MGSC 395 Exam 1 (Timothy Fry) Study
Guide: Verified Questions & Complete
Solutions | 100% Correct
Break Even Analysis - answersAnalysis to compare processes by finding the volume at
which two different processes have equal total costs.
pQ = F + cQ
Break Even Quantity - answersThe volume at which total revenues equal total costs.
Variables for Break Even - answersVariable cost (c)
The portion of the total cost that varies directly with volume of output.
Fixed cost (F)
The portion of the total cost that remains constant regardless of changes in levels of
output.
Quantity (Q)
The number of customers served or units produced per year.
Total cost equation - answersTotal cost = F + cQ
Total Revenue Equation - answersTotal revenue = pQ
Quantity Equation - answersQ= F/(p-c)
A hospital is considering a new procedure to be offered at $200 per patient. The fixed
cost per year would be $100,000 with total variable costs of $100 per patient. What is
the break-even quantity for this service? Use both algebraic and graphic approaches to
get the answer. - answers1000 patients
variables for buy/make options - answersF sub b
The fixed cost (per year) of the buy option
F sub m
The fixed cost of the make option
c sub b
The variable cost (per unit) of the buy option
c sub m
The variable cost of the make option
total costs to make/buy - answers-Total cost to buy
Fb + cbQ
-Total cost to make
Fm + cmQ
,Q= (Fm-Fb)/(cb-cm)
A fast-food restaurant featuring hamburgers is adding salads to the menu
The price to the customer will be the same
Fixed costs are estimated at $12,000 and variable costs totaling $1.50 per salad
Preassembled salads could be purchased from a local supplier at $2.00 per salad
Preassembled salads would require additional refrigeration with an annual fixed cost of
$2,400
Expected demand is 25,000 salads per year
What is the break-even quantity? - answers(12000-2400)/(2-1.50)=19200 salads
Operations Management - answersThe systematic design, direction, and control of
processes that transform inputs into services and products for internal, as well as
external, customers
supply chain management - answersThe synchronization of a firm's processes with
those of its suppliers and customers to match the flow of materials, services, and
information with customer demand
Supply chain - answersAn interrelated series of processes within and across firms the
produces a service or product to the satisfaction of customers
manufacturing process vs. service process - answersmanufacturing:
Physical, durable output, Output can be inventoried, Low customer contact, Long
response time, Capital intensive, Quality easily measured
service:
Intangible, perishable output, Output cannot be inventoried, High customer contact,
short response time, Labor intensive, Quality not easily measured
Supply Chain View - answersEach activity in a process should add value to the
preceding activities; waste and unnecessary cost should be eliminated
Supplier relationship process - answers- A process that selects the suppliers of
services, materials, and information and facilitates the timely and efficient flow of these
items into the firm
New service/product development - - answersA process that designs and develops new
services or products from inputs from external customer specifications or from the
market
Order fulfillment process - - answersA process that includes the activities required to
produce and deliver the service or product to the external customer
, Customer relationship process - - answersA process that identifies, attracts and builds
relationships with external customers and facilitates the placement of orders by
customers
(customer relationship management)
Support Processes - - answersProcesses like Accounting, Finance, Human Resources,
Management Information Systems and Marketing that provide vital resources and inputs
to the core processes
Operations Strategy - answersThe means by which operations implements the firm's
corporate strategy and helps to build a customer-driven firm
Corporate Strategy - answersProvides an overall direction that serves as the framework
for carrying out all the organization's functions
-Environmental Scanning
-Core Competencies:the unique resources and strengths that an organizations
management considers when forming a strategy which includes work force, facilities,
market and financial know how, and
-Core Processes: a set of activities that deliver value to external customers and build
relationships with them, develop new services and product, interact with external
suppliers, and produce the service or product for the external customer.
systems and technology
-Global Strategies
Market Analysis - answersUnderstand what the customers want and how to provide it.
-Market Segmentation
-Needs Assessment
Competitive Priorities - answersThe critical dimensions that a process or supply chain
must possess to satisfy its internal or external customers, both now and in the future.
Competitive Capabilities - answersThe cost, quality, time, and flexibility dimensions that
a process or supply chain actually possesses and is able to deliver.
Order Winners - answersA criterion customers use to differentiate the services or
products of one firm from those of another.
Order Qualifiers - answersMinimum level required from a set of criteria for a firm to do
business in a particular market segment.
Measuring productivity - answersproductivity= output/input
Calculate the Productivity for the following operations
a. Three employees process 600 insurance policies in a week. They work 8 hours per
day, 5 days per week. - answers600/(3*8*5)
= 5 policies per hour
Guide: Verified Questions & Complete
Solutions | 100% Correct
Break Even Analysis - answersAnalysis to compare processes by finding the volume at
which two different processes have equal total costs.
pQ = F + cQ
Break Even Quantity - answersThe volume at which total revenues equal total costs.
Variables for Break Even - answersVariable cost (c)
The portion of the total cost that varies directly with volume of output.
Fixed cost (F)
The portion of the total cost that remains constant regardless of changes in levels of
output.
Quantity (Q)
The number of customers served or units produced per year.
Total cost equation - answersTotal cost = F + cQ
Total Revenue Equation - answersTotal revenue = pQ
Quantity Equation - answersQ= F/(p-c)
A hospital is considering a new procedure to be offered at $200 per patient. The fixed
cost per year would be $100,000 with total variable costs of $100 per patient. What is
the break-even quantity for this service? Use both algebraic and graphic approaches to
get the answer. - answers1000 patients
variables for buy/make options - answersF sub b
The fixed cost (per year) of the buy option
F sub m
The fixed cost of the make option
c sub b
The variable cost (per unit) of the buy option
c sub m
The variable cost of the make option
total costs to make/buy - answers-Total cost to buy
Fb + cbQ
-Total cost to make
Fm + cmQ
,Q= (Fm-Fb)/(cb-cm)
A fast-food restaurant featuring hamburgers is adding salads to the menu
The price to the customer will be the same
Fixed costs are estimated at $12,000 and variable costs totaling $1.50 per salad
Preassembled salads could be purchased from a local supplier at $2.00 per salad
Preassembled salads would require additional refrigeration with an annual fixed cost of
$2,400
Expected demand is 25,000 salads per year
What is the break-even quantity? - answers(12000-2400)/(2-1.50)=19200 salads
Operations Management - answersThe systematic design, direction, and control of
processes that transform inputs into services and products for internal, as well as
external, customers
supply chain management - answersThe synchronization of a firm's processes with
those of its suppliers and customers to match the flow of materials, services, and
information with customer demand
Supply chain - answersAn interrelated series of processes within and across firms the
produces a service or product to the satisfaction of customers
manufacturing process vs. service process - answersmanufacturing:
Physical, durable output, Output can be inventoried, Low customer contact, Long
response time, Capital intensive, Quality easily measured
service:
Intangible, perishable output, Output cannot be inventoried, High customer contact,
short response time, Labor intensive, Quality not easily measured
Supply Chain View - answersEach activity in a process should add value to the
preceding activities; waste and unnecessary cost should be eliminated
Supplier relationship process - answers- A process that selects the suppliers of
services, materials, and information and facilitates the timely and efficient flow of these
items into the firm
New service/product development - - answersA process that designs and develops new
services or products from inputs from external customer specifications or from the
market
Order fulfillment process - - answersA process that includes the activities required to
produce and deliver the service or product to the external customer
, Customer relationship process - - answersA process that identifies, attracts and builds
relationships with external customers and facilitates the placement of orders by
customers
(customer relationship management)
Support Processes - - answersProcesses like Accounting, Finance, Human Resources,
Management Information Systems and Marketing that provide vital resources and inputs
to the core processes
Operations Strategy - answersThe means by which operations implements the firm's
corporate strategy and helps to build a customer-driven firm
Corporate Strategy - answersProvides an overall direction that serves as the framework
for carrying out all the organization's functions
-Environmental Scanning
-Core Competencies:the unique resources and strengths that an organizations
management considers when forming a strategy which includes work force, facilities,
market and financial know how, and
-Core Processes: a set of activities that deliver value to external customers and build
relationships with them, develop new services and product, interact with external
suppliers, and produce the service or product for the external customer.
systems and technology
-Global Strategies
Market Analysis - answersUnderstand what the customers want and how to provide it.
-Market Segmentation
-Needs Assessment
Competitive Priorities - answersThe critical dimensions that a process or supply chain
must possess to satisfy its internal or external customers, both now and in the future.
Competitive Capabilities - answersThe cost, quality, time, and flexibility dimensions that
a process or supply chain actually possesses and is able to deliver.
Order Winners - answersA criterion customers use to differentiate the services or
products of one firm from those of another.
Order Qualifiers - answersMinimum level required from a set of criteria for a firm to do
business in a particular market segment.
Measuring productivity - answersproductivity= output/input
Calculate the Productivity for the following operations
a. Three employees process 600 insurance policies in a week. They work 8 hours per
day, 5 days per week. - answers600/(3*8*5)
= 5 policies per hour
