Capacity Planning & Resource Management Flashcards

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

Answer: To ensure that production capacity meets current and future demand

Capacity planning aims to align production capability with demand to avoid both over-capacity and under-capacity situations.

Which term refers to the maximum output a facility can produce under ideal, theoretical conditions?

Answer: Design capacity

Design capacity is the theoretical maximum output achievable under perfect operating conditions with no interruptions or inefficiencies.

Utilization rate in capacity planning is correctly calculated as:

Answer: Actual output divided by design capacity

Utilization rate = Actual output / Design capacity, expressing how much of the theoretical maximum capacity is actually being used.

Which of the following is a SHORT-TERM strategy for managing unexpected capacity shortfalls?

Answer: Outsourcing production to a third party

Outsourcing is a short-term tactical solution to address capacity shortfalls quickly without long-term capital investment commitments.

In capacity planning, what does the term 'bottleneck' refer to?

Answer: The process step that limits overall system throughput

A bottleneck is the constraint or limiting step that restricts the overall output rate of an entire production or service system.

Which capacity strategy involves deliberately adding capacity in advance of anticipated demand growth?

Answer: Lead strategy

The lead strategy proactively builds capacity ahead of projected demand, reducing the risk of lost sales due to insufficient capacity.

What is the primary purpose of a Capacity Requirements Plan (CRP)?

Answer: To verify sufficient capacity exists to execute the master production schedule

CRP verifies that manufacturing resources are available in sufficient quantities to fulfill the requirements specified in the master production schedule.