs do not increase linearly with output levels
- Quantity discounts are available for material purchases
- Operating efficiency increases as workers gain experience
7.2 Facilities - correct answer ✔✔- make a difference
,- They can provide a competitive edge by enabling and leveraging the latest process concepts
- Facility layouts are more flexible than ever before
Facilities: objectives of facility layout - correct answer ✔✔- facility layout: arrangement of
activities, processes, departments, workstations, storage areas, aisles, and common areas
within an existing or proposed facility
- basic objective of the layout decision is to ensure a smooth flow of work, material, people, and
information through the system
effective layouts...
- Minimize movement and material-handling costs
- Use space efficiently
- Use labour efficiently
- Eliminate bottlenecks
- Facilitate communication and interaction between workers, between workers and their
supervisors, and between workers and customers
- Reduce manufacturing cycle time and customer service time
- Eliminate wasted or redundant movement
- Facilitate the entry, exit, and placement of material, products, and people
- Incorporate safety and security measures
- Promote product and service quality
- Encourage proper maintenance activities
- Provide a visual control of activities
- Provide flexibility to adapt to changing conditions
- Increase capacity.
7.3 Basic Layouts - correct answer ✔✔
, Basic Layouts: process layouts - correct answer ✔✔- also known as functional layouts
- group similar activities together in departments or work centres according to the process or
function they perform
- A process layout is characteristic of intermittent operations, service shops, job shops, or batch
production, which serve different customers with different needs
- equipment in a process layout is general purpose, and the workers are skilled at operating the
equipment in their particular department
- advantage of this layout is flexibility; the disadvantage is inefficiency
- Process layouts in manufacturing firms require flexible material-handling equipment, such as
forklifts, carts, or automated guided vehicles (AGVs), that can follow multiple paths, move in any
direction, and carry large loads of in-process goods
- Process layouts in service firms require large aisles for customers to move back and forth and
ample display space to accommodate different customer preferences
- The major layout concern for a process layout is where to locate the departments or machine
centres in relation to each other
- Although each job or customer potentially has a different route through the facility, some
paths will be more common than others
- Past information on customer orders and projections of customer orders can be used to
develop patterns of flow through the shop
Basic Layouts: product layouts - correct answer ✔✔- better known as assembly lines
- layout that arranges activities in a line according to the sequence of operations for a particular
product or service
- Each product has its own "line" specifically designed to meet its requirements
- The flow of work is orderly and efficient, moving from one workstation to another down the
assembly line until a finished product comes off the end of the line
- Since the line is set up for one type of product or service, special machines can be purchased
to match a product's specific processing requirements
7,10,11,13,16 with complete solutions
2025/2026
7.1 Capacity Planning - correct answer ✔✔- extends over a time horizon long enough to obtain
those resources—usually a year or more for building or expanding facilities or acquiring new
businesses
- Capacity decisions affect product lead times, customer responsiveness, operating costs, and a
firm's ability to compete
- Inadequate capacity can lose customers and limit growth
- Excess capacity can drain a company's resources and prevent investments in more lucrative
ventures
- When to increase capacity and how much to increase it are critical decisions
Capacity Planning & capacity - correct answer ✔✔- CP: strategic decision that establishes the
overall level of productive resources for a firm
- C: maximum capability to produce
Capacity Planning: three basic strategies for timing of capacity expansion in relation to steady
growth in demand - correct answer ✔✔- capacity lead strategy: Capacity is expanded in
anticipation of demand growth, this aggressive strategy is used to lure customers from
competitors who are capacity constrained or to gain a foothold in a rapidly expanding market (It
also allows companies to respond to unexpected surges in demand and to provide superior
levels of service during peak demand periods)
- average capacity strategy: Capacity is expanded to coincide with average expected demand,
this is a moderate strategy in which managers are certain they will be able to sell at least some
portion of expanded output, and endure some periods of unmet demand (Approximately half of
the time capacity leads demand, and half of the time capacity lags demand)
,- capacity lag strategy: Capacity is increased after an increase in demand has been documented,
this conservative strategy produces a higher return on investment but may lose customers in
the process - It is used in industries with standard products and cost-based or weak competition
(The strategy assumes that lost customers will return from competitors after capacity has
expanded)
Capacity Planning: best operating level - correct answer ✔✔- percent of capacity use that
minimizes unit costs
- Average capacity utilization differs by industry
Capacity Planning: capacity cushion - correct answer ✔✔- percent of capacity held in reserve for
unexpected occurrences
- Large-capacity cushions are common in industries in which demand is highly variable, resource
flexibility is low, and customer service is important
Capacity Planning: diseconomies of scale - correct answer ✔✔cost disadvantages that occur
when higher levels of output cost more per unit to produce
Capacity Planning: economies of scale - correct answer ✔✔- cost advantages that occur when it
costs less per unit to produce higher levels of output
- occur when it costs less per unit to produce or operate at high levels of output
Is true when...
- Fixed costs can be spread over a larger number of units
- Production or operating costs do not increase linearly with output levels
- Quantity discounts are available for material purchases
- Operating efficiency increases as workers gain experience
7.2 Facilities - correct answer ✔✔- make a difference
,- They can provide a competitive edge by enabling and leveraging the latest process concepts
- Facility layouts are more flexible than ever before
Facilities: objectives of facility layout - correct answer ✔✔- facility layout: arrangement of
activities, processes, departments, workstations, storage areas, aisles, and common areas
within an existing or proposed facility
- basic objective of the layout decision is to ensure a smooth flow of work, material, people, and
information through the system
effective layouts...
- Minimize movement and material-handling costs
- Use space efficiently
- Use labour efficiently
- Eliminate bottlenecks
- Facilitate communication and interaction between workers, between workers and their
supervisors, and between workers and customers
- Reduce manufacturing cycle time and customer service time
- Eliminate wasted or redundant movement
- Facilitate the entry, exit, and placement of material, products, and people
- Incorporate safety and security measures
- Promote product and service quality
- Encourage proper maintenance activities
- Provide a visual control of activities
- Provide flexibility to adapt to changing conditions
- Increase capacity.
7.3 Basic Layouts - correct answer ✔✔
, Basic Layouts: process layouts - correct answer ✔✔- also known as functional layouts
- group similar activities together in departments or work centres according to the process or
function they perform
- A process layout is characteristic of intermittent operations, service shops, job shops, or batch
production, which serve different customers with different needs
- equipment in a process layout is general purpose, and the workers are skilled at operating the
equipment in their particular department
- advantage of this layout is flexibility; the disadvantage is inefficiency
- Process layouts in manufacturing firms require flexible material-handling equipment, such as
forklifts, carts, or automated guided vehicles (AGVs), that can follow multiple paths, move in any
direction, and carry large loads of in-process goods
- Process layouts in service firms require large aisles for customers to move back and forth and
ample display space to accommodate different customer preferences
- The major layout concern for a process layout is where to locate the departments or machine
centres in relation to each other
- Although each job or customer potentially has a different route through the facility, some
paths will be more common than others
- Past information on customer orders and projections of customer orders can be used to
develop patterns of flow through the shop
Basic Layouts: product layouts - correct answer ✔✔- better known as assembly lines
- layout that arranges activities in a line according to the sequence of operations for a particular
product or service
- Each product has its own "line" specifically designed to meet its requirements
- The flow of work is orderly and efficient, moving from one workstation to another down the
assembly line until a finished product comes off the end of the line
- Since the line is set up for one type of product or service, special machines can be purchased
to match a product's specific processing requirements
