BUSOBA 3230 Exam 2 ACTUAL UPDATED
Exam Questions and CORRECT Answers
In a recent post, it was indicated that Tesla currently has the capacity to build 90k Model S/X
and 400k Model 3/Y in Fremont, California, with an additional 150k capacity for Model 3s in
Shanghai. Which of the following are true? (select all that are correct)
These are input measures
They indicate the number of cars needed to break-even
These are productivity measures
These are output measures
They indicate the maximum number of cars that can be produced per year
They indicate the maximum utilization rate - CORRECT ANSWER - These are output
measures
They indicate the maximum number of cars that can be produced per year
Consider two generic strategies for expanding capacity:
(1) small, frequent increases
(2) larger, infrequent increases
Match industry examples with typical capacity expansion strategies and their associated risks.
,i. Apple
ii. Charmin - CORRECT ANSWER - Apple- larger, infrequent increases
Charmin- small, frequent increases
Typically speaking, how are capital intensity, fixed costs, and economies of scale related? -
CORRECT ANSWER - Higher capital intensity = greater fixed costs = greater
opportunities of economies of scale
Match the industry example with the typical demand uncertainty and capacity cushions.
restaurant
automotive industry - CORRECT ANSWER - restaurant - high demand uncertainty, high
capacity cusion
automotive - lower demand uncertanty, lower capacity cushion
Southwest airlines has set utilization at 60% in response to COVID-19 pandemic. If an airplane
has 100 seats, how many seats will be sold? - CORRECT ANSWER - 60
When lead time, L = 0 and demand is constant, the reorder point (ROP or R) = _______units. -
CORRECT ANSWER -0
When is Q (order quantity) optimal? - CORRECT ANSWER - annual holding cost =
annual ordering cost
When lead time > 0 & constant and demand is constant, reorder point (ROP or R) = - CORRECT
ANSWER - R=dL
, When lead-time > 0 and demand is NOT constant, reorder point (ROP or R) = - CORRECT
ANSWER - R=dL + SS
Finding the overall capacity level of capital-intensive resources to best support the firm's long-
term strategy. - CORRECT ANSWER - Strategic capacity planning
The output that a system is capable of achieving over a period of time. - CORRECT
ANSWER - Capacity
Measure of how close the firm's current output rate is to its best operating level (percent). -
CORRECT ANSWER - Capacity Utilization Rate
Idea that as the plant gets larger and volume increases, the average cost per unit drops. At some
point, the plant gets too large and cost per unit increases. - CORRECT ANSWER -
Economies of Scale
When multiple products can be produced at lower cost in combination than they can be
separately. - CORRECT ANSWER - Economies of Scope
All the money that the system has invested in purchasing things it intends to sell (Goldratt's
definition) - CORRECT ANSWER - Inventory
The demands for these items are unrelated to each other, or to activities that can be predicted
with certainty. - CORRECT ANSWER - Independent demand
The need for an item is a direct result of the need for some other item, usually an item of which it
is a part. Also, when the demand for the item can be predicted with accuracy due to a schedule or
specific activitity. - CORRECT ANSWER - Dependent Demand
An inventory control model where the amount requisitioned is fixed and the actual ordering is
triggered by inventory dropping to a specified level of inventory. - CORRECT ANSWER -
Fixed-order quantity model (Q-model)
Exam Questions and CORRECT Answers
In a recent post, it was indicated that Tesla currently has the capacity to build 90k Model S/X
and 400k Model 3/Y in Fremont, California, with an additional 150k capacity for Model 3s in
Shanghai. Which of the following are true? (select all that are correct)
These are input measures
They indicate the number of cars needed to break-even
These are productivity measures
These are output measures
They indicate the maximum number of cars that can be produced per year
They indicate the maximum utilization rate - CORRECT ANSWER - These are output
measures
They indicate the maximum number of cars that can be produced per year
Consider two generic strategies for expanding capacity:
(1) small, frequent increases
(2) larger, infrequent increases
Match industry examples with typical capacity expansion strategies and their associated risks.
,i. Apple
ii. Charmin - CORRECT ANSWER - Apple- larger, infrequent increases
Charmin- small, frequent increases
Typically speaking, how are capital intensity, fixed costs, and economies of scale related? -
CORRECT ANSWER - Higher capital intensity = greater fixed costs = greater
opportunities of economies of scale
Match the industry example with the typical demand uncertainty and capacity cushions.
restaurant
automotive industry - CORRECT ANSWER - restaurant - high demand uncertainty, high
capacity cusion
automotive - lower demand uncertanty, lower capacity cushion
Southwest airlines has set utilization at 60% in response to COVID-19 pandemic. If an airplane
has 100 seats, how many seats will be sold? - CORRECT ANSWER - 60
When lead time, L = 0 and demand is constant, the reorder point (ROP or R) = _______units. -
CORRECT ANSWER -0
When is Q (order quantity) optimal? - CORRECT ANSWER - annual holding cost =
annual ordering cost
When lead time > 0 & constant and demand is constant, reorder point (ROP or R) = - CORRECT
ANSWER - R=dL
, When lead-time > 0 and demand is NOT constant, reorder point (ROP or R) = - CORRECT
ANSWER - R=dL + SS
Finding the overall capacity level of capital-intensive resources to best support the firm's long-
term strategy. - CORRECT ANSWER - Strategic capacity planning
The output that a system is capable of achieving over a period of time. - CORRECT
ANSWER - Capacity
Measure of how close the firm's current output rate is to its best operating level (percent). -
CORRECT ANSWER - Capacity Utilization Rate
Idea that as the plant gets larger and volume increases, the average cost per unit drops. At some
point, the plant gets too large and cost per unit increases. - CORRECT ANSWER -
Economies of Scale
When multiple products can be produced at lower cost in combination than they can be
separately. - CORRECT ANSWER - Economies of Scope
All the money that the system has invested in purchasing things it intends to sell (Goldratt's
definition) - CORRECT ANSWER - Inventory
The demands for these items are unrelated to each other, or to activities that can be predicted
with certainty. - CORRECT ANSWER - Independent demand
The need for an item is a direct result of the need for some other item, usually an item of which it
is a part. Also, when the demand for the item can be predicted with accuracy due to a schedule or
specific activitity. - CORRECT ANSWER - Dependent Demand
An inventory control model where the amount requisitioned is fixed and the actual ordering is
triggered by inventory dropping to a specified level of inventory. - CORRECT ANSWER -
Fixed-order quantity model (Q-model)
