OPSM 3830 Week 4 Exam Questions with Correct Answers Latest Update 2025/2026
Which of the following statements accurately reflect the (strategic) importance of capacity
decisions? - Answers 1. Capacity decisions can affect competitiveness
2. Capacity decisions impact how well a firm can meet its demand
3. Capacity decisions affect operating costs.
Which of the following may prove to be challenging ways to measure capacity? - Answers 1.
Capacity based on revenues generated
2. Capacity based on units of output
Which of the following cactors directly affect the effective capacity? - Answers 1. Inventory
shortages
2. Employee absenteeism
3. Machine breakdowns
Besides cost-volume analysis, managers should consider ____ analysis, ______ theory, _______ -
line analysis, and/or______. - Answers financial, decision, waiting, simulation.
Before increasing capacity, it is important to make sure an organization's ______ ______ can
handle the ramp up - Answers supply chain
Which of the following improvements will typically increase capacity? - Answers 1. Increasing
productivity
2. Standardizing output
3. Reducing changeover times
T or F: Globalization simplifies capacity decisions because there are more, cheaper options. -
Answers False
Effective capacity is the ______ capacity ______ allowances such as maintenance. - Answers
design, minus
Design capacity minus allowances such as personal time and maintenance is known as ______. -
Answers Effective capacities.
Which of the following are assumptions for cost-volume analysis? - Answers 1. revenue per unit
revenue exceeds per unit variable cost
2. There is only one product.
, 3. The variable cost per unit does not change
4. everything produced can be sold
5. The revenue per unit is the same regardless of volume.
Two important terms in financial analysis are ______ flow and ____ value. - Answers cash ,
present.
Which of the following are additional questions that should be asked in making capacity
planning decisions, beyond the initial key questions? - Answers 1. What are the potential risks?
2. How much will it cost?
3. Should capacity be changed all at once?
T or F: The more uniform production output is, the less effective capacity the operation has. -
Answers False
Design capacity is the ______ output rate a process is _______ for. - Answers maximum, designed
Which of the following are correct formulas for profit? - Answers 1. P = RQ-(FC-vQ)
2. P = RQ-(FC+vQ)
The difference between the cash received from sales and other sources and the cash outflow
for labor, materials, overhead, and taxes is known as_____. - Answers Cash flow
_____ is the quantity at which two competing alternatives are equivalent. - Answers an
indifference point
Which of the following is the correct formula for the break-even point? - Answers Q= FC/R-v
Place the following steps in the capacity planning process in the correct order. - Answers 1.
Estimate future capacity requirements.
2. Evaluate existing capacity and identify gaps.
3. Identify alternatives for meeting requirements.
4. Conduct financial analyses of each alternative.
5. Assess key qualitative issues for each alternative.
6. Select, implement, and monitor the best alternative to pursue.
A bottleneck operation is the step whose ____ is _____ than that of other steps in the sequence
of operations. - Answers Capacity, lower
Which of the following statements accurately reflect the (strategic) importance of capacity
decisions? - Answers 1. Capacity decisions can affect competitiveness
2. Capacity decisions impact how well a firm can meet its demand
3. Capacity decisions affect operating costs.
Which of the following may prove to be challenging ways to measure capacity? - Answers 1.
Capacity based on revenues generated
2. Capacity based on units of output
Which of the following cactors directly affect the effective capacity? - Answers 1. Inventory
shortages
2. Employee absenteeism
3. Machine breakdowns
Besides cost-volume analysis, managers should consider ____ analysis, ______ theory, _______ -
line analysis, and/or______. - Answers financial, decision, waiting, simulation.
Before increasing capacity, it is important to make sure an organization's ______ ______ can
handle the ramp up - Answers supply chain
Which of the following improvements will typically increase capacity? - Answers 1. Increasing
productivity
2. Standardizing output
3. Reducing changeover times
T or F: Globalization simplifies capacity decisions because there are more, cheaper options. -
Answers False
Effective capacity is the ______ capacity ______ allowances such as maintenance. - Answers
design, minus
Design capacity minus allowances such as personal time and maintenance is known as ______. -
Answers Effective capacities.
Which of the following are assumptions for cost-volume analysis? - Answers 1. revenue per unit
revenue exceeds per unit variable cost
2. There is only one product.
, 3. The variable cost per unit does not change
4. everything produced can be sold
5. The revenue per unit is the same regardless of volume.
Two important terms in financial analysis are ______ flow and ____ value. - Answers cash ,
present.
Which of the following are additional questions that should be asked in making capacity
planning decisions, beyond the initial key questions? - Answers 1. What are the potential risks?
2. How much will it cost?
3. Should capacity be changed all at once?
T or F: The more uniform production output is, the less effective capacity the operation has. -
Answers False
Design capacity is the ______ output rate a process is _______ for. - Answers maximum, designed
Which of the following are correct formulas for profit? - Answers 1. P = RQ-(FC-vQ)
2. P = RQ-(FC+vQ)
The difference between the cash received from sales and other sources and the cash outflow
for labor, materials, overhead, and taxes is known as_____. - Answers Cash flow
_____ is the quantity at which two competing alternatives are equivalent. - Answers an
indifference point
Which of the following is the correct formula for the break-even point? - Answers Q= FC/R-v
Place the following steps in the capacity planning process in the correct order. - Answers 1.
Estimate future capacity requirements.
2. Evaluate existing capacity and identify gaps.
3. Identify alternatives for meeting requirements.
4. Conduct financial analyses of each alternative.
5. Assess key qualitative issues for each alternative.
6. Select, implement, and monitor the best alternative to pursue.
A bottleneck operation is the step whose ____ is _____ than that of other steps in the sequence
of operations. - Answers Capacity, lower
