In each of the following, name the term defined or answer the question. Answers are listed at the bottom.
1. The level of capacity for which a process was designed and at which it operates at minimum cost.
2. A facility has a maximum capacity of 4,000 units per day using overtime and skipping the daily maintenance routine. At 3,500 units per day, the facility operates at a level where the average cost per unit is minimized. Currently, the process is scheduled to operate at a level of 3,000 units per day. What is the capacity utilization rate?
3. The concept that relates to gaining efficiency through the full utilization of dedicated resources, such as people and equipment.
4. A facility that limits its production to a single product or a set of very similar products.
5. When multiple (usually similar) products can be produced in a facility less expensive than a single product.
6. The ability to serve more customers than expected.
7. In considering a capacity expansion, we have two alternatives. The first alternative is expected to cost \($1,000,000\) and has an expected profit of \($500,000\) over the next three years. The second alternative has an expected cost of \($800,000\) and an expected profit of \($450,000\) over the next three years. Which alternative should we select, and what is the expected value of the expansion? Assume a 10 percent interest rate and the initial cost of either alternative is not discounted.
8. In a service process such as the checkout counter in a discount store, what is a good target percent for capacity utilization?