Essay on Net Present Value and Moderate Keywords

Chapter 6 | Capacity Planning | | TRUE/FALSE 1. Capacity is the maximum rate of output of a process. Answer: True Reference: Introduction Difficulty: Easy Keywords: capacity, maximum output rate 2. Capacity decisions should be made separate from strategic decisions. Answer: False Reference: Introduction Difficulty: Moderate Keywords: capacity decision, strategic decisions 3. Capacity can be expressed by output or input measures. Answer: True Reference: Planning Long-Term Capacity Difficulty: Moderate Keywords: capacity, input measures, output measures 4. Input measures of capacity are inherently more accurate than output measures of†¦show more content†¦A firm may preempt the expansion of competitive firms by using an expansionist capacity strategy and announcing a large capacity expansion. Answer: True Reference: Capacity Timing and Sizing Strategies Difficulty: Moderate Keywords: expansionist strategy, capacity expansion 17. An expansionist capacity strategy minimizes the risks of overexpansion due to overly optimistic demand forecasts. Answer: False Reference: Capacity Timing and Sizing Strategies Difficulty: Moderate Keywords: wait-and-see strategy, overexpansion, demand forecasts 18. A process’s capacity requirement states the future process capacity needed to meet projected customer demands, and includes an allowance for the desired capacity cushion. Answer: True Reference: A Systematic Approach to Long-Term Capacity Decisions Difficulty: Moderate Keywords: capacity requirement, customer demand, capacity cushion 19. A planning horizon is defined as the period beyond which the company does not have customer orders. Answer: False Reference: A Systematic Approach to Long-term Capacity Decisions Difficulty: Moderate Keywords: time horizon 20. Output measures are used for estimating capacity requirements when product variety and process divergence are high. 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