Process and Capacity - Operations Management

Which of the following phrases best describes product focus?

• low volume, high variety

• finished goods are usually made to order

• processes are designed to perform a wide variety of activities

• high fixed costs, low variable costs

Process X has fixed costs of $10,000 and variable costs of $2.40 per unit. Process Y has fixed costs of $9,000 and variable costs of $2.25 per unit. Which of the following statements is true?

• The crossover point is approximately 6667 units

• It is impossible for one process to have both of its costs lower than those of another process

• Process Y is cheaper than process X at all volumes; there is no crossover point

• Process X should be selected for very large production volumes

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

• raw material costs

• direct labor costs

• transportation costs

• building rental costs

A clothing production line has three processes, Cutting, stitching and ironing, and each department takes 5, 12, and 8 minutes respectively to process each unit. To increase capacity, the manager decides to add an additional workstation for stitching. The capacity will be increased by approximately?

• 100%

• 75%

• 50%

• 25%

A product sells for $5, and has unit variable costs of $3. This product accounts for $20,000 in annual sales, out of the firm's total of $60,000. The weighted contribution of this product is approximately?

• 0.133

• 0.200

• 0.400

• 0.667

Which of the following points are crossover points?

• Only B

• A and C

• Only A

• A, B and C

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

• $ 90,000

• 90,000 Units

• $15,000

• 15,000 Units

Service blueprinting

• provides the basis to negotiate prices with suppliers

• mimics the way people communicate

• determines the best time for each step in the process

• focuses on the provider's interaction with the customer

Which of the following represents a common way to manage capacity in the service sector?

• appointments

• reservations

• changes in staffing levels

• first-come, first served service rule

The crossover point is that production quantity where?

• variable costs of one process equal the variable costs of another process

• fixed costs of a process are equal to its variable costs

• total costs equal total revenues for a process

• total costs for one process equal total costs for another process