ch 15 pt 1

Consider a product that costs $5 to make, and is sold for $15. What is the productivity ratio?

3:1

Which of the following businesses should be most concerned with property, plant, and equipment?

A rancher

Which of the following is not generally considered to be very useful for any purpose other than accounting and income taxes?

Book value

Which of the following statements is true of documenting the operations of your business?

Every business process does not have to be extensively documented.

Assigning a high value to inventory results in increased sales margin and reported profit, but at the price of paying increased income taxes.

False

Disposal value is based on determining the price of either a new asset or a used asset for which there is an organized market.

False

Planning, organizing, and staffing are primarily the responsibility of operations management.

False

Which of the following is one of the disadvantages of the return on investment (ROI) analysis?

The profits received are not the same as cash.

A lease is simply a rental agreement that specifies a minimum period of time for which one must make rental payments.

True

Intangibility, inseparability, and perishability are the three characteristics of services that impact operations choices and decision making.

True

The time value of money is the concept that a dollar received today is worth much more than is a dollar to be received at some time in the future.

True

The total cost of obtaining an asset, including such costs as purchase price, transportation, installation, testing, and calibrating in order to ready it for its first productive use is termed as _____.

acquisition cost

When determining the cost of a capital asset, the _______ is the sum of everything that you spend to acquire and prepare the asset for its first productive use.

acquisition cost

A just-in-time (JIT) inventory system attempts to reduce inventory levels to the absolute minimum by:

assembling the product in the absolute minimum time possible.

Kevin has taken an apartment on lease for five years with a monthly rental of $3,500. At the end of five years, Kevin will be the legal owner of the apartment after an additional payment of $80,000. This type of lease is an example of a(n) _____ lease.

capital

Operations management is primarily concerned with:

directing and controlling.

A long-term rental in which ownership of the asset never passes to the person paying for the lease is called a(n) _____ lease.

operating

A(n) _____ is the amount of inventory that results in the minimum cost, considering the cost of lost sales resulting from running out of stock, the number of units sold per day, and the number of days required to receive inventory.

optimum stocking level

Economic order quantity (EOQ) helps a business to think in terms of:

ordering costs and carrying costs.

The capital budgeting equation used to measure the relationship between initial investment and the profits that are expected to be received from making the investment is called _____.

return on investment

An ideal situation is where a business receives new inventory just as the last unit of the previous order is sold. However, this rarely occurs because the:

sales volumes are not constant.