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Chapter 12 - Capacity Planning
1. Facilities decisions:
Difficulty: Moderate
2. Which of the following functions is NOT affected directly by the facilities decision?
Difficulty: Easy
3. Which of the following statements regarding capacity is NOT true?
Difficulty: Moderate
4. Why is it dangerous to justify capacity expansion using economies of scale?
Chapter 12 - Capacity Planning
12-2
5. In aggregate planning:
Difficulty: Moderate
6. Demand management variables include:
Difficulty: Easy
7. Supply management variables include:
Difficulty: Moderate
8. Aggregate planning differs from scheduling in that:
Difficulty: Moderate
Chapter 12 - Capacity Planning
9. The aggregate planning problem:
Difficulty: Hard
10. Which of the following is NOT a factor affecting the elements of a facilities strategy?
Difficulty: Easy
11. The type of strategy used with respect to the amount of capacity cushion when "the cost or
consequence of running out is approximately in balance with the cost of excess capacity" is
called:
Chapter 12 - Capacity Planning
12. The most popular type of facility used by Fortune 500 companies is:
Difficulty: Moderate
13. Which of the following statements is true about facilities decisions?
Difficulty: Hard
14. Which of the following statement(s) correctly describes aggregate planning?
Chapter 12 - Capacity Planning
15. One option for altering the pattern of demand through aggregate planning is:
Difficulty: Easy
16. Which of the following is NOT true about aggregate planning in service organizations?
Difficulty: Moderate
17. Under a level strategy, variations in demand are managed by:
Difficulty: Moderate
18. Aggregate planning costs do NOT include:
Chapter 12 - Capacity Planning
19. Which of the following accurately describes a chase strategy?
Difficulty: Hard
20. A large capacity cushion is appropriate when:
Difficulty: Moderate
21. A small capacity cushion:
Difficulty: Moderate
22. A firm produces 12 different services and has capacity to service 360,000 customers per
year. A total of 24 service workers are employed. If 270,000 customers receive service
during a particular year, what is the capacity cushion during that year?
Chapter 12 - Capacity Planning
12-7
Difficulty: Moderate
23. The ABC Cement Corporation produces a high quality cement that is supplied to
construction companies. The potential demand and the probability of each potential demand
quantity are given for the upcoming year.
Demand in tons
Probability
500,000
0.3
250,000
0.4
300,000
0.3
Assuming manufacturing capacity of 700,000 tons, the estimated capacity cushion is:
Difficulty: Hard
24. 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.
Difficulty: Moderate
25. One way of leveling a seasonal demand pattern is by developing complementary products
or services.
Difficulty: Easy
Chapter 12 - Capacity Planning
26. Aggregate Planning assumes that the facility decisions can be changed.
Difficulty: Moderate
27. Capacity Utilization = Actual Output/Capacity x 100%.
Difficulty: Moderate
28. It is possible in the short term for a firm to operate above 100% utilization.
Difficulty: Moderate
29. A wait-and-see facility approach uses a positive capacity cushion.
Difficulty: Moderate
30. Describe the types of short-range, the medium-range, and the long-range capacity
decisions.
Chapter 12 - Capacity Planning
12-9
31. Describe the most important questions to be answered concerning decisions. Apply the
questions to a fast food restaurant chain with expanding demand.
