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  1. Why is capacity planning strategically important?
  2. Describe three strategies for expanding capacity.
  3. What are the advantages and disadvantages of incremental versus one-step expansion?
  4. Explain economies and diseconomies of scale. Give an example of each.
  5. What is the purpose of aggregate production planning?
  6. When is aggregate production planning most useful?
  7. List several alternatives for adjusting capacity.
  8. What is the difference between a pure and a mixed strategy?
  9. Describe the output of aggregate production planning.
  10. How do the following techniques differ in terms of the types of cost functions used and the type of solution produced?
    1. Linear programming
    2. Linear decision rule
    3. Search decision rule
    4. Management coefficients model
  11. Identify several industries that have highly variable demand patterns. Explore how they adjust capacity.
  12. What options are available for altering the capacity of each of the following?
    1. An elementary school
    2. A prison
    3. An airline
  13. Discuss the advantages and disadvantages of the following strategies for meeting demand:
    1. Use part-time workers.
    2. Subcontract work.
    3. Build up and deplete inventory.
  14. Discuss several strategies for managing demand. Give an example of those you personally have experienced.
  15. Describe the levels of production and capacity planning in the hierarchical planning process.
  16. How is the aggregate planning process different when used for services rather than for manufacturing?
  17. Explore capacity planning at your university or place of business. How is capacity measured? What factors influence the acquisition and allocation of resources?

Drag & Drop Exercises

Enter the cost of each production alternative into the small square at the corner of each cell.

    Launch Exercise 11.1

With your mouse, drag the terms to the proper location on the chart.

    Launch Exercise 11.2

Solved Problem

Vultex Fibers produces a line of sweatclothes that exhibits a varying demand pattern. Given the following demand forecasts, production costs, and constraints, design a production plan for Vultex using the transportation method of LP. Also, calculate the cost of the production plan.

Maximum regular production 100 units/month
Maximum overtime production 50 units/month
Maximum subcontracting 50 units/month
Regular production costs $10/unit
Overtime production costs $25/unit
Subcontracting costs $35/unit
Inventory holding costs $5/unit/month
Beginning inventory 0