Exam 20: Capacity and Constraint Management

Christopher's Cranks uses a machine that can produce 100 cranks per hour.The firm operates 12 hours per day,five days per week.Due to regularly scheduled preventive maintenance,the firm expects the machine to be running during approximately 95% of the available time.Based on experience with other products,the firm expects to achieve an efficiency level for the cranks of 85%.What is the expected weekly output of cranks for this company?

The theory of constraints has its origins in:

Define fixed costs.

A product is currently made in a process-focused shop,where fixed costs are $9,000 per year and variable cost is $50 per unit.The firm sells the product for $200 per unit.What is the break-even point for this operation? What is the profit (or loss)on a demand of 200 units per year?

Possible decision alternatives found in capacity EMV problems are future demands or market favorability.

Utilization will always be lower than efficiency because:

Explain the importance of a bottleneck operation in a production sequence.

The basic break-even model can be modified to handle more than one product.This extension of the basic model requires:

In the service sector,scheduling customers is a type of ________ management,while scheduling the workforce is a type of ________.

The net present value of $10,000 to be received in exactly three years is considerably greater than $10,000.

Which of the following statements regarding fixed costs is TRUE?

What is a common method used to increase capacity with a lag strategy?

The bottleneck time is always at least as long as the throughput time.

Net present value:

Define variable costs.What special assumption is made about variable costs in the textbook?

Why is the capacity decision important?

________ is the number of units a facility can hold,store,receive,or produce in a period of time.

Consider a production line with five stations.Station 1 can produce a unit in 9 minutes.Station 2 can produce a unit in 10 minutes.Station 3 has two identical machines,each of which can process a unit in 12 minutes (each unit only needs to be processed on one of the two machines.Station 4 can produce a unit in 5 minutes.Station 5 can produce a unit in 8 minutes.Which station is the bottleneck station?

Which of the following is not one of the four principles of bottleneck management?

A firm sells two products.Product R sells for $20;its variable cost is $6.Product S sells for $50;its variable cost is $30.Product R accounts for 60 percent of the firm's sales,while S accounts for 40 percent.The firm's fixed costs are $4 million annually.Calculate the firm's break-even point in dollars.