Bus 140 Operations Supply Chain Ch 6 Processes and Technology
If a firm can sell a product for $40.00 each, then what is the volume needed to break-even if the fixed cost of production is $125,000.00 and labor and material costs are $30.00 per item?
12,500
A company is considering producing a product for a new market. The fixed costs required for manufacturing and delivering the product is $50,000. Labor and material costs are estimated to be approximately $25.00 per product. If the product is sold for $35.00 each, the firm's break-even volume would be
5,000 units
A company is evaluating which of two alternatives should be used to produce a product that will sell for $35.00 per unit. The following cost information describes the two alternatives Process A Process B Fixed Cost $500,000 $750,000 Variable Cost per Unit $25.00 $23.00 The break-even volume for Process A is
50,000 units
A company is evaluating which of two alternatives should be used to produce a product that will sell for $35.00 per unit. The following cost information describes the two alternatives Process A Process B Fixed Cost $500,000 $750,000 Variable Cost per Unit $25.00 $23.00 The break-even volume for Process B is
62,500 units
A company is considering producing an item that can be sold for $37.50 per unit. If the fixed costs for setting up production are $225,000 and the variable cost per unit for the item is $35.00 then the break-even volume for this item is
90,000 units
What is a process strategy and how does it affect the firm?
Ans: There are several noneconomic factors which can influence or dominate the economic considerations of a outsourcing decision. Among these are (1) the level of capacity at which the company is operating; (2) the capability to provide quality parts consistently; (3) the speed with which goods can be provided by a supplier; (4) the reliability of suppliers; and (5) the expertise of the firm and its willingness to release valuable product information to a supplier.
A firm's process strategy rarely defines its capital intensity.
False
A process is a group of unrelated tasks with specific inputs and outputs.
False
Batch production is also known as a job shop because it creates more jobs than any of the other process choices
False
Companies that control the production of virtually all of the parts that go into a product are said to be horizontally integrated.
False
Customers are rarely involved in a project that takes an extended period of time to complete
False
In general, processes should be analyzed for continuous improvement only after a breakthrough improvement
False
Mass production is characterized by high volumes of a customized product for a mass market.
False
Mass production is characterized by the use of general equipment and highly skilled labor.
False
Most of the operations in batch production involve the assembly rather than fabrication.
False
Process analysis yields a set of documents detailing manufacturing and service delivery specifications
False
Process innovation is most successful in organizations that view their systems as a set of functional areas vying for limited resources
False
Process plans are a set of documents that detail the steps in process selection
False
Process strategy defines what tasks need to be done and how they are to be coordinated among functions, people, and organizations.
False
Producing a high volume of a single product is a characteristic of batch production.
False
Subcontracting is rarely a source of human resources for a project.
False
Supplier speed is rarely an important consideration in outsourcing decisions.
False
Which of the following is NOT associated with the sourcing continuum?
In-house production
List some non-economic factors that can influence a firm's outsourcing decision
There are several noneconomic factors which can influence or dominate the economic considerations of a outsourcing decision. Among these are (1) the level of capacity at which the company is operating; (2) the capability to provide quality parts consistently; (3) the speed with which goods can be provided by a supplier; (4) the reliability of suppliers; and (5) the expertise of the firm and its willingness to release valuable product information to a supplier.
A firm's process strategy defines the extent of customer involvement in providing a service
True
A high-level process map is a useful tool in beginning the redesign of a process.
True
A process flowcharts is a useful tool for analyzing a process because it often highlights nonproductive activities.
True
Batch production is characterized by small volumes and high product variety.
True
Break-even analysis examines the cost tradeoffs associated with demand volume when selecting a process.
True
Breakthrough improvement is often implemented when opportunities for continuous improvement have been exhausted
True
Capital budgeting techniques are often one of the inputs used for technology decisions.
True
Companies that control the production of virtually all of the parts that go into a product are said to be vertically integrated.
True
Continuous production is characterized by very high volumes of commodity products.
True
Mass production is characterized by high volumes of a standard product for a mass market.
True
Mass production is characterized by the use of specialized equipment and workers with limited skills.
True
Mass production is often associated with assembly lines.
True
Most of the operations in batch production involve fabrication rather than assembly.
True
One characteristic of batch production is variable demand.
True
One-of-a-kind production of a product based on a customer's unique specifications is a called a project
True
Outsourcing occurs when a company cannot or will not make all the parts that go into a product.
True
Planning, analyzing, and improving processes is the purpose of operations management.
True
Process design specifies what tasks need to be done and how they are to be coordinated among functions, people, and organizations.
True
Process innovation reflects the total redesign of a process for a breakthrough improvement.
True
Process planning determines how a manufactured good is produced or a service is provided.
True
Supplier reliability is often an important consideration in outsourcing decisions.
True
Technology decisions are often a significant factor in process planning
True
Technology decisions that involve the outlay of funds is considered a capital investment.
True
The basic tools of process analysis include process flowcharts, diagrams and maps.
True
The best process strategy is usually found on the diagonal of the product-process matrix.
True
The organization's overall approach for producing goods and providing services is its process strategy.
True
Two approaches to process improvement include continuous and breakthrough
True
Vertical integration is the degree to which a firm produces the parts that go into its products.
True
A print shop is an example of which of the following process choices?
batch production
Variable demand and small to moderate quantities produced to order are characteristics usually associated with
batch production
Complex scheduling problems are most likely to occur with which process type?
batch production systems
64. A company is evaluating which of two alternatives should be used to produce a product that will sell for $35.00 per unit. The following cost information describes the two alternatives Process A Process B Fixed Cost $500,000 $750,000 Variable Cost per Unit $25.00 $23.00 If total demand (volume) is 120,000 units, then the company should
c. select Process A with a profit of $700,000 to maximize profit
Technology decisions typical in operations management include all the following areas except
communication technology.
Steel, paper, paints, and chemicals are examples of products that use
continuous production
As process selection moves up the diagonal from project to continuous production
demand volume increases.
Which of the following is not a potential risk associated with a project?
extensive learning curve benefits
Most of the operations in batch production involve
fabrication
Disadvantages of batch production include all of the following except
flexibility
A company is evaluating which of two alternatives should be used to produce a product that will sell for $35.00 per unit. The following cost information describes the two alternatives Process A Process B Fixed Cost $500,000 $750,000 Variable Cost per Unit $25.00 $23.00 For what level of volume (output) would the firm prefer Process A to Process B?
for all volume levels greater than 125,000
Which of the following is not an advantage of batch production?
frequent changes in product mix
Which of the following is not a characteristic of mass production?
high product variety
One disadvantage of mass production is its
lack of responsiveness.
The ease of adjusting resources in response to changes in demand defines firm's
process flexibility
A firm's process strategy defines all of the following except its
process selection
All the following are factors influencing the outsourcing decision except
product variety.
A company is evaluating which of two alternatives should be used to produce a product that will sell for $35.00 per unit. The following cost information describes the two alternatives Process A Process B Fixed Cost $500,000 $750,000 Variable Cost per Unit $25.00 $23.00 If total demand (volume) is 150,000 units, then the company should
select Process B with a profit of $1,050,000 to maximize profit
Mass production systems tend to employ
specialized equipment and limited labor skills.
The product-process matrix includes all the following process types except
stable production.
The extent to which the firm will produce the inputs and control the outputs of each stage of the production process is known as
vertical integration.
