Bus 140 Operations Supply Chain Ch 6 Processes and Technology

If a firm can sell a product for $40.00 each, then what is the volume needed to break-even if the fixed cost of production is $125,000.00 and labor and material costs are $30.00 per item?

12,500

A company is considering producing a product for a new market. The fixed costs required for manufacturing and delivering the product is $50,000. Labor and material costs are estimated to be approximately $25.00 per product. If the product is sold for $35.00 each, the firm's break-even volume would be

5,000 units

A company is evaluating which of two alternatives should be used to produce a product that will sell for $35.00 per unit. The following cost information describes the two alternatives Process A Process B Fixed Cost $500,000 $750,000 Variable Cost per Unit $25.00 $23.00 The break-even volume for Process A is

50,000 units

A company is evaluating which of two alternatives should be used to produce a product that will sell for $35.00 per unit. The following cost information describes the two alternatives Process A Process B Fixed Cost $500,000 $750,000 Variable Cost per Unit $25.00 $23.00 The break-even volume for Process B is

62,500 units

A company is considering producing an item that can be sold for $37.50 per unit. If the fixed costs for setting up production are $225,000 and the variable cost per unit for the item is $35.00 then the break-even volume for this item is

90,000 units

What is a process strategy and how does it affect the firm?

Ans: There are several noneconomic factors which can influence or dominate the economic considerations of a outsourcing decision. Among these are (1) the level of capacity at which the company is operating; (2) the capability to provide quality parts consistently; (3) the speed with which goods can be provided by a supplier; (4) the reliability of suppliers; and (5) the expertise of the firm and its willingness to release valuable product information to a supplier.

A firm's process strategy rarely defines its capital intensity.

False

A process is a group of unrelated tasks with specific inputs and outputs.

False

Batch production is also known as a job shop because it creates more jobs than any of the other process choices

False

Companies that control the production of virtually all of the parts that go into a product are said to be horizontally integrated.

False

Customers are rarely involved in a project that takes an extended period of time to complete

False

In general, processes should be analyzed for continuous improvement only after a breakthrough improvement

False

Mass production is characterized by high volumes of a customized product for a mass market.

False

Mass production is characterized by the use of general equipment and highly skilled labor.

False

Most of the operations in batch production involve the assembly rather than fabrication.

False

Process analysis yields a set of documents detailing manufacturing and service delivery specifications

False

Process innovation is most successful in organizations that view their systems as a set of functional areas vying for limited resources

False

Process plans are a set of documents that detail the steps in process selection

False

Process strategy defines what tasks need to be done and how they are to be coordinated among functions, people, and organizations.

False

Producing a high volume of a single product is a characteristic of batch production.

False

Subcontracting is rarely a source of human resources for a project.

False

Supplier speed is rarely an important consideration in outsourcing decisions.

False

Which of the following is NOT associated with the sourcing continuum?

In-house production

List some non-economic factors that can influence a firm's outsourcing decision

There are several noneconomic factors which can influence or dominate the economic considerations of a outsourcing decision. Among these are (1) the level of capacity at which the company is operating; (2) the capability to provide quality parts consistently; (3) the speed with which goods can be provided by a supplier; (4) the reliability of suppliers; and (5) the expertise of the firm and its willingness to release valuable product information to a supplier.

A firm's process strategy defines the extent of customer involvement in providing a service

True

A high-level process map is a useful tool in beginning the redesign of a process.

True

A process flowcharts is a useful tool for analyzing a process because it often highlights nonproductive activities.

True

Batch production is characterized by small volumes and high product variety.

True

Break-even analysis examines the cost tradeoffs associated with demand volume when selecting a process.

True

Breakthrough improvement is often implemented when opportunities for continuous improvement have been exhausted

True

Capital budgeting techniques are often one of the inputs used for technology decisions.

True

Companies that control the production of virtually all of the parts that go into a product are said to be vertically integrated.

True

Continuous production is characterized by very high volumes of commodity products.

True

Mass production is characterized by high volumes of a standard product for a mass market.

True

Mass production is characterized by the use of specialized equipment and workers with limited skills.

True

Mass production is often associated with assembly lines.

True

Most of the operations in batch production involve fabrication rather than assembly.

True

One characteristic of batch production is variable demand.

True

One-of-a-kind production of a product based on a customer's unique specifications is a called a project

True

Outsourcing occurs when a company cannot or will not make all the parts that go into a product.

True

Planning, analyzing, and improving processes is the purpose of operations management.

True

Process design specifies what tasks need to be done and how they are to be coordinated among functions, people, and organizations.

True

Process innovation reflects the total redesign of a process for a breakthrough improvement.

True

Process planning determines how a manufactured good is produced or a service is provided.

True

Supplier reliability is often an important consideration in outsourcing decisions.

True

Technology decisions are often a significant factor in process planning

True

Technology decisions that involve the outlay of funds is considered a capital investment.

True

The basic tools of process analysis include process flowcharts, diagrams and maps.

True

The best process strategy is usually found on the diagonal of the product-process matrix.

True

The organization's overall approach for producing goods and providing services is its process strategy.

True

Two approaches to process improvement include continuous and breakthrough

True

Vertical integration is the degree to which a firm produces the parts that go into its products.

True

A print shop is an example of which of the following process choices?

batch production

Variable demand and small to moderate quantities produced to order are characteristics usually associated with

batch production

Complex scheduling problems are most likely to occur with which process type?

batch production systems

64. A company is evaluating which of two alternatives should be used to produce a product that will sell for $35.00 per unit. The following cost information describes the two alternatives Process A Process B Fixed Cost $500,000 $750,000 Variable Cost per Unit $25.00 $23.00 If total demand (volume) is 120,000 units, then the company should

c. select Process A with a profit of $700,000 to maximize profit

Technology decisions typical in operations management include all the following areas except

communication technology.

Steel, paper, paints, and chemicals are examples of products that use

continuous production

As process selection moves up the diagonal from project to continuous production

demand volume increases.

Which of the following is not a potential risk associated with a project?

extensive learning curve benefits

Most of the operations in batch production involve

fabrication

Disadvantages of batch production include all of the following except

flexibility

A company is evaluating which of two alternatives should be used to produce a product that will sell for $35.00 per unit. The following cost information describes the two alternatives Process A Process B Fixed Cost $500,000 $750,000 Variable Cost per Unit $25.00 $23.00 For what level of volume (output) would the firm prefer Process A to Process B?

for all volume levels greater than 125,000

Which of the following is not an advantage of batch production?

frequent changes in product mix

Which of the following is not a characteristic of mass production?

high product variety

One disadvantage of mass production is its

lack of responsiveness.

The ease of adjusting resources in response to changes in demand defines firm's

process flexibility

A firm's process strategy defines all of the following except its

process selection

All the following are factors influencing the outsourcing decision except

product variety.

A company is evaluating which of two alternatives should be used to produce a product that will sell for $35.00 per unit. The following cost information describes the two alternatives Process A Process B Fixed Cost $500,000 $750,000 Variable Cost per Unit $25.00 $23.00 If total demand (volume) is 150,000 units, then the company should

select Process B with a profit of $1,050,000 to maximize profit

Mass production systems tend to employ

specialized equipment and limited labor skills.

The product-process matrix includes all the following process types except

stable production.

The extent to which the firm will produce the inputs and control the outputs of each stage of the production process is known as

vertical integration.