Question 1

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

Accepted Answer

The five-step process of the theory of c

Question 2

What are the assumptions of the net present value technique?

Accepted Answer

The assumptions of the net present value

Question 3

A local business owner is considering adding another employee to his staff in an effort to increase the number of hours the store is open per day.
a. If the employee will cost the owner $4,000 per month and the store takes in $50/hour in revenue with variable costs of $15/hour, how many hours must the new employee work for the owner to break even?
b. The employee again costs $4000 and has agreed to work 120 hours. If variable costs remain at $15/hour and revenue is uncertain with a 40% chance of being $40/hour, 35% chance of being $20/hour, and 25% chance of being $35/hour should the owner hire the employee?

Accepted Answer

A- BEP = 4000/(50-15) = 114.3

Question 4

__________ is actual output as a percent of effective capacity.

Accepted Answer

The answer of __________ is actual output as a percent...

Question 5

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

Accepted Answer

A) True 
 B)False

Question 6

Fabricators, Inc. wants to increase capacity by adding a new machine. The fixed costs for machine A are $90,000, and its variable cost is $15 per unit. The revenue is $21 per unit. The break-even point for machine A is

Accepted Answer

A)  $90,000 dollars 
B)  90,000 units 
C)  $15,000 dollars 
D)  15,000 units 
E)  cannot be calculated from the information provided 
A)  $90,000 dollars 
B)  90,000 units 
C)  $15,000 dollars 
D)  15,000 units 
E)  cannot be calculated from the information provided

Question 7

The staff training center at a large regional hospital provides training sessions in CPR to all employees. Assume that the capacity of this training system was designed to be 1800 employees per year. Since the training center was first put in use, the program has become more complex, so that 1400 now represents the most employees that can be trained per year. In the past year, 1350 employees were trained. Calculate the efficiency and the utilization of this system.

Accepted Answer

Efficiency = 1350 /

Question 8

What is sometimes referred to as rated capacity?

Accepted Answer

A)  efficiency 
B)  utilization 
C)  effective capacity 
D)  expected output 
E)  design capacity 
A)  efficiency 
B)  utilization 
C)  effective capacity 
D)  expected output 
E)  design capacity

Question 9

A fabrication company wants to increase capacity by adding a new machine. The firm is considering proposals from vendor A and vendor B. The fixed costs for machine A are $90,000 and for machine B, $75,000. The variable cost for A is $15.00 per unit and for B, $18.00. The revenue generated by the units processed on these machines is $21 per unit. If the estimated output is 5000 units, which machine should be purchased?

Accepted Answer

A)  machine A 
B)  machine B 
C)  either machine A or machine B 
D)  no purchase because neither machine yields a profit at that volume 
E)  purchase both machines since they are both profitable 
A)  machine A 
B)  machine B 
C)  either machine A or machine B 
D)  no purchase because neither machine yields a profit at that volume 
E)  purchase both machines since they are both profitable

Question 10

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

Accepted Answer

A)  greater than $80,000 
B)  greater than $130,000 
C)  less than $30,000 
D)  Impossible to calculate, because no interest rate is given. 
E)  Impossible to calculate, because variable costs are not known. 
A)  greater than $80,000 
B)  greater than $130,000 
C)  less than $30,000 
D)  Impossible to calculate, because no interest rate is given. 
E)  Impossible to calculate, because variable costs are not known.

Question 11

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?

Accepted Answer

EMV = (0.7)($300,000

Question 12

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

Accepted Answer

A)  Release work orders to the system at the bottleneck's capacity pace. 
B)  Lost time at the bottleneck is lost system capacity. 
C)  Increasing capacity at non-bottleneck stations is a mirage. 
D)  Increased bottleneck capacity is increased system capacity. 
E)  Bottlenecks should be moved to the end of the system process. 
A)  Release work orders to the system at the bottleneck's capacity pace. 
B)  Lost time at the bottleneck is lost system capacity. 
C)  Increasing capacity at non-bottleneck stations is a mirage. 
D)  Increased bottleneck capacity is increased system capacity. 
E)  Bottlenecks should be moved to the end of the system process.

Question 13

Break-even analysis is a powerful analytical tool, but is useful only when the organization produces a single product.

Accepted Answer

A) True 
 B)False

Question 14

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

Accepted Answer

A)  inexpensive rates for weekend phone calls 
B)  appointments 
C)  reservations 
D)  first-come, first-served 
E)  none of the above 
A)  inexpensive rates for weekend phone calls 
B)  appointments 
C)  reservations 
D)  first-come, first-served 
E)  none of the above

Question 15

Describe how EMV might be used to analyze a capacity decision.

Accepted Answer

The EMV for each capacity decision (perh

Question 16

TOC was popularized by

Accepted Answer

A)  Goldratt and Cox 
B)  Ford 
C)  Taguchi 
D)  Deming 
E)  Motorola and GE 
A)  Goldratt and Cox 
B)  Ford 
C)  Taguchi 
D)  Deming 
E)  Motorola and GE

Question 17

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

Accepted Answer

A) True 
 B)False

Question 18

A product is currently made in a process-focused shop, where fixed costs are $8,000 per year and variable cost is $40 per unit. The firm currently sells 200 units of the product at $200 per unit. A manager is considering a repetitive focus to lower costs (and lower prices, thus raising demand). The costs of this proposed shop are fixed costs = $24,000 per year and variable costs = $10 per unit. If a price of $80 will allow 400 units to be sold, what profit (or loss) can this proposed new process expect?
 Do you anticipate that the manager will want to change the process?
 Explain.

Accepted Answer

Old: TR = $40,000, TC = $16,000, therefo

Question 19

Of the three approaches to capacity expansion, the approach that "straddles" demand

Accepted Answer

A)  uses incremental expansion 
B)  uses one-step expansion 
C)  at some times leads demand, and at other times lags 
D)  works best when demand is not growing but is stable 
E)  Choices A and C are both correct. 
A)  uses incremental expansion 
B)  uses one-step expansion 
C)  at some times leads demand, and at other times lags 
D)  works best when demand is not growing but is stable 
E)  Choices A and C are both correct.

Question 20

A useful tactic for increasing capacity is to redesign a product in order to get more throughput.

Accepted Answer

A) True 
 B)False

Exam9: Capacity and Constraint Management

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

What are the assumptions of the net present value technique?

__________ is actual output as a percent of effective capacity.

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

Fabricators, Inc. wants to increase capacity by adding a new machine. The fixed costs for machine A are $90,000, and its variable cost is $15 per unit. The revenue is $21 per unit. The break-even point for machine A is

What is sometimes referred to as rated capacity?

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

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?

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

Break-even analysis is a powerful analytical tool, but is useful only when the organization produces a single product.

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

Describe how EMV might be used to analyze a capacity decision.

TOC was popularized by

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

Of the three approaches to capacity expansion, the approach that "straddles" demand

A useful tactic for increasing capacity is to redesign a product in order to get more throughput.

Operations and Productivity

Operations Strategy in a Global Environment

Project Management

Forecasting

Design of Goods and Services

Managing Quality

Statistical Process Control

Process Strategy

Location Strategies

Layout Strategies

Human Resources, Job Design, and Work Measurement

Supply-Chain Management

Outsourcing as a Supply-Chain Strategy

Inventory Management

Aggregate Planning

Material Requirements Planning MRP and ERP

Short-Term Scheduling

Just-In-Time and Lean Options

Maintenance and Reliability

Decision-Making Tools

Linear Programming

Transportation Models

Waiting-Line Models

Learning Curves

Simulation

Filters