Exam 6: Managing Capacity

A collection of companies decides to work together for a while to provide service for what they see as a short term window of opportunity. These firms plan to coordinate their activities by deploying sophisticated information systems to share critical data. Each of these companies is skilled at one or two core activities - design, manufacturing, distribution, marketing, and so on. This association of companies can be described as a(n)________.

What is a virtual supply chain and how is it different from a traditional supply chain?

Saul Goodman represents several clients and bills at $400 per hour. He forgot to record the time it took to complete each activity, but he knows his eight-hour day was spent representing three consecutive clients involved in one high profile case. He also remembers that Walt told him once that his learning curve percentage was 85%. How much should Saul bill each of his three clients?

A learning percentage of 80 means that each time output is doubled, it takes ________ percent less time to produce than before.

In general, higher conformance quality reduces capacity since the extra care taken during production slows the output rate.

Which of the following statements about theoretical capacity is best?

Business at the Kwik-E-Mart is brisk, with one customer arriving at a rate of six per hour on average. Ringing up purchases is an easy matter for owner/operator Apu; he can usually do so in 2 minutes. If both arrival and service rates are Poisson distributed, how many customers are in the store on average?

________ capacity is always greater than or equal to ________ capacity.

A company with fixed costs of $200,000 per month believes that they have this holiday season's hot selling item, a towel that folds itself into a variety of shapes so you can turn your own home into a cruise ship cabin. They believe they can sell 100,000 units and need to determine a minimum price that will cover their fixed and variable costs, with the latter being $45 per unit.

Which of the following statements about learning curves is best?

In a decision tree, outcome points are under direct control of the decision maker and show the results of choices.

A Seattle entrepreneur must decide on the size of a latte stand to construct. The manager has narrowed the choice down to large or small. If he builds large and experiences low demand he could grin and bear it for a $200 daily profit, lower prices ($225 daily profit), or hire street performers to attract attention ($175 daily profit). If he builds small and experiences high demand he could do nothing ($175 profit per day), stay open longer hours (profit of $225/day), improve processes ($250/day profit), or raise prices ($200/day profit). Building large for high demand has an expected payoff of $250/day and building small for low demand has an expected payoff of $175/day. There is a 0.7 probability of high demand and 0.3 probability of low demand. Sketch a decision tree for this scenario and determine what size stand should be constructed to slake the unquenchable thirst of caffeine addicts.

Which is a benefit of a virtual supply chain?

A traditional university classroom has room for 30 students and is scheduled for use during 12 consecutive one hour periods from 8:00 a.m. to 8:00 p.m. in the spring semester. Its theoretical capacity is therefore half of its rated capacity.

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. Develop a graph showing the ideal alternative across a range of demand that reflects all decision points. Import Produce Smuggle Outsource Fixed Cost \ 25,000 \ 500,000 \ 200,000 \ 0 Variable Cost \ 30 \ 10 \ 15 \ 37

A firm's capacity can be limited by members of its supply chain.

A ninety percent learning curve is steeper than an eighty percent learning curve.

Describe the three capacity strategies and the advantages of each.

Total cost to produce is the sum of expenses incurred regardless of output plus the variable cost per unit of business activity multiplied by ________.

In waiting line theory, a customer service attendant is a(n)________.