Capsim Exam Questions

The TQM report can be accessed from A. The Capstone(r) Courier B. The Decisions menu.

A. The Capstone(r) Courier The TQM information appears on the last page of the Capstone Courier.

Which team(s) does labor see the opening offers from? A. One team B. All teams C. Two teams D. Only your team

B. All teams

Each inside salesperson costs $50,000. A. True B. False

A. True The inside sales staff works the existing customer list. Each inside salesperson costs $50,000.

What is the industry newsletter called? A. Capstone Courier B. Capstone Quarterly C. Capstone Messenger

A. Capstone Courier

Worker training is entered by the A. Hour B. Dollar

A. Hour Hours are entered on the HR Screen. Training costs $20.00 per hour per worker.

Hiring the Needed Complement will always eliminate A. Overtime B. worker layoffs C. a Second Shift D. strikes

A. Overtime Hiring the Needed Complement eliminates all Overtime. The Second Shift workers are paid the same as workers on Overtime, however, Second Shift workers are more efficient and do not seek work elsewhere, therefore reducing turnover.

In the Promotion Budget Resource, teams can select which of the following media areas A. Print Media and Direct Mail B. Email and Telephone Contact C. Trade and Road Shows D. Web Media and Television

A. Print Media and Direct Mail The scenario utilizes business to business media outlets that reach Original Equipment Manufacturers (OEMs). Television, for example, is not an efficient way to reach OEMs.

If a company with low automation wanted to invest in a single area that exclusively lowers labor costs, they would select: A. QIT (Quality Initiative Training) B. Concurrent Engineering C. Vendor/JIT (Just in Time [Inventory])

A. QIT (Quality Initiative Training) The TQM area allows teams with an established strategy to invest in areas which will benefit them the most. For example, if a team formulates a strategy that sacrifices labor cost so it can complete R&D projects faster, it would want to invest in QIT, which reduces labor costs

The Proformas are dynamic financial statements that recalculate based on your decisions. A. True B. False

A. True

In the Sales Budget Resource, the outside sales force meets with customers face-to-face. The cost of each salesperson includes which of the following? A. Salary and Wardrobe B. Commission and Support C. Travel and Brochures

B. Commission and Support Each salesperson costs $125,000, which includes salary, commission, travel and support.

According to the S-Shaped curve, diminishing returns for a single year budget become noticeable at A. $1,000,000 B. $1,500,000 C. $2,000,000

C. $2,000,000 The S-Shaped curve predicts return on investment. Depending on the slope of the curve, the return on investment can be small or large. For example, suppose a project is budgeted at $500,000. This project might go through a planning stage that produces a set of recommendations, but there is no money left to implement the recommendations. At $1,000,000, sufficient funds are available to plan, and begin implementing the recommendations. At $1,500,000, the budget is sufficient to plan and put in place most of the recommendations. At $2,000,000, all of the recommendations have been implemented, and additional money beyond that level has little or no effect.

The maximum length of a strike is: A. 4 weeks B. 8 weeks C. 12 weeks D. 16 weeks

C. 12 weeks REMARKS: Strike length depends upon the spread between your top offer and Labor's demands. The maximum length of a strike is 12 weeks, at which point both sides accept arbitration. Strikes last one week for every $1 difference in wages, $300 difference in benefit package, and percentage point difference in profit sharing or wage escalator.

Products are invented and revised by which department? A. Marketing B. Production C. Research and Development D. Finance

C. Research and Development

In the current contract, the workers wage rate is $20.00. Which of the following negotiation ranges would be outside the rules? A. $18.00 to $18.00 B. $15.60 to $16.80 C. $30.20 to $32.20 D. $30.00 to $32.00 E. Both B and C would be outside the rules.

E. Both B and C would be outside the rules. REMARKS: "B" fails because your opening wage offer cannot be less than 80% of your current contract. "C" fails because your opening offer cannot be higher than 150% of the current contract. In both cases, the opening offers would be adjusted. $7.80 would become $16.00. $30.20 would become $30.00

True or False: The new contract that you negotiate with Labor will take affect starting January 1st of the year the contract is renegotiated. A. True B. False

B. False

Prices are established by the: A. Finance Department B. Marketing Department C. Production Department D. R&D Department

B. Marketing Department

The Marketing Budget Detail asks teams to determine budgets by A. Product B. Segment C. Both

C. Both On the Marketing Budget Detail, the Promotion Budget Resource sections asks teams to assign budgets by product, but the section also asks teams to assign a target segment for each product. This facilitates products that might start the year in one segment, then as an R&D project completes, moves to another segment. Teams can begin promoting in the new segment prior to the move. The same holds true for a product that will have a new segment drift over it. In the Sales Budget Resource, Sales budgets are allocated by Segment. However, Sales budgets can be fine tuned with the Product Allocations box. For example, if teams have two products in one segment, the Product Allocations box can be used to prioritize one product over the other.

The exact outcome of TQM efforts appear on the TQM Report, and as bar charts on the TQM spreadsheet. These results are for A. the previous round only B. the upcoming round only C. cumulative for the previous and all remaining rounds (assuming no additional investment is made)

C. cumulative for the previous and all remaining rounds (assuming no additional investment is made) TQM investments take effect the year they are made, and are cumulative, paying off year after year.

Each market segment responds to different types of media (e.g. print, direct mail, etc.) to a varying degree. It follows then that each product must be identified with its target segment. Product target segments are identified by A. their placement on the Perceptual Map B. entering their status on the Pricing and Forecasting spreadsheet C. entering the target segment on the Marketing Budget Detail

C. entering the target segment on the Marketing Budget Detail The Marketing Budget Detail includes a combo box for each product that allows teams to define the product's target segment. If teams anticipate moving a product from one segment to another (perhaps an R&D project completes in mid year) they can define the target segment at the beginning of the year.

Production runs can be scheduled in A. only one shift B. always two shifts C. one or two shifts D. up to three shifts

C. one or two shifts Up to twice the production line's First Shift Capacity can be scheduled for each individual product. Production runs that exceed the First Shift Capacity result in either Overtime and/or a Second Shift, depending on the Worker Complement.

What are your company's options for raising money? A. Borrowing Long-term debt B. Borrowing Short-term debt C. Issuing Stock D. All the above

D. All the above

Generally, Separation Costs will be incurred when A. Production levels increase B. Automation Levels increase C. Production Levels decrease D. Production levels decrease and / or Automation levels increase

D. Production levels decrease and / or Automation levels increase The Needed Complement is determined by a combination of: a) the number of units ordered into production; and b) the Automation level of the assembly lines. Decreasing the number of units produced from one year to the next will decrease the Needed Complement. Similarly, increases in Automation will decrease the Needed Complement. If teams adjust the This Year cell to match the Needed Complement, Separation Costs will be incurred

Increasing Training Hours tends to A. increase the Needed Complement B. decrease the Needed Complement C. neither increase nor decrease the Needed Complement D. both increase and decrease the Needed Complement

D. both increase and decrease the Needed Complement In the short term, increasing Training Hours will increase the Needed Complement-- Workers are taken off the production line and put in the classroom. However, as time goes on, investing in Training Hours increases worker productivity, and therefore tends to decreases the Needed Complement

There are two teams, Andrews and Baldwin. As a result of an earlier labor negotiation, Andrews workers earn $20.00. Baldwin workers earn $22.00. What will Labor demand? A. Andrews $22.00. Baldwin $24.20. B. Andrews $24.20. Baldwin $24.20. C. Andrews $24.20. Baldwin $22.00. D. Andrews $24.00. Baldwin $24.00 E. None of the above.

B. Andrews $24.20. Baldwin $24.20 REMARKS: Labor will demand parity with industry "best" from Andrews. The industry best is Baldwin's $22.00. Labor will demand a 10% increase from the industry leader. Since Baldwin currently pays $22.00, Labor will demand $24.20.

Suppose workers earn $20.00 in the current contract. There are only two teams, Andrews and Baldwin. Labor demands $22.00. Andrews gives its negotiators a range of $23.00 to $25.00. Baldwin gives its negotiators a range of $20.20 to $22.20. Will Labor strike: A. Andrews B. Baldwin C. Both D. Neither

B. Baldwin REMARKS: Although Baldwin would not experience a strike under the original Labor demand, Andrews changed the game with its opening offer of $23.00. Labor will now demand $23.00 from Baldwin. Baldwin negotiators will hit their ceiling at $22.20. The strike will settle a few days later at $22.60. Andrews will not experience a strike. Baldwin's technicians will get $23.00 next round. (Ignores wage escalator.)

Each additional advertisement increases customer Awareness by the same amount of the first A. True B. False

B. False Increasing the number of advertisements does not linearly increase Awareness. When the advertisement runs a second time, a percentage of people who saw it the first time will see it again. Those who see the ad twice do not become aware of the product when the see it the second time. Therefore, the second placement does not add as much Awareness as the first-- the result, diminishing returns apply.

True or False: Generally speaking, a team with high levels of automation would be inclined to Make a "low ball" offer to the unions in order to further lower costs. A. True B. False

B. False REMARKS: Of course, the team might do the opposite. At an automation rating of 10.0, however, the labor cost per unit is very low, say $1.50 per unit. (Actual numbers vary with contract and time.) Labor costs per unit are low because few workers remain in the plant. If the team offers a 50% raise, its costs increase to $2.25 per unit. A competitor with higher labor costs, say $10 per unit, would see a $5.00 jump if it offered a 50% raise. Teams with high labor costs are motivated to contain them even if that means a strike. Teams with low labor costs can afford to behave capriciously.

Teams can eliminate all Recruiting Costs if they wish A. True B. False

B. False Teams can choose to enter 0 in the Recruiting Spend cell on the Human Resources screen, however that number is in addition to a base Recruiting Cost of $1,000 per worker. A Recruiting Spend entry facilitates recruiting a better quality of worker.

The Target Segment selection lets teams move their products from one location on the Perceptual Map to another A. True B. False

B. False The Target Segment selection pertains exclusively to Promotion, and allows teams to select which segment their promotion efforts should be directed towards.

Product prices are set on the Marketing Budget Detail spreadsheet A. True B. False

B. False When the Advanced Marketing Module is activated, marketing activities are divided between two spreadsheets. Prices and forecasts are entered on the Pricing & Forecasting spreadsheet.

Recruiting Costs are incurred when A. Automation levels increase B. Production runs increase and teams match hiring to Needed Complement C. workers are assigned to a Second Shift

B. Production runs increase and teams match hiring to Needed Complement Increasing production and then matching the Needed Complement will result in new hires, and therefore increase Recruiting Costs

Which of these investments is not a function of the Production department? A. Increasing Automation B. Wage Increases C. Creating new production lines

B. Wage Increases

Distributors are A. support staff for the outside sales force B. a separate Sales channel C. Original Equipment Manufacturers

B. a separate Sales channel Distributors place your product in their own showrooms. You pay each distributor $100,000 per year to stock your product line.

Management should strive to A. increase Turnover B. decrease Turnover

B. decrease Turnover Lowering Turnover reduces Recruitment costs.

Assuming the Productivity Index is greater than 100%, adding Overtime will A. increase the Productivity Index B. decrease the Productivity Index

B. decrease the Productivity Index While the Productivity Index can never fall below 100%, it is possible for teams to increase the Index by investing in a higher quality of worker (Recruiting Spend) and in education (Training Hours). However, scheduling Overtime will decrease the Index because workers will become tired and disgruntled

Investing in the same TQM Initiative round after round will create A. ever increasing returns B. diminishing returns C. the same amount of return

B. diminishing returns With sufficient investment, initiatives will improve processes and quality to the greatest extent possible, however, each initiative will reach a point where no further improvement is possible, therefore the investments create no additional returns.

Increasing Capacity tends to A. reduce the Needed Complement B. reduce the number of workers on Second Shift C. reduce Overtime

B. reduce the number of workers on Second Shift Increasing Capacity tends to reduce the number of workers on the Second Shift. As an example, a production order of 1,200 units on a line with a Capacity of 800 units (numbers in thousands) will require 400 units to be produced by the Second Shift. Increasing Capacity to a total of 1,000 units will result in 1,000 units manufactured by First Shift labor, and only 200 units produced by more expensive Second Shift labor.