Question 1

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?

Accepted Answer

A)   1,600
B)   2,400
C)   3,000
D)   2,000
E)   1,000F) A) and C)
G) A) and B)

Question 2

Which of the following would tend to reduce effective capacity?

Accepted Answer

A)   suppliers that provide more reliable delivery performance
B)   reduced changeover times
C)   employees that are fully trained
D)   improved production quality
E)   greater variety in the product lineF) A) and B)
G) C) and D)

Question 3

A market constraint can be overcome by:

Accepted Answer

A)   lobbying.
B)   cash flow management.
C)   outsourcing.
D)   advertising or price changes.
E)   supplier development.F) B) and E)
G) C) and E)

Question 4

Production units have an optimal rate of output where:

Accepted Answer

A)   total costs are minimum.
B)   average unit costs are minimum.
C)   marginal costs are minimum.
D)   rate of output is maximum.
E)   total revenue is maximum.F) B) and E)
G) B) and C)

Question 5

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

Accepted Answer

A) True 
 B)False

Question 6

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 7

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 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)   repositioningF) A) and D)
G) A) and C)

Question 9

Given the following information, what would utilization be?
Effective capacity = 20 units per day
Design capacity = 60 units per day
Actual output = 15 units per day

Accepted Answer

A)   25%
B)   33%
C)   50%
D)   75%
E)   none of theseF) B) and C)
G) B) and D)

Question 10

Utilization is defined as the ratio of:

Accepted Answer

A)   actual output to effective capacity.
B)   actual output to design capacity.
C)   design capacity to effective capacity.
D)   effective capacity to actual output.
E)   design capacity to actual output.F) A) and E)
G) C) and E)

Question 11

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?

Accepted Answer

A)   0 percent
B)   40 percent
C)   60 percent
D)   67 percent
E)   100 percentF) B) and D)
G) D) and E)

Question 12

The impact that a significant change in capacity will have on a key vendor is a:

Accepted Answer

A)   supply chain factor.
B)   process limiting factor.
C)   internal factor.
D)   human resource factor.
E)   operational process factor.F) B) and E)
G) B) and C)

Question 13

The ratio of actual output to design capacity is:

Accepted Answer

A)   design capacity.
B)   effective capacity.
C)   actual capacity.
D)   efficiency.
E)   utilization.F) None of the above
G) D) and E)

Question 14

An example of an external factor that influences effective capacity is government safety regulations.

Accepted Answer

A) True 
 B)False

Question 15

When buying component parts, risk does not include:

Accepted Answer

A)   loss of control.
B)   vendor viability.
C)   interest rate fluctuations.
D)   need to disclose proprietary information.
E)   product liability.F) A) and B)
G) A) and C)

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. If the holding area at this new location has design and effective capacities of 10,000 and 7,500 prisoners processed annually, respectively, and 5,000 prisoners will be processed per year, what will be the utilization of the holding area?

Accepted Answer

A)   0 percent
B)   30 percent
C)   50 percent
D)   60 percent
E)   100 percentF) B) and E)
G) B) and D)

Question 17

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?

Accepted Answer

A)   1,600
B)   2,400
C)   3,000
D)   1,000
E)   4,000F) B) and E)
G) A) and E)

Question 18

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?

Accepted Answer

A)   12,000
B)   2,400
C)   3,000
D)   1,000
E)   5,000F) A) and B)
G) B) and D)

Question 19

Capacity decisions often involve a long-term commitment of resources which, when implemented, are difficult or impossible to modify without major added costs.

Accepted Answer

A) True 
 B)False

Question 20

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.F) All of the above
G) D) and E)

Exam 6: Strategic Capacity Planning for Products and Services

A market constraint can be overcome by:

Correct Answer
verified

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

Correct Answer
verified

Correct Answer
verified

Given the following information, what would utilization be? Effective capacity = 20 units per day Design capacity = 60 units per day Actual output = 15 units per day

Correct Answer
verified

Utilization is defined as the ratio of:

Correct Answer
verified

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

Correct Answer
verified

Capacity decisions often involve a long-term commitment of resources which, when implemented, are difficult or impossible to modify without major added costs.

Correct Answer
verified

The impact that a significant change in capacity will have on a key vendor is a:

Correct Answer
verified

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

Correct Answer
verified

An example of an external factor that influences effective capacity is government safety regulations.

Correct Answer
verified

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.

Correct Answer
verified

Which of the following would tend to reduce effective capacity?

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

The ratio of actual output to design capacity is:

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. Finding a way to increase Y's effective capacity would be an example of ________ a constraint.

Correct Answer
verified

Production units have an optimal rate of output where:

Correct Answer
verified

When buying component parts, risk does not include:

Correct Answer
verified

Correct Answer
verified

Exam 6: Strategic Capacity Planning for Products and Services

A market constraint can be overcome by:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Given the following information, what would utilization be? Effective capacity = 20 units per day Design capacity = 60 units per day Actual output = 15 units per day

Correct AnswerverifiedShow Answer

Utilization is defined as the ratio of:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Capacity decisions often involve a long-term commitment of resources which, when implemented, are difficult or impossible to modify without major added costs.

Correct AnswerverifiedShow Answer

The impact that a significant change in capacity will have on a key vendor is a:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

An example of an external factor that influences effective capacity is government safety regulations.

Correct AnswerverifiedShow Answer

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.

Correct AnswerverifiedShow Answer

Which of the following would tend to reduce effective capacity?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The ratio of actual output to design capacity is:

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. Finding a way to increase Y's effective capacity would be an example of ________ a constraint.

Correct AnswerverifiedShow Answer

Production units have an optimal rate of output where:

Correct AnswerverifiedShow Answer

When buying component parts, risk does not include:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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