OMGT 3123 Chapter 6

52) Wally's Filling Station is manned by one capable attendant that can fill your tank and check your tires, oil, and water in 5 minutes. If four customers arrive each hour, and the service and arrival rates are governed by the Poisson distribution, what is the utilization of the attendant? A) 0.33 B) 0.50 C) 0.66 D) 0.80

A) 0.33

48) What is the break-even point for location D if Jimbo decides to charge $21 per student? A) 4,000 students B) 4,250 students C) 4,500 students D) 5,000 students

A) 4,000 students

33) Customer arrivals at a dry cleaning service occur randomly throughout the day. The distribution that is usually used to model the interval between arrivals is the: A) Poisson distribution. B) uniform distribution. C) random distribution. D) normal distribution.

A) Poisson distribution.

34) The bank manager of a busy downtown location found herself unable to find good teller help so she invested in an ATM to handle the routine withdrawals that tended to occupy an inordinate amount of the teller's time. Before she installed the ATM she found that customers were arriving on average every 2 minutes (Poisson distributed) and it took a teller 30 seconds (exponentially distributed) to process their request. The ATM is able to maintain a constant 30 second service time. What is the impact on system utilization? A) There is no change. B) Utilization has dropped by 15%. C) Utilization has dropped by 30%. D) Utilization has dropped by 45%.

A) There is no change.

45) An example of a variable cost is: A) a payment to your raw materials supplier. B) a lease payment on a piece of equipment. C) a mortgage payment on buildings. D) a monthly licensing fee for a software package.

A) a payment to your raw materials supplier.

42) Which of these factors typically does NOT impact capacity? A) fixed cost B) conformance quality C) product variations D) actions of supply chain partners

A) fixed cost

One advantage of simulation modeling is: A) it allows the user to conduct a "what if" analysis. B) the many simplifying assumptions that are often made when using it. C) the fact that an optimal solution is reached. D) the time and cost required to make a perfectly realistic simulation.

A) it allows the user to conduct a "what if" analysis.

41) A bottling machine has a theoretical capacity of 100 bottles per minute. During every ten hour shift it operates continuously but is shut down once for 30 minutes for cleaning, inspection, and lubrication. What is its rated capacity? A) 100 bottles/minute B) 95 bottles/minute C) 90 bottles/minute D) 85 bottles/minute

B) 95 bottles/minute

Jimbo Elrod has obtained fixed and variable cost information for four potential locations for his professional wrestling school and summarized it in tabular form below. All values are in dollars. Site Fixed Cost Variable Cost A 10,000 24 B 12,000 20 C 14,000 18 D 16,000 17 47) Jimbo plans to charge the same amount for tuition regardless of where he decides to establish his school. If he believes that 700 students will matriculate each year, which location will result in the lowest total cost?

B) Location B

40) Which of the following statements about theoretical capacity is BEST? A) Theoretical capacity allows adjustments for preventive maintenance. B) Running a factory at this level for a short time is often better than permanently raising resource levels. C) Theoretical capacity levels are usually lower than rated capacity levels. D) Theoretical capacity levels take into account that machines occasionally break and that workers occasionally call in sick.

B) Running a factory at this level for a short time is often better than permanently raising resource levels.

Which of the following statements about simulation is BEST? A) Tools like linear programming and regression analysis work best when they are simulated. B) Simulation permits managers to test the effects of new policies and procedures without disrupting customer service. C) As computers have increased in power, simulation results have become less accurate. D) Computer-based simulation is the only "true" simulation.

B) Simulation permits managers to test the effects of new policies and procedures without disrupting customer service.

49) A company with fixed costs of $10,000 per month has a target price of $165 for their sole product, a heat shield for masonry fireplaces. What level of output represents their break-even point if their variable cost for producing is $35 per unit? A) between 60 and 70 units B) between 70 and 80 units C) between 80 and 90 units D) between 90 and 100 units

B) between 70 and 80 units

32) A customer enters a business and joins the one line that snakes back and forth through the lobby in order to receive service. The initial part of the service is performed by one customer service representative, after which the customer enters a second, shorter line to complete the service before leaving the establishment. Which description of this waiting line system is appropriate? A) single channel, single phase B) single channel, multiple phase C) multiple channel, single phase D) multiple channel, multiple phase

B) single channel, multiple phase

Which of the following is characteristic of Monte Carlo simulation? A) Results are usually not valid, but provide managers with an approximation. B) Time compression is not possible using this technique. C) Statistical sampling is used to create outcomes for many trials. D) Computer packages such as Simquick and Arena can show on-screen graphics of customers moving through the system or inventory accumulation.

C) Statistical sampling is used to create outcomes for many trials.

50) Which of the following statements about learning curves is BEST? A) Learning improvements always follow a constant pattern. B) Frequent design changes and reengineering have no effect on learning rates. C) Underestimated learning effects may cause overestimation of capacity needs. D) An eighty percent learning curve means that each unit takes twenty percent less time to produce than its immediate predecessor.

C) Underestimated learning effects may cause overestimation of capacity needs.

46) If a firm cannot make a profit regardless of output volume, then: A) FC > VC. B) VC > FC. C) VC > R. D) BEP > VC.

C) VC > R.

43) A lead capacity strategy has the advantage of: A) a reduced risk of overbuilding. B) greater productivity due to high utilization levels. C) assuring adequate capacity during all types of growth. D) the ability to put off large investments as long as possible.

C) assuring adequate capacity during all types of growth.

31) A customer enters a business and has the opportunity to select any one of three lines to receive service. The service is performed by one customer service representative after which the customer leaves the establishment. Which description of this waiting line system is appropriate? A) single channel, single phase B) single channel, multiple phase C) multiple channel, single phase D) multiple channel, multiple phase

C) multiple channel, single phase

39) Which of the following is NOT an appropriate measure of capacity? A) square yards of carpet installed per hour B) number of cars assembled per month C) thickness of laminate on a desktop D) printed pages per minute

C) thickness of laminate on a desktop

44) Which of the following statements about capacity strategies is NOT correct? A) Lead capacity strategy can be used to preempt competitors who might be planning to expand their own capacity. B) A lag capacity strategy tends to have greater productivity due to higher utilization levels. C) A match capacity strategy tends to avoid periods of high under- or overutilization. D) A lag capacity strategy would be well-suited for a period of high growth.

D) A lag capacity strategy would be well-suited for a period of high growth.

Consider the system composed of four processes linked by a conveyor belt. There is no storage between these processes pictured below. Which statement is BEST A) The overall system output is 220 units/hr. B) The process that determines the system's capacity is process 4. C) If only process 3 experiences 5 minutes of unplanned downtime, the system's overall output is diminished. D) Overall system improvement efforts should focus on process 1.

D) Overall system improvement efforts should focus on process 1.

Each outcome of flipping a fair coin is completely independent of the previous flip. This outcome is known as: A) simulation. B) Monte Carlo. C) 50/50. D) memory less.

D) memory less.

10) In a decision tree, outcome points are under direct control of the decision maker and show the results of choices.

False

13) A ninety percent learning curve is steeper than an eighty percent learning curve.

False

16) A busy toll highway that has four toll collectors for northbound traffic is an example of a single-channel, single-phase system.

False

19) In most waiting line models, customers are assumed to arrive at random intervals, based on a normal distribution.

False

2) A traditional university classroom has room for 30 students and is scheduled for use during 12 consecutive one hour periods from 8:00 a.m. to 8:00 p.m. in the spring semester. Its theoretical capacity is therefore half of its rated capacity.

False

20) The Greek letter lambda (λ) is used to represent the service rate of a waiting line system.

False

21) A waiting line cannot be both multiple-channel and multiple-phase.

False

25) The term time compression refers to the phenomenon that a server tends to speed up the service process if the waiting line exceeds some critical number of customers.

False

27) In most cases, simulation models provide optimal solutions to problems just like most of the equations presented in your textbook.

False

3) In general, higher conformance quality reduces capacity since the extra care taken during production slows the output rate.

False

6) Virtual supply chains have the advantage of efficiency, but this advantage is gained in a trade-off with decreased flexibility.

False

8) For a given fixed cost and revenue, as the variable cost rises, the break-even point also rises.

False

9) A business analyst identifies three possible demand levels for the new service they are considering for the new year. In addition to the levels of demand, the analyst estimates the likelihood of occurrence for each of these levels of demand. If he calculates the expected value of demand he should expect that the calculated value matches one of the three levels he originally identified.

False

1) Capacity is the capability of a worker, machine, work center, plant, or organization to produce output per time period.

True

11) The break-even formula does not include a provision for a price break if a customer purchases a large quantity.

True

12) Learning curve theory suggests that productivity will increase as people and systems learn to perform tasks more efficiently.

True

14) A firm is more likely to develop the internal capacity to perform activities that are strategically important to its success than it is to outsource those activities.

True

15) The Theory of Constraints would support the statement that a chain is only as strong as its weakest link.

True

17) In operations and supply chain environments that must deal with random demand, it is virtually impossible to achieve very high capacity utilization levels and still provide acceptable customer service.

True

18) In waiting line theory, the number of channels refers to the number of customer waiting lines in the system.

True

22) All waiting line formulas assume that customers are served on a first-come first-served (FCFS) basis.

True

23) With only a half hour for lunch I screamed into the parking lot of the nearest Golden Arches Supper Club at 40 miles an hour. When I saw the drive through line was 15 cars deep I didn't bother getting in line; I was off to visit the Colonel. This behavior might be described as balking.

True

24) Everything about two different waiting line systems is the same except one system has a constant service time and the other has a Poisson distributed service time. Customers using the system with the constant service time will have half the waiting time of the customers using the system with Poisson distributed service times.

True

26) It is more costly to create a more realistic simulation than one that is less realistic.

True

28) Monte Carlo simulation uses statistical sampling to create outcomes for a large number of trials.

True

29) Customers enter the stadium and purchase refreshments before they are shown to their seats by experienced ushers. The customers are considered objects in the simulation model.

True

30) Customers enter the stadium and purchase refreshments before they are shown to their seats by experienced ushers. The concession stand lines are considered elements in the simulation model.

True

4) A firm's capacity can be limited by members of its supply chain.

True

5) A firm is able to meet current demand. If it adopts a lead capacity strategy, then it is probably making the assumption that demand will increase in the future.

True

7) Building rental and depreciation on capital equipment are examples of fixed costs.

True