Capacity Planning Concepts: Master Capacity Planning Strategies

Question 1

Which of the following is NOT a potential risk associated with overcapacity?

Accepted Answer

Enhanced customer satisfaction

Answer

Excess inventory

Answer

Underutilization of resources

Answer

Increased operating costs

Question 2

How do capacity decisions impact an organization's operational performance?

Accepted Answer

Capacity decisions can influence efficiency, productivity, and profitability

Answer

Capacity decisions have no significant impact on operational performance

Answer

Capacity decisions primarily affect customer service levels

Answer

Capacity decisions only influence inventory management strategies

Question 3

In what way does capacity planning differ between service organizations and manufacturing organizations?

Accepted Answer

Service organizations focus on managing demand fluctuations, while manufacturing organizations prioritize physical capacity management

Answer

Manufacturing organizations focus on managing demand fluctuations, while service organizations prioritize physical capacity management

Answer

There is no fundamental difference in capacity planning between these types of organizations

Answer

Capacity planning is only relevant for manufacturing organizations

Question 4

When creating a capacity plan, which factor is most crucial to consider?

Accepted Answer

Customer demand

Answer

Production costs

Answer

Employee morale

Answer

Sustainability

Question 5

In operations management, what's the primary purpose of capacity planning?

Accepted Answer

To optimize resource allocation and meet customer demand.

Answer

To prevent stockouts and excess inventory.

Answer

To maximize production and minimize costs.

Question 6

The process of determining the amount of capacity needed to meet expected demand is known as:

Accepted Answer

Capacity Planning

Answer

Demand Forecasting

Answer

Resource Allocation

Answer

Inventory Control

Question 7

Which capacity planning strategy is often used by organizations with predictable demand?

Accepted Answer

Level strategy

Answer

Chase strategy

Answer

Mixed strategy

Answer

Flex strategy

Question 8

Which factor is not typically taken into consideration when developing a capacity plan?

Accepted Answer

Employee morale

Answer

Market demand forecast

Answer

Production lead time

Answer

Company budget

Question 9

What is the role of forecasting in capacity planning?

Accepted Answer

To estimate future demand and plan capacity accordingly

Answer

To determine the current level of capacity

Answer

To identify potential capacity constraints

Answer

To optimize resource allocation

Question 10

Which of the following is an advantage of using simulation in capacity planning?

Accepted Answer

It allows for testing different scenarios without real-world consequences

Answer

It provides highly accurate and reliable results

Answer

It is easy to implement and use without any specialized training

Answer

It eliminates the need for historical data

Question 11

What is the primary purpose of a capacity cushion?

Accepted Answer

To absorb unexpected demand fluctuations and variations

Answer

To reduce production costs

Answer

To improve product quality

Answer

To increase customer satisfaction

Question 12

Which type of capacity flexibility allows for significant changes in capacity over a longer period of time?

Accepted Answer

Strategic flexibility

Answer

Tactical flexibility

Answer

Operational flexibility

Answer

Permanent flexibility

Question 13

Which of the following is NOT a type of capacity?

Accepted Answer

Theoretical

Answer

Physical

Answer

Design

Answer

Effective

Question 14

What is the primary objective of capacity planning?

Accepted Answer

Align supply with demand

Answer

Minimize operating costs

Answer

Maximize production

Answer

Enhance product quality

Question 15

How does lead time impact capacity planning?

Accepted Answer

It influences the ability to adjust capacity to meet fluctuating demand.

Answer

It determines the amount of safety stock required.

Answer

It measures the efficiency of the supply chain.

Answer

It indicates the speed at which orders are fulfilled.

Question 16

What is the distinction between actual and effective capacity?

Accepted Answer

Actual capacity includes breakdowns and downtime, while effective capacity does not.

Answer

Effective capacity is the maximum possible output, while actual capacity is the average output.

Answer

Actual capacity is a theoretical maximum, while effective capacity is the practical maximum.

Answer

There is no difference between actual and effective capacity.

Question 17

What is the primary goal of capacity planning?

Accepted Answer

To ensure that an organization can meet its demand and achieve its business objectives.

Answer

To minimize production costs

Answer

To maximize equipment utilization

Answer

To forecast future capacity needs

Question 18

Which of the following is NOT a capacity planning strategy?

Accepted Answer

Firefighting strategy

Answer

Chase demand strategy

Answer

Level capacity strategy

Answer

Mixed strategy

Question 19

How do capacity decisions impact workforce planning? Discuss the challenges in aligning workforce capacity with the chosen strategy.

Accepted Answer

Capacity decisions directly influence staffing levels, scheduling, and training, requiring coordination between capacity and workforce planning.

Answer

Workforce planning is independent of capacity decisions, focusing solely on hiring and firing.

Answer

Capacity decisions only affect production capacity, with no implications for workforce planning.

Answer

Aligning workforce capacity with capacity decisions is always straightforward, posing no significant challenges.

Question 20

Which option is NOT a type of capacity in operations management?

Accepted Answer

Optimal capacity

Answer

Design capacity

Answer

Effective capacity

Answer

Peak capacity

Question 21

What is the primary aim of capacity planning in operations management?

Accepted Answer

To ensure the organization has adequate resources to meet future demand.

Answer

To minimize production costs.

Answer

To improve product quality.

Answer

To increase employee motivation.

Question 22

What is the process of adjusting capacity in response to changes in demand called?

Accepted Answer

Capacity adjustment

Answer

Capacity expansion

Answer

Capacity reduction

Answer

Capacity management

Question 23

Which of the following is a qualitative method of forecasting demand?

Accepted Answer

Expert opinion

Answer

Historical data analysis

Answer

Regression analysis

Answer

Monte Carlo simulation

Question 24

What is the term for the capacity that is required to meet peak demand?

Accepted Answer

Peak capacity

Answer

Design capacity

Answer

Effective capacity

Answer

Theoretical capacity

Question 25

Which of the following is NOT a consequence of ineffective capacity planning?

Accepted Answer

Improved customer satisfaction

Answer

Lost sales

Answer

Backorders

Answer

Increased production costs

Question 26

What is the initial step in developing a capacity plan?

Accepted Answer

Conduct a demand forecast

Answer

Identify capacity constraints

Answer

Develop capacity alternatives

Answer

Evaluate capacity alternatives

Question 27

What is the primary objective of capacity planning in operations management?

Accepted Answer

To ensure that operations have sufficient resources to meet demand while minimizing costs and maximizing efficiency

Answer

To maximize production output regardless of demand or costs

Answer

To minimize costs without considering demand or efficiency

Answer

To improve customer satisfaction without regard to costs or efficiency

Question 28

What is the purpose of a capacity cushion?

Accepted Answer

To provide a buffer against unexpected fluctuations in demand

Answer

To increase production efficiency

Answer

To reduce the cost of operations

Answer

To improve customer service

Question 29

Which capacity planning strategy is commonly used when demand is highly variable and unpredictable?

Accepted Answer

Chase demand

Answer

Level capacity

Answer

Mixed strategy

Answer

Outsource production overseas

Question 30

What is the primary purpose of a capacity cushion?

Accepted Answer

To absorb unexpected demand fluctuations

Answer

To reduce production variability

Answer

To increase customer retention

Answer

To enhance employee morale

Question 31

What is the purpose of 'capacity cushions' in capacity planning?

Accepted Answer

To buffer against unexpected demand fluctuations, reducing the risk of shortages and disruptions.

Answer

To absorb supply variations and ensure uninterrupted production.

Answer

To avoid underutilized capacity.

Answer

To ensure efficiency in highly predictable environments.

Question 32

How does effective capacity planning contribute to enhancing customer service levels?

Accepted Answer

By reducing lead times and improving delivery speed

Answer

By increasing production costs and passing them on to customers

Answer

By hiring more staff without considering customer needs

Question 33

What is the primary purpose of 'capacity cushions' in capacity planning?

Accepted Answer

To mitigate uncertainties in demand and supply.

Answer

To increase capacity without incurring significant costs.

Answer

To restrict customer demand during peak periods.

Answer

To forecast future demand accurately.

Question 34

Which technologies can improve the accuracy and efficiency of capacity planning?

Accepted Answer

Predictive analytics

Accepted Answer

Simulation software

Answer

Manual calculations

Answer

Expert opinion

Question 35

What is a potential negative outcome of undercapacity in operations?

Accepted Answer

Lost sales and revenue

Answer

Increased customer satisfaction

Answer

Reduced production costs

Answer

Improved employee morale

Question 36

How can capacity planning be effectively integrated with other operational functions, such as supply chain management and inventory management?

Accepted Answer

By aligning capacity plans with supply chain forecasts to ensure production capacity meets anticipated demand, preventing shortages or idle capacity.

Answer

By ignoring inventory levels and focusing solely on maximizing production capacity.

Answer

By isolating capacity planning as an independent process, unrelated to other operational functions.

Question 37

How does capacity planning contribute to improved customer service?

Accepted Answer

Reduced lead times

Answer

Increased production costs

Answer

Improved product quality

Question 38

What is the primary goal of developing a capacity plan?

Accepted Answer

To determine the optimal level of capacity to support business objectives.

Answer

To improve employee morale.

Answer

To reduce production costs.

Question 39

Which type of capacity refers to the maximum possible output?

Accepted Answer

Theoretical capacity

Answer

Peak capacity

Answer

Effective capacity

Answer

Practical capacity

Question 40

What is the key distinction between lead capacity and lag capacity?

Accepted Answer

Lead capacity is added before the anticipated increase in demand, while lag capacity is added after the demand increase.

Answer

Lead capacity is for long-term planning, while lag capacity is for short-term planning.

Question 41

What is the purpose of a capacity cushion?

Accepted Answer

To provide flexibility and absorb unexpected demand fluctuations.

Answer

To hold excess inventory.

Answer

To represent the difference between theoretical and effective capacity.

Question 42

What is the primary objective of chase capacity strategy?

Accepted Answer

To adjust capacity closely to meet fluctuating demand on a day-to-day basis.

Answer

To create a buffer of excess capacity.

Answer

To improve product quality.

Answer

To reduce production costs.

Question 43

What is the difference between effective capacity and design capacity?

Accepted Answer

Effective capacity considers factors that reduce theoretical capacity, such as downtime and maintenance.

Answer

Effective capacity is always higher than design capacity.

Question 44

Which of the following is NOT a type of capacity measurement?

Accepted Answer

Cognitive capacity

Answer

Design capacity

Answer

Effective capacity

Answer

Installed capacity

Question 45

What is the primary goal of capacity planning?

Accepted Answer

To ensure a business can meet customer demand without exceeding its production capabilities.

Answer

To implement new products or services

Answer

To reduce production costs

Question 46

What is the fundamental difference between installed capacity and effective capacity?

Accepted Answer

Installed capacity is the maximum possible output, while effective capacity considers factors that reduce actual output.

Answer

Installed capacity is the minimum possible output, while effective capacity is the expected average output.

Question 47

Which of the following are the three main strategic approaches to capacity planning?

Accepted Answer

Chase demand, level capacity, and match supply and demand

Answer

Increase capacity, decrease capacity, maintain capacity

Answer

Plan for peak demand, plan for average demand, plan for minimum demand

Question 48

List the three critical factors to consider when developing a capacity plan.

Accepted Answer

Demand forecasts, production processes, and resource availability

Answer

Financial statements, marketing campaigns, and technology trends

Answer

Customer preferences, supplier reliability, and employee morale

Question 49

How can technology positively impact capacity planning?

Accepted Answer

Improved demand forecasting, optimized production schedules, and enhanced capacity utilization monitoring

Answer

Technology is irrelevant to capacity planning

Question 50

What are the potential consequences of inadequate capacity planning?

Accepted Answer

Lost sales, increased costs, and customer dissatisfaction

Answer

Reduced inventory levels, streamlined operations, and optimized resource allocation

Answer

Improved efficiency, increased productivity, and enhanced profitability

Question 51

In a dynamic and fast-paced business environment, which approach best supports effective capacity planning?

Accepted Answer

Utilizing flexible planning techniques and continuously reviewing and adjusting plans based on market changes

Answer

Relying solely on historical data and ignoring market trends

Answer

Centralizing all capacity planning decisions without stakeholder input

Question 52

Which of the following is NOT a key performance indicator (KPI) used to measure capacity utilization?

Accepted Answer

Employee turnover rate

Answer

Equipment utilization

Answer

Capacity cushion

Answer

Labor utilization