F
(E.
E. QUANTITATIVE METHODS for the activity times.
B. PERT does not allow for slack times on the activities while CPM
C. PERT considers only activity cost while CPM considers only ac
THEORIES: D. PERT determines the least-cost path through a network while
Economic Order Quantity time path through a network.
1. The economic order quantity is the order quantity that results in
A. the minimum total annual inventory costs. 6. Critical Path Method (CPM) is a technique for analyzing, plann
B. no inventory shortages. complex projects by determining the critical path from a single tim
C. the maximum total annual inventory costs. in a project. The critical path:
D. minimum ordering costs. A. Is the shortest path from the first event to the last event for a
B. Is an activity within the path that requires the most number of
Sensitivity analysis C. Has completion that reflects the earliest time to complete the
2. Missile Company has correctly computed its economic order quantity as 500 units. However, D. Is the maximum amount of time an activity may be delayed
management feels it would rather order quantities of 600 units. How should Missile’s total project beyond its target completion time.
annual purchase-order costs and total annual carrying cost for an order quantity of 600 units
compare to the respective amounts for an order quantity of 500 units? Queuing Theory
A. Higher purchase-order cost and lower carrying cost. 7. A company is designing a new regional distribution warehouse
B. Higher purchase-order cost and higher carrying cost. loading and unloading trucks, an adequate number of loading
C. Lower purchase-order cost and higher carrying cost. most relevant technique to assist in determining the proper numbe
D. Lower purchase-order cost and lower carrying cost. A. Cost-volume-profit analysis C. Linear program
B. PERT/CPM analysis D. Queuing theory
3. A decrease in inventory order costs will
A. Increase the reorder point. Linear Programming
B. Decrease the economic order quantity. Use the following information to answer question Nos. 8 and 9:
C. Have no effect on the economic order quantity. The Kinis Company produces a cosmetic product in 60 gallon batches.
D. Decrease the holding cost percentage. are material X, costing P70 per gallon, and material Y, costing P170 per
gallons of X can be used, and at least 15 gallons of Y must be used.
4. An increase in inventory holding costs will
A. Decrease the economic order quantity. 8. How would the objective function (minimization of product cost) be
B. Have no effect on the economic order quantity. A. 70X + 170Y C. 170X + 70Y
C. Increase the economic order quantity. B. 18X + 15Y D. 18X + 42Y
D. Decrease the number of orders issued per year.
9. Which of the following is not a constraint of the Kinis Company?
PERT-CPM A. X ≤ 18 C. Y ≥ 15
5. Which one of the following statements best describes a difference between basic PERT and B. X + Y ≤ 60 D. X ≥ 0
the Critical Path Method (CPM) of network analysis?
A. PERT uses probability distribution on the activity times while CPM uses point estimates Use the following data to answer Question Nos. 10 through 12:
714
, F
(E.
Sun, Inc. manufactures product X and product Y, which are processed as follows: B. Activity BC 2 weeks
Type A machine Type B machine C. Activity DE 1 week and activity BC 1 week
Product X 6 hours 4 hours D. Activity DE 1 week and activity EF 1 week
Product Y 9 hours 5 hours
Learning Curve
1
The contribution margin is P12 for product X and P7 for product Y. The available time daily for . Contratista, Inc. is considering a three-phase research project
processing the two products is 120 hours for machine Type A and 80 hours for machine Type B. completion of Phase 2 of the project are:
Pessimistic 24 weeks
10. How would the constraint for machine Type A be expressed? Most likely 20 weeks
A. 4X + 5Y C. 4X + 5Y ≤ 80 Optimistic 10 weeks
B. 6X + 9Y ≤ 120 D. 12X + 7Y Using the program evaluation and review technique (PERT
completion of Phase 2 should be
11. How would the constraint for machine Type B be expressed? A. 20 weeks C. 18 weeks
A. 4X + 5Y C. 4X + 5Y ≤ 80 B. 19 weeks D. 24 weeks
B. 6X + 9Y ≤ 120 D. 12X + 7Y 2
. Wind Company expects an 85% learning curve. The first batch of
12. How would the objective function be expressed? hours. The first four batches should take an average of
A. 4X + 5Y C. 4X + 5Y ≤ 80 A. 361.25 hours C. 500.0 hours
B. 6X + 9Y ≤ 120 D. 12X + 7Y B. 425.0 hours D. 322.4 hours
3
. A learning curve of 80% assumes that production unit costs are
PROBLEMS: doubling of output. What is the cost of the sixteenth unit pro
PERT-CPM percent of the first unit produced?
A. 30 percent C. 41 percent
2. Castle Building Company uses the critical path method to monitor
B. 51 percent D. 64 percent
construction jobs. The company is currently 2 weeks behind schedule on Job
WW, which is subject to a P10,500-per-week completion penalty. Path A-B- 4
. Soft Inc. has a target total labor cost of P3,600 for the first four ba
C-F-G-H-I has a normal completion time of 20 weeks, and critical path A-D- is paid P10 an hour. If Soft expects an 80% learning curve, how
E-F-G-H-I has a normal completion time of 22 weeks. The following batch take?
activities can be crashed. A. 360 hours C. 57.6 hours
Activities Cost to Crash 1 Week Cost to Crash 2 Weeks B. 140.63 hours D. 230.4 hours
BC P 8,000 P15,000
5
DE 10,000 19,600 . Havenot has estimated the first batch of product will take 40 h
EF 8,800 19,500 learning curve is expected. If labor is paid P15 per hour, the targe
Castle desires to reduce the normal completion time of Job WW and, at the same time, report of product is
the highest possible income for the year. Castle should crash A. P600 C. P1,944
A. Activity BC 1 week and activity EF 1 week B. P2,160 D. P2,400
715
(E.
E. QUANTITATIVE METHODS for the activity times.
B. PERT does not allow for slack times on the activities while CPM
C. PERT considers only activity cost while CPM considers only ac
THEORIES: D. PERT determines the least-cost path through a network while
Economic Order Quantity time path through a network.
1. The economic order quantity is the order quantity that results in
A. the minimum total annual inventory costs. 6. Critical Path Method (CPM) is a technique for analyzing, plann
B. no inventory shortages. complex projects by determining the critical path from a single tim
C. the maximum total annual inventory costs. in a project. The critical path:
D. minimum ordering costs. A. Is the shortest path from the first event to the last event for a
B. Is an activity within the path that requires the most number of
Sensitivity analysis C. Has completion that reflects the earliest time to complete the
2. Missile Company has correctly computed its economic order quantity as 500 units. However, D. Is the maximum amount of time an activity may be delayed
management feels it would rather order quantities of 600 units. How should Missile’s total project beyond its target completion time.
annual purchase-order costs and total annual carrying cost for an order quantity of 600 units
compare to the respective amounts for an order quantity of 500 units? Queuing Theory
A. Higher purchase-order cost and lower carrying cost. 7. A company is designing a new regional distribution warehouse
B. Higher purchase-order cost and higher carrying cost. loading and unloading trucks, an adequate number of loading
C. Lower purchase-order cost and higher carrying cost. most relevant technique to assist in determining the proper numbe
D. Lower purchase-order cost and lower carrying cost. A. Cost-volume-profit analysis C. Linear program
B. PERT/CPM analysis D. Queuing theory
3. A decrease in inventory order costs will
A. Increase the reorder point. Linear Programming
B. Decrease the economic order quantity. Use the following information to answer question Nos. 8 and 9:
C. Have no effect on the economic order quantity. The Kinis Company produces a cosmetic product in 60 gallon batches.
D. Decrease the holding cost percentage. are material X, costing P70 per gallon, and material Y, costing P170 per
gallons of X can be used, and at least 15 gallons of Y must be used.
4. An increase in inventory holding costs will
A. Decrease the economic order quantity. 8. How would the objective function (minimization of product cost) be
B. Have no effect on the economic order quantity. A. 70X + 170Y C. 170X + 70Y
C. Increase the economic order quantity. B. 18X + 15Y D. 18X + 42Y
D. Decrease the number of orders issued per year.
9. Which of the following is not a constraint of the Kinis Company?
PERT-CPM A. X ≤ 18 C. Y ≥ 15
5. Which one of the following statements best describes a difference between basic PERT and B. X + Y ≤ 60 D. X ≥ 0
the Critical Path Method (CPM) of network analysis?
A. PERT uses probability distribution on the activity times while CPM uses point estimates Use the following data to answer Question Nos. 10 through 12:
714
, F
(E.
Sun, Inc. manufactures product X and product Y, which are processed as follows: B. Activity BC 2 weeks
Type A machine Type B machine C. Activity DE 1 week and activity BC 1 week
Product X 6 hours 4 hours D. Activity DE 1 week and activity EF 1 week
Product Y 9 hours 5 hours
Learning Curve
1
The contribution margin is P12 for product X and P7 for product Y. The available time daily for . Contratista, Inc. is considering a three-phase research project
processing the two products is 120 hours for machine Type A and 80 hours for machine Type B. completion of Phase 2 of the project are:
Pessimistic 24 weeks
10. How would the constraint for machine Type A be expressed? Most likely 20 weeks
A. 4X + 5Y C. 4X + 5Y ≤ 80 Optimistic 10 weeks
B. 6X + 9Y ≤ 120 D. 12X + 7Y Using the program evaluation and review technique (PERT
completion of Phase 2 should be
11. How would the constraint for machine Type B be expressed? A. 20 weeks C. 18 weeks
A. 4X + 5Y C. 4X + 5Y ≤ 80 B. 19 weeks D. 24 weeks
B. 6X + 9Y ≤ 120 D. 12X + 7Y 2
. Wind Company expects an 85% learning curve. The first batch of
12. How would the objective function be expressed? hours. The first four batches should take an average of
A. 4X + 5Y C. 4X + 5Y ≤ 80 A. 361.25 hours C. 500.0 hours
B. 6X + 9Y ≤ 120 D. 12X + 7Y B. 425.0 hours D. 322.4 hours
3
. A learning curve of 80% assumes that production unit costs are
PROBLEMS: doubling of output. What is the cost of the sixteenth unit pro
PERT-CPM percent of the first unit produced?
A. 30 percent C. 41 percent
2. Castle Building Company uses the critical path method to monitor
B. 51 percent D. 64 percent
construction jobs. The company is currently 2 weeks behind schedule on Job
WW, which is subject to a P10,500-per-week completion penalty. Path A-B- 4
. Soft Inc. has a target total labor cost of P3,600 for the first four ba
C-F-G-H-I has a normal completion time of 20 weeks, and critical path A-D- is paid P10 an hour. If Soft expects an 80% learning curve, how
E-F-G-H-I has a normal completion time of 22 weeks. The following batch take?
activities can be crashed. A. 360 hours C. 57.6 hours
Activities Cost to Crash 1 Week Cost to Crash 2 Weeks B. 140.63 hours D. 230.4 hours
BC P 8,000 P15,000
5
DE 10,000 19,600 . Havenot has estimated the first batch of product will take 40 h
EF 8,800 19,500 learning curve is expected. If labor is paid P15 per hour, the targe
Castle desires to reduce the normal completion time of Job WW and, at the same time, report of product is
the highest possible income for the year. Castle should crash A. P600 C. P1,944
A. Activity BC 1 week and activity EF 1 week B. P2,160 D. P2,400
715
