Question 1

When determining the timing and degree of capacity change, one can use the approach of:

Accepted Answer

A)  lead time flexibility strategy. 
B)  expand early strategy. 
C)  wait-and-see strategy. 
D)  backordering. 
E)  delayed differentiation. 
A)  lead time flexibility strategy. 
B)  expand early strategy. 
C)  wait-and-see strategy. 
D)  backordering. 
E)  delayed differentiation. B

Question 2

Consider the following information: $$\begin{array} { l l } 
\text { Fixed Costs: } & \$ 15,000 \text { per year } \
\text { Variable Costs: } & \$ 1.00 \text { per unit } \
\text { Revenue: } & \$ 1.60 \text { per unit } \
\text { Design Capacity: } & 45,000 \text { units per year } \
\text { Effective Capacity: } & 40,000 \text { units per year } \
\text { Anticipated Output: } & 36,000 \text { units per year }
\end{array}$$ What profit (loss) would there be for a quantity of 10,000?

Accepted Answer

$9,000 loss

Question 3

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. C

Question 4

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.

Question 5

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 6

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 7

Given the following data for a make-or-buy decision: $$\begin{array} { l l l } 
\text { Alternative } & \text { Fixed Cost } & \text { Variable Cost } \
\hline  \text { Buy } & \$ 0 \text { per year } & \$ 8 \text { per unit } \
\text { Make } & \$ 100,000 \text { per year } & \$ 4 \text { per unit }
\end{array}$$ What are total costs to buy a quantity of 15,000 units per year?

Accepted Answer

The answer of Given the following data for a make-or-buy...

Question 8

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 9

Which of the following would tend to reduce effective capacity?

Accepted Answer

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 
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

Question 10

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

Accepted Answer

A)  1/4 
B)  1/3 
C)  1/2 
D)  3/4 
E)  none of these 
A)  1/4 
B)  1/3 
C)  1/2 
D)  3/4 
E)  none of these

Question 11

Given the following data for a make-or-buy decision: $$\begin{array} { l l l } 
\text { Alternative } & \text { Fixed Cost } & \text { Variable Cost } \
\hline  \text { Buy } & \$ 0 \text { per year } & \$ 8 \text { per unit } \
\text { Make } & \$ 100,000 \text { per year } & \$ 4 \text { per unit }
\end{array}$$ For what quantity would you be indifferent between buying and making?

Accepted Answer

25,000 uni

Question 12

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?

Accepted Answer

A)  1,600 
B)  2,400 
C)  3,000 
D)  1,000 
E)  4,000 
A)  1,600 
B)  2,400 
C)  3,000 
D)  1,000 
E)  4,000

Question 13

Stating capacity in dollar amounts generally results in a consistent measure of capacity regardless of the actual units of measure.

Accepted Answer

A) True 
 B)False

Question 14

Which of the following is not a reason why capacity decisions are so important?

Accepted Answer

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. 
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.

Question 15

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 16

Consider the following information: $$\begin{array} { l l } 
\text { Fixed Costs: } & \$ 15,000 \text { per year } \
\text { Variable Costs: } & \$ 1.00 \text { per unit } \
\text { Revenue: } & \$ 1.60 \text { per unit } \
\text { Design Capacity: } & 45,000 \text { units per year } \
\text { Effective Capacity: } & 40,000 \text { units per year } \
\text { Anticipated Output: } & 36,000 \text { units per year }
\end{array}$$ What are total revenues for the break-even quantity?

Accepted Answer

The answer of Consider the following information: \[\begin{array} { l...

Question 17

The efficiency of a productive unit is 60 percent. The unit produces an average of 20 forklift trucks per day. Determine the effective capacity of the unit.

Accepted Answer

If Efficiency @#LAT-DLM&, thus

Question 18

Increasing productivity and also quality will result in increased capacity.

Accepted Answer

A) True 
 B)False

Question 19

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?

Accepted Answer

A)  5,000 
B)  3,000 
C)  2,000 
D)  1,000 
E)  0 
A)  5,000 
B)  3,000 
C)  2,000 
D)  1,000 
E)  0

Question 20

Consider the following information: $$\begin{array} { l l } 
\text { Fixed Costs: } & \$ 15,000 \text { per year } \
\text { Variable Costs: } & \$ 1.00 \text { per unit } \
\text { Revenue: } & \$ 1.60 \text { per unit } \
\text { Design Capacity: } & 45,000 \text { units per year } \
\text { Effective Capacity: } & 40,000 \text { units per year } \
\text { Anticipated Output: } & 36,000 \text { units per year }
\end{array}$$ What are total costs for the break-even quantity?

Accepted Answer

The answer of Consider the following information: \[\begin{array} { l...

Exam 5: Strategic Capacity Planning for Products and Services

When determining the timing and degree of capacity change, one can use the approach of:

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

A market constraint can be overcome by:

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

Given the following data for a make-or-buy decision: Alternative Fixed Cost Variable Cost Buy \ 0 per year \ 8 per unit Make \ 100,000 per year \ 4 per unit What are total costs to buy a quantity of 15,000 units per year?

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

Which of the following would tend to reduce effective capacity?

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

Given the following data for a make-or-buy decision: Alternative Fixed Cost Variable Cost Buy \ 0 per year \ 8 per unit Make \ 100,000 per year \ 4 per unit For what quantity would you be indifferent between buying and making?

Stating capacity in dollar amounts generally results in a consistent measure of capacity regardless of the actual units of measure.

Which of the following is not a reason why capacity decisions are so important?

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

Consider the following information: Fixed Costs: \ 15,000 per year Variable Costs: \ 1.00 per unit Revenue: \ 1.60 per unit Design Capacity: 45,000 units per year Effective Capacity: 40,000 units per year Anticipated Output: 36,000 units per year What are total revenues for the break-even quantity?

The efficiency of a productive unit is 60 percent. The unit produces an average of 20 forklift trucks per day. Determine the effective capacity of the unit.

Increasing productivity and also quality will result in increased capacity.

Consider the following information: Fixed Costs: \ 15,000 per year Variable Costs: \ 1.00 per unit Revenue: \ 1.60 per unit Design Capacity: 45,000 units per year Effective Capacity: 40,000 units per year Anticipated Output: 36,000 units per year What are total costs for the break-even quantity?

Introduction to Operations Management

Competitiveness, Strategy, and Productivity

Forecasting

Product and Service Design

Extension: Reliability

Extension: Decision Theory

Process Selection and Facility Layout

Work Design and Measurement

Extension: Learning Curves

Location Planning and Analysis

Extension: The Transportation Model

Management of Quality

Quality Control

Extension: Acceptance Sampling

Aggregate Planning and Master Scheduling

MRP and ERP

Inventory Management

Jit and Lean Operations

Extension: Maintenance

Supply Chain Management

Scheduling

Project Management

Management of Waiting Lines

Linear Programming

Filters