Q&A Hero

Q: Dennis has made a purchase of $50,000 using trade credit with terms of 2/10 net 30. How much discount will a he receive if the buyer pays the bill on the net due date? a. $0 b. $500 c. $1200 d. $3,000

Q: Lead times, inventory availability, and purchase orders outstanding are among the five things operations managers must know for effective use of dependent inventory models.

Q: What would be the break-even point in units for a firm selling trekking poles at a selling price of $130 per pair, variable cost per set is $70, and fixed costs are $100,000?

Q: What is MRP? Identify four benefits from its use.

Q: For a price lining strategy, a companys inventory levels for each line will depend directly on the ____ of the customers. a. buying desires and income level b. personal demographics c. credit worthiness d. product awareness

Q: Describe the role of record accuracy in Wheeled Coach's successful use of MRP.

Q: Contrast penetration price and skimming price strategies.

Q: ________ is a dependent demand technique that uses a bill of material, inventory, expected receipts, and a master production schedule to determine material requirements.

Q: Lorrie Veasey, owner of All That Swag, used discount coupons for special event items to drive customers to her retail stores. Using such promotions and stating that the regular price is never chiseled in stone would indicate Lorrie is using a a. variable pricing strategy. b. price lining strategy. c. skimming pricing strategy. d. product line pricing strategy.

Q: Wheeled Coach uses ________ as the catalyst for low inventory, high quality, tight schedules, and accurate records.

Q: What are the five factors that entrepreneurs need to consider with deciding to extend credit.

Q: Which of the following is NOT a key benefit of MRP? A) increased quality B) better response to customer orders C) faster response to market changes D) improved utilization of facilities and labor E) reduced inventory levels

Q: Tanya would like to gain market share rapidly so she has priced her product at a lower than normal, logn-range market price. Which strategy is Tanya using? a. variable pricing b. skimming price c. price lining d. penetration pricing

Q: Dependent demand and independent demand items differ in that: A) for any product, all components are dependent-demand items. B) the need for independent-demand items is forecast. C) the need for dependent-demand items is calculated. D) All of the above are true. E) None of the above is true.

Q: Explain the relationship between the break-even point and the contribution margin. How does demand affect this relationship?

Q: Demand for a given item is said to be dependent if: A) it originates from the external customer. B) there is a deep bill of material. C) the finished products are mostly services (rather than goods). D) there is a clearly identifiable parent. E) the item has several children.

Q: Stone Creek Farm sells a special type of hay to horse owners. If the farm allows its customers to have hay delivered and then be billed at a later date, it would be using which type of account?. a. an open charge account b. an installment account c. a revolving account d. a selective account

Q: Which of the following is NOT one of the four key tasks that Wheeled Coach insists are necessary for successful MRP implementation? A) The material plan must meet both schedule requirements and facility capabilities. B) The plan must be executed as designed. C) Inventory investment must be minimized. D) Excellent record integrity must be maintained. E) The process must adhere to stringent quality control standards.

Q: How are the two components of total cost related to variable and fixed costs? Use a clothing retailer to illustrate the costs.

Q: Which of the following statements regarding Wheeled Coach is FALSE? A) Wheeled Coach has found competitive advantage through MRP. B) Wheeled Coach builds ambulances in a repetitive process. C) Wheeled Coach's MRP system allowed the company to meet tight schedules, but caused inventory to rise. D) Wheeled Coach's MRP system maintains excellent record integrity. E) Low inventory and high quality are two positive outcomes of Wheeled Coach's use of MRP.

Q: Within the framework of a break-even analysis, an examination of ____ is conducted to determine the quantity at which the product, with an assumed price, will generate enough revenue to start earning a profit. a. costs b. revenues c. sales forecasts d. costs and revenue

Q: The quantity required of a dependent demand item is computed from the demand for the final products in which the item is used.

Q: After defining three pricing strategies, state when a small business would best use the strategy.

Q: A dependent demand item is so called because its demand is dependent on customer preferences.

Q: Which C defines the customers asset conservation? a. Capacity b. Character c. Collateral d. Conditions

Q: Reduced inventory levels and faster response to market changes are both benefits of MRP.

Q: List and describe the three types of credit.

Q: MRP is generally practiced on items with dependent demand.

Q: Active Feet, a small manufacturer of shoes, hired an additional vice-president and purchased a barrel of synthetic rubber used to make shoe soles. These two expenses should be considered a(n) ____ and a(n) ____, respectively. a. selling cost/cost of goods sold b. overhead cost/cost of goods sold c. selling cost/overhead cost d. overhead cost/selling cost

Q: Wheeled Coach obtains competitive advantage through MRP in part because of their excellent record integrity and insistence on record accuracy.

Q: Discuss accounts receivable management methods in a small business.

Q: Finding an ideal mixed strategy is complicated by the huge number of possible strategies.

Q: Buying on credit ____ the amount of working capital needed by the business doing the buying. a. augments b. decreases c. increases d. offsets

Q: Mixed strategies in aggregate planning may utilize inventory, work force, and production rate changes over the planning horizon.

Q: Layla is a well-known successful movie star who recently retired and just started designing handbags. She has opened a boutique business in her home town, which has no national department stores. She hopes to attract other celebrities, tourists, and local residents to shop at her store. She is considering pricing strategies for her products. Which strategy would best fit her image and product?

Q: The level scheduling strategy allows lower inventories than the pure chase strategy.

Q: Slow-paying credit accounts a. almost always help to build goodwill with customers. b. are rarely a problem for small businesses. c. tie up the seller's working capital. d. yield advantages from carry-over effects.

Q: Because service firms do not inventory their output, a pure chase strategy is not appropriate.

Q: A strategy that offers customers basic features at no cost with the idea that they will upgrade to advanced products or services at subscription prices

Q: Advertising and promotion are methods of manipulating product or service supply in aggregate planning.

Q: Diamonds and other jewels often carry a high price to convey an image of high quality or uniqueness. This type of pricing is known as a. skimming pricing. b. penetration pricing. c. variable pricing. d. prestige pricing.

Q: The use of part-time workers as an aggregate planning option may be less costly than using full-time workers, but it may also reduce quality levels.

Q: A technique that uses a particular competitor as a model in setting prices

Q: One motive for using demand-influencing aggregate planning options is to create uses for excess capacity within an organization.

Q: When developing an aggregate plan, one of the adjustable elements of capacity is the extent of subcontracting.

Q: Zemanns, a large firm selling custodial supplies to other businesses, has decided to begin offering trade credit. Its major objective in granting credit is a. to generate consumer goodwill. b. to make sales. c. to promote the business d. to reduce bad debt risk.

Q: A technique that sets a range of several distinct merchandise price levels

Q: In aggregate planning, the amount of overtime and the size of the work force are both adjustable elements of capacity.

Q: The strategies of aggregate planning are broadly divided into demand options and capacity options.

Q: The seller's measure of what he or she is willing to receive in exchange for transferring ownership or use of a product or service is a. credit. b. average pricing. c. demand. d. price.

Q: One of the demand options of aggregate planning is to vary the workforce by hiring or layoffs.

Q: A technique that sets more than one price for a product or service in order to offer price concessions to certain customers

Q: One question that operations managers must answer when generating an aggregate plan is whether prices or other factors should be changed to influence demand.

Q: Information Express is a privately owned and operated organization that collects credit information on business firms. After the organization analyzes and evaluates the data, it makes credit ratings available to client companies for a fee. Information Express is a a. trade-credit agency. b. financial credit agency. c. credit collection agency. d. credit bureau.

Q: What is disaggregation?

Q: A specification of what a seller requires in exchange for transferring ownership or use of a product or service

Q: A(n) ________ is the result of the disaggregation of an aggregate plan.

Q: Markup pricing may be expressed in terms of a percentage of either the ____ or the cost. a. quantity b. operating expenses c. selling price d. estimated expenses

Q: ________ is the process of breaking the aggregate plan into greater detail.

Q: An approach in which the total cost for a given period is divided by the quantity sold in that period to set a price

Q: What directly results from disaggregation of an aggregate plan? A) a master production schedule B) priority scheduling C) a transportation matrix D) a capacity-demand matrix E) detailed work schedules

Q: If the owner of Clarrisas Fine Jewelry instructed the sales team to stress the uniqueness of the stores hand designed jewelry, a ____ pricing strategy would be expected. a. skimming b. prestige c. follow-the-leader d. dynamic

Q: An aggregate plan satisfies forecast demand by potentially adjusting all EXCEPT which of the following? A) production rates B) labor levels C) inventory levels D) overtime work E) facility capacity

Q: An approach based on setting a high price to convey an image of high quality or uniqueness

Q: Aggregate planning would entail which of the following production aspects at BMW for a 12-month period? A) number of cars with a hi-fi stereo system to produce B) number of two-door vs. four-door cars to produce C) number of green cars to produce D) total number of cars to produce E) B, C, and D

Q: Tick Tock, a small retailer of a quality alarm clock, sells its product based on a 35% markup of cost. If the firm's product costs are approximately $133, what is the selling price? a. $138. b. $198. c. $180. d. $289.

Q: A technique that sets very high prices for a limited period before reducing them to more competitive levels

Q: Disaggregation: A) breaks the aggregate plan into greater detail. B) transforms the master production schedule into an aggregate plan. C) calculates the optimal price points for yield management. D) converts product schedules and labor assignments to a facility-wide plan. E) is an assumption required for the use of the transportation model in aggregate planning.

Q: The objective of aggregate planning is to meet forecast demand while ________ over the planning period. A) minimizing cost B) maximizing service level C) minimizing stock out D) minimizing fixed cost E) all of the above

Q: Troy Bourbon, a local bourbon distillery, initially sold its product at a premium price of $45 because the company believed consumers would view the bourbon as a prestige item. The company decided that when startup costs had been fully recovered and competition became imminent, the company would reduce the price to $30 which was more expected in the market. The distillery is using a a. variable pricing strategy. b. skimming price strategy. c. price lining strategy. d. penetration pricing strategy.

Q: A technique that prices on a range of products or services to reflect the benefits to the customer of parts of the range

Q: Disaggregation is the process of breaking the aggregate plan into greater detail; one example of this detail is the master production schedule.

Q: Demand for a product typically ______ as price ______. a. decreases, increases b. decreases, stays the same c. stays the same, increases d. increases, decreases

Q: The objective of aggregate planning is usually to meet forecast demand while smoothing employment and driving down inventory levels over the planning period.

Q: What is the typical planning horizon for aggregate planning?

Q: An approach based on applying a percentage to a products cost to obtain its selling price

Q: What four things are needed to develop an aggregate plan?

Q: Which card is a retailer credit card? a. Mastercard b. VISA c. Discover d. JCPenney Card

Q: ________ is an approach to determine the quantity and timing of production for the intermediate future.

Q: The examination of cost-revenue relationships and the incorporation of sales forecasts into the analysis Match the term with its definition. Some terms may not be used. a. Product line pricing b. Average pricing c. Follow-the-leader pricing d. Markup pricing e. Freemium strategy f. Prestige pricing g. Price lining strategy h. Price i. Skimming price strategy j. Value k. Variable pricing strategy