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I. TRUE OR FALSE

SEATWORK

1. Our estimates regarding short-run variations in demand can influence our desired design capacity.

2. Design capacity is just another term used to indicate effective capacity.

3. Peak loads and seasonal requirements affect design capacity planning, as well as effective capacity and

actual output.

4. The efficiency of our operations will increase as the ratio of design capacity to actual output increases

(Design capacity divided by actual output).

5. Understanding and matching the timing of demand is more important when doing capacity planning for

services than it is for capacity planning for manufacturing.

II. PROBLEM SOLVING

Stephenson Audio manufactures hand-held microphones. The factory in Sandbach has a maximum output of 40,000 units per month. In January, actual output was 32,000 microphones. What is the capacity utilization in January 2015?

QUIZ

1. Shex Hotel can accommodate 300 guests in a single day under maximum conditions.However, under normal conditions this

hotel is designed to accommodate 200 guests per day. In September, the hotel accommodated 150 guests in one day. What is the hotel’s (a) capacity efficiency & (b) capacity utilization?

2. Leopard Transportation Company is designed to process 80 orders per day but can process as many as 100 orders per day

under extreme conditions. For the past month, it has processed 90 orders per day. What is the company’s (a) capacity efficiency

& (b) capacity utilization? (c) What comments can you make regarding its processing rates? (d) Can the company maintain this?

3. Papi Toys can produce 500 toys in a single day under maximum conditions. However, it is designed to produce 400 units per

day under normal conditions. In February, it produced 480 units per day. What was Papi Toys’ capacity utilization for both (a)

design and (b) effective capacity? (c) What do these numbers tell you?

I. TRUE OR FALSE

SEATWORK

1. Our estimates regarding short-run variations in demand can influence our desired design capacity.

2. Design capacity is just another term used to indicate effective capacity.

3. Peak loads and seasonal requirements affect design capacity planning, as well as effective capacity and

actual output.

4. The efficiency of our operations will increase as the ratio of design capacity to actual output increases

(Design capacity divided by actual output).

5. Understanding and matching the timing of demand is more important when doing capacity planning for

services than it is for capacity planning for manufacturing.

II. PROBLEM SOLVING

Stephenson Audio manufactures hand-held microphones. The factory in Sandbach has a maximum output of 40,000 units per month. In January, actual output was 32,000 microphones. What is the capacity utilization in January 2015?

QUIZ

1. Shex Hotel can accommodate 300 guests in a single day under maximum conditions.However, under normal conditions this

hotel is designed to accommodate 200 guests per day. In September, the hotel accommodated 150 guests in one day. What is the hotel’s (a) capacity efficiency & (b) capacity utilization?

2. Leopard Transportation Company is designed to process 80 orders per day but can process as many as 100 orders per day

under extreme conditions. For the past month, it has processed 90 orders per day. What is the company’s (a) capacity efficiency & (b) capacity utilization? (c) What comments can you make regarding its processing rates? (d) Can the company maintain this?

3. Papi Toys can produce 500 toys in a single day under maximum conditions. However, it is designed to produce 400 units per

day under normal conditions. In February, it produced 480 units per day. What was Papi Toys’ capacity utilization for both (a)

design and (b) effective capacity? (c) What do these numbers tell you?

SEATWORK: TRUE OR FALSE

1. TRUE

2. FALSE

3. TRUE

4. FALSE

5. TRUE

ANSWERS

SEATWORK: PROBLEM SOLVING

Capacity Utilization in January 2015 =

(32,000)

(40,000) 100 = %

QUIZ

1.

(a)

Utilization effective = 150 guests / 200 = .75 x 100% = 75%

(b)

Utilization design = 150 guests / 300 = .5 x 100% = 50%

2.

(a)

Utilization effective = 90 orders / 80 = x 100% = 112.5%

(b)

Utilization design = 90 orders / 100 = .9 x 100% = 90%

(c&d) The company would not be able to sustain this utilization without existing and additional constraints increasing within the system. They will need to apply specific focus on managing the constraints.

3.

(a)

Utilization effective = 480 orders / 400 = 1.2 x 100% = 120%

(b)

Utilization design = 480 orders / 500 = .96 x 100% = 96%

(c)

The current output of the warehouse is higher than effective capacity. Papi toys would only be able to operate at this

level for only a short period of time. Constraints would need to be managed closely.