Chapter 11 – Capacity Planning
27. Five primary factors were listed for consideration when making facility-planning
decisions. Which of the following is NOT one of those factors?
28. There are four basic types of facility choices. Which of the following statements
concerning facility choice is NOT true?
29. Correctly complete the following sentence. Aggregate planning typically
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30. Assume you have been assigned the task of identifying a level strategy aggregate
production plan for the coming year. You have been informed that beginning inventory is 0
units, your plan should provide an ending inventory for the year equal to 0 units, and you have
been provided the following forecasts of aggregate demand. What should be the planned rate
of quarterly production?
Quarter Forecast
1 6,000
2 5,500
3 5,000
4 6,500
31. Assume you have been assigned the task of identifying a level strategy aggregate
production plan for the coming year. You have been informed that beginning inventory is
2,000 units, your plan should provide an ending inventory for the year equal to 500 units, and
you have been provided the following forecasts of aggregate demand. What should be the
planned rate of quarterly production?
Quarter Forecast
1 6,000
2 5,500
3 5,000
4 6,500
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32. Assume you have been assigned the task of identifying a chase strategy aggregate
production plan for the coming year. You have been informed that beginning inventory is 500
units, your plan should provide an ending inventory for the year equal to 200 units, and you
have been provided the following forecasts of aggregate demand. Knowing that the typical
objective of chase plans is to avoid carrying inventory, what should you choose as the planned
rate of production for the first quarter?
Quarter Forecast
1 6,000
2 5,500
3 5,000
4 6,500
33. The primary concern with having a large positive capacity cushion is
34. Which of the following statements best fits with the concept of economies of scale?
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38. An assembly-line facility desiring enough flexibility to meet unexpected demand is likely
to set planned utilization at
39. Which of the following fits with a preemptive facilities strategy?
40. Which of the following is true regarding sales and operations planning (S&OP)?
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41. The output of the S&OP process is
42. Inventory carrying costs typically include which of the following?
True/False Questions
43. Facilities planning, aggregate planning, and scheduling form a hierarchy of decisions
extending from long range to medium range to short range, respectively, concerning the
capacity of operations.
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49. A small cushion strategy is appropriate when capacity is inexpensive.
50. Sales and operations planning is a stand-alone system that is used to match supply and
demand using a cross-functional approach.
51. Resolving inconsistencies between supply and demand must wait until the end of the
annual S&OP process.
52. A single Ford plant builds a family of pickup trucks to serve the global market. This is an
example of a market-focused facility.
Chapter 11 – Capacity Planning
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Essay Questions
53. Describe the types of short-range, the medium-range, and the long-range capacity
decisions.
LO: 11.1
Topic: Capacity
Difficulty: 2 Moderate
AACSB: Reflective thinking, written communication
Bloom’s: Understand
Feedback: See below.
Short-range: Decisions are constrained by aggregate planning and facility decisions. Allocate
54. Describe the most important questions to be answered concerning facilities decisions.
Apply the questions to a fast-food restaurant chain with expanding demand.
LO: 11.2
Topic: Facilities Decisions
Difficulty: 2 Moderate
AACSB: Application of knowledge, written communication
Bloom’s: Apply
Feedback: See below.
How much capacity is needed? In a fast-food restaurant chain, determine the forecast demand
and strategically decide the capacity cushion: large, medium, or small.