BUS 370 Final Exam 2 Questions And
100% Correct Answers 2025-2026
Updated.
capacity - Answer the capability of a worker, machine, work center, plant or organization to
produce output per time period
measures of capacity - Answer in terms of inputs, outputs, or a combo
ex: jiffy lube=oil changes per hour
law firm=billable hours
college= student hours per semester
theoretical capacity - Answer the max output capability, allowing for no adjustments for
preventive maintenance or unplanned downtime
rated capacity - Answer the long-term, expected output capability of a resource or system
lead capacity strategy - Answer a capacity strategy in which capacity is added in anticipation of
BEFORE demand
lag capacity strategy - Answer a capacity strategy in which capacity is added only AFTER
demand has materialized
typically a good strategy for mature, cost sensitive products and services
methods of evaluating capacity alternatives - Answer fixed & variable costs
indifference point
break even point
expected value
decision tree
total cost - Answer FC + VC(units)
, expected value - Answer a calculation that summarizes the expected costs, revenues, or
profits of a capacity alternative based on several demand levels, each of which has a different
probability
step 1: calculate total cost
step 2: calculate expected value
decision tree - Answer a visual tool that decision makers use to evaluate capacity decisions to
enable users to see the interrelationships between decisions and possible outcomes
decision tree rules - Answer draw tree left to right starting with decision point and develop
branches from there
decision point=squares
outcome point=circles
for EV problems, calculate the financial results for each of the smaller branches and move
backward by calculating weighted avg for branches based on problems
Forter's Market case study - Answer roast coffee himself vs. buying roasted coffee
indifference point 25000
higher EV was roasting it himself
learning curves - Answer recognize that people become more productive over time due to
learning
-for every doubling of cumulative output, there is a set percentage reduction in the amount of
inputs required
learning rate - Answer 2nd time/1st time
theory of constraints - Answer an approach to visualizing and managing capacity that
recognizes that nearly all products and services are created through a series of linked processes
and in every case, there is at least one process step that limits throughput for the entire chain
steps to improve constraints - Answer 1. identify the constraint
2. exploit the constraint - keep it busy
3. subordinate everything to constraint- strive for 100% utilization
100% Correct Answers 2025-2026
Updated.
capacity - Answer the capability of a worker, machine, work center, plant or organization to
produce output per time period
measures of capacity - Answer in terms of inputs, outputs, or a combo
ex: jiffy lube=oil changes per hour
law firm=billable hours
college= student hours per semester
theoretical capacity - Answer the max output capability, allowing for no adjustments for
preventive maintenance or unplanned downtime
rated capacity - Answer the long-term, expected output capability of a resource or system
lead capacity strategy - Answer a capacity strategy in which capacity is added in anticipation of
BEFORE demand
lag capacity strategy - Answer a capacity strategy in which capacity is added only AFTER
demand has materialized
typically a good strategy for mature, cost sensitive products and services
methods of evaluating capacity alternatives - Answer fixed & variable costs
indifference point
break even point
expected value
decision tree
total cost - Answer FC + VC(units)
, expected value - Answer a calculation that summarizes the expected costs, revenues, or
profits of a capacity alternative based on several demand levels, each of which has a different
probability
step 1: calculate total cost
step 2: calculate expected value
decision tree - Answer a visual tool that decision makers use to evaluate capacity decisions to
enable users to see the interrelationships between decisions and possible outcomes
decision tree rules - Answer draw tree left to right starting with decision point and develop
branches from there
decision point=squares
outcome point=circles
for EV problems, calculate the financial results for each of the smaller branches and move
backward by calculating weighted avg for branches based on problems
Forter's Market case study - Answer roast coffee himself vs. buying roasted coffee
indifference point 25000
higher EV was roasting it himself
learning curves - Answer recognize that people become more productive over time due to
learning
-for every doubling of cumulative output, there is a set percentage reduction in the amount of
inputs required
learning rate - Answer 2nd time/1st time
theory of constraints - Answer an approach to visualizing and managing capacity that
recognizes that nearly all products and services are created through a series of linked processes
and in every case, there is at least one process step that limits throughput for the entire chain
steps to improve constraints - Answer 1. identify the constraint
2. exploit the constraint - keep it busy
3. subordinate everything to constraint- strive for 100% utilization
