Question 1

Suppose operation X feeds directly into operation Y. All of X's output goes to Y, and Y has no other operations feeding into it. X has a design capacity of 80 units per hour and an effective capacity of 72 units per hour. Y has a design capacity of 100 units per hour. What is Y's maximum possible utilization?

Accepted Answer

A) 80 percent 
B) 72 percent 
C) 90 percent 
D) 70 percent 
E) 60 percent

Question 2

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

Question 3

When a decision-making scenario involves two or more departments, if the individual departments pursue what is optimal for them, sometimes the overall organization suffers. This is an example of:

Accepted Answer

A) subminimization. 
B) suboptimization. 
C) rational boundaries. 
D) decision making under risk. 
E) decision making under uncertainty.

Question 4

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

Question 5

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. What would be his profit if he were to perform 5,000 HIV blood analyses?

Accepted Answer

A) $0 
B) $40,000 
C) $60,000 
D) $25,000 
E) $100,000

Question 6

Option A has a payoff of $10,000 in environment 1 and $20,000 in environment 2. Option B has a payoff of $5,000 in environment 1 and $27,500 in environment 2. Once the probability of environment 1 exceeds ______, option A becomes the better choice.

Accepted Answer

A) 0.40 
B) 0.45 
C) 0.50 
D) 0.57 
E) 0.60

Question 7

The more current capacity exceeds desired capacity, the greater the opportunity for profit.

Accepted Answer

A) True 
 B)False

Question 8

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 expected value for the optimum decision alternative?

Accepted Answer

A) 50,000 copies 
B) 40,000 copies 
C) 32,000 copies 
D) 30,500 copies 
E) 10,500 copies

Question 9

A department within a firm works two 10-hour shifts, 345 days a year. The following are figures for the usage of a machine that is currently being considered. How many machines will the department need to purchase?

Accepted Answer

A) 1 
B) 3 
C) 5 
D) 4 
E) 2

Question 10

The expected monetary value (EMV)criterion is the decision-making approach used with the decision environment of:

Accepted Answer

A) certainty. 
B) risk. 
C) uncertainty. 
D) aversion. 
E) neutrality.

Exam 5: Strategic Capacity Planning for Products and Services

When a decision-making scenario involves two or more departments, if the individual departments pursue what is optimal for them, sometimes the overall organization suffers. This is an example of:

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

Option A has a payoff of $10,000 in environment 1 and $20,000 in environment 2. Option B has a payoff of $5,000 in environment 1 and $27,500 in environment 2. Once the probability of environment 1 exceeds ______, option A becomes the better choice.

The more current capacity exceeds desired capacity, the greater the opportunity for profit.

A department within a firm works two 10-hour shifts, 345 days a year. The following are figures for the usage of a machine that is currently being considered. How many machines will the department need to purchase?

The expected monetary value (EMV) criterion is the decision-making approach used with the decision environment of: