Capacity Planning and Management: A Comprehensive Guide for Operations Optimization

Question 1

Which of the following is NOT a crucial factor to consider when determining the optimal production capacity for a product or service?

Accepted Answer

Marketing strategies

Answer

Projected demand

Answer

Available resources

Answer

Production expenses

Question 2

Which of the following statements accurately defines economies of scale?

Accepted Answer

A situation where increased production scale results in lower average production costs.

Answer

A condition where increased production scale leads to higher average production costs.

Answer

A condition where fixed costs decrease as output increases.

Answer

A situation where total costs increase at an increasing rate.

Question 3

What metric indicates the percentage of a firm's production capacity that is currently being utilized?

Accepted Answer

Capacity utilization

Answer

Throughput

Answer

Lead time

Answer

Setup time

Question 4

Which forecasting method assumes that future trends will continue based on historical data?

Accepted Answer

Trend analysis

Answer

Delphi method

Answer

Expert opinion

Answer

Market research

Question 5

How does inventory management contribute to effective capacity planning?

Accepted Answer

It helps buffer against demand fluctuations.

Answer

It reduces production setup times.

Answer

It increases the speed of production processes.

Answer

It improves the accuracy of demand forecasting.

Question 6

How do economies of scale influence capacity planning?

Accepted Answer

Economies of scale result in lower costs per unit at higher production levels.

Answer

Economies of scale lead to increased demand at lower production levels.

Answer

Economies of scale have no effect on capacity planning decisions.

Question 7

Capacity utilization is a measure of:

Accepted Answer

The ratio of actual output to potential output.

Answer

The percentage of time a facility operates at full capacity.

Answer

The number of units produced per hour.

Answer

The efficiency of the production process.

Question 8

What is the cost implication of increasing production capacity?

Accepted Answer

It typically leads to higher fixed costs.

Answer

It typically leads to lower variable costs.

Answer

It typically has no impact on costs.

Answer

It always leads to increased total costs.

Question 9

Which capacity planning approach is best suited for highly variable and unpredictable demand?

Accepted Answer

Chase approach

Answer

Level approach

Answer

Fixed approach

Question 10

In production operations, how does capacity utilization contribute to assessing efficiency, and how can businesses optimize it to enhance productivity?

Accepted Answer

Capacity utilization helps identify underutilized resources, allowing businesses to reallocate them to more productive areas, improving overall efficiency.

Answer

Capacity utilization only indicates production output and doesn't reflect efficiency.

Answer

Optimizing capacity utilization means reducing it to minimize costs by underutilizing resources.

Question 11

What is a key advantage of achieving economies of scale?

Accepted Answer

Enhanced efficiency and reduced costs

Answer

Increased unit production costs

Answer

Greater customization options

Answer

Eliminated need for capacity planning

Question 12

How do you calculate the utilization rate of a production line?

Accepted Answer

Divide actual output by potential output

Answer

Subtract potential output from actual output

Answer

Multiply actual output by potential output

Answer

Divide potential output by actual output

Question 13

Which of the following is NOT a method for identifying bottlenecks in a production process?

Accepted Answer

Employee satisfaction surveys

Answer

Time and motion studies

Answer

Simulation modeling

Answer

Process mapping

Question 14

What is the primary purpose of a master production schedule (MPS)?

Accepted Answer

To streamline production planning and scheduling

Answer

To ensure accurate inventory levels

Answer

To allocate resources effectively

Answer

To forecast customer demand

Question 15

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

Accepted Answer

Revenue analysis

Answer

Demand forecasting

Answer

Capacity assessment

Answer

Resource allocation

Question 16

Define capacity planning and explain its significance in operations management.

Accepted Answer

Capacity planning determines the optimal production capacity to meet demand while minimizing costs.

Answer

Capacity planning involves setting production targets without considering costs or demand.

Answer

Capacity planning is only necessary for large-scale manufacturing operations.

Answer

Capacity planning is solely focused on increasing production capacity.

Question 17

Which factor is NOT typically considered in capacity planning?

Accepted Answer

Employee morale

Answer

Production demand

Answer

Lead times

Answer

Equipment availability

Question 18

Economies of scale occur when:

Accepted Answer

Production increases lead to a less than proportional increase in costs

Answer

Production increases lead to a proportional increase in costs

Answer

Production increases lead to a greater than proportional increase in costs

Answer

Production decreases lead to a decrease in costs

Question 19

In a production process, the bottleneck is the workstation with the:

Accepted Answer

Lowest capacity

Answer

Highest capacity

Answer

Slowest cycle time

Answer

Greatest demand

Question 20

A production line has a cycle time of 12 minutes. If the demand is 144 units per hour, what capacity is required for the line?

Accepted Answer

24 units per hour

Answer

12 units per hour

Answer

18 units per hour

Answer

30 units per hour

Question 21

The proportion of production capacity that is utilized is termed:

Accepted Answer

Capacity utilization

Answer

Resource utilization

Answer

Production efficiency

Answer

Bottleneck efficiency

Question 22

Potential drawbacks of overcapacity in a production system include:

Accepted Answer

Increased costs, idle resources

Answer

Increased sales, higher profits

Answer

Improved customer service, increased flexibility

Answer

Reduced production efficiency, delayed deliveries

Question 23

The technique used to identify the bottleneck in a production process through a visual representation is:

Accepted Answer

Flowcharting

Answer

Linear programming

Answer

Statistical process control

Question 24

The primary goal of capacity planning in operations management is to ensure:

Accepted Answer

The right amount of capacity to meet customer demand

Answer

Elimination of all bottlenecks

Answer

Maximum production output

Question 25

Demand forecasting plays a crucial role in capacity planning because it:

Accepted Answer

Provides a basis for estimating future capacity requirements

Answer

Guarantees that demand will always be met

Answer

Eliminates the need for safety stock