Operations Management: Processes and Supply Chains, 12e (Krajewski)
Chapter 4 Capacity Planning
4.1 Planning Long-Term Capacity
1) Capacity is the maximum rate of output of a process.
Answer: TRUE
Difficulty: Easy
Keywords: capacity, maximum output rate
Learning Outcome: Explain options for managing bottlenecks and managing capacity in service and
manufacturing processes
AACSB: Application of Knowledge
Learning Obj.: Define long-term capacity and its relationship with economies and diseconomies of scale.
2) Capacity can be expressed by output or input measures.
Answer: TRUE
Difficulty: Easy
Keywords: capacity, input measures, output measures
Learning Outcome: Explain options for managing bottlenecks and managing capacity in service and
manufacturing processes
AACSB: Application of Knowledge
Learning Obj.: Define long-term capacity and its relationship with economies and diseconomies of scale.
3) Input measures of capacity are inherently more accurate than output measures of capacity.
Answer: FALSE
Difficulty: Moderate
Keywords: input measures, output measures, capacity
Learning Outcome: Explain options for managing bottlenecks and managing capacity in service and
manufacturing processes
AACSB: Application of Knowledge
Learning Obj.: Define long-term capacity and its relationship with economies and diseconomies of scale.
4) Utilization is the degree to which equipment, space, or labor is currently being used.
Answer: TRUE
Difficulty: Easy
Keywords: utilization, equipment used, space used, labor used
Learning Outcome: Explain options for managing bottlenecks and managing capacity in service and
manufacturing processes
AACSB: Application of Knowledge
Learning Obj.: Define long-term capacity and its relationship with economies and diseconomies of scale.
5) One reason economies of scale drive down cost is the spreading of fixed costs.
Answer: TRUE
Difficulty: Moderate
Keywords: economies of scale, fixed cost
Learning Outcome: Explain options for managing bottlenecks and managing capacity in service and
manufacturing processes
AACSB: Application of Knowledge
Learning Obj.: Define long-term capacity and its relationship with economies and diseconomies of scale.
6) Diseconomies of scale is a concept that states that the average unit cost of a service or good can be
reduced by increasing its output rate.
Answer: FALSE
Difficulty: Easy
Keywords: diseconomies of scale, average unit cost, output rate
Learning Outcome: Explain options for managing bottlenecks and managing capacity in service and
manufacturing processes
AACSB: Application of Knowledge
Learning Obj.: Define long-term capacity and its relationship with economies and diseconomies of scale.