Capacity Planning and Management: A Comprehensive Guide for Operations Management

Question 1

In effective capacity planning and management, which element is crucial?

Accepted Answer

Creating accurate demand forecasts

Answer

Disregarding customer demand information

Answer

Concentrating solely on current capacity requirements

Answer

Investing heavily in capacity without assessing future demand

Question 2

What is the primary function of a capacity cushion?

Accepted Answer

To mitigate unexpected demand fluctuations

Answer

To reduce production costs

Answer

To enhance employee morale

Answer

To eliminate the need for overtime

Question 3

Which of the following techniques is used to determine the optimal capacity level for a process?

Accepted Answer

Linear programming

Answer

Work sampling

Answer

Regression analysis

Answer

Time study

Question 4

What is the initial step in managing capacity constraints?

Accepted Answer

Identify the source of the constraint

Answer

Develop a contingency plan

Answer

Increase capacity

Answer

Reduce demand

Question 5

Which of the following is NOT a key component of a capacity planning system?

Accepted Answer

Inventory management

Answer

Demand forecasting

Answer

Capacity analysis

Answer

Scheduling

Question 6

Distinguish between chase and level capacity strategies.

Accepted Answer

Chase adjusts capacity to match demand, while level maintains a constant capacity

Answer

Level adjusts capacity to meet demand, while chase maintains a constant capacity

Answer

Chase reduces capacity during low demand periods, while level increases capacity

Answer

Level fluctuates capacity to meet peak demand, while chase adjusts capacity gradually

Question 7

Which of the following is NOT a key advantage of effective capacity planning?

Accepted Answer

Increasing inventory levels

Answer

Meeting customer demand

Answer

Optimizing production costs

Answer

Improving resource utilization

Question 8

What is the primary objective of capacity planning?

Accepted Answer

Ensuring adequate resources to meet fluctuating demand

Answer

Eliminating waiting time in production

Answer

Maximizing production speed

Answer

Reducing labor costs

Question 9

How does capacity utilization impact operational performance?

Accepted Answer

Excessive capacity utilization can compromise product quality

Answer

High capacity utilization always leads to optimal performance

Answer

Low capacity utilization leads to increased efficiency

Answer

There is no direct correlation between capacity utilization and performance

Question 10

Which technology is primarily used to analyze capacity utilization and identify potential constraints?

Accepted Answer

Capacity planning software with simulation capabilities

Answer

Production schedules and work orders

Answer

Gantt charts for visualizing schedules and dependencies

Answer

Flowcharts for process mapping and analysis

Question 11

How does demand forecasting contribute to effective capacity planning?

Accepted Answer

Predicting future demand to inform capacity planning decisions

Answer

Ensuring accurate inventory levels to avoid shortages

Answer

Minimizing supply chain disruptions by anticipating demand changes

Answer

Evaluating customer satisfaction and preferences

Question 12

What is the overarching goal of capacity management?

Accepted Answer

Effectively meeting customer demand

Answer

Minimizing production expenses

Answer

Maximizing resource utilization

Answer

Preventing excessive production

Question 13

What is the intended purpose of implementing a capacity cushion?

Accepted Answer

Absorbing unexpected demand variations

Answer

Preventing stockouts

Answer

Reducing production lead times

Answer

Improving employee morale

Question 14

What is a distinguishing characteristic between fixed and variable capacity?

Accepted Answer

Fixed capacity is inflexible, while variable capacity is adjustable

Answer

Fixed capacity is more expensive to operate than variable capacity

Answer

Variable capacity is more efficient than fixed capacity

Answer

There is no distinction between fixed and variable capacity

Question 15

What is the primary focus of lean capacity management?

Accepted Answer

Eliminating waste and optimizing efficiency

Answer

Increasing capacity through capital investments

Answer

Perfectly matching demand and capacity

Answer

Reducing production lead times

Question 16

Improved What is the purpose of maintaining safety capacity?

Accepted Answer

To handle unexpected demand increases

Answer

To reduce the risk of stockouts

Answer

To increase production efficiency

Answer

To enhance customer satisfaction

Question 17

Improved The primary objective of capacity management is to achieve:

Accepted Answer

Alignment between supply and demand

Answer

Minimization of production costs

Answer

Maximization of equipment utilization

Answer

Enhancement of product quality

Question 18

A manufacturing company faces seasonal demand fluctuations. Which capacity planning strategy, chase or level, is more appropriate? Explain your choice.

Accepted Answer

Chase is more suitable as it adjusts capacity to match varying demand.

Answer

Level is more suitable as it maintains consistent capacity, avoiding disruptions.

Answer

Both strategies are equally effective and can be used interchangeably.

Question 19

Examine the ethical considerations in capacity planning, particularly how they affect workforce management.

Accepted Answer

Ensuring fair workload distribution and equitable treatment

Answer

Focusing solely on maximizing productivity and minimizing costs

Answer

Ignoring workforce implications in capacity planning decisions

Answer

Prioritizing automation without considering its impact on the workforce

Question 20

How does capacity planning impact marketing strategies and financial choices?

Accepted Answer

Capacity planning provides insights for demand forecasting, enabling marketing to optimize campaign strategies.

Answer

Capacity planning affects production schedules only and does not impact marketing or finance departments.

Answer

Financial decisions are solely influenced by financial data and have no connection to capacity planning.

Answer

Marketing departments do not provide input or influence capacity planning processes.

Question 21

In operations management, what is the main purpose of capacity planning?

Accepted Answer

To ensure an organization has the resources to meet production goals

Answer

To minimize costs related to idle resources

Answer

To maintain high customer satisfaction

Answer

To continuously expand production capacity

Question 22

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

Accepted Answer

Increased inventory levels

Answer

Enhanced customer service

Answer

Reduced operating expenses

Answer

Improved flexibility to meet changing demands

Question 23

What is the primary goal of capacity management?

Accepted Answer

To ensure that operations have sufficient resources to meet customer demand

Answer

To reduce inventory levels

Answer

To maximize production capacity

Answer

To minimize operating costs

Question 24

What is a capacity cushion?

Accepted Answer

Excess capacity maintained to handle unexpected increases in demand

Answer

The minimum capacity required to meet standard demand

Answer

The maximum capacity that can be achieved

Answer

The average capacity that is utilized

Question 25

What are the three main strategies for managing capacity constraints?

Accepted Answer

Increase capacity, smooth demand, and reduce variability

Answer

Increase capacity, reduce demand, and increase variability

Answer

Reduce capacity, smooth demand, and increase variability

Answer

Reduce capacity, increase demand, and reduce variability

Question 26

What is the difference between chase demand and level capacity strategies?

Accepted Answer

Chase demand adjusts capacity to meet changes in demand, while level capacity maintains a steady capacity level.

Answer

Chase demand maintains a steady capacity level, while level capacity adjusts capacity to meet changes in demand.

Answer

Both chase demand and level capacity strategies adjust capacity to meet changes in demand.

Answer

Both chase demand and level capacity strategies maintain a steady capacity level.

Question 27

What are some of the challenges associated with capacity planning?

Accepted Answer

Accurately forecasting demand, coping with uncertainty, and optimizing resource allocation

Answer

Reducing costs, increasing efficiency, and improving customer satisfaction

Answer

Managing inventory levels, scheduling production, and maintaining equipment

Answer

Hiring and training employees, developing new products, and expanding into new markets

Question 28

What is the role of technology in capacity planning?

Accepted Answer

To enhance forecasting precision, optimize resource allocation, and automate scheduling

Answer

To reduce operating costs, increase efficiency, and improve customer service

Answer

To manage inventory levels, schedule production, and maintain equipment

Answer

To hire and train employees, develop new products, and expand into new markets

Question 29

What is a capacity plan?

Accepted Answer

A document that outlines the actions and strategies for managing capacity

Answer

A schedule that shows the planned production quantities for each product

Answer

A report that evaluates current capacity utilization

Answer

A set of instructions for hiring and training employees

Question 30

What are the critical factors to consider when developing a capacity plan?

Accepted Answer

Forecasted demand, current capacity, and resource constraints

Answer

Production schedules, inventory levels, and customer service goals

Answer

Employee training, equipment maintenance, and financial resources

Answer

Market trends, competitive dynamics, and technological advancements

Question 31

Which of the following is a key benefit of effective capacity planning and management?

Accepted Answer

Enhanced customer satisfaction

Answer

Increased production costs

Answer

Reduced efficiency

Answer

Weakened supply chain relationships

Question 32

The process of assessing a system's maximum output capability is termed:

Accepted Answer

Capacity assessment

Answer

Demand estimation

Answer

Output analysis

Answer

Process evaluation

Question 33

Which type of capacity planning focuses on aligning capacity with long-term demand fluctuations?

Accepted Answer

Strategic capacity planning

Answer

Tactical capacity planning

Answer

Operational capacity planning

Answer

Contingency capacity planning

Question 34

A situation where demand surpasses capacity is referred to as a:

Accepted Answer

Capacity constraint

Answer

Capacity surplus

Answer

Demand shortage

Answer

Production imbalance

Question 35

Which of the following is a recognized strategy for addressing capacity constraints?

Accepted Answer

Subcontracting work

Answer

Ignoring customer orders

Answer

Implementing price reductions

Answer

Laying off employees

Question 36

Demand forecasting in capacity planning serves the purpose of:

Accepted Answer

Supporting informed capacity decisions

Answer

Boosting sales revenue

Answer

Reducing employee workload

Answer

Avoiding excess inventory

Question 37

Which factor is irrelevant when weighing capacity expansion options?

Accepted Answer

Employee motivation

Answer

Return on investment

Answer

Capital expenditure

Answer

Market demand projections

Question 38

The ongoing process of adjusting capacity to meet dynamic demand variations is known as:

Accepted Answer

Capacity management

Answer

Demand forecasting

Answer

Production scheduling

Answer

Inventory control

Question 39

Which advantage is offered by utilizing technology in capacity planning and management?

Accepted Answer

Improved cost-to-serve metrics

Answer

Increased manual labor requirements

Answer

Reduced data accuracy

Answer

Lower employee satisfaction

Question 40

Which factor is NOT typically considered when determining capacity requirements?

Accepted Answer

Employee motivation

Answer

Available production time

Answer

Product demand

Answer

Process quality standards

Question 41

Which capacity planning strategy involves adjusting capacity to meet changing demand patterns?

Accepted Answer

Chase strategy

Answer

Level strategy

Answer

Lag strategy

Answer

Lead strategy

Question 42

What is a fundamental principle of lean manufacturing?

Accepted Answer

Continual improvement

Answer

Investment in automation

Answer

High inventory levels

Answer

Large production batches

Question 43

When considering outsourcing production, which factor is crucial to assess?

Accepted Answer

Quality standards

Answer

Number of employees

Answer

Building ownership

Answer

Corporate culture

Question 44

Which of the following is NOT a tool used in capacity planning?

Accepted Answer

SWOT Analysis

Answer

Linear programming

Answer

Gantt charts

Answer

Facility layout design

Question 45

Which of the following is a primary benefit of effective capacity planning?

Accepted Answer

Enhanced customer satisfaction through reduced lead times and improved product availability

Answer

Increased employee turnover due to unrealistic capacity targets

Answer

Reduced production costs through economies of scale, but potentially resulting in excess capacity

Answer

Increased inventory levels, leading to higher storage costs

Question 46

The formula for calculating capacity utilization is:

Accepted Answer

(Actual Output / Design Capacity) x 100%

Answer

(Actual Output - Design Capacity) x 100%

Answer

(Design Capacity / Actual Output) x 100%

Answer

(Design Capacity - Actual Output) x 100%

Question 47

Which of the following is a viable capacity planning strategy?

Accepted Answer

Level strategy: Maintaining a constant output level to match average demand

Answer

Over produce strategy: Producing significantly more than demand to avoid stockouts

Answer

Ignore demand strategy: Ignoring customer demand and producing at a fixed rate

Answer

Reduce quality strategy: Lowering product quality to increase production output

Question 48

What is the purpose of a capacity cushion?

Accepted Answer

To provide a buffer against unexpected demand surges or production disruptions.

Answer

To reduce customer wait times by ensuring immediate product availability

Answer

To eliminate capacity constraints entirely, ensuring continuous production

Answer

To increase production efficiency by eliminating idle time

Question 49

Which of the following is a common challenge associated with capacity planning?

Accepted Answer

Accurately forecasting future demand

Answer

Training employees effectively

Answer

Setting realistic production schedules

Answer

Acquiring necessary equipment quickly and efficiently

Question 50

The key difference between design capacity and effective capacity is that:

Accepted Answer

Effective capacity considers factors that reduce actual output, such as downtime and quality issues.

Answer

Design capacity is always higher than effective capacity.

Answer

Effective capacity is used for short-term planning, while design capacity is used for long-term planning.

Question 51

The primary goal of aggregate planning is to:

Accepted Answer

Determine the most cost-effective way to meet demand within a specified time frame.

Answer

Calculate the exact capacity required at all times

Answer

Identify specific production schedules for individual products

Question 52

What is the key distinction between a bottleneck and a constraint in a production process?

Accepted Answer

A bottleneck is a specific operation that limits output, while a constraint can be any factor that restricts capacity, including equipment, materials, or labor.

Answer

Bottlenecks are always physical equipment, while constraints can be any type of factor.