Chapter 6

FALSE

1. (p. 162) Process selection refers to the strategic decision of choosing the volume of output to produce in a manufacturing facility depending upon the way that facility produces.

TRUE

10. (p. 164) Break-Even Analysis can be used to help decide whether to perform a task with a special purpose machine or with a general purpose machine.

TRUE

11. (p. 163) The product-process matrix shows the relationship between process structures and product volume and variety characteristics.

TRUE

12. (p. 166-167) The term "assembly line" refers to progressive assembly linked by some material handling device.

FALSE

13. (p. 163) Workcenter layouts allocate dissimilar machines into cells to work on products that have dissimilar processing requirements.

TRUE

14. (p. 163) A project layout is characterized by a relatively low number of production units in comparison with process and product layout formats.

B. Batches of more than 20 units should be run on machine B

31. In a workcenter, machine A has a ten minute set-up time per batch and a two minute per unit run time. Machine B performs the identical function but has a set-up time of thirty minutes and a one minute run time per unit. The workcenter makes products in batches ranging from one unit to one hundred units. Assuming capacity is not a limitation on either machine, on which batches should machine B be used?

D. Workcenter

32. (p. 162) Which of the following is a basic type of process structure?

A. Product-process matrix

33. (p. 162) Which of the following is not a basic type of process structure?

D. Assembly line

34. (p. 163) Which of the following basic types of process structures is one which equipment or work processes are arranged according to the progressive steps by which the product is made?

B. Workcenter

35. (p. 163) Which of the following basic types of process structures is one which similar equipment or functions are grouped together?

TRUE

4. (p. 163) One difference between an assembly line process flow and a continuous process flow is that on the assembly line the flow is discrete rather than continuous.

TRUE

15. (p. 166) A project layout is characterized by a high degree of task ordering.

TRUE

22. (p. 161) An example of an assemble-to-order firm is Dell Computer.

FALSE

19. (p. 161) A make-to-order firm will work with the customer to design the product, and then make it from purchased materials, parts, and components.

TRUE

2. (p. 162) Process selection refers to the strategic decision of selecting which kind of production processes to use to produce a product or provide a service.

FALSE

20. (p. 161) The time needed to respond to a customer's order is called the customer response time.

2,500 units Contribution margin per unit = $50 - $10 = $40. Break even = $100,000/$40 = 2,500.

37. Assume a fixed cost for a process of $100,000. The variable cost to produce each unit of product is $10, and the selling price for the finished product is $50. Ignoring inventory, how many units must the firm sell to break-even? ______________________

TRUE

5. (p. 164) One trade-off illustrated by the product-process matrix is between flexibility and cost.

TRUE

6. (p. 163) The choice of which process structure to select is generally a function of the volume requirements for the product.

TRUE

7. (p. 164) One methodology used to evaluate equipment investment decisions where the investment entails a large initial investment, fixed costs, and variable costs is break-even analysis.

FALSE

8. (p. 164) Break-even analysis can only be used in production equipment decision making when dealing solely with fixed costs, no variable costs.

FALSE

16. (p. 161) The closer the customer is to the customer order decoupling point the longer it takes the customer to receive the product.

TRUE

17. (p. 161) The closer the customer is to the customer order decoupling point the more quickly the customer receives the product.

TRUE

18. (p. 161) Engineer-to-order firms will work with the customer to design the product, and then make it from purchased materials, parts, and components.

TRUE

21. (p. 161) The focus in the make-to-stock environment is on providing finished goods where and when the customers want them.

TRUE

23. (p. 161) The essential issue in satisfying customers in the make-to-stock environment is to balance the level of finished inventory against the level of service to the customer.

FALSE

24. (p. 161) The essential issue in satisfying customers in the make-to-stock environment is to balance the cost of the finished item against the willingness of the consumer to pay for it.

TRUE

25. (p. 162) Assembling-to-order means moving the customer order decoupling point from finished goods to components.

D. Fabrication

26. (p. 162) Which of the following is not considered a major process flow structure?

A. The size of the product

27. (p. 162) A difference between project and continuous flow categories of process flow structures is which two of the following?

E. 1,000 units $25 - $10 = $15. $15,000/$15 = 1,000 units

28. Assume a fixed cost for a process of $15,000. The variable cost to produce each unit of product is $10 and the selling price for the finished product is $25. Which of the following is the number of units that has to be produced and sold to break-even?

C. 8,000 units $50 - $35 = $15. $120,000/$15 = 8,000 units.

29. Assume a fixed cost for a process of $120,000. The variable cost to produce each unit of product is $35, and the selling price for the finished product is $50. Which of the following is the number of units that has to be produced and sold to break-even?

FALSE

3. (p. 163) A continuous process indicates production of discrete parts moving from workstation to workstation at a controlled rate.

B. The company's total margin will be less than its investment . Margin per unit = $30 - $15 = $15. $15 × 15,000 units = $225,000. Since $225,000 < $256,000 the total projected margin for this product will be less than the investment required.

30. You are hired as a consultant to decide if your client should purchase a new, highly specialized, piece of equipment. The product to be produced by this equipment is forecast to have a total worldwide demand of 15,000 units over the entire product life. The initial investment to acquire and install the equipment is $256,000. The variable cost to produce each unit will be $15 and the selling price for the finished product will be $30. Which of the following best describes the situation the firm is facing?

E. Emergency exits

36. The placement of which of the following is not determined by process structure decisions?

TRUE

9. (p. 164) A general purpose machine is less capable than a special purpose machine in certain tasks but can perform a broader variety of tasks.