Question 1

Describe the theory of constraints in a sentence.

Accepted Answer

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Question 2

Break-even analysis can be used by a firm that produces more than one product,but:

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Question 3

Which of the following statements regarding fixed costs is TRUE?

Accepted Answer

Fixed costs are those costs that do not vary with changes in the volume of production or sales. While they are ordinarily constant, fixed costs can "step" upward if volume increases result in additional fixed costs. For example, if a company needs to purchase additional machinery or hire more employees to meet increased demand, this would increase fixed costs.

Question 4

Explain the importance of a bottleneck operation in a production sequence.

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Question 5

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?

Accepted Answer

The break-even point can be calculated by setting the total cost equal to the total revenue and solving for the number of units:
TC = FC + VC
TR = P × Q

Where TC is total cost, FC is fixed cost, VC is variable cost, TR is total revenue, P is the price per unit, and Q is the quantity of units sold.

Let's plug in the given values:
FC = $90,000
VC = $15 per unit
P = $21 per unit

TC = FC + VC = $90,000 + $15Q
TR = P × Q = $21Q

Setting TC equal to TR:
$90,000 + $15Q = $21Q
$6Q = $90,000
Q = 15,000 units

Therefore, the break-even point for machine A is 15,000 units.

Question 6

The theory of constraints has its origins in:

Accepted Answer

The theory of constraints was introduced in the book "The Goal: A Process of Ongoing Improvement" by Eliyahu M. Goldratt and Jeff Cox. This book is considered to be the origin of the theory of constraints.

Question 7

TOC was popularized by:

Accepted Answer

TOC (Theory of Constraints) was popularized by Eliyahu M. Goldratt and Jeff Cox in their book "The Goal".

Question 8

TOC strives to reduce the effect of constraints by:

Accepted Answer

The Theory of Constraints (TOC) aims to reduce the effect of constraints by either offloading work from constrained workstations (choice A) or increasing constrained workstation capability (choice B). These two methods are the primary ways that TOC reduces the effect of constraints. Additionally, changing workstation order to reduce throughput time (choice C) can be a useful strategy for improving overall efficiency, but it is not always necessary or practical. Therefore, the best choice in this case is D - both A and B.

Question 9

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

Accepted Answer

All of the techniques listed are commonly used to deal with bottlenecks in production or service systems. Therefore, there is no one technique that is excluded from this list.

Question 10

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

Accepted Answer

Building rental costs are fixed costs that would be incurred regardless of whether any units are produced. The other costs listed (raw material, direct labor, transportation, and purchasing) are all variable costs that would only be incurred if units were produced.

Question 11

Basic break-even analysis typically assumes that:

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...

Question 12

Identify,in proper sequence,the steps in the process of recognizing and managing constraints.

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Question 13

The basic break-even model can be modified to handle more than one product.This extension of the basic model requires:

Accepted Answer

In order to handle more than one product, the break-even model must take into account the price, variable cost, and percent of sales for each individual product. This allows for a more accurate calculation of the break-even point for the entire product mix.

Question 14

Fixed costs are those costs that continue even if no units are produced.

Accepted Answer

Fixed costs are not dependent on the level of production and continue regardless of whether any units are produced. Examples of fixed costs include rent, salaries, insurance, and property taxes.

Question 15

Break-even is the number of units at which:

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Question 16

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.When performing multiproduct break-even analysis,what is the weighted contribution of this product?

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Question 17

In "drum,buffer,rope," the ________ acts like signals between workstations.

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The answer of In "drum,buffer,rope," the ________ acts like signals...

Question 18

In "drum,buffer,rope," what provides the schedule,i.e.the pace of production?

Accepted Answer

The drum represents the rate of production, which sets the pace or schedule for the production process. The buffer and rope are used to synchronize the flow of materials and prevent disruptions, but they do not determine the pace.

Question 19

Break-even analysis is a powerful analytical tool,but is useful only when the organization produces a single product.

Accepted Answer

Break-even analysis can be used for multiple products, but it requires more complex calculations and assumptions about the sales mix of each product.

Question 20

Break-even analysis identifies the volume at which fixed costs and revenue are equal.

Accepted Answer

Break-even analysis identifies the volume at which total costs (fixed plus variable costs) and total revenue are equal, not just fixed costs and revenue.

Quiz 20: Capacity Planning