Question 1

When the output is less than the optimal rate of output, the average unit cost will be:

Accepted Answer

A) lower. 
B) the same. 
C) higher. 
D) could be either higher or lower. 
E) could be either higher, lower or the same. 
A) lower. 
B) the same. 
C) higher. 
D) could be either higher or lower. 
E) could be either higher, lower or the same.

Question 2

The advertising manager for Roadside Restaurants, Inc., needs to decide whether to spend this month's budget for advertising on print media, television, or a mixture of the two. She estimates that the cost per thousand "hits" (readers or viewers)will vary depending upon the success of the new cable television network she plans to use, as follows:
 
For what range of probability that the new cable network will be successful will she select the television media strategy?

Accepted Answer

A) 0-0.4 
B) 0-0.55 
C) 0.4-0.7 
D) 0.55-1 
E) 0.7-1 
A) 0-0.4 
B) 0-0.55 
C) 0.4-0.7 
D) 0.55-1 
E) 0.7-1

Question 3

Design capacity refers to the maximum output rate that can be achieved under ideal conditions.

Accepted Answer

A) True 
 B)False

Question 4

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?

Accepted Answer

A) 100 percent 
B) 80 percent 
C) 75 percent 
D) 70 percent 
E) 0 percent 
A) 100 percent 
B) 80 percent 
C) 75 percent 
D) 70 percent 
E) 0 percent

Question 5

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.

Accepted Answer

A) overcoming 
B) cushioning 
C) insourcing 
D) cycling 
E) repositioning 
A) overcoming 
B) cushioning 
C) insourcing 
D) cycling 
E) repositioning

Question 6

Having excess capacity tends to keep operating costs low.

Accepted Answer

A) True 
 B)False

Question 7

Option A has an expected value of $2,000, a minimum payoff of −$4,000, and a maximum payoff of $18,000. Option B has an expected value of $2,200, a minimum payoff of −$1,000, and a maximum payoff of $6,000. Option C has an expected value of $1,900, a minimum payoff of $100, and a maximum payoff of $2,000. In this situation, a risk-averse decision maker would pay __________ for his risk aversion, and a risk-seeking decision maker would pay __________ for his risk seeking.

Accepted Answer

A) $200; $300 
B) $1,100; $5,000 
C) $300; $200 
D) $2,100; $16,000 
E) $400; $200 
A) $200; $300 
B) $1,100; $5,000 
C) $300; $200 
D) $2,100; $16,000 
E) $400; $200

Question 8

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?

Accepted Answer

A) 12,000 
B) 2,400 
C) 3,000 
D) 1,000 
E) 5,000 
A) 12,000 
B) 2,400 
C) 3,000 
D) 1,000 
E) 5,000

Question 9

Which of the following is not a strategy to manage service capacity or cope with service capacity limitations?

Accepted Answer

A) hiring extra workers 
B) storing inventories of the service 
C) pricing and promotion 
D) part-time workers 
E) subcontracting 
A) hiring extra workers 
B) storing inventories of the service 
C) pricing and promotion 
D) part-time workers 
E) subcontracting

Question 10

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.

Accepted Answer

A) capacity cushion 
B) first station 
C) bottleneck 
D) economy of scale 
E) diseconomy of scale 
A) capacity cushion 
B) first station 
C) bottleneck 
D) economy of scale 
E) diseconomy of scale

Question 11

The advertising manager for Roadside Restaurants, Inc., needs to decide whether to spend this month's budget for advertising on print media, television, or a mixture of the two. She estimates that the cost per thousand "hits" (readers or viewers)will vary depending upon the success of the new cable television network she plans to use, as follows:
 
If she uses the minimax regret criterion, which advertising strategy will she use?

Accepted Answer

A) print 
B) mixed 
C) television 
D) either print or mixed 
E) either mixed or television 
A) print 
B) mixed 
C) television 
D) either print or mixed 
E) either mixed or television

Question 12

Risk implies that there are certain parameters that have _____ outcomes.

Accepted Answer

A) probabilistic 
B) complex 
C) unknown 
D) uncertain 
E) irrational 
A) probabilistic 
B) complex 
C) unknown 
D) uncertain 
E) irrational

Question 13

The expected monetary value approach is most appropriate when the decision maker is risk neutral.

Accepted Answer

A) True 
 B)False

Question 14

The current trend toward global operations has made capacity decisions much easier since we have the whole world in which to consider operations.

Accepted Answer

A) True 
 B)False

Question 15

Consider the following decision scenario:
 
*PV for profits ($000)
The minimax regret strategy would be:

Accepted Answer

A) buy. 
B) lease. 
C) rent. 
D) high. 
E) low. 
A) buy. 
B) lease. 
C) rent. 
D) high. 
E) low.

Question 16

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?

Accepted Answer

A) 0 percent 
B) 75 percent 
C) 83 percent 
D) 90 percent 
E) 100 percent 
A) 0 percent 
B) 75 percent 
C) 83 percent 
D) 90 percent 
E) 100 percent

Question 17

The term "sensitivity analysis" is most closely associated with:

Accepted Answer

A) maximax. 
B) maximin. 
C) decision making under risk. 
D) minimax regret. 
E) Laplace criterion. 
A) maximax. 
B) maximin. 
C) decision making under risk. 
D) minimax regret. 
E) Laplace criterion.

Question 18

Short-term considerations in determining capacity requirements include:

Accepted Answer

A) demand trend. 
B) cyclical demand variations. 
C) seasonal demand variations. 
D) mission statements. 
E) new product development plans. 
A) demand trend. 
B) cyclical demand variations. 
C) seasonal demand variations. 
D) mission statements. 
E) new product development plans.

Question 19

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?

Accepted Answer

A) 3,000 
B) 4,800 
C) 5,000 
D) 12,000 
E) 3,750 
A) 3,000 
B) 4,800 
C) 5,000 
D) 12,000 
E) 3,750

Question 20

A market constraint can be overcome by:

Accepted Answer

A) lobbying. 
B) cash flow management. 
C) outsourcing. 
D) advertising or price changes. 
E) supplier development. 
A) lobbying. 
B) cash flow management. 
C) outsourcing. 
D) advertising or price changes. 
E) supplier development.

When the output is less than the optimal rate of output, the average unit cost will be:

Design capacity refers to the maximum output rate that can be achieved under ideal conditions.

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.

Having excess capacity tends to keep operating costs low.

Which of the following is not a strategy to manage service capacity or cope with service capacity limitations?

Risk implies that there are certain parameters that have _____ outcomes.

The expected monetary value approach is most appropriate when the decision maker is risk neutral.

The current trend toward global operations has made capacity decisions much easier since we have the whole world in which to consider operations.

Consider the following decision scenario: *PV for profits ($000) The minimax regret strategy would be:

The term "sensitivity analysis" is most closely associated with:

Short-term considerations in determining capacity requirements include:

A market constraint can be overcome by:

Introduction to Operations Management

Competitiveness, Strategy, and Productivity

Forecasting

Product and Service Design

Process Selection and Facility Layout

Work Design and Measurement

Location Planning and Analysis

Management of Quality

Quality Control

Aggregate Planning and Master Scheduling

Inventory Management

MRP and ERP

Jit and Lean Operations

Supply Chain Management

Scheduling

Project Management

Management of Waiting Lines

Linear Programming

Filters

Exam 5: Strategic Capacity Planning for Products and Services

When the output is less than the optimal rate of output, the average unit cost will be:

Design capacity refers to the maximum output rate that can be achieved under ideal conditions.

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.

Having excess capacity tends to keep operating costs low.

Which of the following is not a strategy to manage service capacity or cope with service capacity limitations?

Risk implies that there are certain parameters that have _____ outcomes.

The expected monetary value approach is most appropriate when the decision maker is risk neutral.

The current trend toward global operations has made capacity decisions much easier since we have the whole world in which to consider operations.

Consider the following decision scenario: *PV for profits ($000) The minimax regret strategy would be:

The term "sensitivity analysis" is most closely associated with:

Short-term considerations in determining capacity requirements include:

A market constraint can be overcome by:

Introduction to Operations Management

Competitiveness, Strategy, and Productivity

Forecasting

Product and Service Design

Process Selection and Facility Layout

Work Design and Measurement

Location Planning and Analysis

Management of Quality

Quality Control

Aggregate Planning and Master Scheduling

Inventory Management

MRP and ERP

Jit and Lean Operations

Supply Chain Management

Scheduling

Project Management

Management of Waiting Lines

Linear Programming

Filters