Question 1

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

Accepted Answer

The Theory of Constraints focuses on systematically improving the system by identifying and optimizing the bottleneck or constraint, not necessarily eliminating all bottlenecks.

Question 2

A capacity _____ strategy is a strategy for expanding capacity that waits until demand has increased to a point where additional capacity is necessary.
A) lag
B) lead
C) reduction
D) match

Accepted Answer

A lag capacity strategy involves waiting until demand has increased to a point where additional capacity is necessary before expanding.

Question 3

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

Accepted Answer

Long-term capacity decisions typically involve investments in new facilities, equipment, or major technology changes, rather than adjustments in schedules or staffing levels, which are more related to short-term capacity decisions.

Question 4

The traditional operations management definition of throughput is:
A) the average number of goods or services completed per time period by a process.
B) anything in an organization that limits it from moving toward its goal.
C) associated with the capacity of a resource such as a machine,employee,or workstation.
D) a physical activity in which idle capacity exists.

Accepted Answer

Throughput is defined as the rate at which goods or services are produced by a process. It is the number of units completed per time period, such as per hour or per day.

Question 5

Which of the following statements is true of a work order?
A) It is also called the capacity cushion.
B) It includes processing requirements for a type of work.
C) It cannot be defined for services.
D) It does not include resources needed for a type of work.

Accepted Answer

A work order includes the necessary processing requirements for a type of work, including resources needed and instructions for completion. It is not called the capacity cushion, cannot be defined for services, and does include resources needed for a type of work.

Question 6

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) a physical constraint
B) the capacity cushion
C) overbooking
D) capacity straddle

Accepted Answer

The reserve of equipment and produced goods are examples of the capacity cushion strategy, where a company keeps extra resources to handle sudden demand surges or material shortages. This strategy helps to ensure that the company can meet customer demand without delays or stockouts. Option A (a physical constraint) refers to limitations on manufacturing capacity caused by factors such as space, labor or equipment. Option C (overbooking) refers to selling more capacity than is available, while option D (capacity straddle) is not a recognized term in operations management.

Question 7

Which of the following is a way to manage capacity by adjusting short-term capacity levels?
A) Varying the price of goods or services
B) Adding peripheral goods and/or services
C) Providing reservations
D) Shifting work to slack periods

Accepted Answer

Shifting work to slack periods is a way to manage capacity by adjusting short-term capacity levels. This involves scheduling work during off-peak hours to balance demand and capacity utilization. This can be done by offering incentives such as discounts, promotions or special deals to customers who are willing to use services during off-peak hours. This helps to increase utilization of existing capacity without the need for additional investment in resources. The other options listed, varying the price of goods or services, adding peripheral goods and/or services, and providing reservations, may also impact capacity management, but they are not specific to adjusting short-term capacity levels.

Question 8

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

Accepted Answer

This statement is true. Yield management is the process of maximizing revenue by strategically managing pricing and inventory availability. It is often used in the hospitality and airline industries.

Question 9

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

Accepted Answer

Offering complementary goods or services is more related to product strategy and marketing rather than a short-term capacity strategy, which involves adjustments to manage demand and supply in the short term, such as overtime, shift adjustments, or temporary closures.

Question 10

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.
A) focused factory
B) work order
C) revenue management system
D) nonbottleneck work activity

Accepted Answer

A revenue management system (RMS) is designed to optimize pricing and product availability in order to maximize revenue growth. It accomplishes this through a combination of forecasting, inventory management, and pricing optimization techniques. RMS is commonly used in industries such as hospitality, airlines, and rental cars, where perishable inventory needs to be sold at the right price to the right customer at the right time.

Question 11

The earliest revenue management systems focused solely on _____.
A) forecasting
B) overbooking
C) allocation
D) pricing

Accepted Answer

The answer of The earliest revenue management systems focused solely...

Question 12

Nonbottleneck management principles differ from bottleneck management principles because according to nonbottleneck management principles,_____.
A) idle time is acceptable if there is no work to do
B) an hour lost at a nonbottleneck resource is an hour lost for the entire process or factory output
C) large order sizes should be used to minimize setup time and maximize resource utilization
D) the input should always exceed the capacity

Accepted Answer

Nonbottleneck management principles allow for idle time when there is no work to do because the focus is on maximizing overall flow, not just individual resource utilization. In contrast, bottleneck management principles prioritize minimizing downtime at the bottleneck resource, even if it means overworking nonbottleneck resources or producing excess inventory. Choices B, C, and D are all principles of bottleneck management.

Question 13

A _____ matches capacity additions with demand as closely as possible.
A) lag
B) straddle
C) lead
D) reduction

Accepted Answer

The answer of A _____ matches capacity additions with demand...

Question 14

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 _____.
A) 20%
B) 30%
C) 40%
D) 50%

Accepted Answer

Resource utilization is the percentage of the total capacity that is actually being used. If Scorla Corp. has an average resource utilization of 70%, it means that 30% of its capacity is not being used. This unused capacity can be considered as its safety capacity, which is the capacity reserved for unexpected situations or demand spikes. Therefore, the average safety capacity of Scorla Corp. is 30%.

Question 15

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 _____.
A) 0.75
B) 0.83
C) 1
D) 1.2

Accepted Answer

The utilization of spinning machines is calculated by dividing the number of machines used by the total number of machines available. 
Utilization= Number of machines used / Total number of machines available 
Utilization= 500/600 = 0.83 
Therefore, the utilization of spinning machines at Greyon Spinning Mills Inc. is 0.83, which is closest to option B (0.83).

Question 16

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

Accepted Answer

Constraints are the limiting factors that determine the maximum throughput of a facility in the Theory of Constraints.

Question 17

At Rues and West Bros.,a spare parts manufacturing company,the most important competitive priority is quality.Only a few key spare parts are produced using similar process designs.In this scenario,Rues and West Bros._____.
A) is a focused factory
B) has no throughput
C) is an unfocused factory
D) uses a mass customization strategy

Accepted Answer

Rues and West Bros. is a focused factory as it has a specific competitive priority (quality) and produces only a few key spare parts with similar process designs.

Question 18

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

Accepted Answer

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

Question 19

In a revenue management system,forecasting,allocation,overbooking,and pricing must work in unison if the objective is to:
A) manage a nonperishable asset.
B) meet the future demand of goods and services.
C) determine the single price that needs to be charged to all customers.
D) maximize the revenue generated by a perishable asset.

Accepted Answer

Revenue management systems are used to maximize the revenue generated by perishable assets, such as hotel rooms or airline seats. In order to do this, forecasting is used to predict demand, allocation is used to determine how many units of the asset are available to sell, overbooking is employed to manage cancellations and no-shows, and pricing is used to determine the optimal price to charge for each unit sold. By working in unison, these four elements can help a business to sell the right amount of product at the right price, resulting in maximum revenue generation.

Question 20

Diseconomies of scale are known as the capacity cushion.

Accepted Answer

Diseconomies of scale refer to the situation where the cost per unit increases as the scale of production increases beyond a certain point. The term "capacity cushion" refers to the excess production capacity a company maintains to accommodate fluctuations in demand or unexpected events. They are not the same concept.

Quiz 10: Capacity Management

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

A capacity _____ strategy is a strategy for expanding capacity that waits until demand has increased to a point where additional capacity is necessary.

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

The traditional operations management definition of throughput is:

Which of the following statements is true of a work order?

Which of the following is a way to manage capacity by adjusting short-term capacity levels?

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

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

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.

The earliest revenue management systems focused solely on _____.

Nonbottleneck management principles differ from bottleneck management principles because according to nonbottleneck management principles,_____.

A _____ matches capacity additions with demand as closely as possible.

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 _____.

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 _____.

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

At Rues and West Bros.,a spare parts manufacturing company,the most important competitive priority is quality.Only a few key spare parts are produced using similar process designs.In this scenario,Rues and West Bros._____.

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

In a revenue management system,forecasting,allocation,overbooking,and pricing must work in unison if the objective is to:

Diseconomies of scale are known as the capacity cushion.