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Solution Library
Capacity Concepts in Operations Management
Question
A company that is in the business of producing make-to-order cakes advertises itself as offering the “Quickest Make-to-Order Cakes in NYC”. Orders arrive randomly and the company’s objective is to fulfill them on the same day. After investigating their operations, an MBA student that hasn’t taken Operations Management is astonished about the fact that the utilization of the firm’s manufacturing process is only 60%. The student thinks that it does not make sense to have their main asset so highly unutilized. Based on what you learned in the class and on the firm’s business strategy (expressed in their ad), the low level of utilization can be explained with which of the following statements.
a) The objective is to maximize the capacity of the bottleneck.
b) The objective is to improve demand forecasting.
c) The objective is to reduce lead time in the manufacturing process.
d) The objective is to reduce product variety.
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