373Exam2

Outsourcing some production is a means of _________ a capacity constraint. A. identifying B. modifying C. supporting D. overcoming E. repeating

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

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

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.

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

Unbalanced systems are evidenced by: A. top-heavy operations. B. labor unrest. C. bottleneck operations. D. increasing capacities. E. assembly lines.

Maximum capacity refers to the upper limit of: A. inventories. B. demand. C. supplies. D. rate of output. E. finances.

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.

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.

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.

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.

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

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

The ratio of actual output to effective capacity is: A. design capacity. B. effective capacity. C. actual capacity. D. efficiency. E. utilization.

The ratio of actual output to design capacity is: A. design capacity. B. effective capacity. C. actual capacity. D. efficiency. E. utilization.

Given the following information, what would efficiency be? Effective capacity = 80 units per day Design capacity = 100 units per day Utilization = 48 percent

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

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

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

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

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.

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.

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

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

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.

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.

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.

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.

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.

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

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.

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.

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

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.

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.

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.

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.

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

A market constraint can be overcome by: A. lobbying. B. cash flow management. C. outsourcing. D. advertising or price changes. E. supplier development.

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

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

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

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

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

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

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

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. How many rosebushes would she have to produce and sell in order to break even? A. 1,600 B. 2,400 C. 2,000 D. 1,000 E. 1,500

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. How many rosebushes would she have to produce and sell in order to make a profit of $6,000? A. 1,600 B. 2,400 C. 3,000 D. 1,000 E. 4,000

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. If her available land has design and effective capacities of 3,000 and 2,000 rosebushes per year respectively, and she plans to grow 1,200 rosebushes each year on this land, what will be the utilization of this land? A. 0 percent B. 40 percent C. 60 percent D. 67 percent E. 100 percent

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. If her available land has design and effective capacities of 3,000 and 2,000 rosebushes per year, respectively, and she expects to be 80 percent efficient in her use of this land, how many rosebushes does Rose plan to grow each year on this land? A. 1,600 B. 2,400 C. 3,000 D. 2,000 E. 1,000

A Virginia county is considering whether to pay $50,000 per year to lease a prisoner transfer facility in a prime location near Washington, D.C. They estimate it will cost $50 per prisoner to process the paperwork at this new location. The county is paid a $75 commission for each new prisoner they process. What would be the county's annual profit if they were to process 4,000 prisoners per year at this new location? A. $0 B. $75,000 C. $50,000 D. $100,000 E. $300,000

A Virginia county is considering whether to pay $50,000 per year to lease a prisoner transfer facility in a prime location near Washington, D.C. They estimate it will cost $50 per prisoner to process the paperwork at this new location. The county is paid a $75 commission for each new prisoner they process. How many prisoners would they have to process annually to break even at this new location? A. 5,000 B. 8,000 C. 2,000 D. 4,000 E. 6,000

A Virginia county is considering whether to pay $50,000 per year to lease a prisoner transfer facility in a prime location near Washington, D.C. They estimate it will cost $50 per prisoner to process the paperwork at this new location. The county is paid a $75 commission for each new prisoner they process. How many prisoners would they have to process annually to make a profit of $100,000 at this new location? A. 5,000 B. 8,000 C. 2,000 D. 4,000 E. 6,000

A Virginia county is considering whether to pay $50,000 per year to lease a prisoner transfer facility in a prime location near Washington, D.C. They estimate it will cost $50 per prisoner to process the paperwork at this new location. The county is paid a $75 commission for each new prisoner they process. If the holding area at this new location has design and effective capacities of 10,000 and 7,500 prisoners processed annually, respectively, and 5,000 prisoners will be processed per year, what will be the utilization of the holding area? A. 0 percent B. 30 percent C. 50 percent D. 60 percent E. 100 percent

A Virginia county is considering whether to pay $50,000 per year to lease a prisoner transfer facility in a prime location near Washington, D.C. They estimate it will cost $50 per prisoner to process the paperwork at this new location. The county is paid a $75 commission for each new prisoner they process. If their holding area at this new location has design and effective capacities of 10,000 and 7,500 prisoners processed annually, respectively, and they plan to be 80 percent efficient in their use of this space, how many prisoners does the county plan to process per year? A. 5,000 B. 8,000 C. 2,000 D. 4,000 E. 6,000

Doctor J. is considering purchasing a new blood analysis machine to test for HIV; it will cost $60,000. He estimates that he could charge $25.00 for an office visit to have a patient's blood analyzed, while the actual cost of a blood analysis would be $5.00. What would be his profit if he were to perform 5,000 HIV blood analyses? A. $0 B. $40,000 C. $60,000 D. $25,000 E. $100,000

Doctor J. is considering purchasing a new blood analysis machine to test for HIV; it will cost $60,000. He estimates that he could charge $25.00 for an office visit to have a patient's blood analyzed, while the actual cost of a blood analysis would be $5.00. How many HIV blood analyses would he have to perform in order to break even? A. 12,000 B. 2,400 C. 3,000 D. 1,000 E. 5,000

Doctor J. is considering purchasing a new blood analysis machine to test for HIV; it will cost $60,000. He estimates that he could charge $25.00 for an office visit to have a patient's blood analyzed, while the actual cost of a blood analysis would be $5.00. How many HIV blood analyses would he have to perform in order to make a profit of $15,000? A. 3,000 B. 4,800 C. 5,000 D. 12,000 E. 3,750

Doctor J. is considering purchasing a new blood analysis machine to test for HIV; it will cost $60,000. He estimates that he could charge $25.00 for an office visit to have a patient's blood analyzed, while the actual cost of a blood analysis would be $5.00. If this new blood analysis machine has design and effective capacities of 6,000 and 5,000 blood analyses per year, respectively, and Dr. J. expects to perform 4,500 HIV blood analyses each year, what will be the utilization of this machine? A. 0 percent B. 75 percent C. 83 percent D. 90 percent E. 100 percent

Doctor J. is considering purchasing a new blood analysis machine to test for HIV; it will cost $60,000. He estimates that he could charge $25.00 for an office visit to have a patient's blood analyzed, while the actual cost of a blood analysis would be $5.00. If this new blood analysis machine has design and effective capacities of 6,000 and 5,000 blood analyses per year, respectively, and Dr. J. expects to be 80 percent efficient in his use of this machine, how many HIV blood analyses does he plan to perform each year? A. 3,200 B. 4,800 C. 4,000 D. 1,000 E. 5,000

Operation X feeds into operation Y. Operation X has an effective capacity of 55 units per hour. Operation Y has an effective capacity of 50 units per hour. Increasing X's effective capacity to ensure that Y's utilization is maximized would be an example of ________ a(n) constraint. A. overcoming B. outsourcing C. insourcing D. cushioning E. supporting

Operation X feeds into operation Y. Operation X has an effective capacity of 55 units per hour. Operation Y has an effective capacity of 50 units per hour. Finding a way to increase Y's effective capacity would be an example of ________ a constraint. A. overcoming B. cushioning C. insourcing D. cycling E. repositioning

Which of the following makes using present value approaches in capacity decisions difficult? A. The discount rate must be adjusted to account for inflation. B. Some cash flows are positive and other cash flows are negative. C. The payback period might not be long enough to justify a capacity decision. D. Capacity decisions are made amidst much uncertainty, so cash flows cannot be estimated with great accuracy. E. There is a cash outflow at the outset followed by, possibly, net cash inflows.

Suppose operation X feeds directly into operation Y. All of X's output goes to Y, and Y has no other operations feeding into it. X has a design capacity of 80 units per hour and an effective capacity of 72 units per hour. Y has a design capacity of 100 units per hour. What is Y's maximum possible utilization? A. 80 percent B. 72 percent C. 90 percent D. 70 percent E. 60 percent

Students at a major university must go through several registration steps. Officials have observed that it is typically the case that the waiting line at the fee-payment station is the longest. This would seem to suggest that the fee-payment station is the ___________ in the student registration process. A. capacity cushion B. first station C. bottleneck D. economy of scale E. diseconomy of scale