Mgo 302 Chapter 5 Text

Front 1

What is capacity?

Back 1

Capacity represents the maximum value that can be provided by an operation

Front 2

Capacity planning begins with ____ _____ of a unit of measurement.

Back 2

intelligent selection

Front 3

What is design capacity?

Back 3

the theoretical maximum output of a system, assuming ideal operating conditions

Front 4

What is effective capacity?

Back 4

it is expected to be less than its design capacity, in that it reflects the system's potential under normal operating conditions

Front 5

Design capacity is notoriously ______

Back 5

fixed

Front 6

Define utilization.

Back 6

Percent of design capacity in use

Front 7

What is efficiency?

Back 7

percent of a resource in productive use.

Front 8

What is the formula for utilization?

Back 8

(actual output/design capacity)

Front 9

What is the formula of efficiency?

Back 9

actual output/effective capacity

Front 10

Why is efficiency more operational than utilization?

Back 10

it states how much of a resource is being used, given its reasonable availability

Front 11

In capacity planning, desirability is determined by...

Back 11

cost, and the operating level of a facility that minimizes at which the facility can operate.

Front 12

At low levels of output volume, average cost...

Back 12

is often high

Front 13

What are fixed costs?

Back 13

cost incurred regardless of the volume of associated activity.

Front 14

For output volume, any increase to output level...

Back 14

decreases average cost by spreading the fixed cost further

Front 15

What is economies of scale?

Back 15

Decreasing average unit cost by increasing volume.

Front 16

What is diseconomies of scale?

Back 16

Increasing average unit cost by increasing volume

Front 17

What is the theoretically desirable optimal operating level?

Back 17

Where economies of scale and diseconomies of scale meet.

Front 18

Can facilities operate beyond design capacity.

Back 18

Yes facilities can operate beyond their design capacity.

Front 19

What is break even?

Back 19

just enough revenue to cover costs.

Front 20

Define variable costs.

Back 20

costs that varies with volume of associated activity.

Front 21

What is the formula of break even point?

Back 21

Fixed costs + (variable costs *quantity)= (revenue*quantity)

Front 22

What is the alternative formula for break even?

Back 22

Break even quantity= FC/(Revenue-Variable costs)

Front 23

Break even analysis helps clarify the strategic issue of _________ or __________ some portion of an organization's production

Back 23

subcontract

outsource

Front 24

Define subcontracting.

Back 24

to engage a third party in provision of value to a customer

Front 25

Define outsourcing.

Back 25

to subcontract an internal process to an external provider

Front 26

Any company should resist ______ ________ of its business, because the business may lose its competitive advantage within its own market.

Back 26

core competency

Front 27

Describe a conservative capacity strategy.

Back 27

The design capacity is adjusted upward only after demand on the system has increased to levels well beyond current capacities

Front 28

What are the advantages of a conservative capacity strategy?

Back 28

High utilization rates throughout the organization's history can translate into high values for return on assets

Shortages created by delaying expansion might not necessarily translate into lost customers.

Front 29

What are the disadvantages of a conservative capacity strategy?

Back 29

(1) customer service is likely to suffer throughout the firm's timeline.

(2) competitors may maximize opportunities to enter the market and establish themselves by claiming unmet demand.

(3) system overload may result in higher average costs than necessary

Front 30

Explain an aggressive capacity strategy.

Back 30

an organization pursuing an aggressive capacity strategy expands in anticipation of growing demand. Here the design capacity of the system is never allowed to fall below demand, resulting in adequate supply of its output throughout the organization's timeline

Front 31

What is a capacity cushion?

Back 31

largely idle capacity maintained be beyond the expected load level of a system to absorb expected demand.

Front 32

What is the advantage to an aggressive capacity strategy?

Back 32

Customer service is maximized throughout the firm's timeline

Competitors have less incentive and opportunity to enter this marketplace

Front 33

What are the disadvantages to an aggressive capacity strategy?

Back 33

Aggressive expansion of capacity lower utilization levels throughout the organization's history, possibly translating into lower return on assets.

Increased costs associated with maintaining the idle capacity cushion often provide little or no direct benefit in the absence of unexpected demand.

Front 34

Companies follow a combination of ____ versus ______ capacity.

Back 34

aggressive

conservative

Front 35

When determining whether a firm should use an aggressive or conservative strategy, a firm looks at...

Back 35

the cost unmet demand relative to the cost of idle capacity

Front 36

What are queue?

Back 36

a waiting line

Front 37

what is the queuing theory?

Back 37

mathematical modeling of waiting lines.

Front 38

The first component of any waiting line is...

Back 38

the source of its customer arrivals.

Front 39

What is a finite calling population?

Back 39

implies that the overall number of potential customers is small enough that customers arrival rate and the number of customers in the system are not independent events

Front 40

What is an infinite calling population?

Back 40

It contains enough customers that the customer arrival rate and the number of customers in the system function independently: the arrival of one customer does not reduce the overall size of the population enough to change the probability that another customer arrival will follow

Front 41

______ ______ is a discrete probability distribution describing the likelihood of a particular number of independent events within a particular interval

Back 41

poisson distribution

Front 42

What is the formula for a poisson distribution?

Back 42

The probability of x customers arriving= ((mean number of customers that arrive in that period^number of customers)(e*mean number of customers that arrive in that period))/(number of customers!)

Front 43

What is perfectly patient?

Back 43

every arriving customer joins the line and all customers wait until they are served, customer arrivals are said to be perfectly patient

Front 44

What are the two common forms of impatience?

Back 44

balking

reneging

Front 45

What is balking?

Back 45

occurs when a customer arrives and leaves immediately without joining the line

Front 46

What is reneging?

Back 46

occurs when a customer arrives, joins the line, but leaves at some point without receiving the service.

Front 47

When observing a line, there are two queue characteristics to watch for?

Back 47

(1) any issue of limitation on the length of the queue

(2) what rule is governing the order in which waiting customers are being served.

Front 48

Any customer arriving after a limited queue has reached its capacity is said to be ___ from the system

Back 48

blocked

Front 49

Define blocking.

Back 49

preventing customer arrivals from entering a system due to limitations on the allowable length of a queue.

Front 50

What is queue discipline?

Back 50

a policy of the system specifying the order in which waiting arrivals are served.

Front 51

What is a FCFS?

Back 51

a sequencing rule that means first come, first served.

Front 52

What is a serpentine line?

Back 52

a single queue of customers waiting in a line that must bend one or more times to fit within the service facility.

Front 53

______ _____ is a labeling system for classifying waiting line models according to their initial assumptions.

Back 53

kendall notation

Front 54

What is tractable?

Back 54

easy to use; yields insight with a limited number of calculations

Front 55

What is the difference between absolute time and perceived time?

Back 55

Absolute time is the passage of time as measured by a clock

Perceived time is a passage of time as measured by a person, usually without the use of a clock