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Chapter 7S: Capacity and Constraint
Management answers
Summer 2011, Exam 2
8)
Utilization will always be lower than efficiency because
A.
Effective capacity is less than design capacity.
B.
Effective capacity is greater than design capacity.
C.
Effective capacity
equals design capacity.
D.
False, Utilization and efficiency are equal in value.
E.
False, Utilization is normally greater than efficiency.
Answer: A
11)
The staff training center at a large regional hospital provides training sessions in
CPR to all employees
. Assume that the capacity of this training system was designed to
be 1200 employees per year. Since the training center was first put in use, the program
has become more complex, so that 1050 now represents the most employees that can
be trained per year
. In the past year, 950 employees were trained. The efficiency of this
system is approximately __________ and its utilization is approximately __________.
A.
79.2 percent; 90.5 percent
B.
90.5 percent; 79.2 percent
C.
87.5 percent; 950 employees
D.
950 employees; 105
0 employees
E.
110.5 percent; 114.3 percent
Answer: B
13)
Adding a complementary product to what is currently being produced is a demand
management strategy used when
A.
demand exceeds capacity
B.
capacity exceeds demand for a product which has stable demand
C.
the
existing product has seasonal or cyclical demand
D.
price increases have failed to bring about demand management
E.
efficiency exceeds 100 percent
Answer: C
14)
Of the four approaches to capacity expansion, the approach that "straddles" demand
A.
uses
incremental expansion
B.
uses one

step expansion
C.
at some times leads demand, and at other times lags
D.
works best when demand is not growing but is stable
E.
Choices A and C are both correct.
Answer: E
15)
A firm produces three products. Product A sells for $60
; its variable costs are $20.
Product B sells for $200; its variable costs are $120. Product C sells for $25; its variable
costs are $10. Last year, the firm sold 1000 units of A, 2000 units of B, and 10,000 units
of C. The firm has fixed costs of $320,000
per year. Calculate the break

even point of
the firm (Choose the closest answer).
Product
Selling
price P
Variable
cost V
V/P
1

V/P
Sales
Percent
of sales
Weighted
contrib
A
$60
$20
.333
.667
$60,000
.0845
.0564
B
$200
$120
.600
.400
$400,000
.5634
.2254
C
$25
$10
.400
.600
$250,000
.3521
.2113
$710,000
1.0000
.4931
A.
649,000
B.
597,900
C.
656,000
D.
627,400
E.
636,000
Answer: A
Summer 2011, Exam 3
23) The Academic Computing Center has five trainers available in its computer labs to
provide training
sessions to students. Assume that the capacity of the system is 1900
students per semester and the utilization is 90%. If the number of students who actually
got their orientation session is 1500, what is the efficiency of the system?
A.
1350 students
B.
1710 st
udents
C.
75%
D.
87.7%
E.
90%
Answer: D
Spring 2012, Exam 2
7) Machine used to produce a part for a stereo speaker can produce 100 parts per hour.
The factory operates 12 hours per day 7 days a week. Due to routine scheduled
maintenance the firm expects the ma
chine to be in use only 95% of the time. The firm
also expect from it’s knowledge of its operating facility to achieve an operating efficiency
of only 85%. What is the expected weekly output for this part?
A.
6,783 parts
B.
8,400 parts
C.
4,845 parts
D.
7,140 parts
E.
100 parts
Answer: A
12

13 You have been provided with the following flow process diagram (with activity
times listed) for the production of office chairs. The process occurs 5 days a week for 8

hour days. What is the theoretical cycle time for the proc
ess represented above?
12) What is the theoretical cycle time for the system represented above?
A.
5 min
B.
1min
C.
25 min
D.
21 min
13) What is the process time for the system represented above (capacity
of the system)?
A.
5 min
B.
6min
C.
7 min
D.
9 min
ANS: B
14) Which of the following is not one of the four principles of bottleneck management?
A.
Release work orders to the system at the bottleneck's capacity pace.
B.
Lost time at the bottleneck is lost system capacity.
C.
Increasing capacity at non

bottleneck stations is a mirage.
D.
Increased bottleneck capacity is increased system capacity.
E.
Bottlenecks should be moved to the end of the system process.
Answer: E
15) Basic break

even analysis typically assumes that
A.
revenues
increase in direct proportion to the volume of production, while
costs increase at a decreasing rate as production volume increases
B.
variable costs and revenues increase in direct proportion to the volume of
production
C.
both costs and revenues are made up o
f fixed and variable portions
D.
costs increase in direct proportion to the volume of production, while
revenues increase at a decreasing rate as production volume increases
because of the need to give quantity discounts
3m
2m
6m
2m
1m
5m
5m
2m
1m
3m
5m
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