Question 1

The decision to outsource opens the firm up to certain risks, among them _________ and ________.

Accepted Answer

A)   lower costs; fewer task-specific investments
B)   loss of direct control over operations; need to disclose proprietary information
C)   access to greater expertise; greater demand variability
D)   greater capacity rigidity; tight knowledge control
E)   higher marketing costs; small ordersF) A) and B)
G) A) and C)

Question 2

Utilization is defined as the ratio of effective capacity to design capacity.

Accepted Answer

A) True 
 B)False

Question 3

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. Increasing X's effective capacity to ensure that Y's utilization is maximized would be an example of ________ a(n)  constraint.

Accepted Answer

A)   overcoming
B)   outsourcing
C)   insourcing
D)   cushioning
E)   supportingF) A) and E)
G) B) and C)

Question 4

For fixed costs of $2,000, revenue per unit of $2, and variable cost per unit of $1.60, the break-even quantity is:

Accepted Answer

A)   1,000.00
B)   1,250.00
C)   2,250.00
D)   5,000.00
E)   3,000.00F) All of the above
G) A) and E)

Question 5

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)   500F) C) and D)
G) B) and D)

Question 6

The ratio of actual output to effective capacity is:

Accepted Answer

A)   design capacity.
B)   effective capacity.
C)   actual capacity.
D)   efficiency.
E)   utilization.F) A) and B)
G) A) and D)

Question 7

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 expected to be 32 cords per day, what would be its efficiency?

Accepted Answer

A)   100 percent
B)   80 percent
C)   75 percent
D)   70 percent
E)   0 percentF) A) and E)
G) A) and D)

Question 8

Seasonal variations are often easier to deal with in capacity planning than random variations because seasonal variations tend to be:

Accepted Answer

A)   smaller.
B)   larger.
C)   predictable.
D)   controllable.
E)   less frequent.F) A) and B)
G) A) and C)

Question 9

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 percentF) B) and C)
G) B) and E)

Question 10

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

Accepted Answer

A) True 
 B)False

Question 11

The method of financial analysis which results in an equivalent interest rate is:

Accepted Answer

A)   payback.
B)   net present value.
C)   internal rate of return.
D)   queuing.
E)   cost-volume.F) B) and E)
G) None of the above

Question 12

When the output is less than the optimal rate of output, the average unit cost will be:

Accepted Answer

A)   lower.
B)   the same.
C)   higher.
D)   could be either higher or lower.
E)   could be either higher, lower or the same.F) C) and E)
G) A) and E)

Question 13

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)   $100,000F) C) and E)
G) D) and E)

Question 14

Which of the following is a key question in capacity planning?

Accepted Answer

A)   Should we make the product in-house or outsource it?
B)   Where do we need the capacity?
C)   When do we need the capacity?
D)   Who will pay for the capacity change?
E)   Should we change capacity all at once, or through several small changes?F) C) and D)
G) A) and B)

Question 15

Outsourcing some production is a means of supporting a constraint.

Accepted Answer

A) True 
 B)False

Question 16

A Virginia county is considering whether to pay $50,000 per year to lease a prisoner transfer facility in a prime location near Washington, D.C. They estimate it will cost $50 per prisoner to process the paperwork at this new location. The county is paid a $75 commission for each new prisoner they process. What would be the county's annual profit if they were to process 4,000 prisoners per year at this new location?

Accepted Answer

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

Question 17

Design capacity refers to the maximum output rate that can be achieved under ideal conditions.

Accepted Answer

A) True 
 B)False

Question 18

The maximum possible output given a product mix, scheduling difficulties, personal time, and so on is:

Accepted Answer

A)   utilization.
B)   design capacity.
C)   efficiency.
D)   effective capacity.
E)   available capacity.F) A) and B)
G) A) and C)

Question 19

Outsourcing some production is a means of _________ a capacity constraint.

Accepted Answer

A)   identifying
B)   modifying
C)   supporting
D)   overcoming
E)   repeatingF) A) and D)
G) C) and E)

Question 20

Waiting line analysis can be useful for capacity design, especially for service systems.

Accepted Answer

A) True 
 B)False

Exam 6: Strategic Capacity Planning for Products and Services

The maximum possible output given a product mix, scheduling difficulties, personal time, and so on is:

Correct Answer
verified

Outsourcing some production is a means of supporting a constraint.

Correct Answer
verified

Seasonal variations are often easier to deal with in capacity planning than random variations because seasonal variations tend to be:

Correct Answer
verified

Design capacity refers to the maximum output rate that can be achieved under ideal conditions.

Correct Answer
verified

Waiting line analysis can be useful for capacity design, especially for service systems.

Correct Answer
verified

Correct Answer
verified

Which of the following is a key question in capacity planning?

Correct Answer
verified

Utilization is defined as the ratio of effective capacity to design capacity.

Correct Answer
verified

Correct Answer
verified

The decision to outsource opens the firm up to certain risks, among them _ and .

Correct Answer
verified

Outsourcing some production is a means of _________ a capacity constraint.

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

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. Increasing X's effective capacity to ensure that Y's utilization is maximized would be an example of ________ a(n) constraint.

Correct Answer
verified

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

Correct Answer
verified

When the output is less than the optimal rate of output, the average unit cost will be:

Correct Answer
verified

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

Correct Answer
verified

For fixed costs of $2,000, revenue per unit of $2, and variable cost per unit of $1.60, the break-even quantity is:

Correct Answer
verified

The ratio of actual output to effective capacity is:

Correct Answer
verified

The method of financial analysis which results in an equivalent interest rate is:

Correct Answer
verified

Exam 6: Strategic Capacity Planning for Products and Services

The maximum possible output given a product mix, scheduling difficulties, personal time, and so on is:

Correct AnswerverifiedShow Answer

Outsourcing some production is a means of supporting a constraint.

Correct AnswerverifiedShow Answer

Seasonal variations are often easier to deal with in capacity planning than random variations because seasonal variations tend to be:

Correct AnswerverifiedShow Answer

Design capacity refers to the maximum output rate that can be achieved under ideal conditions.

Correct AnswerverifiedShow Answer

Waiting line analysis can be useful for capacity design, especially for service systems.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which of the following is a key question in capacity planning?

Correct AnswerverifiedShow Answer

Utilization is defined as the ratio of effective capacity to design capacity.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The decision to outsource opens the firm up to certain risks, among them _________ and ________.

Correct AnswerverifiedShow Answer

Outsourcing some production is a means of _________ a capacity constraint.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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. Increasing X's effective capacity to ensure that Y's utilization is maximized would be an example of ________ a(n) constraint.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

When the output is less than the optimal rate of output, the average unit cost will be:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

For fixed costs of $2,000, revenue per unit of $2, and variable cost per unit of $1.60, the break-even quantity is:

Correct AnswerverifiedShow Answer

The ratio of actual output to effective capacity is:

Correct AnswerverifiedShow Answer

The method of financial analysis which results in an equivalent interest rate is:

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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The decision to outsource opens the firm up to certain risks, among them _ and .

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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