Question

1. Capacity planning are strategic decisions, because:
   1. Impact organizations ability to meet future demands
   2. Affect operating costs
   3. Do not involve long-term commitment of resources
   4. Cannot affect competitiveness
   5. Alternatives a) and b) are both correct
2. True/False: Control charts are the difference between the actual value and the value predicted

Answer 1

Q1 : Alternatives a) and b) are both correct

Both options A and B are correct. Option A is correct because it takes time to scale up capacity. We may need to build new factories, sign new contracts for additional raw materials and hire new labor all of which cannot be done in short amount of time. Hence poor capacity planning affect the organizations ability to meet future demands. Option B is also correct that to increase capacity a lot of things stated above needs to be in place. If we do not have a strategic view, we may only take a decision with the short term view in mind which may ultimately lead to a higher operating cost.

Option C and D are not correct as capacity buidling involves long term committment of resources especially in fixed cost like land and factories. It also affects competitiveness as it has a direct impact on supply and cost.

Q2 : False

This is false as control charts are not used to visualize the difference between the actual value and the value predicted. Rather control charts are used to check if the process in within the control limits. In this the limits of the control chart or the process are first determined. Then the values of the process are plotted and checked if all the values lie within the control limits, thus helping identify if the process is in control or out of control.