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1. (TCO 11) A reason for the importance of capacity decisions is that capacity (Points : 5)
limits the rate of possible output.
affects operating costs.
is a major determinant of initial costs.
is a long-term commitment of resources.
All of the above
2. (TCO 11) Which of the following is a factor that affects service capacity planning? (Points : 5)
The need to be near customers
The inability to store services
The degree of volatility of demand
The customer’s willingness to wait
All of the above
3. (TCO 12) Under ideal conditions, the maximum possible capacity if there were no quality issues, material shortages, labor absenteeism, scheduling issues, and so forth would be known as (Points : 5)
effective capacity.
available capacity.
design capacity.
efficiency.
4. (TCO 12) Utilization is defined as the ratio of (Points : 5)
actual output to effective capacity.
actual output to design capacity.
design capacity to effective capacity.
effective capacity to actual output.
design capacity to actual output.
5. (TCO 13) Unbalanced systems are evidenced by (Points : 5)
top-heavy operations.
labor unrest.
bottleneck operations.
increasing capacities.
assembly lines.
6. (TCO 14) An alternative will have fixed costs of $10,000 per month, variable costs of $50 per unit, and revenue of $70 per unit. The break-even point volume is (Points : 5)
100.
2,000.
500.
1,000.
None of these

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