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Q:
The owner of a greenhouse and nursery is considering whether to spend $6,000 to acquire the licensing rights to grow a new variety of rosebush, which she could then sell for $6 each. Per-unit variable cost would be $3. What would the profit be if she were to produce and sell 5,000 rosebushes?
A. $0
B. $9,000
C. $15,000
D. $10,000
E. $30,000
Q:
The owner of Firewood To Go is considering buying a hydraulic wood splitter which sells for $50,000. He figures it will cost an additional $100 per cord to purchase and split wood with this machine, while he can sell each cord of split wood for $125. If, for this machine, design capacity is 50 cords per day, effective capacity is 40 cords per day, and actual output is expected to be 32 cords per day, what would be its efficiency?
A. 100 percent
B. 80 percent
C. 75 percent
D. 70 percent
E. 0 percent
Q:
The owner of Firewood To Go is considering buying a hydraulic wood splitter which sells for $50,000. He figures it will cost an additional $100 per cord to purchase and split wood with this machine, while he can sell each cord of split wood for $125. If, for this machine, design capacity is 50 cords per day, effective capacity is 40 cords per day, and actual output is anticipated to be 35 cords per day, what would be its utilization?
A. 100 percent
B. 80 percent
C. 75 percent
D. 70 percent
E. 0 percent
Q:
The owner of Firewood To Go is considering buying a hydraulic wood splitter which sells for $50,000. He figures it will cost an additional $100 per cord to purchase and split wood with this machine, while he can sell each cord of split wood for $125. How many cords of wood would he have to split with this machine to make a profit of $30,000?
A. 3,200
B. 1,500
C. 2,000
D. 1,000
E. 500
Q:
The owner of Firewood To Go is considering buying a hydraulic wood splitter which sells for $50,000. He figures it will cost an additional $100 per cord to purchase and split wood with this machine, while he can sell each cord of split wood for $125. How many cords of wood would he have to split with this machine to break even?
A. 5,000
B. 3,000
C. 2,000
D. 1,000
E. 0
Q:
The owner of Firewood To Go is considering buying a hydraulic wood splitter which sells for $50,000. He figures it will cost an additional $100 per cord to purchase and split wood with this machine, while he can sell each cord of split wood for $125. What would the potential profit be if he were to split 4,000 cords of wood with this machine?
A. $0
B. $200,000
C. $100,000
D. $75,000
E. $50,000
Q:
Improving cash flow would be a reasonable thing to focus on when trying to overcome a _________ constraint.
A. financial
B. market
C. demand
D. supplier
E. material
Q:
A market constraint can be overcome by:
A. lobbying.
B. cash flow management.
C. outsourcing.
D. advertising or price changes.
E. supplier development.
Q:
The first, and perhaps most important, step in constraint management is to ____________ the most pressing constraint.
A. improve
B. support
C. identify
D. elevate
E. modify
Q:
The method of financial analysis which results in an equivalent interest rate is:
A. payback.
B. net present value.
C. internal rate of return.
D. queuing.
E. cost-volume.
Q:
When determining the timing and degree of capacity change, one can use the approach of:
A. lead time flexibility strategy.
B. expand early strategy.
C. wait-and-see strategy.
D. backordering.
E. delayed differentiation.
Q:
The method of financial analysis which focuses on the length of time it takes to recover the initial cost of an investment is:
A. payback.
B. net present value.
C. internal rate of return.
D. queuing.
E. cost-volume.
Q:
If the output rate is increased but the average unit costs also increase, we are experiencing:
A. market share erosion.
B. economies of scale.
C. diseconomies of scale.
D. value-added accounting.
E. step-function scaleup.
Q:
Which of the following would not be a potential upside in a decision to outsource?
A. supplier capacity
B. potential to lower fixed costs
C. supplier expertise
D. knowledge sharing
E. supplier cost
Q:
For fixed costs of $2,000, revenue per unit of $2, and variable cost per unit of $1.60, the break-even quantity is:
A. 1,000.
B. 1,250.
C. 2,250.
D. 5,000.
E. 3,000.
Q:
An alternative will have fixed costs of $10,000 per month, variable costs of $50 per unit, and revenue of $70 per unit. The break-even point volume is:
A. 100.
B. 2,000.
C. 500.
D. 1,000.
E. 800.
Q:
What is the break-even quantity for the following situation? FC = $1,200 per week
VC = $2 per unit
Rev = $6 per unit
A. 100
B. 200
C. 600
D. 1,200
E. 300
Q:
At the break-even point:
A. output equals capacity.
B. total cost equals total revenue.
C. total cost equals profit.
D. variable cost equals fixed cost.
E. variable cost equals total revenue.
Q:
When buying component parts, risk does not include:
A. loss of control.
B. vendor viability.
C. interest rate fluctuations.
D. need to disclose proprietary information.
E. product liability.
Q:
When the output is less than the optimal rate of output, the average unit cost will be:
A. lower.
B. the same.
C. higher.
D. could be either higher or lower.
E. could be either higher, lower or the same.
Q:
Production units have an optimal rate of output where:
A. total costs are minimum.
B. average unit costs are minimum.
C. marginal costs are minimum.
D. rate of output is maximum.
E. total revenue is maximum.
Q:
Seasonal variations are often easier to deal with in capacity planning than random variations because seasonal variations tend to be:
A. smaller.
B. larger.
C. predictable.
D. controllable.
E. less frequent.
Q:
Which of the following is not a criterion for developing capacity alternatives?
A. design structured, rigid systems
B. take a big-picture approach to capacity changes
C. prepare to deal with capacity in "chunks"
D. attempt to smooth out capacity requirements
E. identify the optimal operating level
Q:
Short-term considerations in determining capacity requirements include:
A. demand trend.
B. cyclical demand variations.
C. seasonal demand variations.
D. mission statements.
E. new product development plans.
Q:
Capacity in excess of expected demand that is intended to offset uncertainty is a:
A. margin protect.
B. line balance.
C. capacity cushion.
D. timing bubble.
E. positioning hedge.
Q:
Everything else being equal, a firm considering outsourcing can be reasonably certain that:
A. total costs will be lower.
B. its supplier probably has more expertise in whatever is being outsourced.
C. it can maintain tight control over knowledge.
D. proprietary information will not be disclosed.
E. control over operations will be maintained.
Q:
Which of the following is not a determinant of effective capacity?
A. facilities
B. product mix
C. actual output
D. human factors
E. external factors
Q:
Which of the following is not a strategy to manage service capacity?
A. hiring extra workers
B. backordering
C. pricing and promotion
D. part-time workers
E. subcontracting
Q:
Given the following information, what would utilization be? Effective capacity = 20 units per day
Design capacity = 60 units per day
Actual output = 15 units per day
A. 1/4
B. 1/3
C. 1/2
D. 3/4
E. none of these
Q:
Given the following information, what would efficiency be? Effective capacity = 50 units per day
Design capacity = 100 units per day
Actual output = 30 units per day
A. 40 percent
B. 50 percent
C. 60 percent
D. 80 percent
E. 90 percent
Q:
Given the following information, what would efficiency be? Effective capacity = 80 units per day
Design capacity = 100 units per day
Utilization = 48 percent
A. 20 percent
B. 35 percent
C. 48 percent
D. 60 percent
E. 80 percent
Q:
The ratio of actual output to design capacity is:
A. design capacity.
B. effective capacity.
C. actual capacity.
D. efficiency.
E. utilization.
Q:
The ratio of actual output to effective capacity is:
A. design capacity.
B. effective capacity.
C. actual capacity.
D. efficiency.
E. utilization.
Q:
The decision to outsource opens the firm up to certain risks, among them _________ and ________.
A. lower costs; fewer task-specific investments
B. loss of direct control over operations; need to disclose proprietary information
C. access to greater expertise; greater demand variability
D. greater capacity rigidity; tight knowledge control
E. higher marketing costs; small orders
Q:
Which of the following would tend to reduce effective capacity?
A. suppliers that provide more reliable delivery performance
B. reduced changeover times
C. more employee cross-training
D. improved production quality
E. greater variety in the product line
Q:
Utilization is defined as the ratio of:
A. actual output to effective capacity.
B. actual output to design capacity.
C. design capacity to effective capacity.
D. effective capacity to actual output.
E. design capacity to actual output.
Q:
Efficiency is defined as the ratio of:
A. actual output to effective capacity.
B. actual output to design capacity.
C. design capacity to effective capacity.
D. effective capacity to actual output.
E. design capacity to actual output.
Q:
The maximum possible output given a product mix, scheduling difficulties, quality factors, and so on is:
A. utilization.
B. design capacity.
C. efficiency.
D. effective capacity.
E. available capacity.
Q:
The impact that a significant change in capacity will have on a key vendor is a:
A. supply chain factor.
B. process limiting factor.
C. internal factor.
D. human resource factor.
E. operational process factor.
Q:
Maximum capacity refers to the upper limit of:
A. inventories.
B. demand.
C. supplies.
D. rate of output.
E. finances.
Q:
Unbalanced systems are evidenced by:
A. top-heavy operations.
B. labor unrest.
C. bottleneck operations.
D. increasing capacities.
E. assembly lines.
Q:
Which of the following is the case where capacity is measured in terms of inputs?
A. steel mill
B. electrical power plant
C. restaurant
D. petroleum refinery
E. airline
Q:
Which of the following is not a reason why capacity decisions are so important?
A. Capacity limits the rate of output possible.
B. Capacity affects operating costs.
C. Capacity is a major determinant of initial costs.
D. Capacity is a long-term commitment of resources.
E. Capacity affects organizations' images.
Q:
Which of these factors would not be subtracted from design capacity when calculating effective capacity?
A. personal time
B. equipment maintenance
C. scheduling problems
D. changing the mix of products
E. all of the choices
Q:
Which of the following is not a basic question in capacity planning?
A. what kind is needed
B. how much is needed
C. when is it needed
D. who will pay for it
E. what it will be used for
Q:
Outsourcing some production is a means of _________ a capacity constraint.
A. identifying
B. modifying
C. supporting
D. overcoming
E. repeating
Q:
Outsourcing some production is a means of supporting a constraint.
Q:
Capacity decisions often involve a long-term commitment of resources which, when implemented, are difficult or impossible to modify without major added costs.
Q:
Waiting line analysis can be useful for capacity design, especially for service systems.
Q:
Capacity planning requires an analysis of needs: what kind, how much, and when.
Q:
The current trend toward global operations has made capacity decisions much easier since we have the whole world in which to consider operations.
Q:
The more current capacity exceeds desired capacity, the greater the opportunity for profit.
Q:
According to the reading on restaurant sourcing practices, only fast-food restaurants are able to bring in outsourced foods.
Q:
The break-even quantity can be determined by dividing the fixed costs by the difference between the revenue per unit and the variable cost per unit.
Q:
In cost-volume analysis, costs that vary directly with volume of output are referred to as fixed costs because they are a fixed percentage of output levels.
Q:
Capacity increases are usually acquired in fairly large "chunks" rather than in smooth increments.
Q:
Cost and competitive priorities reduce effective capacities.
Q:
An example of an external factor that influences effective capacity is government safety regulations.
Q:
Increasing capacity just before a bottleneck operation will improve the output of the process.
Q:
Utilization is defined as the ratio of effective capacity to design capacity.
Q:
Increasing productivity and also quality will result in increased capacity.
Q:
If the unit cost to buy something is less than the variable cost to make it, the decision to make or buy is based solely on the fixed costs.
Q:
Design capacity refers to the maximum output that can possibly be attained.
Q:
Stating capacity in dollar amounts generally results in a consistent measure of capacity regardless of the actual units of measure.
Q:
Capacity decisions are usually one-time decisions; once they have been made, we know the limits of our operations.
Q:
The term capacity refers to the maximum quantity an operating unit can process over a given period of time.
Q:
Elements of the service process in which there is little to no contact with the customer are referred to as:
A. robust.
B. delayed differentiators.
C. back-of-the-house.
D. user-friendly.
E. mission-consistent.
Q:
Which of the following is not one of the phases of product design and development?
A. Specify product specifications.
B. Conduct market test.
C. Specify process specifications.
D. Conduct design review.
E. Perform applied research.
Q:
Which of the following is not true about remanufacturing?
A. Remanufactured products can be sold at lower cost.
B. The process requires mostly unskilled and semiskilled workers.
C. There is less depletion of natural resources.
D. It produces high-quality products easily.
E. Remanufacturing is mainly carried out by small and mid-sized companies.
Q:
A formal way to document customer requirements is:
A. consumer surveys.
B. quality function deployment.
C. focus groups.
D. the Delphi technique.
E. a sales/marketing matrix.
Q:
One of these is not a characteristic of a well-designed service system:
A. user friendly
B. robust
C. distributed computer networks
D. cost effective
E. easy to sustain
Q:
Making plans for how products that have reached the end of their useful lives will be dealt with is the primary subject of:
A. cradle-to-grave assessment.
B. end-of-life programs.
C. life-cycle analysis.
D. three R's programs.
E. process mapping.
Q:
The structural approach for integrating customer requirements into every aspect of product development is known as:
A. total quality management.
B. customer satisfaction.
C. quality function deployment.
D. customer integration.
E. a product development team.
Q:
Service design generally differs from product design in which of the following ways?
A. Service design tends to focus on tangible factors.
B. There is less latitude in detecting and correcting errors prior to delivery.
C. There is a lesser requirement to be aware of competitors' offerings.
D. There is less visibility to customers.
E. There is no difference.
Q:
The term "standardization" is closely associated with:
A. customization.
B. high cost.
C. longer lead times.
D. variety.
E. interchangeability.
Q:
The term "degrees of newness" is associated with:
A. average age of employees.
B. average length of time on the job.
C. total years of business experience.
D. degree of design change.
E. average age of the capital equipment.
Q:
The process of dismantling and inspecting a competitor's new or revised product for the purpose of gleaning design ideas is called:
A. design by imitation.
B. product analysis.
C. reverse engineering.
D. benchmarking.
E. disassembly.
Q:
The assessment of the environmental impact of a product or service throughout its useful life is called:
A. flow diagramming.
B. service blueprinting.
C. quality function deployment.
D. process mapping.
E. life cycle analysis.
Q:
A software company is weighing whether to release a new version of its software. The company can go ahead and release the version now and correct flaws with subsequent patches or upgrades, or it can wait until the new version is reasonably bug-free. This is an example of:
A. life cycle analysis.
B. value analysis.
C. vaporware.
D. concurrent engineering.
E. design for production.
Q:
Which one of the following is not a factor of successful product and service design?
A. Be aware of what the competitors are doing.
B. Be aware of what customers want.
C. Know what government regulations are.
D. Use computerized design techniques.
E. Know what new technologies are available.