Question 1

The net present value of $10,000 to be received in exactly three years is considerably greater than $10,000.

Accepted Answer

A) True 
 B)False

Question 2

The process time of a system is always at least a long as the process cycle time.

Accepted Answer

A) True 
 B)False

Question 3

Which of the following represents a common way to manage capacity in the service sector?

Accepted Answer

A) appointments 
B) reservations 
C) changes in staffing levels 
D) first-come,first served service rule 
E) "early bird" specials in restaurants 
A) appointments 
B) reservations 
C) changes in staffing levels 
D) first-come,first served service rule 
E) "early bird" specials in restaurants

Question 4

Utilization will always be lower than efficiency because

Accepted Answer

A) effective capacity is less than design capacity. 
B) effective capacity is greater than design capacity. 
C) effective capacity equals design capacity. 
D) utilization and efficiency are equal in value. 
E) utilization is normally greater than efficiency. 
A) effective capacity is less than design capacity. 
B) effective capacity is greater than design capacity. 
C) effective capacity equals design capacity. 
D) utilization and efficiency are equal in value. 
E) utilization is normally greater than efficiency.

Question 5

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 6

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

Accepted Answer

A) True 
 B)False

Question 7

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?

Accepted Answer

Calculations for the original version of

Question 8

Identify the tactics for matching capacity to demand.

Accepted Answer

1.Making staffing changes (increasing or

Question 9

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?

Accepted Answer

Design Capacity = 800 trucks
E

Question 10

The local convenience store makes personal pan pizzas.Currently,their oven can produce 50 pizzas per hour.It has a fixed cost of $2,000,and a variable cost of $0.25 per pizza.The owner is considering a bigger oven that can make 75 pizzas per hour.It has a fixed cost of $3,000,but a variable cost of $0.20 per pizza.
a.At what quantity do the two ovens have equal costs?
b.If the owner expects to sell 9,000 pizzas,should he get the new oven?

Accepted Answer

(a)The crossover is where $2,0

Question 11

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%,the net present value of this investment is approximately

Accepted Answer

A) $20,920. 
B) $26,160. 
C) $49,840. 
D) $70,920. 
E) $106,990. 
A) $20,920. 
B) $26,160. 
C) $49,840. 
D) $70,920. 
E) $106,990.

Question 12

A new machine tool is expected to generate receipts as follows: $5,000 in year one;$3,000 in year two,nothing in the next year,and $2,000 in the fourth year.At an interest rate of 6%,what is the present value of these receipts? Is this a better present value than $2,500 each year over four years? Explain.

Accepted Answer

5,000 × .943 + 3,000 × .890 + 2,000 × .7

Question 13

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 14

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 15

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 clients

Question 16

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 17

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 18

The efficiency of a factory is 75% and its utilization 50%.If effective capacity is 1000 find design capacity.

Accepted Answer

Output = Efficiency∗Effective

Question 19

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.

Accepted Answer

Calculations for this problem are:
 @#IMG-DLM& Bre

Question 20

Fred's Fabrication,Inc.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,$70,000.The variable cost for A is $9.00 per unit and for B,$14.00.The revenue generated by the units processed on these machines is $20 per unit.The crossover between machine A and machine B is

Accepted Answer

A) 4,000 units,with A more profitable at low volumes. 
B) 4,000 dollars,with A more profitable at low volumes. 
C) 4,000 units,with B more profitable at low volumes. 
D) 4,000 dollars,with B more profitable at low volumes. 
E) cannot be calculated from the information provided. 
A) 4,000 units,with A more profitable at low volumes. 
B) 4,000 dollars,with A more profitable at low volumes. 
C) 4,000 units,with B more profitable at low volumes. 
D) 4,000 dollars,with B more profitable at low volumes. 
E) cannot be calculated from the information provided.

The net present value of $10,000 to be received in exactly three years is considerably greater than $10,000.

The process time of a system is always at least a long as the process cycle time.

Which of the following represents a common way to manage capacity in the service sector?

Utilization will always be lower than efficiency because

Effective capacity is the

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

Identify the tactics for matching capacity to demand.

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%,the net present value of this investment is approximately

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

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

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

The efficiency of a factory is 75% and its utilization 50%.If effective capacity is 1000 find design capacity.

Operations and Productivity

Operations Strategy in a Global Environment

Project Management

Forecasting

Design of Goods and Services

Managing Quality

Statistical Process Control

Process Strategy and Sustainability

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 Mrpand Erp

Short-Term Scheduling

Jit and Lean Operations

Maintenance and Reliability

Decision-Making Tools

Linear Programming

Transportation Models

Waiting-Line Models

Learning Curves

Simulation

Filters

Exam 19: Capacity and Constraint Management

The net present value of $10,000 to be received in exactly three years is considerably greater than $10,000.

The process time of a system is always at least a long as the process cycle time.

Which of the following represents a common way to manage capacity in the service sector?

Utilization will always be lower than efficiency because

Effective capacity is the

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

Identify the tactics for matching capacity to demand.

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%,the net present value of this investment is approximately

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

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

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

The efficiency of a factory is 75% and its utilization 50%.If effective capacity is 1000 find design capacity.

Operations and Productivity

Operations Strategy in a Global Environment

Project Management

Forecasting

Design of Goods and Services

Managing Quality

Statistical Process Control

Process Strategy and Sustainability

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 Mrpand Erp

Short-Term Scheduling

Jit and Lean Operations

Maintenance and Reliability

Decision-Making Tools

Linear Programming

Transportation Models

Waiting-Line Models

Learning Curves

Simulation

Filters