MKTG 372 Chapter 7 Test Bank

A make-to-order firm will work with the customer to design the product and then make it from purchased materials, parts, and components

FALSE

Which of the following is not a basic type of process structure? A. Product-process matrix B. Work center C. Manufacturing cell D. Assembly line E. Continuous process

A. Product-process matrix

A difference between project and continuous flow categories of process flow structures is which of the following? A. The size and bulk of the product B. Discrete parts moving from workstation to workstation C. Degree of equipment specialization D. Being a "virtual factory" E. Profit per unit

A. The size and bulk of the product

In a work center, machine A has a 10-minute set-up time per batch and a 2-minute per unit run time. Machine B performs the identical function but has a set-up time of 30 minutes and a 1-minute run time per unit. The work center makes products in batches ranging from 1 unit to 100 units. Assuming capacity is not a limitation on either machine, in order to minimize the total processing time, on which batches should machine B be used? A. All batches should be run on machine B. B. Batches of more than 20 units should be run on machine B. C. Batches of fewer than 80 units should be run on machine B. D. Batches with up to 50 units should be run on machine B. E. No batches should be run on machine B.

B. Batches of more than 20 units should be run on machine B. (Total processing time for a batch of size Q: In Machine A: 10 + 2Q. In Machine B: 30 + 1Q. Point of indifference is where 10 + 2Q = 30 + Q or Q = 20. That is, for batches of size less than 20, total processing time is smaller in Machine A and for batches of size greater than 20, total processing time is smaller in Machine B. Thus, B is the most correct answer)

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? A. The company will recover its initial investment. B. The company's total margin will be less than its investment. C. It is a good investment. D. The break-even is lower than the 15,000 units that are expected to sell. E. All of these

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

Which of the following basic types of process structures is one in which similar equipment or functions are grouped together? A. Project B. Work center C. Manufacturing cell D. Assembly line E. Continuous process

B. Work center

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? A. 5,000 units B. 6,000 units C. 8,000 units D. 11,000 units E. 12,000 units

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

Which of the following basic types of process structures is one in which equipment or work processes are arranged according to the progressive steps by which the product is made? A. Project B. Work center C. Manufacturing cell D. Assembly line E. Continuous process

D. Assembly line

Which of the following is not a step in developing a manufacturing cell layout? A. Grouping parts into families that follow a common sequence of steps B. Identifying dominant flow patterns of parts families as a basis for location of processes C. Physically grouping machines and processes into cells D. Disposing of leftover machinery and outsourcing ungrouped processes E. None of these

D. Disposing of leftover machinery and outsourcing ungrouped processes

Which of the following is not considered a major work flow structure? A. Work center B. Project C. Assembly line D. Fabrication E. Continuous flow

D. Fabrication

Which of the following is a basic type of process structure? A. Process flow diagram B. Product matrix C. Process matrix D. Work center E. Manual assembly

D. Work center

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? A. 500 units B. 667 units C. 790 units D. 900 units E. 1,000 units

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

The placement of which of the following is not determined by production process organization decisions? A. Departments B. Work groups C. Workstations D. Machines E. Emergency exits

E. Emergency exits

A continuous process indicates production of discrete parts moving from workstation to workstation at a controlled rate.

FALSE

Break-even analysis can only be used in production equipment decision making when dealing solely with fixed costs, not variable costs

FALSE

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

FALSE

The closer the customer is to the customer order decoupling point, the longer it takes the customer to receive the product

FALSE

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

FALSE

The time needed to respond to a customer's order is called the customer response time

FALSE

Work-center layouts allocate dissimilar machines into cells to work on products that have dissimilar processing requirements

FALSE

A general-purpose machine is less capable than a special-purpose machine in certain tasks but can perform a broader variety of tasks

TRUE

A high-level map or diagram of a supply chain process can be useful to understand how material flows and where inventory is held

TRUE

A project layout is characterized by a high degree of task ordering

TRUE

A project layout is characterized by a relatively low number of production units in comparison with process and product layout formats

TRUE

An example of an assemble-to-order firm is Dell Computer

TRUE

Assemble-to-order means moving the customer order decoupling point from finished goods to components

TRUE

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

Engineer-to-order firms will work with the customer to design the product and then make it from purchased materials, parts, and components

TRUE

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

One methodology used to evaluate equipment investment decisions where the investment entails an initial investment, fixed costs, and variable costs is break-even analysis

TRUE

One trade-off illustrated by the product-process matrix is between flexibility and cost.

TRUE

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

TRUE

The closer the customer is to the customer order decoupling point, the more quickly the customer receives the product

TRUE

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

TRUE

The focus in the make-to-stock environment is on providing finished goods where and when the customers want them

TRUE

The product-process matrix shows the relationship between process structures and product volume and variety characteristics

TRUE

The term "assembly line" refers to progressive assembly linked by some material handling device

TRUE

The volume requirements for the product are one determinant of the choice of which process structure to select

TRUE