Exam 20: Capacity and Constraint Management

Suppose that the market has a 70% chance of being favorable and a 30% chance of being unfavorable.A favorable market will yield a profit of $300,000,while an unfavorable market will yield a profit of $20,000.What is the expected monetary value (EMV)in this situation?

TOC was popularized by:

Multiproduct break-even analysis calculates the ________ of each product,________ it in proportion to each product's share of total sales.

A fleet repair facility has the capacity to repair 800 trucks per month.However,due to scheduled maintenance of their equipment,management feels that they can repair no more than 600 trucks per month.Last month,two of the employees were absent several days each,and only 400 trucks were repaired.What are the utilization and efficiency of the repair shop?

A firm produces three products.Product A sells for $60;its variable costs are $20.Product B sells for $200;its variable costs are $120.Product C sells for $25;its variable costs are $10.Last year,the firm sold 1000 units of A,2000 units of B,and 10,000 units of C.The firm has fixed costs of $320,000 per year.Calculate the break-even point of the firm.

A tortilla chip workstation produces 1,000 chips in 20 seconds.What is its bottleneck time?

________ is a means of determining the discounted value of a series of future cash receipts.

A capacity alternative has an initial cost of $50,000 and cash flow of $20,000 for each of the next four years.If the cost of capital is 5 percent,the net present value of this investment is:

A work system has five stations that have process times of 5,9,4,9,and 8.What is the throughput time of the system?

An organization whose capacity is on that portion of the average unit cost curve that falls as output rises:

________ analysis finds the point at which costs equal revenues.

Health Care Systems of the South is about to buy an expensive piece of diagnostic equipment.The company estimates that it will generate uniform revenues of $500,000 for each of the next eight years.What is the present value of this stream of earnings,at an interest rate of 6%? What is the net present value if the machine lasts only six years,not eight? If the equipment cost $2,750,000,should the company purchase it?

Which of the following is FALSE regarding capacity expansion?

Identify,in proper sequence,the steps in the process of recognizing and managing constraints.

Capacity decisions are based on technological concerns,not demand forecasts.

What is the fundamental distinction between design capacity and effective capacity? Provide a brief example.

How is break-even analysis useful in the study of the capacity decision? What limitations does this analytical tool have in this application?

A firm produces three products in a repetitive process facility.Product A sells for $60;its variable costs are $20.Product B sells for $200;its variable costs are $80.Product C sells for $25;its variable costs are $15.The firm has annual fixed costs of $320,000.Last year,the firm sold 1000 units of A,2000 units of B,and 10,000 units of C.Calculate the break-even point of the firm.The firm has some idle capacity at these volumes,and chooses to cut the selling price of A from $60 to $45,believing that its sales volume will rise from 1000 units to 2500 units.What is the revised break-even point?

Which of the following represents an aggressive approach to demand management in the service sector when demand and capacity are not particularly well matched?

To find the throughput time with simultaneous processes,compute the time over all paths and choose the shortest path through the system.