Capacity Planning and Management: A Comprehensive Guide for Operations Management

Question 1

Which of the following is a **disadvantage** of implementing effective capacity planning and management in operations management?

Accepted Answer

Increased likelihood of production disruptions due to misaligned capacity

Answer

Enhanced customer satisfaction through meeting demand effectively

Answer

Reduced production costs due to optimized resource utilization

Answer

Increased operational flexibility to adapt to changing market conditions

Question 2

When determining production capacity, which of the following factors should be considered?

Accepted Answer

Demand, Equipment, Raw materials

Answer

Company culture

Answer

Brand reputation

Answer

Employee morale

Question 3

What is the main objective of resource allocation in capacity planning?

Accepted Answer

To optimize resource utilization and minimize costs

Answer

To allocate resources based on seniority

Answer

To ensure equal distribution of resources

Answer

To prioritize projects based on importance

Question 4

Which of the following is an advantage of effective capacity planning?

Accepted Answer

Reduced production costs

Answer

Increased customer complaints

Answer

Enhanced brand image

Answer

Improved employee turnover

Question 5

Distinguish between level and chase capacity strategies.

Accepted Answer

Level strategy maintains constant capacity, while chase strategy adjusts capacity to match demand fluctuations

Answer

Level strategy adjusts capacity to match demand, while chase strategy maintains constant capacity

Answer

Both strategies maintain constant capacity

Question 6

Which of the following could pose a challenge in capacity planning?

Accepted Answer

Unreliable demand forecasts

Answer

Availability of advanced technology

Answer

Highly skilled workforce

Answer

Strict government regulations

Question 7

What is the primary purpose of buffers in capacity planning?

Accepted Answer

To absorb unexpected variations in demand or supply

Answer

To reduce production costs

Answer

To boost employee morale

Answer

To enhance product quality

Question 8

When evaluating alternative capacity plans, which factors should be considered?

Accepted Answer

Operational efficiency, Customer satisfaction, Financial implications

Answer

Employee workload

Answer

Company culture

Answer

Government regulations

Question 9

Why is it crucial to continuously monitor and adjust capacity plans?

Accepted Answer

To align with evolving market conditions and customer demands

Answer

To ensure compliance with industry standards

Answer

To minimize the need for managerial oversight

Question 10

Which forecasting method incorporates market surveys, sales force estimates, and historical data?

Accepted Answer

Composite forecasting

Answer

Exponential smoothing

Answer

Trend analysis

Answer

Moving average

Question 11

What type of schedule specifies the sequence and timing of operations required to produce a product?

Accepted Answer

Operation schedule

Answer

Demand schedule

Answer

Production plan

Answer

Resource allocation plan

Question 12

The process of aligning demand for products with available production capacity is known as:

Accepted Answer

Capacity planning

Answer

Inventory control

Answer

Demand management

Answer

Production planning

Question 13

Which of the following is NOT an advantage of effective capacity planning?

Accepted Answer

Increased labor costs

Answer

Reduced lead times

Answer

Optimized resource allocation

Answer

Improved customer satisfaction

Question 14

A resource smoothing technique that involves distributing production over multiple periods to balance demand is known as:

Accepted Answer

Level scheduling

Answer

Subcontracting

Answer

Overtime

Answer

Chase strategy

Question 15

Which measurement represents the rate at which a production system can produce units?

Accepted Answer

Throughput rate

Answer

Backlog

Answer

Inventory level

Answer

Lead time

Question 16

Demand that is relatively stable and predictable is referred to as:

Accepted Answer

Steady demand

Answer

Random demand

Answer

Intermittent demand

Answer

Seasonal demand

Question 17

Which of the following is a strategy used to create a buffer against unexpected demand fluctuations?

Accepted Answer

Safety stock

Answer

Scheduling flexibility

Answer

Overtime

Answer

Subcontracting

Question 18

What is the process called that determines the optimal level of capacity to meet customer demand?

Accepted Answer

Aggregate planning

Answer

Resource allocation

Answer

Production planning

Answer

Demand planning

Question 19

Which of the following is a potential drawback of subcontracting?

Accepted Answer

Loss of control over production

Answer

Reduced costs

Answer

Improved quality

Answer

Increased flexibility

Question 20

What is the purpose of load forecasting in capacity planning?

Accepted Answer

To predict future demand for products or services

Answer

To determine the current production capacity

Answer

To schedule production activities

Answer

To allocate resources efficiently

Question 21

What are the main factors to consider when scheduling production activities?

Accepted Answer

Demand, capacity, lead times, and dependencies

Answer

Cost, quality, and customer satisfaction

Answer

Market trends, competition, and regulatory requirements

Answer

Equipment availability, employee skills, and raw materials

Question 22

What is the purpose of resource allocation in capacity planning?

Accepted Answer

To ensure that the right resources are available at the right time and place

Answer

To improve product quality

Answer

To reduce production costs

Question 23

What is the role of inventory management in capacity planning?

Accepted Answer

To balance supply and demand, and to cushion against unexpected changes

Answer

To improve product quality

Answer

To reduce production costs

Question 24

What are the consequences of overcapacity?

Accepted Answer

Increased costs, idle resources, and reduced profitability

Answer

Increased sales revenue

Answer

Improved customer satisfaction

Question 25

Which of the following is NOT a benefit of effective capacity planning?

Accepted Answer

Higher operational costs

Answer

Enhanced customer satisfaction

Answer

Improved production efficiency

Answer

Reduced lead times

Question 26

What scheduling method visually depicts the relationship between tasks, resources, and time?

Accepted Answer

Gantt chart

Answer

Line balancing

Answer

Program evaluation and review technique (PERT)

Answer

Critical path method (CPM)

Question 27

What is the primary purpose of resource allocation in capacity planning?

Accepted Answer

To optimize the utilization of resources and minimize bottlenecks

Answer

To determine the overall capacity of a facility

Answer

To forecast future demand

Question 28

Which key performance indicator (KPI) measures the percentage of time that a resource or facility is being used?

Accepted Answer

Capacity utilization ratio

Answer

Return on investment (ROI)

Answer

Throughput time

Answer

Inventory turnover

Question 29

What is the main objective of capacity planning in a manufacturing environment?

Accepted Answer

To align production capacity with customer demand and minimize operating costs

Answer

To reduce inventory levels to zero

Answer

To maximize production output regardless of demand

Question 30

When determining the capacity of a service operation, which factors are crucial to consider?

Accepted Answer

Customer demand, service time, and staffing levels

Answer

Market share and financial resources

Answer

Production schedule and inventory levels

Answer

Equipment capacity and material availability

Question 31

Differentiate between chase demand and level capacity strategies in capacity planning.

Accepted Answer

Chase demand adjusts capacity to meet demand fluctuations, while level capacity maintains a constant capacity level.

Answer

Chase demand involves hiring and firing employees, while level capacity uses overtime and part-time workers.

Question 32

What is NOT a capacity planning tool?

Accepted Answer

Manual spreadsheet

Answer

Queuing theory

Answer

Simulation modeling software

Answer

Enterprise resource planning (ERP) system

Question 33

How does technology contribute to effective capacity planning?

Accepted Answer

Enables accurate forecasting, efficient scheduling, and real-time monitoring

Answer

Makes capacity planning more complex and time-consuming

Answer

Automates all aspects of capacity planning, eliminating the need for human intervention

Question 34

Which of the following is NOT a factor that influences production capacity?

Accepted Answer

Employee motivation

Answer

Labor availability and skills

Answer

Raw material supply

Answer

Equipment capabilities

Question 35

What is the primary purpose of forecasting in capacity planning?

Accepted Answer

To predict future demand and plan resource allocation effectively

Answer

To improve product quality

Answer

To reduce inventory levels

Answer

To eliminate uncertainty in demand patterns

Question 36

Which scheduling method is designed for high-volume, repetitive production processes?

Accepted Answer

Line scheduling

Answer

Flow scheduling

Answer

Batch scheduling

Answer

Job scheduling

Question 37

What is the main objective of resource allocation in capacity planning?

Accepted Answer

To optimize resource utilization and minimize production bottlenecks

Answer

To improve product quality

Answer

To increase employee satisfaction

Answer

To reduce production costs

Question 38

Which of the following is a common constraint in capacity planning?

Accepted Answer

Limited availability of resources and skilled labor

Answer

Customer preferences

Answer

Technological advancements

Answer

Government regulations

Question 39

What is the key difference between chase and level production strategies?

Accepted Answer

Chase strategy matches production to fluctuating demand, while level strategy maintains a steady production rate regardless of demand variations

Answer

Chase strategy focuses on short-term optimization, while level strategy considers long-term goals.

Question 40

Which of the following is a benefit of incorporating capacity cushions in capacity planning?

Accepted Answer

Reduced risk of production disruptions and customer dissatisfaction

Answer

Increased employee productivity

Answer

Lower production costs

Question 41

How should capacity planning align with the organization's overall business strategy?

Accepted Answer

Capacity planning should support and enable the achievement of strategic goals and objectives

Answer

Capacity planning is independent of business strategy.

Answer

Business strategy should not influence capacity planning decisions.

Question 42

Which of the following is NOT a typical step in the capacity planning process?

Accepted Answer

Implementing a new product line without assessing its impact on capacity

Answer

Forecasting future demand

Answer

Analyzing current capacity

Question 43

How does technology impact capacity planning?

Accepted Answer

Technology can automate processes, improve data analysis, and facilitate capacity modeling.

Answer

Technology is not relevant to capacity planning.

Answer

Technology only plays a minor role in capacity planning.

Question 44

What is the primary objective of capacity planning and management?

Accepted Answer

To ensure an organization can meet current and future demands for its products or services.

Answer

To minimize resource usage and reduce costs.

Answer

To maximize employee utilization and productivity.

Question 45

Which of these is NOT a crucial factor to consider in capacity planning?

Accepted Answer

Employee motivation levels

Answer

Available resources, including equipment and labor

Answer

Forecasted demand for products or services

Question 46

A company anticipates a 15% increase in product demand next year. Which capacity planning strategy is most suitable?

Accepted Answer

Expansion: Invest in additional resources to increase capacity.

Answer

Level Production: Maintain a constant production rate despite demand fluctuations.

Answer

Subcontracting: Outsource some production to external suppliers.

Question 47

Which of the following is a quantitative method for forecasting demand in capacity planning?

Accepted Answer

Time series analysis

Answer

Market research surveys

Answer

Delphi method

Answer

Focus groups

Question 48

What is the main purpose of a Gantt chart in capacity management?

Accepted Answer

To visually represent project schedules and track progress.

Answer

To forecast future demand based on historical data.

Answer

To analyze production bottlenecks and identify areas for improvement.

Question 49

In operations management, what is a 'bottleneck'?

Accepted Answer

The resource or process with the lowest capacity, limiting overall production output.

Answer

A sudden surge in customer demand that exceeds production capacity.

Answer

A delay in the supply chain causing disruption to production.

Question 50

How does the 'Theory of Constraints' contribute to capacity management?

Accepted Answer

It focuses on identifying and improving bottlenecks to increase overall system throughput.

Answer

It advocates for maximizing the utilization of all resources, regardless of their capacity.

Answer

It emphasizes the importance of reducing inventory levels to minimize storage costs.

Question 51

What is the advantage of using a 'capacity cushion' in production planning?

Accepted Answer

It provides a buffer to accommodate unexpected demand fluctuations or production disruptions.

Answer

It guarantees maximum utilization of all resources, leading to increased efficiency.

Answer

It eliminates the need for inventory, reducing storage costs and waste.

Question 52

Which capacity planning approach prioritizes flexibility and responsiveness to changing market conditions?

Accepted Answer

Agile Capacity Planning

Answer

Long-term Capacity Planning

Answer

Resource-Based Capacity Planning

Answer

Fixed Capacity Planning

Question 53

How can effective capacity planning contribute to improved customer satisfaction?

Accepted Answer

By ensuring timely delivery of products or services and minimizing stockouts.

Answer

By reducing production costs and offering lower prices to customers.

Answer

By focusing on employee training and development to enhance service quality.