Capsim Exam

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1. When opening the Excel version of Capstone®, you should do what to Macros?


If there are two identical products, one that has 100% accessibility and one that has 0% accessibility,

the product with 100% accessibility will outsell the other 2 to 1 providing all other attributes are identical.

3. How many products does every team start with?

Five products

4. What are three of the five Segments?

a. Traditional, Low End, Performance

5. A segment manager’s task is to

b. verify the products entering and leaving a segment, the margin potential for those products, capacity level and the distribution system as compared to competitors.

6. What is the difference between the market segments at the beginning of the round to the final round?

b. The fine cuts overlap in the beginning and in year 8 only the rough cuts overlap.

7. Successful managers will:

a. Create a strategy b. Coordinate company activities c. Analyze the market and its competing products

After you have uploaded your decisions to the website, can you change your official decisions as many times as you want prior to the processing date and time of the round?


9. Once you upload your official decisions during a round, how many times can you change them before the end of the round?

e. As many times as you want

10. What trend can be explicitly observed in the industry in which your company is operating?

c. Products become smaller and smaller.

11. On perceptual map, the percentage of customers interested in a product positioned outside of the rough cuts of that product is


12. MTBF is measured in

b. hour increments.

13. Customers that want low prices and are willing to sacrifice miniaturization and performance are in the

c. low End segment.

14. Customers that want small products and are willing to sacrifice performance are in the

e. size segment.

15. In Capstone©, pricing standards are set by:

a. Customers (Market Segment).

16. "Reliability" is expressed in terms of:

a. Mean Time Between Failure.

17. MTBF measures what?

c. Reliability

18. The two characteristics that the perceptual map evaluates are

a. Performance and Size.

19. The Perceptual Map is

a. a marketing tool used to track the position of the company’s products against those of the competitors.

20. The segments all drift to the lower-right section of the perceptual map. Why does this drift take place?

c. Customers want smaller and faster products.

c. Customers want smaller and faster products.

d. down; right

22. When tracking market segments on the performance and size perceptual map, which segment moves or "drifts" the slowest?

b. Traditional

23. What happens to a product priced at $1 above or below the segment guideline when a segment’s product supply outstrips demand?

c. It loses 20% of its appeal.

24. What’s the measure for product reliability?

c. Expected time a product lasts

25. At what dollar amount above the segment guidelines is all consumer appeal lost?

b. $5

26. The prices in each segment

a. drop by $0.50 each year.

27. MTBF in the segments should be

MTBF (Performance) > MTBF (High End)., and MTBF (Low End) < MTBF (Size).

28. Which of the following are not buying criteria?

b. Automation

29. Inside each fine cut circle,

a. segments have an ideal spot where demand is at its highest.

30. The Traditional ideal spot is

c. near the center of its circle.

31. Increasing a product’s reliability will result in which of the following changes to production costs?

b. Higher material cost

32. Age refers to:

b. Product Age.

33. What happens to a product’s Perceived Age when it is repositioned in R&amp;D?

a. It is reduced by 50%.

34. The preferred product perceived age for each sector peaks at:

c. zero years for high end and seven years for low end.

c. zero years for high end and seven years for low end.

a. 2

36. Pricing plays a role

in the rough cut stage of the purchase decision and in the fine cut stage of the purchase decision.

37. What are the top buying criteria that low end customers most value?

b. Price

38. Which of the following is not a type of market segment in CapSim?

c. Standard

39. What is the correct answer concerning the top buying criteria for the following segment:

d. Price for low end and Positioning for high end.

40. Low End customers emphasize buying criteria in which order?

a. Price, Age, Positioning, Reliability

41. Each segment places

b. a different emphasis on features of the 4 buying criteria.

42. Which market segment places the most importance on price?

c. Low End

43. What is the most important criterion to a "Low End Segment" customer?

a. Price

44. If you are marketing to High End customers, which criteria are most important to them in order of importance?

e. Positioning, Age, MTBF, Price

45. Which one is not an area in which Capstone® separates company activities?

d. Logistics

46. The following represent core company activities that must be addressed each year except:

d. Labor Negotiations.

47. Which of the following is not addressed by R&amp;D?

e. Workforce Complement

48. In the Marketing Plan, Research and Development addresses all but the:

d. automation of assembly lines.

49. When an R&amp;D effort started in 2001 completes on September 15, 2002, the product revision kicks in

b. immediately upon completion.

50. The relative cost of a product’s material cost increases as:

c. MTBF is raised.

51. R&amp;D completion time can be shortened

d. when a company takes advantage of existing technology.

52. R&amp;D completion time depends on

a. number of projects in R&D. b. automation rating. c. the age of the product.

53. Which Automation rating requires the longest time to reposition a product?

e. 10

54. In Capstone®

c. the terms age and perceived age are used interchangeably.

55. When a product is moved to a new location on the Perceptual Map, the Perceived Age (or Age) is:

c. divided in half.

56. Changing MTBF will:

a. have no impact on Perceived Age.

57. R&amp;D projects can change a product’s:

a. size. b. age. c. reliability. d. performance.

58. If your team decides to introduce a new product, when should capacity and automation be purchased?

b. One round prior to product release

59. If you purchase production capacity and automation:

c. it is available in the next year.

60. Marketing is concerned with 4 things. What are they?

c. Price, Place, Promotion, and Product

61. An increase in promotional budgets have:

c. decreasing returns over time.

62. Promotion efforts are subject to

c. diminishing returns.

63. What effect do increases in the Promotion Budget have on a product’s Awareness?

d. Diminishing returns

64. Assuming no additional product promotion, what percent of customers, reached through last year’s marketing campaign will carry over into the current year?

c. 67%

65. How is the strength of the sales channel measured?

b. Accessibility on a scale of 0 to 100%

66. If you drop your sales budget to zero, accessibility drops to 0% in how many years?


67. If your company has a sales budget of $3 million and drops it to zero,

c. accessibility drops to 0% in three years.

68. All of the following are direct implications of hiring a second shift except:

d. increased MTBF.

69. How can assembly lines double their capacity?

b. Add a second shift.

70. If you increase automation from 2.0 to 5.0, the cost is:

a. $12 per unit of capacity.

71. What is one drawback of increasing automation?

a. The product requires increased time/expense for subsequent short-move repositioning.

72. If you reduce automation in the production component of Marketing, you will:

b. incur a retooling cost.

73. If you want to add 500,000 units of capacity to an assembly line with an automation rating of 5, how much will it cost?

c. 13,000,000

74. If a line has a capacity of 100,000 units, the cost of changing the automation level 1 unit either up or down is

c. $400,000.

75. Depreciation is calculated:

e. over a straight line 15-year period.

76. Which three factors drive labor cost?

b. Wage and benefit rates c. Automation levels d. Second shift/Overtime costs

77. If current wages are set at $10/hour, what would be the minimum starting pay that your company would offer?

b. $8/hour

78. In the current contract, the workers’ wage rate is $20.00. Which of the following negotiation positions would be outside the starting and ceiling amounts?

c. $18.00 to $35.00

79. For Wages, the negotiation Starting Position cannot be less than ____% or more than ____% of the current contract.

d. 80; 150

80. Labor Negotiation includes:

a. hourly wage. b. benefits. c. profit sharing. d. annual raise.

81. To run perfectly, all HR department managers should know that

c. all strike settlements should be halfway between the demand and the negotiation ceiling.

82. Your workers go on strike because they have demanded $20/hour and your wage negotiation ceiling is at $18/hour. Assuming that there are no other labor demands, how long will the strike last?

a. 2 weeks

83. In the Human Resources section, workers will strike one week for:

a. every 1% your Annual Raise Negotiation Ceiling is beneath Labor’s demand. b. every $300 your Benefits Negotiation Ceiling is beneath Labor’s demand. c. every 1% your Profit Sharing Negotiation Ceiling is beneath Labor’s demand. d. every $1 your Wage Negotiation Ceiling is beneath Labor’s demand.

84. The Finance Department can use which of the following methods to acquire capital for company activities?

a. Current Debt, Stock Issues, Bond Issues, and Profits

85. Your finance department is primarily concerned with

a. acquiring the capital needed for company activities. b. establishing a dividend policy that maximizes the return to shareholders. c. setting credit policies for customers and suppliers. d. profits.

86. Capital needed for company activities cannot be acquired through:

d. arbitrarily firing employees.

87. Which financial obligation is best satisfied with Bond Issues?

b. Increased production capacity

88. What happens to a company when its debt-to-assets ratio increases?

c. Its short term interest rates increase. d. Its bond rating is reduced.

89. What is your bond rate? The prime rate is 10%; your current bond rating slipped one category (from AAA to AA).

b. 10.5%

90. An AAA rating bond with a given prime rate at r, the bond rating slips to B if the current debt interest rate is charged at

a. R+2.5%

91. If your interest rate is 12.1%, and when you issue new bonds, the bond interest rate is:

c. 13.5%.

92. Given a prime rate of r and a short term interest rate of r+2.5, is the bond rate for issuing a new bond is equal to (r+3.9%).


93. You pay no brokerage fee if you:

d. Allow bonds to mature to their due date.

94. In Capstone® what would the bond number be for a bond with an interest rate of 6.5% that matures in 2003?

c. 6.5S2003

95. You are charged a ____ brokerage fee to issue stock and ____ brokerage fee to retire stock.

b. 5%; 1.5%

96. The Credit Policy Lag has implications for:

a. Customer survey score. c. Production

97. Budgeting money to Quality initiative will lead to these outcomes except:

c. increase Labor Costs.

98. How can the R&amp;D cycle time be reduced?

b. Budgeting money to quality initiatives

99. Investing in CPI can

c. reduce material costs and labor costs to a lesser degree.

100. Investing in CCE/Six Sigma can

c. reduce labor and material costs.

101. Within the Process Management Initiatives, channel support systems

c. increase demand.

102. Benchmarking reduces

d. Administrative Cost.

103. Which of the following is an example of a TQM initiative?

c. Quality Function Deployment Effort

104. Within the process management initiatives, concurrent engineering

d. reduces R&D cycle time.

105. The situation analysis consists of ______ parts.


106. The situation analysis is

a. a team exercise. b. designed to help your group understand the current market conditions. c. designed to help your group understand how the industry will evolve over the next 8 years. d. a five part analysis.

107. Which three customer groups "ride the wave of technology" and are considered to be in the high technology segments?

a. Performance, High End, and Size

108. When plotting the segment locations for each round

a. the goal is to determine the ideal spot location for each segment during the 8 years.

109. Which of the following questions is answered by the demand analysis?

c. Are the market segments growing at the same rate?

110. Two points that should be considered in your strategy are

c. it is easy to confuse unit market size with dollar market size.

111. What is the total cost in dollars for adding 1.0 million units of capacity to a production line with an automation level of 1.0 and floor space costs per unit of $6? Assume automation costs per unit of $4.

b. $10 million 1 000 000 (6 +4*1) = 10 000 000

112. If you are currently producing 100,000 units and your automation level is 10, how much will it cost you to double your capacity?

b. $4,600,000 100 000 (6 + 4*10) = 4 600 000

113. What is the right formula for capacity investment?

d. Investment = Capacity x [$6 + ($4 x Automation)]

114. If your current capacity is 10,000 units and your automation level is 5.0, what is the difference of the investment between doubling your capacity and doubling your automation level?

a. $60,000 10 000 (6+45) = 260 000, 10 000 4 (10-5)=200 000, 260 000 – 200 000 = 60 000

115. If you are currently producing 100,000 units at an automation level of 5, how much would it cost to maximize automation?

c. $2,000,000 100 000 4 (10 -5) = 2 000 000

116. As a manager you need to change the automation level of your segment from 2 to 5. The line has a capacity of 2 million. How much would it cost?

b. $24 million 2 000 000 (5-2) 4 = 24 000 000

117. Rapid movement of an existing product on the Perceptual Map requires

b. low automation levels.

118. If a product’s Price was $20, its Material $8, and its Labor $7, the Margin Per Unit would be:

d. $5. 20 – (8 + 7) = 5

119. If the price/product is $10 and the material cost/product is $2 and the labor cost/product is $3, what is the margin/product?

e. none of the above 10 – (2 + 3) = 5

120. In the Capstone® simulation, what are the components of a product’s minimum material cost?

b. Reliability component cost and positioning component cost

121. The reliability component cost of a product with a 17,000 hour MTBF rating is:

a. $5.10. 17 000 * 0.3 /1 000 = 5.1

122. The best case margin potential for a product with a top price of $30 and a minimum cost of goods sold of $15 is:

a. $45. b. $2. c. $450. d. $.50. e. none of the above. <———

123. A point or some points you consider for your strategy are

a. strive to give your customers the top two buying criteria. b. the perceptual map is more important as a rough cut consideration than a fine cut distinction. c. maximize the effectiveness of R&D, to achieve higher demand you must have a substantially better offer, it does not matter how good your product is if you stock out.

124. In Capstone®, the spreadsheets allow team members to

a. make changes to variables. b. observe the results of changes made to variables.

125. Each of the spreadsheets

a. work independently. b. depend on values entered in other spreadsheets.

126. New products are created on which spreadsheet?

b. Research and Development

127. Using the R&amp;D Spreadsheet to design your products, you have which of the following projects to choose from?

a. Repositioning b. Invention c. Reliability adjustment

128. What is the minimum amount of time that it takes to create a new product?

c. 1 year

129. What are the drivers of Material Costs?

a. Higher performance b. Smaller size c. Higher Mean Time Between Failure (MTBF)

130. The marketing spreadsheet is used to set which of the following:

a. prices. b. promotion budgets. c. sales budgets.

131. The A/R lag is

a. a marketing spreadsheet definition. b. the accounts receivable lag (in days). c. the time between customers receiving products and when they are expected to pay for them.

132. What happens to a company when it increases the A/P lag?

a. It improves its cash position. d. Its suppliers withhold material for production.

133. The automation level

b. causes you to require more manpower with lower ratings. c. causes you to require less manpower with higher ratings.

134. When going to a new automation level

a. there is a 1 year lag.

135. Negotiation Ceilings which represent the maximum management is willing to pay are always

c. 10% above the starting positions.

136. Maximum issue is

a. the upper limit in thousands of dollars that teams can issue in stock this year.

137. Cash position is

c. the cash position at the beginning of the round and a projection of the cash position at the end of the round.

138. What effects do Process Management Initiatives have?

a. Administrative savings b. Higher production efficiency c. Increase in demand d. Reduction of R&D times

139. Your team will make decisions for

a. Marketing. b. Finance. c. Human Resources. d. Production.

140. Which customer group or market segment seeks proven products using current technology?

b. Low End customers

141. Which customer group or market segment seeks proven products, are indifferent to technological sophistication, and are price motivated?

b. Low End customers

142. Which customer group or market segment seeks cutting edge technology in both size and performance?

c. High End customers

143. Which customer group or market segment seeks high reliability, advanced technology products that emphasize high performance?

d. Performance customers

144. Which customer group or market segment seeks advanced technology products that focus on small size?

e. Size customers

145. Repositioning moves a product on the Perceptual Map from its old location to a new one. When does the new location become active?

a. The day the R&D project completes

146. If a product’s Automation rating is substantially increased, it will:

a. take longer to move the product across the Perceptual Map.

147. There is ______ lag in buying new Capacity and ______ lag in changing Automation.

d. 1 year; 1 year

148. Which of the following is not a primary concern for your Finance Department?

c. Employee turnover

149. This strategy attempts to gain a competitive advantage by keeping R&amp;D costs, production costs and raw material costs to a minimum in order to compete on the basis of price. The product life cycle focus will enable sales for many years on each new product introduced into the High End segment. Products will begin their lives in the High End, mature into Traditional and finish as Low End products before they are retired and their assets harvested.

c. Cost Leader with Product Life Cycle Focus

150. This strategy will allow us to maintain a presence in every market segment. Competitive advantage will be gained by keeping R&amp;D costs, Production costs and raw material costs to a minimum, enabling us to compete on the basis of price. We will price below average. We will increase automation levels to improve our margins and to make it acceptable to run second shift/overtime.

a. Broad Cost Leader

151. This strategy will allow us to maintain a presence in every market segment. Competitive advantage will be gained by distinguishing our product with an excellent design, high awareness, and easy accessibility. We will develop an R&amp;D competency that keeps our designs fresh and exciting. Our products will keep pace with the market, offering improved size and performance. The price of the products will be above average and capacity will expand as we generate higher demand.

e. Broad Differentiation

152. This strategy will concentrate on the Traditional and Low End segment. Competitive advantage will be gained by keeping R&amp;D costs, Production costs, and raw materials costs to a minimum, enabling us to compete on the basis of price (low prices). The product will be priced below average and automation levels will be increased to improve contribution margins and make it acceptable to run second shift/overtime.

b. Niche Cost Leader

153. This strategy will focus on the high technology segments (High End, Performance and Size). Competitive advantage will be gained by distinguishing our products with excellent design, high awareness, easy accessibility, and product extenders. Our R&amp;D competency will keep our designs fresh and exciting. Our products will keep pace with the market, offering improved size and performance. The prices of our products will be above average and we will expand capacity as we generate higher demand.

a. Niche Differentiation

154. The resources used in the Sales Budget are

d. Outside Sales, Distributors, and Inside Sales.

155. When working with inside sales, each inside salesperson costs

c. $50,000.

156. When working with Distributors, each distributor costs

b. $100,000.

157. When working with Outside Sales, each salesperson costs

d. $125,000.

158. In only one product segment, diminishing returns for distributors is reached at

c. 15

159. In only one product segment, diminishing returns for inside sales is reached at

e. 30

160. In only one product segment, diminishing returns for outside sales is reached at

b. 12

161. The marketing budget detail sales screen allows companies to allocate their promotion budget to different media channels. These media channels are:

b. Print Media, Direct Mail, Trade Shows, E-Mail, and Web Media.

162. When investing in print media, diminishing returns apply after

a. $700,000 per product.

163. The potential reach for E-mail is rated as good for the

e. Size and Performance.

164. The potential reach for Trade Shows is rated as good for the

b. High End.

165. The Promotion part of advanced marketing allows teams to allocate their time based on

b. each Product.

166. The time allocation on the advanced marketing module can be used to

b. make a greater effort by the sales staff which translates into increased demand for that product.

167. In forecasting, it is not likely that you will take half of the sales unless

d. the price is at the low end of the range and the positioning, age and MTBF are superior.

168. A product’s demand is driven by

b. customer survey.

169. The customer survey score is driven by

c. 4Ps.

170. Process Management Initiatives

a. improve business procedures, resulting in improved efficiencies and cost structures.

171. TQM initiatives

b. improve product quality while reducing the time and resources required to design, manufacture, warehouse and ship products.

172. This process management initiative reduces material cost and, to a lesser degree, labor costs.

c. Continuous Process Improvement systems (CPI)

173. This process management initiative reduces material costs and administrative overhead.

b. Vendor/Just-in-Time Inventory (JIT)

174. This process management initiative reduces labor costs.

d. Quality Initiative Training (QIT)

175. This process management initiative increases the effectiveness of the Sales Budget and therefore demand.

d. Channel Support systems

176. This process management initiative reduces R&amp;D cycle time,

a. Concurrent Engineering (CCE)

177. These TQM initiatives reduce administrative overhead; reduces the R&amp;D cycle time and enhances the effectiveness of the promotion and sales budget.

b. Quality Function Deployment and Benchmarking

178. The TQM initiative reduces material costs and labor costs.

a. Concurrent Engineering (CCE)/Six Sigma

179. If there are 4 products listed in the Capstone Courier in the traditional segment that have a customer survey scoring of 32, 28, 22 and 14, then the top product’s demand would be:

d. 33%.

180. One of the ways of calculating the top product’s demand is by

c. divide the top product segment’s score by the sum of all other scores in that segment (not counting fringe products).

181. Combining size and performance creates a product attribute known as

c. positioning.

182. Which statement is true?

b. Increases in capacity and changes in automation take a full year to implement. Sales of capacity are immediately effective.

183. The traditional market segment is expected

d. to make up 27.5% of the electronic sensor market in five years from now.

184. The sales channel effectiveness for the distributors is highest for

c. Traditional and Low.

185. When investing in direct mail, diminishing returns apply after

c. $800,000 per product.

186. The potential reach for direct mail is rated as good for the

c. Traditional and Low End.

187. This strategy will gain competitive advantage by distinguishing our products with an excellent design, high awareness, easy accessibility, and product extenders. We will develop R&amp;D competency that keeps our designs fresh and exciting. Our products will keep pace with the market, offering improved size and performance. We will price above average. We will expand capacity as we generate higher demand in our markets: High, Traditional and Low End.

b. Differentiation Strategy with a Product Life Cycle Focus

188. Sales channel effectiveness for inside salespeople is highest for

d. Performance

189. The performance segment places more importance on

b. reliability and positioning.

190. Which market segment places the most importance on reliability?

b. Performance

191. What product attributes do Performance customers value the most?

d. Reliability

192. At what rate is inventory carrying cost charged?

d. 12%

193. Customers that want proven products and current technology of moderate size and performance are in the

a. traditional segment

194. Customers that are willing to pay for products with cutting edge technology that are fast performing and small in size are in the

b. high end segment

195. What two factors are considered in both the rough cut and fine cut of the customer buying process?

a. Price and Reliability

196. When a segment’s product supply exceeds demand, how much appeal, to the customer, will a product priced $1 above or below the segment price range lose?

d. 20%

197. What section of the perceptual map is considered ideal for the low end segment?

d. Upper Left

198. Increasing performance and shrinking size does what to the material cost?

b. Increases

199. The promotion budget affects:

a. awareness

200. What is the starting awareness percentage of a new product?

d. 25%

201. When investing in web media, diminishing returns apply after

a. $500,000 per product.

202. When investing in Trade Shows, diminishing returns apply after

d. $300,000 per product.

203. In order to achieve 100% accessibility, a team must:

b. have at least two products in the same segment’s fine cut.

204. At the start of the simulation, your production plant has ___lines with room for ____more

d. 5, 3

205. If you sell off a production line (capacity and automation), the amount of cash that the company will receive from the sales of capacity will be

a. 65% of the original value.

206. Inventory Carrying Cost is ___% of the average cost of production.

e. 12

207. Traditional customers consider this buying criteria to be the most important

d. Age

208. What is the most important criteria to a "High End Segment" customer?

a. Positioning

209. Size Segment customer consider this buying criteria to be the most important

a. Positioning

210. It takes ______ years to invent a product.

c. at least one year

211. A new unit of capacity costs $6 for the floor space plus $4 times

b. automation rating.

212. A functional manager is responsible for coordinate strategy and tactics across all functional areas of the company exemplified by

b. R&D, Marketing, Production, Finance, Human Resources & TQM.

213. How many market segments are there?


214. Which of the following buying criteria does not have a rough cut?


215. When investing in E-mail, diminishing returns apply after

b. $600,000 per product.

216. What is a market segment?

c. Group of customers with similar purchasing concerns

217. The company’s negotiation starting position for wages

a. is never more than 150% of the current contract.

218. Labor will strike for a maximum:

b. 84 days.

219. The interest rate on a bond ______ by________ for each______ in the bond rating category.

a. Increases; 0.5%; Decrease

220. You are charged a ______ brokerage fee to issue bonds and ______ brokerage fee if you retire bonds prior to their maturation date.

d. 5%; 1.5%

221. EPS (Earning Per Share) is calculated by

d. dividing net profit by the number of shares outstanding.

222. Which of the following is not a Process Management Initiative available to your company?

b. GEMI Sustainability

223. Which of the following is not one of the five parts to the Situation Analysis:

e. Forecasting Analysis.

224. Products that are halfway between the fine and rough cut circle will experience a drop in customer survey score by:


225. Quality Initiative Training can

d. decrease labor costs.

226. Investing in Vendor Just In Time can

d. reduce material costs and administrative costs.

227. Adding one additional unit of capacity costs

b. $6 + ($4 x Current Automation Level).

228. How much does it cost for MTBF per 1,000 hours of reliability?

c. $0.30

229. How are the Starting Position and the Negotiation Ceiling related?

e. The Negotiation Ceiling is always 10% above the Starting Position.

e. The Negotiation Ceiling is always 10% above the Starting Position.

a. Wage and benefit rates b. Automation levels c. Second shift d. TQM investment

231. The sales channel effectiveness for the outside sales people is highest for

a. High End and Size.

232. The potential reach for web media is rated as good for the

b. Size and Performance.

233. A 6 month project in R&amp;D costs____________; while a 12 month project in R&amp;D costs ________.

c. 500,000; 1,000,000

234. The potential reach for print media is rated as good for the

c. Traditional and Low End.

235. Stock price is a function of:

e. Book value, Earnings per Share, and Dividend.

236. Which of the following is true about the Accounts Receivable Lag and its implications on customer survey score?

a. If you offer no credit, customer survey score falls to about 60% of maximum.

237. If your company offers 90 days Account Payable policy, suppliers will start to withhold material for production at

d. 26%.

238. A bond with the number 12.6S2005, indicates that:

e. the interest rate is 12.6%; due on December 31, 2005.

239. Investing in Quality Function Deployment Effort can

d. reduce R&D cycle time and enhance the effectiveness of the promo and sales Budgets.

240. Investing in Concurrent Engineering can

a. reduce R&D cycle time and lower R&D costs

241. Investing in Channel Support Systems can

a. increase demand.

242. If the previous year you reached 100% customer awareness in your company, this year what will you need to do to maintain this level?

c. I would only need to create 33% new awareness to maintain 100% this year.

243. Teams can produce up to ______ products.


244. A production line with 1000 units of capacity has a max production capability of:

d. 2000.

245. When purchasing increased Capacity and Automation, the new capacity becomes available

b. in 1 year.

246. Capacity is sold by

d. entering a negative number in the Buy/Sell row on the Production Spreadsheet.

247. Your inventory for a product will be automatically liquidated at half average cost of production if you

a. Sell all the capacity on the corresponding production line

248. Emergency loans are made at what rate over the normal Current Debt interest rate?

b. 7.5%

249. The Ideal Spot

c. drifts at same pace as the segment.

250. Ideal Spot is particularly important for

d. high technology segments.

251. What is the size of the plant at the start of the simulation?

b. 5 assembly lines with space to add 3 more.

252. What are the Process Management Initiatives?

d. CPI, UNEP Green, JIT, QIT, Channel Support Systems, Concurrent Engineering

253. Each round is the equivalent of

c. one year.

254. The Consumer Report rates product attributes of price, reliability, age, positioning, awareness and accessibility using:

a. Three levels (such as Good, Fair, or Poor)

255. If you see a red flag on one of your spreadsheets, what does it mean?

d. There is more information.

256. Which one of these criteria is not a top product characteristic of at least one segment?

d. Promotion

257. Customer Awareness Reports:

c. percentage of Customers who knew about the product.

258. For positioning in the fine cut, which one is not right?

c. High End preferred Position is located in the lower left of the circle.

c. High End preferred Position is located in the lower left of the circle.

b. T-Bills

260. Price accounts for _________customers’ decision-making in the low end sector.


261. What does not drive length of R&amp;D project?

e. The labor strike.

262. With each year (round) customer awareness for each product decreases by:


263. Diminishing returns for a single year and a single initiative on TQM budgets become noticeable at

c. $2.0M.

264. High end customers prefer a product age of 0, at what age exceeds the fine cut for the product

2 years

265. For non-advanced marketing module, promotion expenditures reach diminishing returns at

a. about $3M

266. In the High End Segment, price as a buying criteria accounts for:

b. 9% of decision.

267. Companies with this strategy state their vision as follows: Low priced products for the whole industry, our brands offer solid value. Our primary stakeholders and bondholders, customers, stockholders and management.

d. Broad Cost Leader

268. In the Traditional Segment, age as a buying criteria accounts for:

c. 47% of decision.

269. An accessibility of 60% means that ________.

a. only 60% of customers have an easy time finding a product, talking to a salesperson and taking delivery. b. of the customers who cannot easily locate the product, they will seek it out.

270. How much higher are second shift wages than the first shift wages?

d. 50 %

271. The accounts payable lag has implications for production. At ________ days, suppliers withhold all material.


272. The center spot of traditional products drifts _______ each year.

a. +0.7 performance, -0.7 size

273. Finance Decisions should be made

c. after the other departments have entered their decisions.

274. If you sell all the capacity on a production line, Capstone interprets this as

b. a liquidation instruction and will sell your remaining inventory for half the average cost of production.

275. Customers evaluate the sensor industry based on:

a. Positioning. b. Reliability. c. Age. d. Price.

276. When the Human Resources module is activated, which areas must be addressed?

a. Complement (number of workers) b. Caliber (recruitment of talent of workers) c. Training (time workers spend in training)

277. A product’s __________ does not play a role in the rough cut


278. In CapSim, a product’s demand is driven by its _________________.

b. Customer Survey Score

279. The ______________ details sales volume in all segments, reporting each product’s actual and potential sales.

b. Market Share Report

280. Automation levels are given on a scale of _____ to _____.

d. 1.0; 10.0

281. Which of the following will give your company an AAA bond rating:

b. Have absolutely no debt.

282. Products that are modified through R&amp;D:

d. Are perceived to be half the age as before entering R&D.

283. The order of the 4 buying criteria is the same for the following two segments:

c. Size and High End.

284. Which of the following will result in the highest interest rate:

d. Emergency Loan.

285. In the December customer survey, a product would not receive a perfect score of 100 if

c. it had an MTBF at the middle of the expected range.

286. Each product can be promoted by

a. Print media. b. Direct mail. c. Web media. d. Trade shows.

287. Which one of the following statements regarding preferred position in fine cut is false?

b. Low end customers want the high performance and large sized product.

288. The turnover rate

a. is the percentage of workers who left the company last year, excluding down-sizing. d. includes unavoidable factors like retirement, relocation and weeding out poor workers (about 5%).

289. Workers will not strike approximately 7 days for

d. 1 hour difference in training.

290. In promo budget of the advanced marketing module, the term "reach" refers to

a. the potential number of customers who would see the advertisement message.

291. Capital used for financing activities can be acquired through_______________.

a. Current debt b. Stock issues c. Bond issues d. Profits

292. The inner fine cut circles on the perceptual map have a radius of ________ units.

b. 2.5

293. Every year the Traditional segment circle drifts ____ in performance and _____ in size.

b. +0.7, -0.7

294. The growth rate for industry demand in the _____ segment is 18.3%.

e. Size

295. The cost to increase automation to 8.0 is equal to

c. First Shift Capacity X [$4 X (8 – Automation Level).

296. Companies can enter a Recruiting Spend budget up to an additional ____.

a. $5,000

297. The following describe the strategy of Differentiation with Product Lifecycle Focus, except:

c. prices are below average.

298. One way to enter sales forecasts and production schedules is to develop a worst case/best case scenario. Where would you enter your best case scenario and where would you enter your worst case scenario?

a. On the Marketing spreadsheet enter your worst case forecast in Your Sales Forecast cell, and on the Production spreadsheet enter your best case forecast in the Production Schedule cell.

299. Which of the following statements is true about promo and sales budget?

a. From one year to the next, a third of those who knew about a product forgot about it. b. If a product ended last year with an awareness of 50%, this year it will start with an awareness of approximately 33%. c. If you have two or more products that meet a segment’s fine cut criteria, the sales budget for each product contributes to that segment’s accessibility percentage. d. Companies must have at least two products in the segment’s fine cut to achieve 100% accessibility.

300. Which of the following is not one of the primary concerns in the Finance Department?

e. Deciding promo and sales budget.

301. Which of the following is not the correct yearly drift rate for the corresponding segment?

e. In the size segment performance drifts by -0.7 and size by +1.0.

302. The CAPSIM simulation is based on which industry?

a. sensor industry

303. Your ___________ department controls the performance and size, therefore position of your sensor products within the market.

c. R&D

304. Customers go through ________________stage(s) as they make their purchase decisions.

c. fine cut and rough cut

305. Account Receivables lag impacts sales. At no credit terms, the customer survey score falls to about ______ % of maximum, at 30 days, the score is _____ %, at 60 days, the score is ______%.

b. 60, 93, 99.3

306. Do decisions on a product’s prices and MTBFs in its segment’s rough cut affect the product’s demand?


307. Which module in CAPSTONE allows investment in workforce training?

a. HR

308. Investments in training leads to a __________ and _________.

b. higher productivity, lower turnover

309. In what circumstance would a company have a high market share relative to that of its competitors, though it is not making best use of resources available to it?

b. Where competitors underperform, a company may have a higher market share than that of its competitors though it is not making best use of its resources.

310. A perfect product (with 100% awareness) starting with a survey score of 100, what is the survey score if the accessibility rate is only 60%?

d. ((1+accessibility)/2)*base score = 20

311. What is most likely to happen on introduction of a new product, if you do not buy the production line, in the year prior to the product’s introduction?

a. You cannot manufacture your new product.

312. R&amp;D project length can be as long as ___________.

d. 3 years

313. Your company was formed ______________

c. When a former monopoly was broken up into identical competitor

314. How is Contribution Margin calculated?

c. Price – (Material cost + Labor cost)

315. The percentage of workers that left the company last year is the:

d. Turnover rate.

316. At the start of the simulation, all assembly lines have an automation level between:

b. 3.0 and 5.0.

317. Segment price ranges drop _____ per year.

d. $0.50

318. Each year the company receives bond ratings. The range of these bond ratings from best to worse is:

e. AAA to D.

319. The December Customer Survey indicates

b. how customers perceived the products in the segment.

320. Period costs include

a. R&D. b. promotion. c. sales and administration expenses.

321. Lowering the automation level will result in

c. a charge.

322. If all of the capacity on a production line is sold

a. all remaining inventory is sold for half the average cost of production. b. a loss is written off on the income statement. c. Capstone interprets the action as a liquidation instruction. d. the company will receive a cash payment of 65% the original investment on capacity.

323. As a general rule, stock issues are used to:

c. Fund long term investments in capacity and automation.

324. Which segment has the highest growth rate?

d. Performance

325. Looking at the production, if the potential bar is higher than the actual one,

d. the company under produced and missed sales opportunities.

326. Looking at the production, if the potential bar is lower than the actual,

c. the company picked up sales because other companies under produced.

327. Investing more than $5,000,000 in the same TQM initiative over a two or three year period creates

a. little or no additional improvement.

328. According to Capstone, Complement is best defined as:

a. the number of workers in your workforce this year.

329. Capstone’s definition of reach in the marketing module is defined by the potential number of customers who would see the message. Based on this definition what segment has "fair" reach with direct mailing?

a. High End

330. Where are the credit policies for customer and supplier set in Capstone.xls?

a. Marketing spreadsheet

331. The primary difference between the Proformas and annual reports is:

b. Proformas are projections of results for the upcoming year; annual reports are results from the previous year.

332. What is the most important element that ensures the accuracy of the Proformas reports?

b. Marketing sales forecasts

333. When should you purchase the production line to produce a new product?

c. The year prior to its introduction

334. Which tool can you use as a quick comparison tool when conducting a competitive analysis concerning production?

c. Customer survey

335. In the Perceptual Map each segment has a set of circles where:

b. The inner fine cut circles represent the heart of the segment where demand is strong.

336. Different customer demands impact the drifting speed of the segments such that:

b. High End, Performance and Size drift at a faster rate than the other segments.

337. Which screens are necessary to make a complete human resource decision when the advance module has been activated?

a. Production & human resources

338. What is working capital?

a. Current asset minus current liability

339. What happens if you increase the A/R lag days in the marketing function?

a. Sales forecast increases b. Collection time increases

340. Which of the following is an important about working capital in Capsim?

a. Emergency loans are closely linked to your working capital policy b. Shows the liquidity situation of your firm c. Can be calculated using numbers from the balance sheet under the headings current assets and current liabilities d. Shows how much equity is in use

341. Which is false about production in Capsim?

a. Teams cannot produce beyond 100% capacity.

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