Outsourcing some production is a means of _________ a capacity constraint. |
D. overcoming |

Which of the following is not a basic question in capacity planning? |
D. who will pay for it |

Which of these factors would not be subtracted from design capacity when calculating effective capacity? |
E. all of the choices |

Which of the following is not a reason why capacity decisions are so important? A. Capacity limits the rate of output possible. |
E. Capacity affects organizations’ images. |

Which of the following is the case where capacity is measured in terms of inputs? |
C. restaurant |

Unbalanced systems are evidenced by: |
D. increasing capacities. |

Maximum capacity refers to the upper limit of: |
D. rate of output. |

The impact that a significant change in capacity will have on a key vendor is a: A. supply chain factor. |
A. supply chain factor. |

The maximum possible output given a product mix, scheduling difficulties, quality factors, and so on is: |
effective capacity. |

Efficiency is defined as the ratio of: |
A. actual output to effective capacity. |

Utilization is defined as the ratio of: |
B. actual output to design capacity. |

Which of the following would tend to reduce effective capacity? |
E. greater variety in the product line |

The decision to outsource opens the firm up to certain risks, among them _________ and ________. |
B. loss of direct control over operations; need to disclose proprietary information |

The ratio of actual output to effective capacity is: |
E. utilization. |

The ratio of actual output to design capacity is: |
E. utilization. |

Given the following information, what would efficiency be? |
D. 60 percent |

Given the following information, what would efficiency be? |
C. 60 percent |

Given the following information, what would utilization be? |
A. 1/4 |

Which of the following is not a strategy to manage service capacity? |
B. backordering |

Which of the following is not a determinant of effective capacity? |
C. actual output |

Everything else being equal, a firm considering outsourcing can be reasonably certain that: |
B. its supplier probably has more expertise in whatever is being outsourced. |

Capacity in excess of expected demand that is intended to offset uncertainty is a: |
C. capacity cushion. |

Short-term considerations in determining capacity requirements include: |
C. seasonal demand variations. |

Which of the following is not a criterion for developing capacity alternatives? |
A. design structured, rigid systems |

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

Production units have an optimal rate of output where: |
B. average unit costs are minimum. |

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

When buying component parts, risk does not include: |
C. interest rate fluctuations. |

At the break-even point: |
B. total cost equals total revenue. |

What is the break-even quantity for the following situation? |
E. 300 |

An alternative will have fixed costs of $10,000 per month, variable costs of $50 per unit, and revenue of $70 per unit. The break-even point volume is: |
C. 500. |

For fixed costs of $2,000, revenue per unit of $2, and variable cost per unit of $1.60, the break-even quantity is: |
D. 5,000. |

Which of the following would not be a potential upside in a decision to outsource? |
D. knowledge sharing |

If the output rate is increased but the average unit costs also increase, we are experiencing: |
C. diseconomies of scale. |

The method of financial analysis which focuses on the length of time it takes to recover the initial cost of an investment is: |
A. payback. |

When determining the timing and degree of capacity change, one can use the approach of: |
B. expand early strategy. |

The method of financial analysis which results in an equivalent interest rate is: A. payback. |
C. internal rate of return. |

The first, and perhaps most important, step in constraint management is to ____________ the most pressing constraint. |
C. identify |

A market constraint can be overcome by: A. lobbying. |
D. advertising or price changes. |

Improving cash flow would be a reasonable thing to focus on when trying to overcome a _________ constraint. |
A. financial |

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? |
E. $50,000 |

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? |
C. 2,000 |

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? |
A. 3,200 |

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 anticipated to be 35 cords per day, what would be its utilization? |
D. 70 percent |

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? |
B. 80 percent |

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. What would the profit be if she were to produce and sell 5,000 rosebushes? |
B. $9,000 |

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 break even? |
C. 2,000 |

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? |
E. 4,000 |

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. If her available land has design and effective capacities of 3,000 and 2,000 rosebushes per year respectively, and she plans to grow 1,200 rosebushes each year on this land, what will be the utilization of this land? |
B. 40 percent |

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. If her available land has design and effective capacities of 3,000 and 2,000 rosebushes per year, respectively, and she expects to be 80 percent efficient in her use of this land, how many rosebushes does Rose plan to grow each year on this land? |
A. 1,600 |

A Virginia county is considering whether to pay $50,000 per year to lease a prisoner transfer facility |
C. $50,000 |

A Virginia county is considering whether to pay $50,000 per year to lease a prisoner transfer facility |
C. 2,000 |

A Virginia county is considering whether to pay $50,000 per year to lease a prisoner transfer facility |
E. 6,000 |

A Virginia county is considering whether to pay $50,000 per year to lease a prisoner transfer facility |
C. 50 percent |

A Virginia county is considering whether to pay $50,000 per year to lease a prisoner transfer facility |
E. 6,000 |

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? |
B. $40,000 |

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 break even? |
C. 3,000 |

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? |
E. 3,750 |

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? |
B. 75 percent |

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 |
C. 4,000 |

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. |
E. supporting |

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. |
A. overcoming |

Which of the following makes using present value approaches in capacity decisions difficult? A. The discount rate must be adjusted to account for inflation. |
D. Capacity decisions are made amidst much uncertainty, so cash flows cannot be estimated with great accuracy. |

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? |
B. 72 percent |

Students at a major university must go through several registration steps. Officials have observed that it is typically the case that the waiting line at the fee-payment station is the longest. This would seem to suggest that the fee-payment station is the ___________ in the student registration process. |
C. bottleneck |

# MIS 373 exam 2 CH 5

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