Prod Ops Test 1
Knowledge about challenges specific to the operations function can help marketing personnel to judge how _____________ new product designs will be
manufacturable
In the 1970s and early 1980s in the United States, organizations concentrated on:
marketing and financial strategies.
What is credited with gains in industrial productivity, increased standards of living, and affordable products?
mass production
Which of the following is not an ongoing trend in manufacturing?
mass production for greater economies of scale
Determining the worst payoff for each alternative and choosing the alternative with the "best worst" is the approach called:
maximin.
The maximin approach to decision making refers to:
maximizing the minimum return.
Two widely used metrics of variation are the __________ and the _________.
mean; standard deviation
Which one of these is not used in decision making under risk?
minimax regret
The term "opportunity loss or regret" is most closely associated with:
minimax regret.
The fundamental purpose for the existence of any organization is described by its:
mission statement.
Which of the following factors would tend to reduce productivity?
more inexperienced workers
Farming is an example of:
nonmanufactured goods.
Scheduling personnel is an example of an operations management:
operational decision.
With regard to operations strategy, organization strategy should, ideally, take into account:
operations' strengths and weaknesses.
The external elements of SWOT analysis are:
opportunities and threats
Years ago in the overnight delivery business, providing package tracking capability gave some firms a competitive advantage. Now, all firms must offer this capability simply to be in this line of business. This is an example of ______________ becoming ____________ over time.
order winners; order qualifiers
An organization's mission statement serves as the basis for:
organizational goals.
Productivity is expressed as:
output divided by input.
Value added can be calculated by:
outputs minus inputs
Managing the supply chain has become more important as a result of firms increasing their levels of:
outsourcing
Manufacturing work sent to other countries is called
outsourcing.
Modern firms increasingly rely on other firms to supply goods and services instead of doing these tasks themselves. This increased level of _____________ is leading to increased emphasis on ____________ management.
outsourcing; supply chain
Operation X feeds into operation Y. Operation X has an effective capacity of 55 units per hour. Operation Y has an effective capacity of 50 units per hour. Finding a way to increase Y's effective capacity would be an example of ________ a constraint.
overcoming
Outsourcing some production is a means of _________ a capacity constraint.
overcoming
The method of financial analysis which focuses on the length of time it takes to recover the initial cost of an investment is:
payback.
A tabular presentation that shows the outcome for each decision alternative under the various possible states of nature is called a:
payoff table.
Sensitivity analysis is required because:
payoffs and probabilities are estimates.
The responsibilities of the operations manager are
planning, organizing, staffing, directing, and controlling.
Seasonal variations are often easier to deal with in capacity planning than random variations because seasonal variations tend to be:
predictable.
Increasing the service offered to the customer makes it more difficult to compete on the basis of:
price
The ratio of good output to quantity of raw material input is called
process yield.
Which of the following is not a factor that affects productivity?
product price
Competitiveness doesn't include:
profitability
Maximum capacity refers to the upper limit of:
rate of output.
Dealing with the fact that certain aspects of any management situation are more important than others is called:
recognition of priorities.
Which of the following is the case where capacity is measured in terms of inputs?
restaurant
The term "suboptimization" is best described as the:
result of individual departments making the best decisions for their own areas but hurting other areas.
Some companies attempt to maximize the revenue they receive from fixed operating capacity by influencing demands through price manipulation. This is an example of:
revenue management.
The expected monetary value criterion (EMV) is the decision-making approach used with the decision environment of:
risk.
Core competencies in organizations generally do not relate to:
sales price.
Short-term considerations in determining capacity requirements include:
seasonal demand variations.
Testing how a problem solution reacts to changes in one or more of the model parameters is called:
sensitivity analysis.
Which of the following is not a key factor of competitiveness?
size of organization
Production systems with customized outputs typically have relatively
skilled workers.
Which of the following makes using present value approaches in capacity decisions difficult?
Capacity decisions are made amidst much uncertainty, so cash flows cannot be estimated with great accuracy.
The Balanced Scorecard is a useful tool for helping managers translate their strategy into action in the following areas:
Customers; Financial; Internal Business Processes; Learning and Growth
Measurement of productivity in service is more straightforward than in manufacturing since it is not necessary to take into account the cost of materials.
False
Mission statements should be as specific as possible regarding exactly how they will be accomplished.
False
Most people encounter operations only in profit-making organizations.
False
National productivity is determined by averaging the productivity measures of various companies or industries
False
Operations management and marketing are the two functional areas that exist to support activities in other functions such as accounting, finance, IT, and human resources.
False
Operations managers are responsible for assessing consumer wants and needs and selling and promoting the organization's goods or services.
False
Operations managers, who usually use quantitative approaches, are not really concerned with ethical decision making.
False
Operations, marketing, and finance function independently of each other in most organizations.
False
Organizational strategy should be determined without considering the realities of functional area strengths and weaknesses since they can be changed to meet our strategy
False
Outsourcing tends to improve quality but at the cost of lowered productivity
False
Productivity is defined as the ratio of input to output.
False
Productivity tends to be only a very minor factor in an organization's ability to compete
False
Service operations require additional inventory because of the unpredictability of consumer demand.
False
Special-purpose technology is a common way of offering increased customization in manufacturing or services without taking on additional labor costs.
False
Stating capacity in dollar amounts generally results in a consistent measure of capacity regardless of the actual units of measure.
False
The current trend toward global operations has made capacity decisions much easier since we have the whole world in which to consider operations.
False
The more current capacity exceeds desired capacity, the greater the opportunity for profit.
False
The operations manager has primary responsibility for making operations system design decisions, such as system capacity and location of facilities.
False
The word "technology" is used only to refer to "information technology."
False
Utilization is defined as the ratio of effective capacity to design capacity.
False
Determining the average payoff for each alternative and choosing the alternative with the highest average is the approach called:
Laplace.
In addition to operations, which of the following is considered a "line" function?
Sales
___________ is generally used to facilitate an organization strategy that emphasizes low cost.
Standardization
Which of the following principles emphasizes that actions should make the community as a whole better off?
The Common Good Principle
Elton Mayo's Hawthorne experiments were the focal point of the human relations movement, which emphasized the importance of the human element in job design.
True
Environmental scanning is a search for events or trends that present either threats or opportunities to the organization.
True
Increasing productivity and also quality will result in increased capacity.
True
Lean production systems incorporate the advantages of both mass production and craft production.
True
Many operations management decisions can be described as trade-offs.
True
Often, the collective success or failure of companies' operations functions will impact the ability of a nation to compete with other nations.
True
One concern in the design of production systems is the degree of standardization.
True
People who work in the field of operations should have skills that include both knowledge and people skills.
True
Prior to the Industrial Revolution, goods were produced primarily by craftsmen or their apprentices using custom-made parts.
True
Productivity is defined as the ratio of output to input.
True
Productivity is directly related to the ability of an organization to compete.
True
Service involves a much higher degree of customer contact than manufacturing.
True
Service often requires greater labor content, whereas manufacturing is more capital intensive.
True
Services often don't fit simple yield measurements
True
Standardization has the advantage of reducing variability.
True
Strategy includes both organizational and functional strategies.
True
The Pareto phenomenon is one of the most important and pervasive concepts that can be applied at all levels of management.
True
The break-even quantity can be determined by dividing the fixed costs by the difference between the revenue per unit and the variable cost per unit.
True
The greater the degree of customer involvement, the more challenging the design and management of operations.
True
The hierarchy and sequence of planning and decision making is: mission, organizational strategy, tactics, and operational decisions
True
The majority of our textbook deals with tactical operations that support established functional strategies.
True
The optimal solutions produced by quantitative techniques should always be evaluated in terms of the larger framework.
True
The term capacity refers to the maximum quantity an operating unit can process over a given period of time.
True
The use of models will guarantee the best possible decisions.
True
The value of outputs is measured by the prices customers are willing to pay for goods or services.
True
Tracking productivity measures over time enables managers to judge organizational performance and decide where improvements are needed.
True
Traditional strategies of business organizations have tended to emphasize cost minimization or product differentiation.
True
Wage and salary increases that are not accompanied by productivity increases tend to exert inflationary pressures on a nation's economy.
True
A decision tree is:
a schematic representation of alternatives.
Which of the following is not a characteristic of service operations?
easy measurement of productivity
The maximum possible output given a product mix, scheduling difficulties, quality factors, and so on is:
effective capacity.
The ratio of actual output to effective capacity is:
efficiency
Which of the following is not among the chief reasons organizations fail?
emphasizing labor productivity in labor-intensive environments
Which of the following would not be a potential upside in a decision to outsource?
knowledge sharing
Marketing depends on operations for information regarding:
lead time
Which phrase best describes the term "bounded rationality"?
limits imposed on decision making by costs, time, and technology
Operations and sales are the two ________ functions in businesses
line
The decision to outsource opens the firm up to certain risks, among them _________ and ________.
loss of direct control over operations; need to disclose proprietary information
Design capacity refers to the maximum output that can possibly be attained.
True
Which of these factors would be least likely to affect productivity?
advertising
A market constraint can be overcome by:
advertising or price changes.
Cost and competitive priorities reduce effective capacities.
FALSE
If the unit cost to buy something is less than the variable cost to make it, the decision to make or buy is based solely on the fixed costs.
False
Improving efficiency will guarantee a similar improvement in productivity.
False
If one organization is better able than most to respond to changes in demands or opportunities, we say that organization exhibits higher:
agility.
Which of these factors would not be subtracted from design capacity when calculating effective capacity?
all of the choices
Production units have an optimal rate of output where:
average unit costs are minimum.
If the output rate is increased but the average unit costs also increase, we are experiencing:
diseconomies of scale.
In cost-volume analysis, costs that vary directly with volume of output are referred to as fixed costs because they are a fixed percentage of output levels.
False
Increasing capacity just before a bottleneck operation will improve the output of the process.
False
A decision maker's worst option has an expected value of $1,000, and her best option has an expected value of $3,000. With perfect information, the expected value would be $5,000. The decision maker has discovered a firm that will, for a fee of $1,000, make her position-risk free. How much better off will her firm be if she takes this firm up on its offer?
$1,000 Subtract the fee from the expected value with perfect information
The manager of a carpet store is trying to determine the best installation crew size. He has tried various crew sizes with the results shown below. Based on productivity, what crew size do you recommend? Look at files
2
Which of the following statements about variation is false?
Any variation makes a production process less productive.
Managers should most often rely on quantitative techniques for important decisions since quantitative approaches result in more accurate decisions.
False
One local hospital has just enough space and funds currently available to start either a cancer or heart research lab. If administration decides on the cancer lab, there is a 20 percent chance of getting $100,000 in outside funding from the American Cancer Society next year, and an 80 percent chance of getting nothing. If the cancer research lab is funded the first year, no additional outside funding will be available the second year. However, if it is not funded the first year, then management estimates the chances are 50 percent it will get $100,000 the following year, and 50 percent that it will get nothing again. If, however, the hospital's management decides to go with the heart lab, then there is a 50 percent chance of getting $50,000 in outside funding from the American Heart Association the first year and a 50 percent change of getting nothing. If the heart lab is funded the first year, management estimates a 40 percent chance of getting another $50,000 and a 60 percent chance of getting nothing additional the second year. If it is not funded the first year, then management estimates a 60 percent chance for getting $50,000 and a 40 percent chance for getting nothing in the following year. For both the cancer and heart research labs, no further possible funding is anticipated beyond the first two years. What would be the total payoff if the heart lab were funded in both the first and second years?
$100,000
A decision maker's worst option has an expected value of $1,000, and her best option has an expected value of $3,000. With perfect information, the expected value would be $5,000. What is the expected value of perfect information?
$2,000 Subtract the expected value without perfect information from the expected value with perfect information.
Option A has an expected value of $2,000, a minimum payoff of -$4,000, and a maximum payoff of $18,000. Option B has an expected value of $2,200, a minimum payoff of -$1,000, and a maximum payoff of $6,000. Option C has an expected value of $1,900, a minimum payoff of $100, and a maximum payoff of $2,000. In this situation, a risk-averse decision maker would pay __________ for his risk aversion, and a risk-seeking decision maker would pay __________ for his risk seeking.
$300; $200 The risk-averse decision maker would get an expected value of only $1,900, which is $300 less than that of a risk-neutral decision maker. The risk-seeking decision maker would get an expected value of only $2,200, which is $200 less than that of the risk-neutral decision maker.
Doctor J. is considering purchasing a new blood analysis machine to test for HIV; it will cost $60,000. He estimates that he could charge $25.00 for an office visit to have a patient's blood analyzed, while the actual cost of a blood analysis would be $5.00. What would be his profit if he were to perform 5,000 HIV blood analyses?
$40,000 Total revenue would be $125,000. Total cost would be $85,000 (fixed = $60,000; variable = $25,000).
One local hospital has just enough space and funds currently available to start either a cancer or heart research lab. If administration decides on the cancer lab, there is a 20 percent chance of getting $100,000 in outside funding from the American Cancer Society next year, and an 80 percent chance of getting nothing. If the cancer research lab is funded the first year, no additional outside funding will be available the second year. However, if it is not funded the first year, then management estimates the chances are 50 percent it will get $100,000 the following year, and 50 percent that it will get nothing again. If, however, the hospital's management decides to go with the heart lab, then there is a 50 percent chance of getting $50,000 in outside funding from the American Heart Association the first year and a 50 percent change of getting nothing. If the heart lab is funded the first year, management estimates a 40 percent chance of getting another $50,000 and a 60 percent chance of getting nothing additional the second year. If it is not funded the first year, then management estimates a 60 percent chance for getting $50,000 and a 40 percent chance for getting nothing in the following year. For both the cancer and heart research labs, no further possible funding is anticipated beyond the first two years. What is the expected value for the decision alternative to select the heart lab?
$50,000
The owner of Firewood To Go is considering buying a hydraulic wood splitter which sells for $50,000. He figures it will cost an additional $100 per cord to purchase and split wood with this machine, while he can sell each cord of split wood for $125. What would the potential profit be if he were to split 4,000 cords of wood with this machine?
$50,000
A Virginia county is considering whether to pay $50,000 per year to lease a prisoner transfer facility in a prime location near Washington, D.C. They estimate it will cost $50 per prisoner to process the paperwork at this new location. The county is paid a $75 commission for each new prisoner they process. What would be the county's annual profit if they were to process 4,000 prisoners per year at this new location?
$50,000 Total revenue would be $300,000. Total cost would be $250,000 (fixed = $50,000; variable = $200,000).
One local hospital has just enough space and funds currently available to start either a cancer or heart research lab. If administration decides on the cancer lab, there is a 20 percent chance of getting $100,000 in outside funding from the American Cancer Society next year, and an 80 percent chance of getting nothing. If the cancer research lab is funded the first year, no additional outside funding will be available the second year. However, if it is not funded the first year, then management estimates the chances are 50 percent it will get $100,000 the following year, and 50 percent that it will get nothing again. If, however, the hospital's management decides to go with the heart lab, then there is a 50 percent chance of getting $50,000 in outside funding from the American Heart Association the first year and a 50 percent change of getting nothing. If the heart lab is funded the first year, management estimates a 40 percent chance of getting another $50,000 and a 60 percent chance of getting nothing additional the second year. If it is not funded the first year, then management estimates a 60 percent chance for getting $50,000 and a 40 percent chance for getting nothing in the following year. For both the cancer and heart research labs, no further possible funding is anticipated beyond the first two years. What is the expected value for the decision alternative to select the cancer lab?
$60,000
The owner of Firewood To Go is considering buying a hydraulic wood splitter which sells for $50,000. He figures it will cost an additional $100 per cord to purchase and split wood with this machine, while he can sell each cord of split wood for $125. How many cords of wood would he have to split with this machine to break even?
2,000
One local hospital has just enough space and funds currently available to start either a cancer or heart research lab. If administration decides on the cancer lab, there is a 20 percent chance of getting $100,000 in outside funding from the American Cancer Society next year, and an 80 percent chance of getting nothing. If the cancer research lab is funded the first year, no additional outside funding will be available the second year. However, if it is not funded the first year, then management estimates the chances are 50 percent it will get $100,000 the following year, and 50 percent that it will get nothing again. If, however, the hospital's management decides to go with the heart lab, then there is a 50 percent chance of getting $50,000 in outside funding from the American Heart Association the first year and a 50 percent change of getting nothing. If the heart lab is funded the first year, management estimates a 40 percent chance of getting another $50,000 and a 60 percent chance of getting nothing additional the second year. If it is not funded the first year, then management estimates a 60 percent chance for getting $50,000 and a 40 percent chance for getting nothing in the following year. For both the cancer and heart research labs, no further possible funding is anticipated beyond the first two years. What is the expected value for the optimum decision alternative?
$60,000
The head of operations for a movie studio wants to determine which of two new scripts they should select for their next major production. (Due to budgeting constraints, only one new picture can be undertaken at this time.) She feels that script 1 has a 70 percent chance of earning about $10,000,000 over the long run, but a 30 percent chance of losing $2,000,000. If this movie is successful, then a sequel could also be produced, with an 80 percent chance of earning $5,000,000, but a 20 percent chance of losing $1,000,000. On the other hand, she feels that script 2 has a 60 percent chance of earning $12,000,000, but a 40 percent chance of losing $3,000,000. If successful, its sequel would have a 50 percent chance of earning $8,000,000, but a 50 percent chance of losing $4,000,000. Of course, in either case, if the original movie were a flop, then no sequel would be produced. What is the expected value of selecting script 2?
$7,200,000
The owner of a greenhouse and nursery is considering whether to spend $6,000 to acquire the licensing rights to grow a new variety of rosebush, which she could then sell for $6 each. Per-unit variable cost would be $3. What would the profit be if she were to produce and sell 5,000 rosebushes?
$9,000
The head of operations for a movie studio wants to determine which of two new scripts they should select for their next major production. (Due to budgeting constraints, only one new picture can be undertaken at this time.) She feels that script 1 has a 70 percent chance of earning about $10,000,000 over the long run, but a 30 percent chance of losing $2,000,000. If this movie is successful, then a sequel could also be produced, with an 80 percent chance of earning $5,000,000, but a 20 percent chance of losing $1,000,000. On the other hand, she feels that script 2 has a 60 percent chance of earning $12,000,000, but a 40 percent chance of losing $3,000,000. If successful, its sequel would have a 50 percent chance of earning $8,000,000, but a 50 percent chance of losing $4,000,000. Of course, in either case, if the original movie were a flop, then no sequel would be produced. What would be the total payoff if script 1 were a success, but its sequel were not?
$9,000,000 This is the EMV of the best path that emerges if the first script is a success.
The head of operations for a movie studio wants to determine which of two new scripts they should select for their next major production. (Due to budgeting constraints, only one new picture can be undertaken at this time.) She feels that script 1 has a 70 percent chance of earning about $10,000,000 over the long run, but a 30 percent chance of losing $2,000,000. If this movie is successful, then a sequel could also be produced, with an 80 percent chance of earning $5,000,000, but a 20 percent chance of losing $1,000,000. On the other hand, she feels that script 2 has a 60 percent chance of earning $12,000,000, but a 40 percent chance of losing $3,000,000. If successful, its sequel would have a 50 percent chance of earning $8,000,000, but a 50 percent chance of losing $4,000,000. Of course, in either case, if the original movie were a flop, then no sequel would be produced. What is the expected value for the optimum decision alternative?
$9,060,000
The head of operations for a movie studio wants to determine which of two new scripts they should select for their next major production. (Due to budgeting constraints, only one new picture can be undertaken at this time.) She feels that script 1 has a 70 percent chance of earning about $10,000,000 over the long run, but a 30 percent chance of losing $2,000,000. If this movie is successful, then a sequel could also be produced, with an 80 percent chance of earning $5,000,000, but a 20 percent chance of losing $1,000,000. On the other hand, she feels that script 2 has a 60 percent chance of earning $12,000,000, but a 40 percent chance of losing $3,000,000. If successful, its sequel would have a 50 percent chance of earning $8,000,000, but a 50 percent chance of losing $4,000,000. Of course, in either case, if the original movie were a flop, then no sequel would be produced. What is the expected value of selecting script 1?
$9,060,000 This represents the expected value of the payoffs associated with the script 1 branch of the decision tree
The head of operations for a movie studio wants to determine which of two new scripts they should select for their next major production. (Due to budgeting constraints, only one new picture can be undertaken at this time.) She feels that script 1 has a 70 percent chance of earning about $10,000,000 over the long run, but a 30 percent chance of losing $2,000,000. If this movie is successful, then a sequel could also be produced, with an 80 percent chance of earning $5,000,000, but a 20 percent chance of losing $1,000,000. On the other hand, she feels that script 2 has a 60 percent chance of earning $12,000,000, but a 40 percent chance of losing $3,000,000. If successful, its sequel would have a 50 percent chance of earning $8,000,000, but a 50 percent chance of losing $4,000,000. Of course, in either case, if the original movie were a flop, then no sequel would be produced. What is the probability that script 1 will be a success, but its sequel will not?
.14 Multiply the two probabilities.
The owner of a greenhouse and nursery is considering whether to spend $6,000 to acquire the licensing rights to grow a new variety of rosebush, which she could then sell for $6 each. Per-unit variable cost would be $3. How many rosebushes would she have to produce and sell in order to break even?
2,000
One local hospital has just enough space and funds currently available to start either a cancer or heart research lab. If administration decides on the cancer lab, there is a 20 percent chance of getting $100,000 in outside funding from the American Cancer Society next year, and an 80 percent chance of getting nothing. If the cancer research lab is funded the first year, no additional outside funding will be available the second year. However, if it is not funded the first year, then management estimates the chances are 50 percent it will get $100,000 the following year, and 50 percent that it will get nothing again. If, however, the hospital's management decides to go with the heart lab, then there is a 50 percent chance of getting $50,000 in outside funding from the American Heart Association the first year and a 50 percent change of getting nothing. If the heart lab is funded the first year, management estimates a 40 percent chance of getting another $50,000 and a 60 percent chance of getting nothing additional the second year. If it is not funded the first year, then management estimates a 60 percent chance for getting $50,000 and a 40 percent chance for getting nothing in the following year. For both the cancer and heart research labs, no further possible funding is anticipated beyond the first two years. What is the probability that the heart lab will be funded in both the first and second years?
.2
Two professors at a nearby university want to coauthor a new textbook in either economics or statistics. They feel that if they write an economics book, they have a 50 percent chance of placing it with a major publisher, and it should ultimately sell about 40,000 copies. If they cannot get a major publisher to take it, then they feel they have an 80 percent chance of placing it with a smaller publisher, with ultimate sales of 30,000 copies. On the other hand, if they write a statistics book, they feel they have a 40 percent chance of placing it with a major publisher, and it should result in ultimate sales of about 50,000 copies. If they cannot get a major publisher to take it, they feel they have a 50 percent chance of placing it with a smaller publisher, with ultimate sales of 35,000 copies. What is the probability that the statistics book would wind up being placed with a smaller publisher?
.3 Multiply the probability of it not being placed with a big publisher (.6) times the probability of it then being placed with small publisher (.5).
Two professors at a nearby university want to coauthor a new textbook in either economics or statistics. They feel that if they write an economics book, they have a 50 percent chance of placing it with a major publisher, and it should ultimately sell about 40,000 copies. If they cannot get a major publisher to take it, then they feel they have an 80 percent chance of placing it with a smaller publisher, with ultimate sales of 30,000 copies. On the other hand, if they write a statistics book, they feel they have a 40 percent chance of placing it with a major publisher, and it should result in ultimate sales of about 50,000 copies. If they cannot get a major publisher to take it, they feel they have a 50 percent chance of placing it with a smaller publisher, with ultimate sales of 35,000 copies. What is the probability that the economics book would wind up being placed with a smaller publisher?
.4 Multiply the probability of it not being placed with a big publisher (.5) times the probability of it then being placed with a small publisher (.8).
Option A has a payoff of $10,000 in environment 1 and $20,000 in environment 2. Option B has a payoff of $12,500 in environment 1 and $17,500 in environment 2. Once the probability of environment 2 exceeds ______, option A becomes the better choice.
.50
Option A has a payoff of $10,000 in environment 1 and $20,000 in environment 2. Option B has a payoff of $5,000 in environment 1 and $27,500 in environment 2. Once the probability of environment 1 exceeds ______, option A becomes the better choice.
.60
The owner of a greenhouse and nursery is considering whether to spend $6,000 to acquire the licensing rights to grow a new variety of rosebush, which she could then sell for $6 each. Per-unit variable cost would be $3. If her available land has design and effective capacities of 3,000 and 2,000 rosebushes per year, respectively, and she expects to be 80 percent efficient in her use of this land, how many rosebushes does Rose plan to grow each year on this land?
1,600 Multiply the effective capacity of 2,000 rosebushes by 0.8.
The weekly output of a fabrication process is shown below, together with data for labor and material inputs. Standard selling price is $125 per unit. Overhead is charged weekly at the rate of $1,500 plus .5 times direct labor cost. Assume a 40-hour week and an hourly wage of $16. Material cost is $10 per foot. What is the average multifactor productivity? Look at files
1.457
Given the following information, what would utilization be? Effective capacity = 20 units per day Design capacity = 60 units per day Actual output = 15 units per day
1/4
In an assembly operation at a furniture factory, six employees assembled an average of 450 standard dining chairs per five-day week. What is the labor productivity of this operation?
15 chairs/worker/day
A Virginia county is considering whether to pay $50,000 per year to lease a prisoner transfer facility in a prime location near Washington, D.C. They estimate it will cost $50 per prisoner to process the paperwork at this new location. The county is paid a $75 commission for each new prisoner they process. How many prisoners would they have to process annually to break even at this new location?
2,000 Divide the fixed cost of $50,000 by the per-unit contribution margin of $25
Doctor J. is considering purchasing a new blood analysis machine to test for HIV; it will cost $60,000. He estimates that he could charge $25.00 for an office visit to have a patient's blood analyzed, while the actual cost of a blood analysis would be $5.00. How many HIV blood analyses would he have to perform in order to break even?
3,000 Divide the fixed cost of $60,000 by the per-unit contribution margin of $5.
The owner of Firewood To Go is considering buying a hydraulic wood splitter which sells for $50,000. He figures it will cost an additional $100 per cord to purchase and split wood with this machine, while he can sell each cord of split wood for $125. How many cords of wood would he have to split with this machine to make a profit of $30,000?
3,200
Doctor J. is considering purchasing a new blood analysis machine to test for HIV; it will cost $60,000. He estimates that he could charge $25.00 for an office visit to have a patient's blood analyzed, while the actual cost of a blood analysis would be $5.00. How many HIV blood analyses would he have to perform in order to make a profit of $15,000?
3,750 Add the desired profit to the fixed cost and then divide the sum by the per-unit contribution margin.
Two professors at a nearby university want to coauthor a new textbook in either economics or statistics. They feel that if they write an economics book, they have a 50 percent chance of placing it with a major publisher, and it should ultimately sell about 40,000 copies. If they cannot get a major publisher to take it, then they feel they have an 80 percent chance of placing it with a smaller publisher, with ultimate sales of 30,000 copies. On the other hand, if they write a statistics book, they feel they have a 40 percent chance of placing it with a major publisher, and it should result in ultimate sales of about 50,000 copies. If they cannot get a major publisher to take it, they feel they have a 50 percent chance of placing it with a smaller publisher, with ultimate sales of 35,000 copies. What is the expected value for the decision alternative to write the statistics book?
30,500 copies Multiply the expected value of the small publisher node (17,500 copies) by the likelihood of a large publisher rejecting the book (.6). Multiply the payoff of a large publisher (50,000 copies) by the likelihood of a large publisher accepting the book. Add these together.
What is the break-even quantity for the following situation? FC = $1,200 per week VC = $2 per unit Rev = $6 per unit
300
Two professors at a nearby university want to coauthor a new textbook in either economics or statistics. They feel that if they write an economics book, they have a 50 percent chance of placing it with a major publisher, and it should ultimately sell about 40,000 copies. If they cannot get a major publisher to take it, then they feel they have an 80 percent chance of placing it with a smaller publisher, with ultimate sales of 30,000 copies. On the other hand, if they write a statistics book, they feel they have a 40 percent chance of placing it with a major publisher, and it should result in ultimate sales of about 50,000 copies. If they cannot get a major publisher to take it, they feel they have a 50 percent chance of placing it with a smaller publisher, with ultimate sales of 35,000 copies. What is the expected value for the optimum decision alternative?
32,000 copies
Two professors at a nearby university want to coauthor a new textbook in either economics or statistics. They feel that if they write an economics book, they have a 50 percent chance of placing it with a major publisher, and it should ultimately sell about 40,000 copies. If they cannot get a major publisher to take it, then they feel they have an 80 percent chance of placing it with a smaller publisher, with ultimate sales of 30,000 copies. On the other hand, if they write a statistics book, they feel they have a 40 percent chance of placing it with a major publisher, and it should result in ultimate sales of about 50,000 copies. If they cannot get a major publisher to take it, they feel they have a 50 percent chance of placing it with a smaller publisher, with ultimate sales of 35,000 copies. What is the expected value for the decision alternative to write the economics book?
32,000 copies Multiply the expected value of the small publisher node (24,000 copies) by the likelihood of a large publisher rejecting the book. Multiply the payoff of a large publisher (40,000 copies) by the likelihood of a large publisher accepting the book. Add these together.
The owner of a greenhouse and nursery is considering whether to spend $6,000 to acquire the licensing rights to grow a new variety of rosebush, which she could then sell for $6 each. Per-unit variable cost would be $3. How many rosebushes would she have to produce and sell in order to make a profit of $6,000?
4,000 Add the desired profit of $6,000 to the fixed cost, then divide the sum by the per-unit contribution margin
Doctor J. is considering purchasing a new blood analysis machine to test for HIV; it will cost $60,000. He estimates that he could charge $25.00 for an office visit to have a patient's blood analyzed, while the actual cost of a blood analysis would be $5.00. If this new blood analysis machine has design and effective capacities of 6,000 and 5,000 blood analyses per year, respectively, and Dr. J. expects to be 80 percent efficient in his use of this machine, how many HIV blood analyses does he plan to perform each year?
4,000 Multiply the effective capacity by 0.8.
The owner of a greenhouse and nursery is considering whether to spend $6,000 to acquire the licensing rights to grow a new variety of rosebush, which she could then sell for $6 each. Per-unit variable cost would be $3. If her available land has design and effective capacities of 3,000 and 2,000 rosebushes per year respectively, and she plans to grow 1,200 rosebushes each year on this land, what will be the utilization of this land?
40 percent Divide actual output by the design capacity.
For fixed costs of $2,000, revenue per unit of $2, and variable cost per unit of $1.60, the break-even quantity is:
5,000.
A Virginia county is considering whether to pay $50,000 per year to lease a prisoner transfer facility in a prime location near Washington, D.C. They estimate it will cost $50 per prisoner to process the paperwork at this new location. The county is paid a $75 commission for each new prisoner they process. If the holding area at this new location has design and effective capacities of 10,000 and 7,500 prisoners processed annually, respectively, and 5,000 prisoners will be processed per year, what will be the utilization of the holding area?
50 percent Divide the actual output by the design capacity.
Gourmet Pretzels bakes soft pretzels on an assembly line. It currently bakes 800 pretzels each eight-hour shift. If the production is increased to 1,200 pretzels each shift, then productivity will have increased by:
50 percent.
An alternative will have fixed costs of $10,000 per month, variable costs of $50 per unit, and revenue of $70 per unit. The break-even point volume is:
500.
A Virginia county is considering whether to pay $50,000 per year to lease a prisoner transfer facility in a prime location near Washington, D.C. They estimate it will cost $50 per prisoner to process the paperwork at this new location. The county is paid a $75 commission for each new prisoner they process. How many prisoners would they have to process annually to make a profit of $100,000 at this new location?
6,000 Add the desired profit of $100,000 to the fixed costs, then divide the sum by the per-unit contribution margin
A Virginia county is considering whether to pay $50,000 per year to lease a prisoner transfer facility in a prime location near Washington, D.C. They estimate it will cost $50 per prisoner to process the paperwork at this new location. The county is paid a $75 commission for each new prisoner they process. If their holding area at this new location has design and effective capacities of 10,000 and 7,500 prisoners processed annually, respectively, and they plan to be 80 percent efficient in their use of this space, how many prisoners does the county plan to process per year?
6,000 Multiply the effective capacity by 0.8.
Given the following information, what would efficiency be? Effective capacity = 50 units per day Design capacity = 100 units per day Actual output = 30 units per day
60 percent
Given the following information, what would efficiency be? Effective capacity = 80 units per day Design capacity = 100 units per day Utilization = 48 percent
60 percent
The owner of Firewood To Go is considering buying a hydraulic wood splitter which sells for $50,000. He figures it will cost an additional $100 per cord to purchase and split wood with this machine, while he can sell each cord of split wood for $125. If, for this machine, design capacity is 50 cords per day, effective capacity is 40 cords per day, and actual output is anticipated to be 35 cords per day, what would be its utilization?
70 percent
Suppose operation X feeds directly into operation Y. All of X's output goes to Y, and Y has no other operations feeding into it. X has a design capacity of 80 units per hour and an effective capacity of 72 units per hour. Y has a design capacity of 100 units per hour. What is Y's maximum possible utilization?
72 percent If the maximum rate of output from X is 72 units per hour, then the maximum rate of input into Y (and therefore output from Y) is 72 units per hour.
Doctor J. is considering purchasing a new blood analysis machine to test for HIV; it will cost $60,000. He estimates that he could charge $25.00 for an office visit to have a patient's blood analyzed, while the actual cost of a blood analysis would be $5.00. If this new blood analysis machine has design and effective capacities of 6,000 and 5,000 blood analyses per year, respectively, and Dr. J. expects to perform 4,500 HIV blood analyses each year, what will be the utilization of this machine?
75 percent Divide the actual output by the design capacity.
The owner of Firewood To Go is considering buying a hydraulic wood splitter which sells for $50,000. He figures it will cost an additional $100 per cord to purchase and split wood with this machine, while he can sell each cord of split wood for $125. If, for this machine, design capacity is 50 cords per day, effective capacity is 40 cords per day, and actual output is expected to be 32 cords per day, what would be its efficiency?
80 percent
Suppose a country's productivity last year was 84. If this country's productivity growth rate of 5 percent is to be maintained, this means that this year's productivity will have to be:
88.2.
Which of the following is not true about the systems approach?
All of the choices are true.
Which of the following is not a reason why capacity decisions are so important?
Capacity affects organizations' images.
Which of the following is least likely to affect the cost an organization incurs in producing its products or services?
Price
"Value added" by definition is always a positive number since "added" implies increases.
False
A systems approach means that we concentrate on efficiency within a subsystem and thereby assure overall efficiency.
False
According to the reading on restaurant sourcing practices, only fast-food restaurants are able to bring in outsourced foods.
False
An organization that is twice as productive as its competitor will be twice as profitable
False
As long as we match a competitor on quality and price we will gain market share.
False
Assembly lines achieved productivity but at the expense of standard of living.
False
Capacity decisions are usually one-time decisions; once they have been made, we know the limits of our operations.
False
Companies are either producing goods or delivering services. This means that only one of the two types of operations management strategies are used.
False
Competitiveness relates to the profitability of an organization in the marketplace.
False
Global competition really only applies to multinational organizations
False
Goods-producing organizations are not involved in service activities.
False
Government statistics are a good source of data about productivity trends in the service sector.
False
If people would only work harder, productivity would increase.
False
Which of the following is true?
Functional strategies are shaped by corporate strategy.
Which of the following is not typically considered a cure for poor competitiveness?
Minimize attention to the operations function.
Which of the following is not a stage in the decision-making process?
Monitor the competition.
The fact that a few improvements in a few key areas of operations will have more impact than many improvements in many other areas is consistent with the:
Pareto phenomenon.
Which of the following characterizes decision making under uncertainty?
The likelihood of possible future events is unknown.
Which of the following would make decision trees an especially attractive decision-making tool?
The need to think through a possible sequence of decisions.
Which of the following is not a benefit of using models in decision making?
They force the decision maker to take into account qualitative issues such as personalities and emotions.
A business that is rated highly by its customers for service quality will tend to be more profitable than a business that is rated poorly.
True
A characteristic that was once an order winner may become an order qualifier, and vice versa.
True
A mission statement should provide a guide for the formulation of strategies for the organization.
True
A systems approach emphasizes interrelationships among subsystems, but its main theme is that the whole is greater than the sum of its individual parts.
True
Among Ford's many contributions was the introduction of mass production, using the concepts of interchangeable parts and division of labor.
True
An example of a strategic operations management decision is the choice of where to locate.
True
An example of a tactical operations management decision is determining employment levels
True
An example of an external factor that influences effective capacity is government safety regulations.
True
An example of an operational operations management decision is inventory level management.
True
As an abstraction of reality, a model is a simplified version of a real phenomenon.
True
Capacity increases are usually acquired in fairly large "chunks" rather than in smooth increments.
True
Capacity planning requires an analysis of needs: what kind, how much, and when.
True
A "product package" consists of:
a combination of goods and services.
Which of the following is not a determinant of effective capacity?
actual output
Utilization is defined as the ratio of:
actual output to design capacity.
Efficiency is defined as the ratio of:
actual output to effective capacity.
Which of the following is not a type of operations?
advertising
Which of the following is not a strategy to manage service capacity?
backordering
Students at a major university must go through several registration steps. Officials have observed that it is typically the case that the waiting line at the fee-payment station is the longest. This would seem to suggest that the fee-payment station is the ___________ in the student registration process.
bottleneck
Unbalanced systems are evidenced by:
bottleneck operations.
In a decision-making setting, if the manager has to contend with limits on the amount of information he or she can consider, this __________ can lead to a poor decision.
bounded rationality
Which of the following is essential to consider with respect to managing a process to meet demand?
capacity
Capacity in excess of expected demand that is intended to offset uncertainty is a:
capacity cushion.
Knowledge skills usually don't include
communication skills
The process of comparing outputs to previously established standards to determine if corrective action is needed is called:
controlling
Which of the following is not a key step toward improving productivity?
converting bond debt to stock ownership
Unique attributes of firms that give them a competitive edge are called:
core competencies.
Which of the following would be least important in the pursuit of a time-based strategy?
cost minimization
Which is not an area of significant difference between manufacturing and service operations?
cost per unit
The term "sensitivity analysis" is most closely associated with:
decision making under risk.
Which of the following is not an approach for decision making under uncertainty?
decision trees
Which of the following is not a criterion for developing capacity alternatives?
design structured, rigid systems
For firms competing in worldwide markets, conducting __________________ is more complex, since what works in one country or region might not work in another.
environmental analysis
For an organization to grow its market share, it must:
exceed minimum standards of acceptability for its products or services.
When determining the timing and degree of capacity change, one can use the approach of:
expand early strategy.
Among decision environments, uncertainty implies that states of nature have wide-ranging probabilities associated with them.
false
Decision trees, with their predetermined analysis of a situation, are really not useful in making health care decisions since every person is unique.
false
In reaching a decision, the alternative with the lowest cost should be ranked number 1.
false
Outsourcing some production is a means of supporting a constraint.
false
The maximax approach is a pessimistic strategy.
false
The maximin approach involves choosing the alternative with the highest payoff.
false
The value of perfect information is inversely related to losses predicted.
false
Measurements taken at various points in the transformation process for control purposes are called:
feedback.
Budgeting, analysis of investment proposals, and provision of funds are activities associated with the _______ function.
finance
Improving cash flow would be a reasonable thing to focus on when trying to overcome a _________ constraint.
financial
The key to successfully competing is understanding what customers want and then __________ satisfy those wants.
finding the best way to
Which of the following would tend to reduce effective capacity?
greater variety in the product line
When the output is less than the optimal rate of output, the average unit cost will be:
higher.
The first, and perhaps most important, step in constraint management is to ____________ the most pressing constraint.
identify
Which of the following would tend to increase the importance of supply chain management?
increased globalization
Operations management involves continuous decision making; hopefully most decisions made will be:
informed.
When buying component parts, risk does not include:
interest rate fluctuations.
Time-based approaches of business organizations focus on reducing the time to accomplish certain necessary activities. Time reductions seldom apply to:
internal audits.
The method of financial analysis which results in an equivalent interest rate is:
internal rate of return.
Supplying operations with parts and materials, performing work on products, and/or performing services are part of the firm's:
internal supply chain.
Which of the following does not relate to system design?
inventory management
Everything else being equal, a firm considering outsourcing can be reasonably certain that:
its supplier probably has more expertise in whatever is being outsourced.
Suppose a firm has decided to break its departments down into smaller units. While this likely will help with __________ issues, it raises the possibility that poor decisions will result due to __________.
span of control; suboptimization
Which one of the following would not generally be classified under the heading of transformation?
staffing
Product design and choice of location are examples of _______ decisions.
strategic
Where a firm locates would typically not affect that firm's
strategy.
A systemic view of the organization and its operations processes can help minimize the risk of __________ leading to a poor decision.
suboptimization
When a decision-making scenario involves two or more departments, if the individual departments pursue what is optimal for them, sometimes the overall organization suffers. This is an example of:
suboptimization.
The impact that a significant change in capacity will have on a key vendor is a:
supply chain factor.
Which of the following most involves coordinating the activities among all the elements of the business?
supply chain management
Business organizations consist of three major functions which, ideally
support one another.
Operation X feeds into operation Y. Operation X has an effective capacity of 55 units per hour. Operation Y has an effective capacity of 50 units per hour. Increasing X's effective capacity to ensure that Y's utilization is maximized would be an example of ________ a(n) constraint.
supporting
Which of the following refers to service and production processes that use resources in ways that do not harm ecological systems?
sustainability
Taking a systems viewpoint with regard to operations in today's environment increasingly leads decision makers to consider ______________ in response to the ___________.
sustainability; threat of global warming
Product design and process selection are examples of _______ decisions.
system design
Which of the following is not a reason for poor performance of our organization in the marketplace?
taking advantage of strengths/opportunities, and recognizing competitive threats
At the break-even point:
total cost equals total revenue.
A weakness of the maximin approach is that it loses some information.
true
Among decision environments, risk implies that certain parameters have probabilistic outcomes.
true
Bounded rationality refers to the limits imposed on decision making because of costs, human abilities, time, technology, and/or availability of information.
true
Capacity decisions often involve a long-term commitment of resources which, when implemented, are difficult or impossible to modify without major added costs.
true
Expected monetary value gives the long-run average payoff if a large number of identical decisions could be made.
true
In decision theory, states of nature refer to possible future conditions.
true
The Laplace criterion treats states of nature as being equally likely.
true
The expected monetary value approach is most appropriate when the decision maker is risk neutral.
true
The maximin approach involves choosing the alternative that has the "best worst" payoff.
true
Waiting line analysis can be useful for capacity design, especially for service systems.
true
Technology choices seldom affect:
union activity.
The ratio of actual output to design capacity is:
utilization.
If the minimum expected regret is computed, it indicates to a decision maker the expected:
value of perfect information.
The difference between expected payoff under certainty and expected payoff under risk is the expected:
value of perfect information.
A firm pursuing a strategy based on customization and variety will tend to structure and manage its supply chain to accommodate more _____________ than a firm pursuing a strategy based on low cost and high volume.
variation
Which of the following is not a basic question in capacity planning?
who will pay for it
A productivity increase in one operation that does not improve overall productivity of the business is not
worthwhile.
