Question 1

A tabular presentation that shows the outcome for each decision alternative under the various possible states of nature is called a:

Accepted Answer

A) payoff table. 
B) feasible region. 
C) Laplace table. 
D) decision tree. 
E) payback period matrix. 
A) payoff table. 
B) feasible region. 
C) Laplace table. 
D) decision tree. 
E) payback period matrix.

Question 2

The dean of a college wants to determine which of two new classes to offer for the upcoming semester. Due to facility constraints only one class can be offered at this time. The dean feels that the first class has an 80 percent chance of earning the college about $75,000, but a 20 percent chance of losing $35,000. If the class is successful, then its next level class will be offered, with a 75 percent chance of earning $60,000, but a 20 percent chance of losing $30,000. Weighing the options, the dean feels that the second class has a 60 percent chance of earning $85,000, but a 40 percent chance of losing $40,000. If the second class is successful, then its next level class will be offered with a 50 percent chance of earning $80,000, but a 50 percent chance of losing $45,000. If both classes are not successful, neither of their next level classes will be offered to the students.What is the expected value for selecting the first class?

Accepted Answer

A) $90,000 
B) $83,000 
C) $75,500 
D) $50,000 
E) $45,500 
A) $90,000 
B) $83,000 
C) $75,500 
D) $50,000 
E) $45,500

Question 3

A decision making involving certainty about potential future conditions will have a relatively _____ decision.

Accepted Answer

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

Question 4

Which of the following makes using present value approaches in capacity decisions difficult?

Accepted Answer

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. 
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.

Question 5

According to the reading on restaurant sourcing practices, only fast-food restaurants are able to bring in outsourced foods.

Accepted Answer

A) True 
 B)False

Question 6

The owner of Tastee Cookies needs to decide whether to lease a small, medium, or large new retail outlet. She estimates that monthly profits will vary with demand for her cookies as follows:
 
For what range of probability that demand will be high, will she decide to lease the large facility?

Accepted Answer

A) 0-0.25 
B) 0-0.33 
C) 0.25-0.5 
D) 0.33-1 
E) 0.5-1 
A) 0-0.25 
B) 0-0.33 
C) 0.25-0.5 
D) 0.33-1 
E) 0.5-1

Question 7

Consider the following decision scenario:
 
*PV for profits ($000)
With equally likely states of nature, the alternative that has the largest expected monetary value is:

Accepted Answer

A) A. 
B) B. 
C) C. 
D) D. 
E) E. 
A) A. 
B) B. 
C) C. 
D) D. 
E) E.

Question 8

Which of the following is not a factor that influences how frequently or infrequently capacity choices are made?

Accepted Answer

A) supply chain disruption 
B) stability of demand 
C) product design 
D) technological change 
E) competitive factors 
A) supply chain disruption 
B) stability of demand 
C) product design 
D) technological change 
E) competitive factors

Question 9

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 feels that there is a 60 percent chance that the new cable network will be successful, what is her expected value (per thousand "hits")of perfect information?

Accepted Answer

A) $3.40 
B) $4.60 
C) $8.00 
D) $9.00 
E) $10.00 
A) $3.40 
B) $4.60 
C) $8.00 
D) $9.00 
E) $10.00

Question 10

The owner of Tastee Cookies needs to decide whether to lease a small, medium, or large new retail outlet. She estimates that monthly profits will vary with demand for her cookies as follows:
 
If she uses the maximax criterion, what size outlet will she decide to lease?

Accepted Answer

A) small 
B) medium 
C) large 
D) either small or medium 
E) either medium or large 
A) small 
B) medium 
C) large 
D) either small or medium 
E) either medium or large

Question 11

Among decision environments, risk implies that certain parameters have probabilistic outcomes.

Accepted Answer

A) True 
 B)False

Question 12

Maximum capacity commonly refers to the upper limit on:

Accepted Answer

A) utilization. 
B) the rate of demand. 
C) efficiency. 
D) the rate of output. 
E) finances. 
A) utilization. 
B) the rate of demand. 
C) efficiency. 
D) the rate of output. 
E) finances.

Question 13

The new owner of a beauty shop is trying to decide whether to hire one, two, or three beauticians. She estimates that profits next year (in thousands of dollars)will vary with demand for her services, and she has estimated demand in three categories, low, medium, and high.
 
If she uses the Laplace criterion, how many beauticians will she decide to hire?

Accepted Answer

A) one 
B) two 
C) three 
D) either one or two 
E) either two or three 
A) one 
B) two 
C) three 
D) either one or two 
E) either two or three

Question 14

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

Accepted Answer

A) small. 
B) medium. 
C) med.-large. 
D) large. 
E) ex-large. 
A) small. 
B) medium. 
C) med.-large. 
D) large. 
E) ex-large.

Question 15

The method of financial analysis which results in an equivalent interest rate is:

Accepted Answer

A) payback. 
B) net present value. 
C) internal rate of return. 
D) queuing. 
E) cost-volume. 
A) payback. 
B) net present value. 
C) internal rate of return. 
D) queuing. 
E) cost-volume.

Question 16

Outsourcing some production is a means of _________ a capacity constraint.

Accepted Answer

A) identifying 
B) modifying 
C) supporting 
D) overcoming 
E) repeating 
A) identifying 
B) modifying 
C) supporting 
D) overcoming 
E) repeating

Question 17

One local hospital has just enough space and funds currently available to start either a cancer or heart research lab. If administration decides on the cancer lab, there is a 20 percent chance of getting $100,000 in outside funding from the American Cancer Society next year, and an 80 percent chance of getting nothing. If the cancer research lab is funded the first year, no additional outside funding will be available the second year. However, if it is not funded the first year, then management estimates the chances are 50 percent it will get $100,000 the following year, and 50 percent that it will get nothing again. If, however, the hospital's management decides to go with the heart lab, then there is a 50 percent chance of getting $50,000 in outside funding from the American Heart Association the first year and a 50 percent chance of getting nothing. If the heart lab is funded the first year, management estimates a 40 percent chance of getting another $50,000 and a 60 percent chance of getting nothing additional the second year. If it is not funded the first year, then management estimates a 60 percent chance for getting $50,000 and a 40 percent chance for getting nothing in the following year. For both the cancer and heart research labs, no further possible funding is anticipated beyond the first two years.
What is the probability that the heart lab will be funded in both the first and second years?

Accepted Answer

A) 0.4 
B) 0.3 
C) 0.2 
D) 0.1 
E) 0 
A) 0.4 
B) 0.3 
C) 0.2 
D) 0.1 
E) 0

Question 18

Which of the following is not a criterion for developing capacity alternatives?

Accepted Answer

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 
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

Question 19

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 feels that there is a 60 percent chance that the new cable network will be successful, what is her expected cost (per thousand "hits")under certainty?

Accepted Answer

A) $3.40 
B) $4.60 
C) $8.00 
D) $9.00 
E) $10.00 
A) $3.40 
B) $4.60 
C) $8.00 
D) $9.00 
E) $10.00

Question 20

Two professors at a nearby university want to coauthor a new textbook in either economics or statistics. They feel that if they write an economics book, they have a 50 percent chance of placing it with a major publisher, and it should ultimately sell about 40,000 copies. If they cannot get a major publisher to take it, then they feel they have an 80 percent chance of placing it with a smaller publisher, with ultimate sales of 30,000 copies. On the other hand, if they write a statistics book, they feel they have a 40 percent chance of placing it with a major publisher, and it should result in ultimate sales of about 50,000 copies. If they cannot get a major publisher to take it, they feel they have a 50 percent chance of placing it with a smaller publisher, with ultimate sales of 35,000 copies.
What is the probability that the economics book would wind up being placed with a smaller publisher?

Accepted Answer

A) 0.8 
B) 0.5 
C) 0.4 
D) 0.2 
E) 0.1 
A) 0.8 
B) 0.5 
C) 0.4 
D) 0.2 
E) 0.1

A tabular presentation that shows the outcome for each decision alternative under the various possible states of nature is called a:

A decision making involving certainty about potential future conditions will have a relatively _____ decision.

Which of the following makes using present value approaches in capacity decisions difficult?

According to the reading on restaurant sourcing practices, only fast-food restaurants are able to bring in outsourced foods.

The owner of Tastee Cookies needs to decide whether to lease a small, medium, or large new retail outlet. She estimates that monthly profits will vary with demand for her cookies as follows: For what range of probability that demand will be high, will she decide to lease the large facility?

Consider the following decision scenario: *PV for profits ($000) With equally likely states of nature, the alternative that has the largest expected monetary value is:

Which of the following is not a factor that influences how frequently or infrequently capacity choices are made?

The owner of Tastee Cookies needs to decide whether to lease a small, medium, or large new retail outlet. She estimates that monthly profits will vary with demand for her cookies as follows: If she uses the maximax criterion, what size outlet will she decide to lease?

Among decision environments, risk implies that certain parameters have probabilistic outcomes.

Maximum capacity commonly refers to the upper limit on:

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

The method of financial analysis which results in an equivalent interest rate is:

Outsourcing some production is a means of _________ a capacity constraint.

Which of the following is not a criterion for developing capacity alternatives?

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

A tabular presentation that shows the outcome for each decision alternative under the various possible states of nature is called a:

A decision making involving certainty about potential future conditions will have a relatively _____ decision.

Which of the following makes using present value approaches in capacity decisions difficult?

According to the reading on restaurant sourcing practices, only fast-food restaurants are able to bring in outsourced foods.

The owner of Tastee Cookies needs to decide whether to lease a small, medium, or large new retail outlet. She estimates that monthly profits will vary with demand for her cookies as follows: For what range of probability that demand will be high, will she decide to lease the large facility?

Consider the following decision scenario: *PV for profits ($000) With equally likely states of nature, the alternative that has the largest expected monetary value is:

Which of the following is not a factor that influences how frequently or infrequently capacity choices are made?

The owner of Tastee Cookies needs to decide whether to lease a small, medium, or large new retail outlet. She estimates that monthly profits will vary with demand for her cookies as follows: If she uses the maximax criterion, what size outlet will she decide to lease?

Among decision environments, risk implies that certain parameters have probabilistic outcomes.

Maximum capacity commonly refers to the upper limit on:

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

The method of financial analysis which results in an equivalent interest rate is:

Outsourcing some production is a means of _________ a capacity constraint.

Which of the following is not a criterion for developing capacity alternatives?

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