For each question below, choose the BEST answer. For problems, choose the CLOSEST multiple-choice answer.
Use this scenario for questions 2-4
A firm is considering three capacity alternatives: A, B, and C. Alternative A would have an annual fixed cost of $100,000 and variable costs of $22 per unit. Alternative B would have annual fixed costs of $120,000 and variable costs of $20 per unit. Alternative C would have fixed costs of $80,000 and variable costs of $30 per unit. Revenue is expected to be $50 per unit.
2. Which alternative has the lowest break-even quantity?
A. 3571
B. 4000
C. 4000
3. Which alternative will produce the highest profits for an annual output of 10,000 units?
A.180k
B. 180k
C. 120k
4. Which alternative would require the lowest volume of output to generate an annual profit of $50,000?
A. 5357
B. 5667
C. 6500
5. If the unit cost to buy something is less than the variable cost to make it, should you make or buy?
A. make
B. buy
6. Doctor J. is considering purchasing a new blood analysis machine to test for HIV; it will cost $60,000. He estimates that he could charge $25.00 for an office visit to have a patient's blood analyzed, while the actual cost of a blood analysis would be $5.00.
What would be his profit if he were to perform 5,000 HIV blood analyses?
A. $0
B. $25,000
C. $40,000
D. $60,000
E. $100,000
7. The break-even quantity can be determined by dividing the fixed costs by the difference between the revenue per unit and the variable cost per unit.
A. true
B. false
8. Which of the following is not a component of the General System Model (GST)
A. input
B. output
C. process
D. hypothesis
9. The Management Science process includes
A. input, process, feedback
B. observation, hypothesis testing, implementation
C. model construction, solution, implementation
D. feedback, control, measurement
Use this scenario for questions 10-11
The owner of a greenhouse and nursery is considering whether to spend $6,000 to acquire the licensing rights to grow a new variety of rosebush, which she could then sell for $6 each. Per-unit variable cost would be $3.
10. How many rosebushes would she have to produce and sell in order to make a profit of $6,000?
A. 1,600
B. 2,400
C. 3,000
D. 1,000
E. 4,000
11. What would the profit be if she were to produce and sell 5,000 rosebushes?
A. $0
B. $9,000
C. $10,000
D. $15,000
E. $30,000
12. In a project network (i.e., a PERT network), the actual project completion time will never exceed the expected duration of the activities on the critical path.
A. true
B. false
13. The objective of project scheduling is to
A. minimize project cost.
B. minimize project duration.
C. maximize project profit.
D. maximize customer satisfaction.
14. Which of the following statements is not true?
A. PERT and CPM were developed at about the same time, in the 1950s.
B. CPM uses a single time estimate for activities.
C. In PERT, activities are represented by arcs or arrows between nodes ("activity on arrow").
D. There is no difference between PERT and CPM.
15. "Project Management" is usually interpreted to include which of the following elements?
A. objectives, project scope, schedules
B. material forecasts, computers, contract requirements
C. schedules, resources, publicity
D. contract requirements, control, re-work
16. A "green" project is one which may not have a tangible dollar ROI, but can protect a company against regulatory infractions and improve the company's public image.
A. true
B. false
17. Assignment to a project team is usually
A. permanent
B. temporary
C. a form of punishment
D. a form of reward
18. Return on investment (ROI) is a measure of performance, and can be used to compare a number of different projects.
A. true
B. false
19. Projects with "soft" returns or benefits are especially easy to measure with ROI.
A. true
B. false
20. A work breakdown structure (WBS) is a type of
A. Gantt Chart
B. PERT or CPM diagram
C. organization chart
D. responsibility assignment matrix
21. An inventory is defined as
a. a warehouse or terminal where goods are stored
b. a list of customer orders
c. a stock of items kept on hand to meet customer demand
d. a plan or schedule for production operations
22. A company keeps an inventory so that it can
a. satisfy anticipated customer demand
b. satisfy unexpected variations in excess of anticipated customer demand
c. satisfy seasonal or cyclical demand
d. all of the above
23. Suppose an automobile company decides to produce 1,000 automobiles and therefore orders 5,000 wheels and tires. The number 5,000 is an example of
a. dependent demand
b. independent demand
c. multiplicative inventory
d. raw material demand
24. Inventory costs include
a. shortage costs
b. carrying costs
c. ordering costs
d. all of the above
25. The purpose of inventory management is to decide
a. when to order
b. how much to order
c. both a and b
d. none of the above