Question 1

Capacity increases are usually acquired in fairly large "chunks" rather than in smooth increments.

Accepted Answer

A) True 
 B)False

Question 2

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 3

A small business owner is contemplating the addition of another product line. Capacity increases and equipment will result in an increase in annual fixed costs of $50,000. Variable costs will be $25 per unit.
(A) What unit selling price must the owner obtain to break even on a volume of 2,500 units a year?
(B) Because of market conditions, the owner feels a revenue of $47 is preferred to the value determined in part A. What volume of output will be required to achieve a profit of $16,000 using this revenue?

Accepted Answer

@#LAT-DLM& per year
@#LAT-DLM& per unit
A) If @#LAT-DLM& the

Question 4

Capacity planning requires an analysis of needs: what kind, how much, and when.

Accepted Answer

A) True 
 B)False

Question 5

Capacity in excess of expected demand that is intended to offset uncertainty is a:

Accepted Answer

A)  margin protect. 
B)  line balance. 
C)  capacity cushion. 
D)  timing bubble. 
E)  positioning hedge. 
A)  margin protect. 
B)  line balance. 
C)  capacity cushion. 
D)  timing bubble. 
E)  positioning hedge.

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. 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 be 80 percent efficient in his use of this machine, how many HIV blood analyses does he plan to perform each year?

Accepted Answer

A)  3,200 
B)  4,800 
C)  4,000 
D)  1,000 
E)  5,000 
A)  3,200 
B)  4,800 
C)  4,000 
D)  1,000 
E)  5,000

Question 7

A Virginia county is considering whether to pay $50,000 per year to lease a prisoner transfer facility in a prime location near Washington,

Accepted Answer

A)  5,000 
B)  8,000 
C)  2,000 
D)  4,000 
E)  6,000 
A)  5,000 
B)  8,000 
C)  2,000 
D)  4,000 
E)  6,000

Question 8

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 9

The term capacity refers to the maximum quantity an operating unit can process over a given period of time.

Accepted Answer

A) True 
 B)False

Question 10

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 11

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 make a profit of $30,000?

Accepted Answer

A)  3,200 
B)  1,500 
C)  2,000 
D)  1,000 
E)  500 
A)  3,200 
B)  1,500 
C)  2,000 
D)  1,000 
E)  500

Question 12

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 13

The break-even quantity can be determined by dividing the fixed costs by the difference between the revenue per unit and the variable cost per unit.

Accepted Answer

A) True 
 B)False

Question 14

A Virginia county is considering whether to pay $50,000 per year to lease a prisoner transfer facility in a prime location near Washington,

Accepted Answer

A)  $0 
B)  $75,000 
C)  $50,000 
D)  $100,000 
E)  $300,000 
A)  $0 
B)  $75,000 
C)  $50,000 
D)  $100,000 
E)  $300,000

Question 15

The utilization of a machine is 50 percent. The machine has a design capacity of 70 units per hour and an effective capacity of 60 units per hour. Find the efficiency of the machine.

Accepted Answer

First, solve for actual output using the

Question 16

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 17

Given the following information, what would efficiency be? Effective capacity = 50 units per day
Design capacity = 100 units per day
Actual output = 30 units per day

Accepted Answer

A)  40 percent 
B)  50 percent 
C)  60 percent 
D)  80 percent 
E)  90 percent 
A)  40 percent 
B)  50 percent 
C)  60 percent 
D)  80 percent 
E)  90 percent

Question 18

Which of these factors would not 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 choices 
A)  personal time 
B)  equipment maintenance 
C)  scheduling problems 
D)  changing the mix of products 
E)  all of the choices

Question 19

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 quantity would be required for a profit of $2,000?

Accepted Answer

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

Question 20

Cost and competitive priorities reduce effective capacities.

Accepted Answer

A) True 
 B)False

Capacity increases are usually acquired in fairly large "chunks" rather than in smooth increments.

Capacity planning requires an analysis of needs: what kind, how much, and when.

Capacity in excess of expected demand that is intended to offset uncertainty is a:

A Virginia county is considering whether to pay $50,000 per year to lease a prisoner transfer facility in a prime location near Washington,

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.

The term capacity refers to the maximum quantity an operating unit can process over a given period of time.

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

Unbalanced systems are evidenced by:

The break-even quantity can be determined by dividing the fixed costs by the difference between the revenue per unit and the variable cost per unit.

A Virginia county is considering whether to pay $50,000 per year to lease a prisoner transfer facility in a prime location near Washington,

The utilization of a machine is 50 percent. The machine has a design capacity of 70 units per hour and an effective capacity of 60 units per hour. Find the efficiency of the machine.

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

Given the following information, what would efficiency be? Effective capacity = 50 units per day Design capacity = 100 units per day Actual output = 30 units per day

Which of these factors would not be subtracted from design capacity when calculating effective capacity?

Cost and competitive priorities reduce effective capacities.

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

Exam 5: Strategic Capacity Planning for Products and Services

Capacity increases are usually acquired in fairly large "chunks" rather than in smooth increments.

Capacity planning requires an analysis of needs: what kind, how much, and when.

Capacity in excess of expected demand that is intended to offset uncertainty is a:

A Virginia county is considering whether to pay $50,000 per year to lease a prisoner transfer facility in a prime location near Washington,

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.

The term capacity refers to the maximum quantity an operating unit can process over a given period of time.

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

Unbalanced systems are evidenced by:

The break-even quantity can be determined by dividing the fixed costs by the difference between the revenue per unit and the variable cost per unit.

A Virginia county is considering whether to pay $50,000 per year to lease a prisoner transfer facility in a prime location near Washington,

The utilization of a machine is 50 percent. The machine has a design capacity of 70 units per hour and an effective capacity of 60 units per hour. Find the efficiency of the machine.

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

Given the following information, what would efficiency be? Effective capacity = 50 units per day Design capacity = 100 units per day Actual output = 30 units per day

Which of these factors would not be subtracted from design capacity when calculating effective capacity?

Cost and competitive priorities reduce effective capacities.

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