Q&A Hero

Q: Lower-risk investments require a higher rate of return compared with higher-risk investments.

Q: Which of the following is usually not one of the top considerations in choosing a country for a facility location?A) availability of labor and labor productivityB) exchange ratesC) attitude of governmental unitsD) zoning regulationsE) location of markets

Q: For projects financed from borrowed funds, the hurdle rate must exceed the interest rate paid on these funds.

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Q: A hurdle rate is the minimum acceptable rate of return for an investment.

Q: In location planning, environmental regulations, cost and availability of utilities, and taxes areA) global factorsB) country factorsC) regional/community factorsD) site-related factorsE) none of the above

Q: All capital investment evaluation methods use the time value of money concept.

Q: Globalization of the location decision is the result of all of the following exceptA) market economicsB) higher quality of labor overseasC) ease of capital flow between countriesD) high differences in labor costsE) more rapid, reliable travel and shipping

Q: The process of restating cash flows in terms of their present values is called discounting.

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Q: A location decision for an appliance manufacturer would tend to have a(n)A) cost focusB) focus on finding very highly skilled techniciansC) revenue focusD) environmental focusE) education focus

Q: The time value of money concept works on the principle that a dollar tomorrow is worth more than a dollar today.

Q: Governmental attitudes toward issues such as private property, intellectual property, zoning, pollution, and employment stability may change over time. The term associated with this phenomenon isA) bureaucratic riskB) political riskC) legislative riskD) judicial riskE) democratic risk

Q: Capital budgeting decisions that relate to investments in technology are not as risky as other types of capital budgeting decisions.

Q: Currency risk is based on what assumption?A) Firms that do not continuously innovate will lose market share.B) Values of foreign currencies continually rise and fall in most countries.C) Changing product lines by reacting to every current trend may alienate the customer base.D) The value of one dollar today is greater than the value of one dollar to be received one year from now.E) The U.S. stock market fluctuates daily.

Q: Capital budgeting decisions are not affected by return on investment considerations.

Q: The reason fast food restaurants often are found in close proximity to each other isA) they enjoy competitionB) location clustering near high traffic flowsC) low costD) availability of skilled laborE) all of the above

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Q: A employee produces 15 parts during a shift in which he made $90. The labor content of the product isA) $90B) $5C) $6D) $.167E) none of the above

Q: There is only one method of evaluating capital budgeting decisions.

Q: Which of the following workers is the most productive?A) $50 wages, 10 parts producedB) $10 wages, 1 part producedC) $30 wages, 5 parts producedD) $100 wages, 21 parts producedE) $500 wages, 100 parts produced

Q: The internal rate of return method of evaluating capital investments cannot be used with uneven cash flows.

Q: __________ and __________ are to key country success factors as __________ and __________ are to key region success factors.A) Cultural issues, location of markets; site size and cost, zoning restrictionsB) Exchange rates, labor availability; site size and cost, environmental impactC) Labor cost, currency risk; land costs, proximity to customersD) Land costs, proximity to customers; labor cost, air and rail systemsE) All of the above are accurate relationships.

Q: Among the following choices, an operations manager might best evaluate political risk of a country by looking at which type of country ranking?A) based on competitivenessB) based on cost of doing businessC) based on corruptionD) based on magnitude of government social programsE) based on average duration between presidential/prime minister elections

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Q: Why is Northern Mexico used as a cluster for electronics firms?A) high traffic flowsB) venture capitalists located nearbyC) natural resources of land and climateD) NAFTAE) high per capita GDP

Q: Which of the following statements regarding the center-of-gravity method is false?A) It is designed to minimize the maximum possible travel distance to any location.B) The optimal x- and y-coordinates are calculated separately.C) The optimal solution is unconstrained, so it could suggest a location in the middle of a body of water.D) The weights used are the quantity of goods moved to or from each location.E) The origin of the coordinate system and the scale used are arbitrary, just as long as the relative distances are correctly represented.

Q: The accounting rate of return is based on cash flows rather than net income in its calculation.

Q: Industrial location analysis typically attempts toA) minimize costsB) maximize salesC) focus more on human resourcesD) avoid countries with strict environmental regulationsE) ignore exchange rates and currency risks

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Q: A shorter payback period reduces the company's ability to respond to unanticipated changes and increases the risk of having to keep an unprofitable investment.

Q: FedEx chose Memphis, Tennessee, as its U.S. hub becauseA) the city is in the center of the U.S., geographicallyB) the airport has relatively few hours of bad weather closuresC) it needed a means to reach cities to which it did not have direct flightsD) the firm believed that a hub system was superior to traditional city-to-city flight schedulingE) All of the above are true.

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Q: The payback period method, unlike the net present value method, does not ignore cash flows after the point of cost recovery.

Q: Location decisions of goods-producing companies often assume that costs are relatively constant for a given area; therefore, the revenue function is critical.

Q: Two investments with exactly the same payback periods are not equally valuable to an investor because the timing of net cash flows may be different.

Q: The location decisions of goods-producing firms will generally pay more attention to parking, access, and traffic counts than will service location decisions.

Q: Labor cost and labor availability often drive the location decision in the call center industry.

Q: The payback period method of evaluating an investment fails to consider cash inflows after the point where an investment's costs are fully recovered.

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Q: Service firms choose locations based, in part, on the revenue potential of a site.

Q: The transportation model calculates an optimal shipping system between a central facility and several outlying customers.

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Q: The factor-rating method can consider both tangible and intangible costs.

Q: . The graphic approach to location break-even analysis displays the range of volume over which each location is preferable.

Q: If the internal rate of return (IRR) of an investment is lower than the hurdle rate, the project should be accepted.

Q: One reason for a firm locating near its competitors is the presence of a major resource it needs.

Q: Manufacturers may want to locate close to their customers, if the transportation of finished goods is expensive or difficult.

Q: # Copyright 2016 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education. 24-80

Q: Location decisions are based on many things, including costs, revenues, incentives, attitudes, and intangibles, but not on ethical considerations.

Q: In location decisions, intangible costs are easier to measure than tangible costs.

Q: An example of an intangible cost, as it relates to location decisions, is the quality of education.

Q: Unfavorable exchange rates can offset other savings in a location decision.

Q: For a location decision, labor productivity may be important in isolation, but low wage rates are a more important criterion.

Q: The ____________________ is computed by dividing a project's annual after-tax net income by the annual average amount invested.

Q: The ratio of labor cost per day to productivity, in units per day, is the labor cost per unit.

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Q: The minimum acceptable rate of return on an investment, often the company's cost of capital, is called the _________________.

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Q: _____________________ is the process of analyzing alternative long-term investments and deciding which assets to acquire or sell.

Q: Flexibility can be achieved with A) movable equipment B) inexpensive equipment C) sophisticated electronic equipment D) modular equipment E) all of the above

Q: Trevoline Company is deciding between two projects. Each project requires an initial investment of $350,000. The projected net cash flows for the two projects are listed below. The revenue is to be received at the end of each year. Trevoline requires a 10% return on its investments. The present value of an annuity of 1 and present value of an annuity factors for 10% are presented below. Use net present value to determine which project should be pursued and explain why. Project A Project B Present Value Present Value of an Periods Cash Flows Cash Flows of 1 at 10% Annuity of 1 at 10% 1 $50,000 $160,000 0.9091 0.9091 2 $200,000 $175,000 0.8264 1.7355 3 $250,000 $175,000 0.7513 2.4869

Q: Making environmentally sound products through efficient processes A) is unprofitable, as long as recyclable materials prices are soft B) is known as lean manufacturing C) can still be profitable D) is easier for repetitive processes than for product-focused processes E) none of the above

Q: Dracor Company is considering the purchase of equipment that would allow the company to add a new product to its line. The equipment is expected to cost $280,000 with a 7-year life, no salvage value, and will be depreciated using straight-line depreciation. The expected annual income related to this equipment follows. Compute the (a) payback period and (b) accounting rate of return for this equipment. Sales $900,000 Costs: Manufacturing $545,000 Depreciation on machine 40,000 Selling and administrative expenses 249,000 (834,000 ) Income before taxes 66,000 Income tax (30%) ( 19,800 ) Net income $ 46,200

Q: Ethical and environmentally friendly processes include which of the following? A) emission controls B) recycling C) efficient use of resources D) reduction of waste by-products E) all of the above

Q: Process redesign A) is the fundamental rethinking of business processes B) can focus on any process C) tries to bring about dramatic improvements in performance D) focuses on activities that cross functional lines E) all of the above

Q: Advances in technology A) have impacted the manufacturing sector only B) have had only limited impact on services C) have failed to change the level of customer interaction with an organization D) have had dramatic impact on customer interaction with services and with products E) have dramatically changed health care, but have not changed retailing

Q: 7118 * 70,000 = 49,826 Total "u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6 $111,690 Initial cost "u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6"u00a6... (110,000) Net present value "u00a6"u00a6"u00a6"u00a6"u00a6"u00a6 $ 1,690

Q: Which of the following is not one of the essential ingredients for mass customization? A) storage of the many variations of finished goods to quickly accommodate the high level of customization B) personnel and facility flexibility C) reliance on modular design D) rapid throughput E) very effective scheduling

Q: "Operators simply load new programs, as necessary, to produce different products" describes A) CAD B) automated guided vehicles C) flexible manufacturing systems D) vision systems E) process control

Q: A system using an automated work cell controlled by electronic signals from a common centralized computer facility is called a(n) A) adaptive control system B) robotics C) flexible manufacturing system D) automatic guided vehicle (AGV) system E) manufacturing cell

Q: Which one of the following technologies is used only for material handling, not actual production or assembly? A) robots B) CNC C) CAD D) AGVs E) FMS

Q: Computer-integrated manufacturing (CIM) includes manufacturing systems that have A) computer-aided design, a flexible manufacturing system, inventory control, warehousing and shipping integrated B) transaction processing, management information systems, and decision support systems integrated C) automated guided vehicles, robots, and process control D) robots, automated guided vehicles, and transfer equipment E) all of the above

Q: "Automatic placement and withdrawal of parts and products into and from designated places in a warehouse" describes A) AGV B) CAD/CAM C) CIM D) ASRS E) FMS

Q: Which of the following technologies would enable a cashier to scan the entire contents of a shopping cart in seconds? A) ASRS B) AGV C) CAD/CAM D) RFID E) FMS

Q: The use of information technology to monitor and control a physical process is known as A) process control B) computer-aided design C) information numeric control D) numeric control E) none of the above

Q: Which of the following is true regarding vision systems? A) They are consistently accurate. B) They are modest in cost. C) They do not become bored. D) All of the above are true. E) None of the above is true.

Q: Which of the following is typical of process control systems? A) The output may take numerous forms including warning lights or statistical process control charts. B) The data are analyzed by computer, which generates feedback. C) Their sensors take measurements on a periodic basis. D) The sensors' measurements are digitized. E) all of the above

Q: Which of the following is true regarding opportunities to improve service processes? A) Automation can do little to improve service processes, because services are so personal. B) Layout is of little consequence, since services seldom use an assembly line. C) If a work force is strongly committed, it need not be cross-trained and flexible. D) All of the above are true. E) None of the above is true.