Exam 6: Managing Capacity

A haberdashery conducts an exhaustive analysis and calculates their profit function as 4x² + 3x - 57. What is their fixed cost?

The MBA program at the University of Central Oregon features seven team-taught courses, five credit hours apiece. Each team is composed of somewhat reluctant professors in two distinct disciplines, each of which brings his own perspective to the topic du jour. The program is difficult to coordinate and makes transferring course credit in and out of the program near impossible, so the MBA Redesign Committee spends three years crafting a new program that features twenty-one courses, two credit hours each, that will unfortunately take 18 months to complete compared to the current program's 12 months. The current MBA program brings in about 60 students each semester with the main selling point being the integration between disciplines. It is thought that if the new program can be successfully marketed as an easy fit with other MBA programs in the area, the ability to transfer credits in might attract as many as 70 new students each semester. If the new program is unveiled but the market is still interested in integrated courses, enrollment in the new program might drop to 40 students per semester. If this were the case, the new courses could be scheduled at the same time in the same room and might attract 65 students each semester (with a 0.6 probability)or might attract as few as 50 students with a 0.4 probability. If the existing program is retained but the market is seeking courses that are more transferable, then enrollment in the existing program might fall to 45 new students per semester. If this happens, then the existing courses might be broken in half each night into two classes back to back. Doing so has a .7 probability of increasing new student demand to 65 but has a .3 probability of increasing demand to 55. The MBA Director believes that the market is ready for a less integrated program, and she pegs the probability of that hunch at 0.6, with a 0.4 probability that the market prefers the current integrated program. What is the difference in expected outcomes between the two alternatives?

The long-term, expected output capability of a resource or system is the ________.

The ________ capacity strategy attempts to adjust the current capacity to a level equivalent to the current demand.

A major computer manufacturer is interested in establishing a customer service center to handle business for the next decade. They conduct exhaustive research on land and construction costs, utilities, tax breaks, and wages at three sites, Oklahoma City, Austin, and Nashville. Answer these questions using these costs as displayed in the table below. Costs Austin Nashville Oklahoma City Fixed (\ ) 200,000 150,000 300,000 Variable ( \/ unit) 7 10 4 Graph the total cost curves and indicate the range of output that is best for each prospective site. What are the assumptions you have made in this analysis?

A busy toll highway that has four toll collectors for northbound traffic is an example of a single-channel, single-phase system.

A fiscally conservative firm is more likely to adopt a match capacity strategy than any other capacity strategy.

A firm is able to meet current demand. If it adopts a lead capacity strategy, then it is probably making the assumption that demand will increase in the future.

A subdivision is planned for forty houses, each with its own in-ground swimming pool. A contractor estimates it will take him 30 hours to build the first pool and that there is a 90% learning curve associated with this process. How long will it take to build the last pool?

Which of the following is NOT an appropriate measure of capacity?

A lead capacity strategy has the advantage of:

Consider the system composed of four processes linked by a conveyor belt. There is no storage between these processes pictured below and market demand exceeds the company's ability to produce. Which statement is best?

The maximum output capability of a system, allowing for no adjustments for preventive maintenance or unplanned downtime is the ________.

When demand is uncertain, the expected value criterion may be used. To do so, demand-level scenarios and their ________ must be identified.

Customers arrive at Rent a Wreck and hope to score an inexpensive and unsightly vehicle to use for what typically is a short period of time. About twenty customers show up in any hour of the day and it takes the customer service representative about two minutes to photocopy their driver's license and insurance card and take an impression of a credit card. Assume that the service and arrival rates are governed by the Poisson distribution. Calculate the system's vital statistics.

Customers arrive at Rent a Wreck and hope to score an inexpensive and unsightly vehicle to use for what typically is a short period of time. About twenty customers show up in any hour of the day and it takes the customer service representative about two minutes to photocopy their driver's license and insurance card and take an impression of a credit card. Assume that the service and arrival rates are governed by the Poisson distribution; how long does it take for the average customer to clear the system?

Saul Goodman represents several clients and bills by the hour at a reasonable $500 per hour. He forgot to record the time it took to complete each activity, but he knows his eight-hour day was spent representing 13 clients involved in one high profile case. He also remembers that Walt told him once that his learning curve percentage was 80%. How many hours should Saul bill his first client?

An entrepreneur identifies a product that she knows will sell like crazy if she can only figure out a way to bring it to her area. The idea is so fantastic that I can't tell you what it is, so we will just refer to it as X. The entrepreneur has identified four ways to bring X to the masses; she can import it, she can smuggle it, she can try to produce it on her own, and she can have a local reputable producer make it for her. The fixed and variable costs for each of these alternatives are shown below. What is her best course of action if she believes the demand will be 55,000 units? Import Produce Smuggle Outsource Fixed Cost \ 0 \ 500,000 \ 200,000 \ 0 Variable Cost \ 30 \ 10 \ 15 \ 37

Consider the system composed of four processes linked by a conveyor belt. There is no storage between these processes pictured below and market demand of 40 units per hour drives the conveyor belt. Assume that no defective units are made. Which statement is best?

The ________ is the output volume level where the firm realizes a $0 net profit.