EXAM #2 BUS-3950 QUESTIONS WELL ANSWERED LATEST UPDATE 2026

EXAM #2 BUS-3950 QUESTIONS WELL ANSWERED LATEST UPDATE 2026 Short-term considerations in determining capacity requirements include Multiple Choice demand trend. cyclical demand variations. seasonal demand variations. mission statements. new product development plans. - Answers seasonal demand variations. Maximum capacity commonly refers to the upper limit on Multiple Choice utilization. the rate of demand. efficiency. the rate of output. finances. - Answers the rate of output. Which of the following would not be a potential upside in a decision to outsource? Multiple Choice increased total production capacity potential to lower fixed costs supplier may have greater expertise to do the outsourced work disclosure of proprietary information to supplier supplier cost may be lower - Answers disclosure of proprietary information to supplier Outsourcing some production is a means of __________blank a capacity constraint. Multiple Choice identifying modifying supporting overcoming repeating - Answers overcoming Which of the following makes using present value approaches in capacity decisions difficult? Multiple Choice The discount rate must be adjusted to account for inflation. Some cash flows are positive and other cash flows are negative. The payback period might not be long enough to justify a capacity decision. Capacity decisions are made amidst much uncertainty, so cash flows cannot be estimated with great accuracy. There is a cash outflow at the outset followed by, possibly, net cash inflows. - Answers Capacity decisions are made amidst much uncertainty, so cash flows cannot be estimated with great accuracy. The ratio of actual output to design capacity is Multiple Choice design capacity. effective capacity. actual capacity. efficiency. utilization. - Answers utilization. Seasonal variations are often easier to deal with in capacity planning than random variations because seasonal variations tend to be Multiple Choice smaller. larger. predictable. controllable. less frequent. - Answers predictable. 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 Multiple Choice 100. 2,000. 500. 1,000. 800. - Answers 500. Which of the following is not a strategy to manage service capacity or cope with service capacity limitations? Multiple Choice hiring extra workers storing inventories of the service pricing and promotion part-time workers subcontracting - Answers storing inventories of the service Everything else being equal, a firm considering outsourcing would find all of the following desirable except Multiple Choice total costs will be lower for outsourced goods or services. its supplier has more expertise in whatever is being outsourced. it can maintain tight control over knowledge. proprietary information will be disclosed to the supplier. control over operations will be maintained by the firm. - Answers proprietary information will be disclosed to the supplier. The decision to outsource opens the firm up to certain risks, among them __________blank and __________blank. Multiple Choice lower costs; fewer task-specific investments loss of direct control over operations; need to disclose proprietary information access to greater expertise; greater demand variability greater capacity rigidity; tight knowledge control higher marketing costs; small orders - Answers loss of direct control over operations; need to disclose proprietary information At the break-even point Multiple Choice output equals capacity. total cost equals total revenue. total cost equals profit. variable cost equals fixed cost. variable cost equals total revenue. - Answers total cost equals total revenue. When the output is less than the optimal rate of output, the average unit cost will be Multiple Choice lower. the same. higher. could be either higher or lower. could be either higher, lower, or the same. - Answers higher. Allowances for which of these factors would be subtracted from design capacity when calculating effective capacity? Multiple Choice personal time equipment maintenance scheduling problems changing the mix of products All of these choices are correct. - Answers All of these choices are correct. The method of financial analysis which results in an equivalent interest rate is Multiple Choice payback. net present value. internal rate of return. queuing. cost-volume. - Answers internal rate of return. Utilization is defined as the ratio of Multiple Choice 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. - Answers actual output to design capacity. Students at a major university must go through several registration steps. Officials have observed that it is typically the case that the waiting line at the fee-payment station is the longest. This would seem to suggest that the fee-payment station is the __________blank in the student registration process. Multiple Choice capacity cushion first station bottleneck economy of scale diseconomy of scale - Answers bottleneck Efficiency is defined as the ratio of Multiple Choice 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. - Answers actual output to effective capacity. Which of the following is not a reason why capacity decisions are so important? Multiple Choice Capacity limits the rate of output possible. Capacity affects operating costs. Capacity is a major determinant of initial costs. Capacity is a long-term commitment of resources. Capacity chunks can be added or deleted quickly and inexpensively. - Answers Capacity chunks can be added or deleted quickly and inexpensively. A market constraint can be overcome by Multiple Choice lobbying. cash flow management. outsourcing. advertising or price changes. supplier development. - Answers advertising or price changes. Which of the following is the case where capacity is measured in terms of inputs? Multiple Choice tons of steel per day that can be produced by a steel mill kilowatt hours per day that can be generated by an electrical power plant number of meals per day that can be served by a restaurant gallons of gasoline that can be produced per day by a petroleum refinery number of passenger seats that can be filled per day on an airline route - Answers number of passenger seats that can be filled per day on an airline route Capacity in excess of expected demand that is intended to offset uncertainty is a Multiple Choice margin protect. line balance. capacity cushion. timing bubble. positioning hedge - Answers capacity cushion. The maximum possible output given a product mix, scheduling difficulties, personal time, and so on is Multiple Choice utilization. design capacity. efficiency. effective capacity. available capacity. - Answers effective capacity. The method of financial analysis, which focuses on the length of time it takes to recover the initial cost of an investment, is Multiple Choice payback. net present value. internal rate of return. queuing. cost-volume. - Answers payback. Determining the average payoff for each alternative and choosing the alternative with the highest average is the approach called Multiple Choice minimin. maximin. maximax. minimax regret. Laplace. - Answers Laplace. Which of the following is not an approach for decision making under uncertainty? Multiple Choice decision trees