OPS MGMT Final Ch. 1,2,6, 7, 7S, 11, 12, MOD A
A plant manager wants to know how much he should be willing to pay for perfect market research. Currently there are two states of nature facing his decision to expand or do nothing. Under favorable market conditions the manager would make $100,000 for the large plant and $5,000 for the small plant. Under unfavorable market conditions the large plant would lose $80,000 and the small plant would make $0. If the two states of nature are equally likely, how much should he pay for perfect information? A. $40,000 B. $25,000 C. $0 D. $145,000 E. $100,000 Ch. MOD A
Answer: A, $40,000
A Three Sigma program has how many defects per thousand? A. 2.7 B. 2,700 C. 3 times the standard deviation D. 1,500 E. 34
Answer: A, 2.7
What decision tree symbol represents a state-of-nature node? A. circle B. triangle C. square D. trapezoid Ch. MOD A
Answer: A, Circle
The ability of an organization to produce goods or services that have some uniqueness in their characteristics is: A. competing on differentiation. B. competing on quality. C. time-based competition. D. mass production. E. competing on productivity. Ch. 2
Answer: A, Competing on differentiation
A set of skills, talents, and capabilities in which a firm is particularly strong is referred to as A. core competencies. B. differentiation. C. experience differentiation. D. key success factors (KSFs). Q47 CQ 5.3
Answer: A, Core competencies
Which of the international operations strategies involves low cost reductions and low local responsiveness? A. international strategy B. multidomestic strategy C. worldwide strategy D. transnational strategy E. global strategy Q13 2.7-6
Answer: A, International strategy
A manager tells her production employees, "It's no longer good enough that your work falls anywhere within the specification limits. I need your work to be as close to the target value as possible." Her thinking is reflective of: A. Taguchi concepts. B. process control charts. C. ISO 9000. D. Six Sigma. E. internal benchmarking. Q2 6.3-32
Answer: A, Taguchi Concepts
Which of the following nets the largest productivity improvement? A. decrease input 15% B. increase both output and input by 5% C. increase output 15% D. decrease input 10%, increase output 3% E. increase output 10%, decrease input 3% Q3 Ch.1.8-16
Answer: A, decrease input 15%
What is the theoretical maximum output of a system in a given period under ideal conditions? A. design capacity B. utilization C. efficiency D. effective capacity Ch. 7S
Answer: A, design capacity
What is the difference between the expected payoff under perfect information and the maximum expected payoff under risk? A. expected value of perfect information B. expected monetary value C. economic order quantity D. PERT E. expected monetary payoff CH. MOD A
Answer: A, expected value of perfect information
What is transferring a firm's activities that have traditionally been internal to external suppliers? A. outsourcing B. make-or-buy C. keiretsu network D. vertical integration Ch. 11
Answer: A, outsourcing
Which of these is NOT an advantage of outsourcing? A. gaining outside expertise B. potential creation of future competition C. accessing outside technology D. cost savings Q4, CQ 6.2
Answer: A, potential creation of future competition
Which of the quadrants in the service process matrix has high labor intensity and high customization? A. professional service B. service shop C. service factory D. mass service Ch. 7
Answer: A, professional service
What is a design that can be produced to requirements even with unfavorable conditions in the production process? A. robust design B. DFMA C. modular design D. CAD
Answer: A, robust design
Break-even analysis can be used by a firm that produces more than one product, but: A. the break-even point depends upon the proportion of sales generated by each of the products. B. the results are estimates, not exact values. C. the firm must allocate some fixed cost to each of the products. D. each product has its own break-even point. E. None of these statements is true. Ch. 7s
Answer: A, the break-even point depends upon the proportion of sales generated by each of the products
Which of the international operations strategies involves high cost reductions and high local responsiveness? A. transnational strategy B. multidomestic strategy C. worldwide strategy D. international strategy E. global strategy Q9 2.7-5 *Understand this one
Answer: A, transnational strategy
In many applications, human quality inspectors can be replaced effectively by A. vision systems. B. automated storage and retrieval systems. C. RFID tags. D. FMS. Ch. 7
Answer: A, vision systems
Productivity tends to be more difficult to improve in the service sector because the work is: A. often an intellectual task performed by professionals. B. frequently processed individually. C. typically labor-intensive. D. often difficult to automate. E. All of the above make service productivity more difficult. Ch. 1
Answer: All of the above make service productivity more difficult.
Prior to embarking on supply chain design, operations managers must first consider A. how to manage supply chain inventory. B. "make-or-buy" and outsourcing decisions. C. what kind of distribution network to have. D. how to select suppliers. Ch. 11
Answer: B, "Make-or-buy" and outsourcing decisions
Which of the following technologies is particularly useful for prototype development and small lot production? A. STEP B. 3-D printing C. CAM D. CAD
Answer: B, 3-D printing
How does Walmart gain a competitive advantage? A. Competing on response B. Competing on cost C. Competing on differentiation D. None of the above Q52 CQ 3.6
Answer: B, Competing on cost
The creation of a unique advantage over competitors is referred as A. response. B. competitive advantage. C. differentiation. D. experience differentiation. Q8, CQ 3.4
Answer: B, Competitive Advantage
Which of the following is a concern as firms move toward globalization? A. Simplification of operations management B. Differences in social and cultural behavior C. Decreases in exchange rate risk D. Opportunities to reach new markets Q31 CQ 1.6
Answer: B, Differences in social & cultural behavior
Internet of Things is associated with which operations management time period? A. Customization Focus B. Globalization Focus C. Quality Focus D. Cost Focus. E. Just-In-Time Focus Q7, 1.6-13 Understand this one
Answer: B, Globalization Focus
Which of the following international operations strategies uses decentralized authority with substantial autonomy at each business? A. global B. multidomestic C. international D. transnational Ch. 2 Need to know this one
Answer: B, Multidomestic
A large percentage of the revenue of most firms is spent on which function? A. research and development B. operations C. marketing D. finance Ch. 1
Answer: B, Operations
Which of the following is not an advantage of outsourcing? A. accessing outside technology B. outsourcing core competencies C. gaining outside expertise D. improving operations and service E. cost savings Ch. 2
Answer: B, Outsourcing core competencies
Which of the following is a possible option to employ when demand exceeds capacity? A. increase advertising expenditures B. schedule long lead times C. temporarily lay-off workers D. lower prices Ch. 7s
Answer: B, Schedule long lead times
What is an occurrence or a situation over which the decision maker has little or no control? A. alternative B. state of nature C. chance event D. unactionable event Q1 CQ 2.2
Answer: B, State of nature
A way to identify those elements in the product/service chain that uniquely add value is referred to as A. the resources view. B. value-chain analysis. C. the five forces model. D. supply chain management. Q33 CQ 4.5
Answer: B, Value-chain analysis
Decision trees: A. are rarely used because one needs specialized software to graph them. B. are especially powerful when a sequence of decisions must be made. C. are too complex to be used by decision makers. D. give more accurate solutions than decision tables. E. give less accurate solutions than decision tables. CH. MOD A
Answer: B, are especially powerful when a sequence of decisions must be made.
Which of the following describes using one supplier for a component and a second supplier for another component, where each supplier acts as a backup for the other? A. backup-sourcing B. cross-sourcing C. parallel-sourcing D. dual-sourcing E. outsourcing Ch. 11
Answer: B, cross-sourcing
The fundamental purpose of an organization's mission statement is to: A. create a good human relations climate in the organization. B. define the organization's purpose in society. C. define the operational structure of the organization. D. define the functional areas required by the organization. E. generate good public relations for the organization. Q37 2.2-6
Answer: B, define the organization's purpose in society
The term maquiladora is most synonymous with: A. areas that do not meet U.S. standards for workplace safety and pollution. B. free trade zones in Mexico. C. tax breaks provided by some South American countries to other South American countries. D. home-based or cottage industry. E. North Korean forced labor camps Ch. 2
Answer: B, free trade zones in Mexico
Which of the following is the Japanese term used to describe continuous improvement efforts? A. poka-yoke B. kaizen C. kanban D. six sigma
Answer: B, kaizen
A fast food restaurant is an example of A. high customization and low degree of labor. B. low customization and low degree of labor. C. low customization and high degree of labor. D. high customization and high degree of labor. Ch. 7
Answer: B, low customization & low degree of labor
The advantage of having many potential suppliers is their willingness to A. provide technical expertise. B. offer lower prices in the short term. C. provide innovations. D. participate in JIT. Ch. 11
Answer: B, offer lower prices in the short term
In terms of decision theory, an occurrence or situation over which the decision maker has no control is called a(n): A. decision under uncertainty. B. state-of-nature. C. EMV. D. decision tree. E. alternative. Ch. MOD A
Answer: B, state-of-nature
Basic break-even analysis typically assumes that: A. costs increase in direct proportion to the volume of production, while revenues increase at a decreasing rate as production volume increases because of the need to give quantity discounts. B. variable costs and revenues increase in direct proportion to the volume of production. C. revenues increase in direct proportion to the volume of production, while costs increase at a decreasing rate as production volume increases. D. both costs and revenues are made up of fixed and variable portions. E. All of the above are assumptions in the basic break-even model. Ch. 7S
Answer: B, variable costs & revenues increase in direct proportion to the volume of production.
Competing on cost is A. Based upon flexibility B. achieving maximum value as perceived by the customer C. Concerned with reliability D. Concerned with uniqueness Q16 3.2
Answer: B. Achieving maximum value as perceived by the customer
A Six Sigma program has how many defects per million? A. 1,000 B. 6 times the standard deviation C. 3.4 D. 34 E. 2,700
Answer: C, 3.4
The Dulac Box plant works two 8-hour shifts each day. In the past, 1,000 cypress packing boxes were produced by the end of each day. The use of new technology has enabled them to increase productivity by 30%. Productivity is now approximately: A. 162.5 boxes/hr. B. 32.5 boxes/hr. C. 81.25 boxes/hr. D. 125 boxes/hr. E. 40.6 boxes/hr. Ch. 1
Answer: C, 81.25 boxes/hr
The role of decision trees in product design is to: A. calculate the value of quality function deployment. B. rank products in descending order of their dollar contribution to the firm. C. calculate the expected value of each course of action. D. calculate the value of the moment of truth. E. better understand the customers' wants. Q3 5.9-2
Answer: C, Calculate the expected value of each course of action
Outsourcing manufacturing is also known as: Ch. 2.6-9 A. hollow manufacturing. B. sublease manufacturing. C. contract manufacturing. D. license manufacturing. E. concurrent manufacturing.
Answer: C, Contract Manufacturing
Productivity can be improved by: A. increasing inputs and outputs in the same proportion. B. increasing inputs while holding outputs steady. C. decreasing inputs while holding outputs steady. D. decreasing outputs while holding inputs steady. E. None of the above. Q42 1.8-17
Answer: C, Decreasing inputs while holding outputs steady
What is a set of quality standards developed by the International Organization for Standardization? A. IOS 2009 B. Deming Prize C. ISO 9000 D. Malcolm Baldrige National Quality Award E. Six Sigma
Answer: C, ISO 9000
Which of the following strategies is part collaboration, part purchasing from few suppliers, and part vertical integration? A. virtual companies B. joint ventures C. keiretsu networks D. horizontal integration Ch. 11
Answer: C, Keiretsu networks
Which is NOT true regarding differences between goods and services? A. Most goods are common to many customers; services are often unique to the final customer. B. Services tend to have higher customer interaction than goods. C. Tangible goods are generally produced and consumed simultaneously; services are not. D. Services tend to have a more inconsistent product definition than goods. E. None, i.e., all of these are true. Q25, 1.7-6
Answer: C, Tangible goods are generally produced and consumed simultaneously; services are not.
What is developing the ability to produce goods or services previously purchased or actually buying a supplier or a distributor? A. virtual companies B. horizontal integration C. vertical integration D. outsourcing Ch. 11
Answer: C, Vertical integration
Which of the following statements best characterizes delivery reliability? A. a company that always delivers on the same day of the week B. a company that has a computerized delivery scheduling system C. a company that always delivers at the promised time D. a company that delivers faster than its competitors E. a company that delivers more frequently than its competitors Ch. 2
Answer: C, a company that always delivers at the promised time
A global network of organizations and activities that supply a firm with goods and services is referred to as A. operations management. B. business functions. C. a supply chain. D. production. Ch. 1
Answer: C, a supply chain
Porter's Five Forces Model is used to evaluate competition based on which 5 aspects? A. cost, legal regulations, advertising effectiveness, potential entrants, and immediate rivals B. research and development, cost, legal regulations, suppliers, customers C. immediate rivals, potential entrants, customers, suppliers, and substitute products D. potential entrants, customers, suppliers, legal regulations, and cost E. immediate rivals, potential entrants, cost, substitute products, and legal regulations Ch. 2
Answer: C, immediate rivals, potential entrants, customers, suppliers, & substitute products
The expected value with perfect information is: A. the maximum EMV for a set of alternatives. B. obtained using conditional probabilities. C. the expected return obtained when the decision maker knows which state of nature is going to occur before the decision is made. D. the same as the expected value of perfect information. E. the difference between the payoff under perfect information and the payoff under risk.
Answer: C, the expected return obtained when the decision maker knows which state of nature is going to occur before the decision is made.
A disadvantage of the "few suppliers" sourcing strategy is: A. the risk of not being ready for technological change. B. the suppliers are less likely to understand the broad objectives of the procuring firm and the end customer. C. the high cost of changing partners. D. the lack of cost savings for customers and suppliers. E. possible violations of the Sherman Antitrust Act. Ch. 11
Answer: C, the high cost of changing partners.
There are three equally likely states of nature (High, Medium, and Low demand). If the large factory will post profits of $60,000, $25,000, and −$10,000 under these states of nature, respectively, what is the EMV of the factory? A. $28,333.33 B. $21,666.67 C. $50,000 D. $25,000 E. $65,000 Ch. MOD A
Answer: D, $25,000
What is an electronically guided and controlled cart used to move materials? A. RFID B. AIS C. CNC D. AGV Ch. 7
Answer: D, AGV
Which of the following is a similarity between goods and services? A. consistency B. automation C. mass production D. Both have quality standards. E. Both can usually be kept in inventory. Q34 1.7-11
Answer: D, Both have quality standards
Which is NOT true regarding differences between goods and services? A. Services are generally produced and consumed simultaneously; tangible goods are not. B. Services tend to be more knowledge-based than goods. C. Reselling is unusual in services; goods often have some residual value. D. Goods tend to have higher customer interaction than services. E. Services tend to have a more inconsistent product definition than goods. Ch. 1
Answer: D, Goods tend to have higher customer interaction than services.
Japanese manufacturers often pursue a strategy that is part collaboration, part purchasing from a few suppliers, and part vertical integration. What is this approach called? A. kanban B. kaizen C. samurai D. keiretsu E. poka-yoke Ch. 11
Answer: D, Keiretsu
Which of the international operations strategies uses the existing domestic model globally? A. global strategy B. transnational strategy C. worldwide strategy D. multidomestic strategy E. international strategy Q22 2.7-8
Answer: D, Multidomestic strategy
The service sector has lower productivity improvements than the manufacturing sector because: A. the service sector uses less skilled labor than manufacturing. B. service sector productivity is hard to measure. C. the quality of output is lower in services than manufacturing. D. services usually are labor-intensive. E. the service sector is often easy to mechanize and automate. Q15 1.8-22
Answer: D, Services usually are labor-intensive
What is the goal for mass customization? A. The goal is to let operations managers work with their supply chain to viciously cut inventories at every level. B. The goal is to seek creative designs, efficient production, and high-quality goods via international collaboration. C. The goal is to enrich jobs and move more decision making to the individual contributor. D. The goal is to produce customized products, whenever and wherever needed. Q2 CQ 9.2 Ch. 1
Answer: D, The goal is to produce customized products, whenever and where ever needed.
The primary advantage of outsourcing is A. to decrease supply chain risk. B. to allow a company to focus on its non-core competencies. C. to decrease logistics and transportation costs. D. to allow a company to focus on its core competencies. Q40 CQ 6.5
Answer: D, allow a company to focus on its core competencies
A strategy is A. the purpose for which an organization is established. B. a functional area of the firm. C. established prior to establishing a mission. D. an action plan to achieve a mission. Q43 CQ 2.1
Answer: D, an action plan to achieve a mission
A forecast that addresses the business cycle by predicting planning indicators is A. a demand forecast. B. a technological forecast. C. an environmental forecast. D. an economic forecast. Q45 CQ 1.3
Answer: D, an economic forecast
Which of the following international operations strategies involves a high degree of centralization? A. transnational B. international C. multidomestic D. global Ch. 2
Answer: D, global
Which of the following could reduce costs and increase profit? A. improved response B. improved reputation C. flexible pricing D. increased productivity
Answer: D, increased productivity
Which of these is a reason why outsourcing continues to expand? A. rapid development and deployment of advancements in automation B. less reliable transportation C. more expensive transportation D. increased technological expertise and specialization
Answer: D, increased technological expertise & specialization
A SWOT analysis determines: A. internal strengths and opportunities and external weaknesses and threats. B. internal strengths and weaknesses and internal opportunities and threats. C. external strengths and weaknesses and internal opportunities and threats. D. internal strengths and weaknesses and external opportunities and threats. E. external strengths and weaknesses and external opportunities and threats. Ch. 2
Answer: D, internal strengths & weaknesses & external opportunities & threats
Which of the international operations strategies uses import/export or licensing of existing products? A. transnational strategy B. worldwide strategy C. multidomestic strategy D. international strategy E. global strategy Q27 2.7-7
Answer: D, international strategy
The total of all outputs produced by the transformation process divided by the total of the inputs is: A. greater in manufacturing than in services. B. defined only for manufacturing firms. C. single-factor productivity. D. multifactor productivity. E. utilization. Q53 1.8-14
Answer: D, multifactor productivity
Low-volume, high-variety production is best suited for which of the following process strategies? A. mass customization B. product focus C. repetitive focus D. process focus Ch. 7
Answer: D, process focus
High-volume, low-variety production is best suited for which of the following process strategies? A. repetitive focus B. process focus C. mass customization D. product focus
Answer: D, product focus
Which of the following is NOT a production technology that enhances production and productivity? A. automatic identification systems B. vision systems C. process control D. service blueprinting Ch. 7
Answer: D, service blueprinting
One of the similarities between product focus and mass-customization is: A. the use of modules. B. the variety of outputs. C. many departments and many routings. D. the volume of outputs. E. All of the above are similarities. Ch. 7
Answer: D, the volume of outputs
Which of the following is an example of competing on quick response? A. A firm produces its product with less raw material waste than its competitors do. B. A firm utilizes its capacity more effectively than its competitors do. C. A firm advertises more than its competitors do. D. A firm offers more reliable products than its competitors do. E. A firm's products are introduced into the market faster than its competitors' products. Q18 2.3-13
Answer: E, A firm's products are introduced into the market faster than it's competitors' products.
Cost cutting in international operations can take place because of: A. lower wage scales. B. less stringent regulations. C. lower taxes and tariffs. D. lower indirect costs. E. All of the above. Ch. 2
Answer: E, All of the above
Reducing the complexity of a product and improving a product's maintainability are activities of: A. product-by-value analysis. B. design for destruction (DFD). C. organizing for product development. D. product lifecycle management (PLM). E. manufacturability and value engineering.
Answer: E, Manufacturability and value engineering
What is the practice of transferring a firm's activities that have traditionally been internal to external suppliers? A. backsourcing B. farshoring C. nearshoring D. offshoring E. outsourcing Ch. 2
Answer: E, Outsourcing
Porter's Five Forces Model contains which of the following? A. potential entrants B. customers C. immediate rivals D. suppliers E. All of the above. Q57 2.4-6
Answer: E, all of the above
What term is given to those individuals with a vested interest in an organization, including customers, distributors, suppliers, owners, lenders, employees, and community members? A. alumni B. investors C. stockholders D. vestors E. stakeholders Q50 1.10-5
Answer: E, stakeholders
How might you measure service quality in a hotel? A. Number of minutes waiting to check in. B. Accuracy of room bill. C. Response time for room service. D. Any unserviceable item in the room (light, TV, radio, mini-bar, etc.) E. Room available by 3:00 PM. F. All of the above. Ch. 6
Answer: F, all of the above
SWOT analysis is a method of determining external strengths and weaknesses and internal opportunities and threats. True False Q35 2.5-2
Answer: False
A decision maker who uses the maximax criterion when solving a problem under conditions of uncertainty is: A. an optimist. B. a pessimist. C. an optometrist. D. an economist. E. making a serious mistake; maximax is not appropriate for conditions of uncertainty.
answer: A, an optimist
Self-checkout at a grocery store is an example of A. customer participation in service delivery. B. customer participation in service design. C. complete automation. D. delayed customization.
answer: A, customer participation in service delivery
What is the ability to respond with little penalty in time, cost, or customer value? A. flexibility B. postponement C. repetitive process D. mass customization
answer: A, flexibility
Which of the following phrases best describes product focus? A. high fixed costs, low variable costs B. Finished goods are usually made to order. C. low volume, high variety D. high inventory E. Processes are designed to perform a wide variety of activities.
answer: A, high fixed costs, low variable costs
The most aggressive and risky approach to capacity planning is A. leading demand with one-step expansion. B. lagging demand with incremental expansion. C. attempts to have an average capacity that straddles demand with incremental expansion. D. leading demand with incremental expansion. Ch. 7S
answer: A, leading demand with one-step expansion
Process X has fixed costs of $10,000 and variable costs of $2.40 per unit. Process Y has fixed costs of $9,000 and variable costs of $2.25 per unit. Which of the following statements is TRUE? A. Process Y is cheaper than process X at all volumes. B. The crossover point is approximately 6667 units. C. Process X should be selected for very large production volumes. D. It is impossible for one process to have both of its costs lower than those of another process. E. Process X is more profitable than process Y and should be selected.
answer: A, process Y is cheaper than process X at all volumes.
The likelihood that a decision maker will ever receive a payoff precisely equal to the EMV when making any one decision is: A. high (near 100%). B. low (near 0%). C. dependent upon the number of alternatives. D. dependent upon the number of states of nature. E. None of the above.
answer: B, low (near 0%)
One hundred percent inspection A. is practical and an excellent fit for world-class manufacturers. B. means that every part is checked to see whether or not it is defective. C. catches all of the defective parts. D. means that only good parts will be shipped to a customer. Ch. 6
answer: B, means that every part is checked to see whether or not it is defective
Pareto charts are used to: A. show the range of values of a measurement and the frequency with which each value occurs. B. organize errors, problems, or defects. C. outline production schedules. D. show material flow. E. identify inspection points in a process.
answer: B, organize errors, problems, or defects.
What is a course of action or strategy that may be chosen by a decision maker? A. mode B. state of nature C. alternative D. mission
answer: C, alternative
A large quantity and large variety of products are produced in A. repetitive focus. B. product focus. C. mass customization. D. process focus. Ch. 7
answer: C, mass customization
Which of the following is NOT an external failure cost? A. returned goods B. costs to society C. scrap D. lost goodwill
answer: C, scrap
High fixed costs and low variable costs are typical of which approach? A. product B. process C. mass customization D. repetitive E. Both A and C. Ch. 7.1-20
answer: E, Both A & C
PDCA is most often applied with regard to which aspect of TQM? A. employee empowerment B. JIT C. benchmarking D. Six Sigma E. continuous improvement Ch. 6.3-15
answer: E, continuous improvement
Break-even is the number of units at which: A. total revenue equals price times quantity. B. total revenue equals total fixed cost. C. total profit equals total cost. D. total revenue equals total variable cost. E. total revenue equals total cost.
answer: E, total revenue equals total cost
Which decision-making rule is known as a "pessimistic" decision criterion? A. minimin B. minimax C. maximin D. maximax
answer: maxmin
Zhu Manufacturing is considering the introduction of a family of new products. Long-term demand for the product group is somewhat predictable, so the manufacturer must be concerned with the risk of choosing a process that is inappropriate. Faye Zhu is VP of operations. She can choose among batch manufacturing or custom manufacturing, or she can invest in group technology. Zhu won't be able to forecast demand accurately until after she makes the process choice. Demand will be classified into four compartments: poor, fair, good, and excellent. The table below indicates the payoffs (profits) associated with each process/demand combination, as well as the probabilities of each long-term demand level: Poor Fair Good Excellent Probability 0.05 0.40 0.20 0.35 Batch -$300,000 $1,000,000 $1,200,000 $1,400,000 Custom $100,000 $400,000 $750,000 $700,000 Group technology -$1,000,000 -$500,000 $500,000 $2,200,000 A. The alternative that provides Zhu the greatest monetary value (EMV) is? B. The amount that Faye Zhu would be willing to pay for a forecast that would accurately determine the level of demand in the future? Ch. MOD A
a) The alternative that provides Zhu the greatest expected monetary value (EMV) is Batch. The EMV for this decision is $1115000 b) The amount that Faye Zhu would be willing to pay for a forecast that would accurately determine the level of demand in the future = $300,000
