Chapter S7 Quiz OM (Quiz #8)

Utilization will always be lower than efficiency because:

Effective capacity is less than design capacity.

The bottleneck time is always at least as long as the throughput time.

False

Which of the following represents an aggressive approach to demand management in the service sector when demand and capacity are not particularly well matched?

Lower resort hotel room prices on Wednesdays

TOC strives to reduce the effort of constraints by:

Offloading work from constrained workstations and increasing constrained workstation capability

Design capacity is the theoretical maximum output of a system in a given period under ideal conditions.

True

One limitation of the net present value approach to investments is that investments with identical net present values may have very different cash flows.

True

Price changes are useful for matching the level of demand to the capacity of a facility.

True

Fabricators, Inc. wants to increase capacity by adding a new machine. The fixed costs for machine A are $90,000, and its variable cost is $15 per unit. The revenue is $21 per unit. What is the break - even point for machine A?

15,000 units

Christopher's Cranks uses a machine that can produce 100 cranks per hour. The firm operates 12 hours per day, five days per week. Due to regularly scheduled preventive maintenance, the firm expects the machine to be running during approximately 95% of the available time. Based on experience with other products, the firm expects to achieve an efficiency level for the cranks of 85%. What is the expected weekly output of cranks for this company?

4845

Which of the following techniques is NOT a technique for dealing with a bottleneck?

All are techniques for dealing with bottlenecks.

Which of the following is not one of the four principles of bottleneck management?

Bottlenecks should be moved to the end of the system process.

Which of the following costs would be incurred even if no units were produced?

Building rental costs