Exam 6: Managing Capacity

A ninety percent learning curve is steeper than an eighty percent learning curve.

Building rental and depreciation on capital equipment are examples of fixed costs.

Capacity is the capability of a worker,machine,work center,plant,or organization to produce output per time period.

The first three rooms took The Painter a total of 9 hours to paint.If the learning curve rate is 85%,how long will it take The Painter to paint all 20 rooms in Stately Wayne Manor?

Four entrepreneurial students want to open a shaved ice business during the coming summer.Maxine thinks that demand will be high and therefore they should purchase a large stand and acquire a premium ice shaving machine.Minnie feels strongly that demand will be low and that they should purchase a tarp and some basic hand tools to work the ice.Midelia is pretty sure that demand will fall in-between these two extremes,so they can get by with a shack and a used ice shaving machine.Their financial wizard of the bunch,Probableah,has estimated the costs,revenues,and likelihoods of each level of demand and created the table shown below.What is the expected profit for this venture?

Consider the system composed of four processes linked by a conveyor belt.There is no storage between these processes pictured below.Which statement is best?

A company with fixed costs of $200,000 per month believes that they have this holiday season's hot selling item,a towel that folds itself into a variety of shapes so you can turn your own home into a cruise ship cabin.They believe they can sell 100,000 units and need to determine a minimum price that will cover their fixed and variable costs,with the latter being $45 per unit.

Which of the following statements about capacity strategies is NOT correct?

Business at the Kwik-E-Mart is brisk,with one customer arriving at a rate of six per hour on average.Ringing up purchases is an easy matter for owner/operator Apu; he can usually do so in 2 minutes.If both arrival and service rates are Poisson distributed,how many customers are in the store on average?

The MBA program at the University of Central Oregon features seven team-taught courses,five credit hours apiece.Each team is composed of somewhat reluctant professors in two distinct disciplines,each of which brings his own perspective to the topic du jour.The program is difficult to coordinate and makes transferring course credit in and out of the program near impossible,so the MBA Redesign Committee spends three years crafting a new program that features twenty one courses,two credit hours each,that will unfortunately take 18 months to complete compared to the current program's 12 months.The current MBA program brings in about 60 students each semester with the main selling point being the integration between disciplines.It is thought that if the new program can be successfully marketed as an easy fit with other MBA programs in the area,the ability to transfer credits in might attract as many as 70 new students each semester.If the new program is unveiled but the market is still interested in integrated courses,enrollment in the new program might drop to 40 students per semester.If this were the case,the new courses could be scheduled at the same time in the same room and might attract 65 students each semester (with a 0.6 probability)or might attract as few as 50 students with a 0.4 probability.If the existing program is retained but the market is seeking courses that are more transferable,then enrollment in the existing program might fall to 45 new students per semester.If this happens,then the existing courses might be broken in half each night into two classes back to back.Doing so has a .7 probability of increasing new student demand to 65 but has a .3 probability of increasing demand to 55.The MBA Director believes that the market is ready for a less integrated program,and she pegs the probability of that hunch at 0.6,with a 0.4 probability that the market prefers the current integrated program.What is the difference in expected outcomes between the two alternatives?

Virtual supply chains have the advantage of efficiency,but this advantage is gained in a trade-off with decreased flexibility.

Wally's Filling Station is manned by one capable attendant that can fill your tank and check your tires,oil,and water in 5 minutes.If four customers arrive each hour,and the service and arrival rates are governed by the Poisson distribution,what is the utilization of the attendant?

Which of the following is NOT an appropriate measure of capacity?

The ________ capacity strategy attempts to adjust the current capacity to a level equivalent to the current demand.

Saul Goodman represents several clients and bills by the hour at a reasonable $500 per.He forgot to record the time it took to complete each activity,but he knows his eight hour day was spent representing 13 clients involved in one high profile case.He also remembers that Walt told him once that his learning curve percentage was 80%.How many hours should Saul bill his first client?

The ________ is the output volume level where the firm realizes a $0 net profit.

Customers arrive at Rent a Wreck and hope to score an inexpensive and unsightly vehicle to use for what typically is a short period of time.About twenty customers show up in any hour of the day and it takes the customer service representative about two minutes to photocopy their driver's license and insurance card and take an impression of a credit card.Assume that the service and arrival rates are governed by the Poisson distribution.Calculate the system's vital statistics.

An entrepreneur identifies a product that he knows will sell like crazy if he can only figure out a way to bring it to her area.The idea is so fantastic that I can't tell you what it is,so we will just refer to it as X.The entrepreneur has identified four ways to bring X to the masses; she can import it,she can smuggle it,she can try to produce it on her own,and she can have a local reputable producer make it for her.The fixed and variable costs for each of these alternatives are shown below.Which of these methods is never the preferred alternative?

Consider the system composed of four processes linked by a conveyor belt.There is no storage between these processes pictured below and market demand of 50 units per hour drives the conveyor belt.Assume that no defective units are made.Which statement is best?

A major computer manufacturer is interested in establishing a customer service center to handle business for the next decade.They conduct exhaustive research on land and construction costs,utilities,tax breaks,and wages at three sites,Oklahoma City,Austin,and Nashville.Answer these questions using these costs as displayed in the table below. Graph the total cost curves and indicate the range of output that is best for each prospective site.What are the assumptions you have made in this analysis?