Question 1

If the output rate is increased but the average unit costs also increase, we are experiencing:

Accepted Answer

A)  market share erosion. 
B)  economies of scale. 
C)  diseconomies of scale. 
D)  value-added accounting. 
E)  step-function scaleup. 
A)  market share erosion. 
B)  economies of scale. 
C)  diseconomies of scale. 
D)  value-added accounting. 
E)  step-function scaleup.

Question 2

Which of the following is not a determinant of effective capacity?

Accepted Answer

A)  facilities 
B)  product mix 
C)  actual output 
D)  human factors 
E)  external factors 
A)  facilities 
B)  product mix 
C)  actual output 
D)  human factors 
E)  external factors

Question 3

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 4

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 5

Having excess capacity tends to keep operating costs low.

Accepted Answer

A) True 
 B)False

Question 6

Capacity decisions are usually one-time decisions; once they have been made, we know the limits of our operations.

Accepted Answer

A) True 
 B)False

Question 7

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 8

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 9

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?

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 10

Which of the following is the case where capacity is measured in terms of inputs?

Accepted Answer

A)  tons of steel per day that can be produced by a steel mill 
B)  kilowatt hours per day that can be generated by an electrical power plant 
C)  number of meals per day that can be served by a restaurant 
D)  gallons of gasoline that can be produced per day by a petroleum refinery 
E)  number of passenger seats that can be filled per day on an airline route 
A)  tons of steel per day that can be produced by a steel mill 
B)  kilowatt hours per day that can be generated by an electrical power plant 
C)  number of meals per day that can be served by a restaurant 
D)  gallons of gasoline that can be produced per day by a petroleum refinery 
E)  number of passenger seats that can be filled per day on an airline route

Question 11

Allowances for which of these factors would be subtracted from design capacity when calculating effective capacity?

Accepted Answer

A)  personal time 
B)  equipment maintenance 
C)  scheduling problems 
D)  changing the mix of products 
E)  all of the other choices 
A)  personal time 
B)  equipment maintenance 
C)  scheduling problems 
D)  changing the mix of products 
E)  all of the other choices

Question 12

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 13

Unbalanced systems are evidenced by:

Accepted Answer

A)  top-heavy operations. 
B)  labor unrest. 
C)  bottleneck operations. 
D)  increasing capacities. 
E)  assembly lines. 
A)  top-heavy operations. 
B)  labor unrest. 
C)  bottleneck operations. 
D)  increasing capacities. 
E)  assembly lines.

Question 14

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?

Accepted Answer

A)  1,600 
B)  2,400 
C)  2,000 
D)  1,000 
E)  1,500 
A)  1,600 
B)  2,400 
C)  2,000 
D)  1,000 
E)  1,500

Question 15

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

Accepted Answer

A)  20 percent 
B)  35 percent 
C)  48 percent 
D)  60 percent 
E)  80 percent 
A)  20 percent 
B)  35 percent 
C)  48 percent 
D)  60 percent 
E)  80 percent

Question 16

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?

Accepted Answer

A)  $0 
B)  $200,000 
C)  $100,000 
D)  $75,000 
E)  $50,000 
A)  $0 
B)  $200,000 
C)  $100,000 
D)  $75,000 
E)  $50,000

Question 17

Increasing capacity just before a bottleneck operation will improve the output of the process.

Accepted Answer

A) True 
 B)False

Question 18

Improving cash flow would be a reasonable thing to focus on when trying to overcome a _________ constraint.

Accepted Answer

A)  financial 
B)  market 
C)  demand 
D)  supplier 
E)  material 
A)  financial 
B)  market 
C)  demand 
D)  supplier 
E)  material

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. 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 20

Everything else being equal, a firm considering outsourcing would find all of the following desirable except:

Accepted Answer

A)  total costs will be lower for outsources goods or services. 
B)  its supplier has more expertise in whatever is being outsourced. 
C)  it can maintain tight control over knowledge. 
D)  proprietary information will be disclosed to the supplier. 
E)  control over operations will be maintained by the firm. 
A)  total costs will be lower for outsources goods or services. 
B)  its supplier has more expertise in whatever is being outsourced. 
C)  it can maintain tight control over knowledge. 
D)  proprietary information will be disclosed to the supplier. 
E)  control over operations will be maintained by the firm.

Exam 6: Strategic Capacity Planning for Products and Services

If the output rate is increased but the average unit costs also increase, we are experiencing:

Which of the following is not a determinant of effective capacity?

Maximum capacity commonly refers to the upper limit on:

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

Having excess capacity tends to keep operating costs low.

Capacity decisions are usually one-time decisions; once they have been made, we know the limits of our operations.

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

Which of the following is the case where capacity is measured in terms of inputs?

Allowances for which of these factors would be subtracted from design capacity when calculating effective capacity?

Short-term considerations in determining capacity requirements include:

Unbalanced systems are evidenced by:

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?

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

Increasing capacity just before a bottleneck operation will improve the output of the process.

Improving cash flow would be a reasonable thing to focus on when trying to overcome a _________ constraint.

Everything else being equal, a firm considering outsourcing would find all of the following desirable except:

Introduction to Operations Management

Competitiveness

Forecasting

Product and Service Design

RELIABILITY – Static

Decision Theory– Static

Process Selection and Facility Layout

Work Design and Measurement

learning curve– Static

Location Planning and Analysis

The Transportation Model– Static

Management of Quality

Quality Control

Acceptance Sampling– Static

Aggregate Planning and Master Scheduling

MRP and ERP

Inventory Management

JIT and Lean Operations

Maintenance– Static

Supply Chain Management

Scheduling

Project Management

Management of Waiting Lines

Linear Programming

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