Collier, James Evans Test Bank

Part 2: Ch 10-19: Page 2-76 Part 1: Ch 1-9: Page 77-144 Operations and Supply Chain Management, 2e David A.Collier, James Evans (Test Bank All Chapters, 100% Original Verified, A+ Grade) Answers At The End Of Each Chapter 1 / 4

Name: Class: Date: Chapter_10_Capacity_Management Powered by Cognero Page 1 Indicate whether the statement is true or false.

1.The Theory of Constraints focuses on eliminating all bottleneck activities in a process.

• True
• False

2.Offering complementary goods or services is an example of a short-term capacity strategy.

• True
• False

3.The ideas and methods surrounding a revenue management system are often called yield management.

• True
• False

4.A work order is a specification of work to be performed for a customer or a client.

• True
• False

5.Long-term capacity decisions usually involve adjusting schedules or staffing levels.

• True
• False

6.In the Theory of Constraints, constraints determine the throughput of a facility.

• True
• False

7.Diseconomies of scale are known as the capacity cushion.

• True
• False

Indicate the answer choice that best completes the statement or answers the question.

8.A doctor's office charges no-show patients $30 if they do not cancel their appointment 24 hours prior to the appointment. In this scenario, which of the following can be used by the doctor's office to handle the risk of idle service capacity?

• A capacity straddle strategy
• A capacity lag strategy
• A revenue management system
• A pull system

9._____ occur when the average unit cost of a good or service begins to increase as the capacity and/or volume of throughput increases.

• Economies of scale
• Diseconomies of scale
• Demand lags
• Nonphysical constraints

Part 2 2 / 4

Name:

Class:

Date:

Chapter_10_Capacity_Management

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• Greyon Spinning Mills Inc. owns 600 spinning machines. Out of these, only 500 are used in a given year. Given this

information, the utilization of spinning machines at Greyon Spinning Mills Inc. is _____.

• 0.75
• 0.83
• 1
• 1.2

• Which of the following is a way to manage capacity by shifting and stimulating demand?
• Adding peripheral goods and/or services
• Adding or sharing equipment
• Changing labor schedules
• Changing labor skill mix

• Avexim Pharmaceutical Laboratories is an international group of companies that manufactures an antiepileptic

prescription drug in huge volumes. The setup time for manufacturing the drug is 75 minutes, the processing time is 8 minutes, and the order size is 700 units. In this case, which of the following is the total time required to meet the given production volume?

• 968 minutes
• 1300 minutes
• 4275 minutes
• 5675 minutes

• Scorla Corp. is an apparel manufacturing factory. Its average resource utilization per year is calculated as 70%. The

average safety capacity of Scorla Corp. is _____.

• 20%
• 30%
• 40%
• 50%

• Harlose Suits owns more equipment than required for manufacturing goods during periods of regular demand in order

to tackle sudden demand surges. It also has a certain reserve of produced goods to tackle material shortages. In this case, the reserve of equipment and produced goods are examples of _____.

• a physical constraint
• the capacity cushion
• overbooking
• capacity straddle

15. The traditional operations management definition of throughput is:

• the average number of goods or services completed per time period by a process.
• anything in an organization that limits it from moving toward its goal.
• associated with the capacity of a resource such as a machine, employee, or workstation.
• a physical activity in which idle capacity exists.

• In the context of strategies for expanding capacity, which of the following statements is true of one large capacity

increase? 3 / 4

Name:

Class:

Date:

Chapter_10_Capacity_Management

Powered by Cognero Page 3

• This strategy aims to match capacity additions with demand as closely as possible.
• An advantage of using this strategy is that the fixed costs of construction and operating system setup need to

be incurred only once.

• This strategy waits until demand has increased to a point where additional capacity is necessary.
• When this strategy is used, there is always excess capacity and safety capacity to meet unexpected demand

from large orders is provided.

• In a revenue management system, forecasting, allocation, overbooking, and pricing must work in unison if the

objective is to:

• manage a nonperishable asset.
• meet the future demand of goods and services.
• determine the single price that needs to be charged to all customers.
• maximize the revenue generated by a perishable asset.

18. Unlike a focused factory, an unfocused factory is characterized by:

• a few key products.
• particular market segments.
• identical people skills.
• dissimilar product lines.

• Magnira Hotels is a leading chain of hotels. Its managers reserve 30% of the rooms available only to the members of

its club. They also provide the rooms at subsidized prices to these members. In this scenario, which of the following components of revenue management system is most likely used by Magnira Hotels?

• Investment
• Allocation
• Capacity expansion
• Capacity sharing

20. Average safety capacity (%) is computed using the formula:

• Average resource utilization (%) − 100%.
• 100% − Average resource utilization (%).
• [Maximum safety capacity (%) + Minimum safety capacity (%)]/2.
• 100% − Maximum resource utilization (%).

• Which of the following statements is true of setup time?
• It is independent of order size for manufacturing work orders.
• It varies with the volume of work orders.
• It is the most insignificant part of total system capacity.
• It is usually the same for manufacturing and service-providing applications.

• A _____ consists of dynamic methods to forecast demand, allocate perishable assets across market segments, decide

when to overbook and by how much, and determine what price to charge different customer classes.

• focused factory
• work order
• revenue management system
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