Question 1

A high value for which of the following signals that an operations manager is excelling?

Accepted Answer

A)  efficiency 
B)  utilization 
C)  effective capacity 
D)  net present value 
E)  design capacity 
A)  efficiency 
B)  utilization 
C)  effective capacity 
D)  net present value 
E)  design capacity

Question 2

A firm is about to undertake the manufacture of a product, and is weighing three capacity alternatives: small job shop, large job shop, and repetitive manufacturing. The small job shop has fixed costs of $3,000 per month, and variable costs of $10 per unit. The larger job shop has fixed costs of $12,000 per month and variable costs of $3 per unit. The repetitive manufacturing plant has fixed costs of $30,000 and variable costs of $1 per unit. Demand for the product is expected to be 1,000 units per month with "moderate" market acceptance, but 2,000 under "strong" market acceptance. The probability of moderate acceptance is estimated to be 60%; strong acceptance has a probability of 40%. The product will sell for $25 per unit regardless of the capacity decision. Which capacity choice should the firm make?

Accepted Answer

The payoffs are as follows: small job sh

Question 3

________ analysis finds the point at which costs equals revenues.

Accepted Answer

The answer of ________ analysis finds the point at which...

Question 4

Which of the following statements regarding fixed costs is true?

Accepted Answer

A)  Fixed costs rise by a constant amount for every added unit of volume. 
B)  While fixed costs are ordinarily constant with respect to volume, they can "step" upward if volume increases result in additional fixed costs. 
C)  Fixed costs are those costs associated with direct labour and materials. 
D)  Fixed costs equal variable costs at the break-even point. 
E)  Fixed cost is the difference between selling price and variable cost. 
A)  Fixed costs rise by a constant amount for every added unit of volume. 
B)  While fixed costs are ordinarily constant with respect to volume, they can "step" upward if volume increases result in additional fixed costs. 
C)  Fixed costs are those costs associated with direct labour and materials. 
D)  Fixed costs equal variable costs at the break-even point. 
E)  Fixed cost is the difference between selling price and variable cost.

Question 5

The three main strategies for increasing capacity are

Accepted Answer

A)  leading, lag, straddle. 
B)  fast, normal, slow. 
C)  before, during, after. 
D)  leading, behind, mixed. 
E)  over, under, even. 
A)  leading, lag, straddle. 
B)  fast, normal, slow. 
C)  before, during, after. 
D)  leading, behind, mixed. 
E)  over, under, even.

Question 6

A good capacity decision requires that it be tightly integrated with the organization's strategy and investments. But there are other "considerations" to making a good capacity decision. Name them. Describe each in a sentence or two.

Accepted Answer

The four considerations are forecast dem

Question 7

Break-even analysis identifies the volume at which fixed costs and revenue are equal.

Accepted Answer

A) True 
 B)False

Question 8

A firm is considering adding a second secretary to answer phone calls and make appointments. The cost of the secretary will be $10/hour and she will work 200 hours each month. If each new client adds $400 of profit to the firm, how many clients must the secretary arrange for the firm to break even? Suppose that the secretary has an equal chance of providing either 0, 2, or 6 new clients each month. Should the firm hire the secretary?

Accepted Answer

BEP = 10(200)/(400) = 5 client

Question 9

A firm is weighing three capacity alternatives: small, medium, and large job shop. Whatever capacity choice is made, the market for the firm's product can be "moderate" or "strong." The probability of moderate acceptance is estimated to be 40%; strong acceptance has a probability of 60%. The payoffs are as follows. Small job shop, moderate market = $24,000; Small job shop, strong market = $54,000. Medium job shop, moderate market = $20,000; medium job shop, strong market = $64,000. Large job shop, moderate market = -$2,000; large job shop, strong market = $96,000. Which capacity choice should the firm make?

Accepted Answer

The expected values for the th

Question 10

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

Accepted Answer

A) True 
 B)False

Question 11

A graphic design studio is considering three new computers. The first model, A, costs $5000. Model B and C cost $3000 and $1000 respectively. If each customer provides $50 of revenue and variable costs are $20/customer, find the number of customers required for each model to break even.

Accepted Answer

A: BEP = 5000/(50 - 20) = 166.

Question 12

Effective capacity is the

Accepted Answer

A)  maximum output of a system in a given period. 
B)  capacity a firm expects to achieve given the current operating constraints. 
C)  average output that can be achieved under ideal conditions. 
D)  minimum usable capacity of a particular facility. 
E)  sum of all of the organization's inputs. 
A)  maximum output of a system in a given period. 
B)  capacity a firm expects to achieve given the current operating constraints. 
C)  average output that can be achieved under ideal conditions. 
D)  minimum usable capacity of a particular facility. 
E)  sum of all of the organization's inputs.

Question 13

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

Accepted Answer

A) True 
 B)False

Question 14

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?

Accepted Answer

A)  5100 
B)  5700 
C)  4845 
D)  969 
E)  6783 
A)  5100 
B)  5700 
C)  4845 
D)  969 
E)  6783

Question 15

A product is currently made in a process-focused shop, where fixed costs are $14,000 per year and variable cost is $80 per unit. The firm sells the product for $150 per unit. What is the break-even point for this operation? What is the profit (or loss) on a demand of 400 units per year?

Accepted Answer

BEP = 200 units; TR

Question 16

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

Accepted Answer

A) True 
 B)False

Question 17

Design capacity is the theoretical maximum output of a system in a given period under ideal conditions.

Accepted Answer

A) True 
 B)False

Question 18

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

Accepted Answer

contributi

Question 19

One limitation of the net present value approach to investments is that investments with identical net present values may have very different cash flows.

Accepted Answer

A) True 
 B)False

Question 20

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

Accepted Answer

A)  price and sales volume for each product. 
B)  price and variable cost for each product, and the percent of sales that each product represents. 
C)  that the firm have very low fixed costs. 
D)  that the ratio of variable cost to price be the same for all products. 
E)  sales volume for each product. 
A)  price and sales volume for each product. 
B)  price and variable cost for each product, and the percent of sales that each product represents. 
C)  that the firm have very low fixed costs. 
D)  that the ratio of variable cost to price be the same for all products. 
E)  sales volume for each product.

Exam 27: Capacity and Constraint Management

A high value for which of the following signals that an operations manager is excelling?

________ analysis finds the point at which costs equals revenues.

Which of the following statements regarding fixed costs is true?

The three main strategies for increasing capacity are

A good capacity decision requires that it be tightly integrated with the organization's strategy and investments. But there are other "considerations" to making a good capacity decision. Name them. Describe each in a sentence or two.

Break-even analysis identifies the volume at which fixed costs and revenue are equal.

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

A graphic design studio is considering three new computers. The first model, A, costs $5000. Model B and C cost $3000 and $1000 respectively. If each customer provides $50 of revenue and variable costs are $20/customer, find the number of customers required for each model to break even.

Effective capacity is the

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

A product is currently made in a process-focused shop, where fixed costs are $14,000 per year and variable cost is $80 per unit. The firm sells the product for $150 per unit. What is the break-even point for this operation? What is the profit (or loss) on a demand of 400 units per year?

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

Design capacity is the theoretical maximum output of a system in a given period under ideal conditions.

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

One limitation of the net present value approach to investments is that investments with identical net present values may have very different cash flows.

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

Operations and Productivity

Operations Strategy in a Global Environment

Project Management

Forecasting

Design of Goods and Services

Managing Quality

Process Strategy and Sustainability

Location Strategies

Layout Strategies

Human Resources, Job Design, and Work Measurement

Supply-Chain Management

Inventory Management

Aggregate Planning

Material Requirements Planning Mrp and Erp

Short-Term Scheduling

Lean Operations

Maintenance and Reliability

Decision-Making Tools

Linear Programming

Transportation Models

Waiting-Line Models

Learning Curves

Simulation

Supply Chain Management Analytics

Sustainability in the Supply Chain

Statistical Process Control

Filters

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