Allocating too much capacity to a location results in? **Question:**Allocating too much capacity to a location results in:a. poor utilization, and as a result, higher costs. b. high utilization, and as a result, higher costs. c. poor utilization, and as a result, lower costs. d. high utilization, and as a result, lower costs. **Explanation:**In operational management, effective capacity allocation is crucial to optimize costs. Too much capacity can lead to poor utilization where resources are underused, often resulting in higher costs due to maintaining unused capacity. Conversely, optimal capacity leads to high utilization, meaning resources are efficiently used, which can lower operational costs. The correct understanding helps in strategic planning and resource management to ensure cost-effectiveness and efficient operations.

The capacity allocation consideration decides how best to utilize resources that help to fulfill conclusive product orders by giving little raw material reserves & limited capacities for manufacturing, final goods transportation & distribution centers.Answer: Correct option: (A) Poor utilization, & as a result of, higher costs. Explanation: Capacity allocation decisions show the fundamental concern on the supply chain performance. If allocating very little capacity then it impacts the bad responsiveness due to this client demand not being fulfilled, & in the case when allocating overly capacity to the location then it impacts poor utilization, & as an effect, higher costs because it affects the entire production, stock, & transportation costs incurred by the supply chain to meet customer demand. Therefore this finding needs to be reconsidered on a frequent basis so that the allocation can be adjusted as per the market conditions or plant conditions vary. Other option: B) High utilization, & as a result, higher costs- When allocating excessively high capacity it impacts the performance & results in lower utilization. hence this option is incorrect.C) Poor utilization, & as a result, lower costs- When allocating overly large capacity it impacts the performance & results in lower utilization then increases the cost of stock, transportation, etc hence this option is incorrect.D) High utilization, & as a result, lower costs- When allocating very large capacity it impacts the performance & results in lower utilization. then increases the cost of stock, transportation, etc hence this option is incorrect.

Business

Operations Management

Allocating too much capacity to a location results in a. poor utilization, b. high utilization, c. poor utilization, d. high utilization, and as a result, higher costs. and as a result, higher costs. and as a result, lower costs. and as a result, lower costs.

Allocating too much capacity to a location results in a. poor utilization, b. high utilization, c. poor utilization, d. high utilization, and as a result, higher costs. and as a result, higher costs. and as a result, lower costs. and as a result, lower costs.

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter2: Introduction To Spreadsheet Modeling

Section: Chapter Questions

Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...

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