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Exam 6: Strategic Capacity Planning for Products and Services

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Question 51

Multiple Choice

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What is the break-even quantity for the following situation? FC = $1,200 per week VC = $2 per unit Rev = $6 per unit

A)  100
B)  200
C)  600
D)  1,200
E)  300

F) C) and E)
G) C) and D)

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Question 52

Multiple Choice

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Which of the following would not be a potential upside in a decision to outsource?

A)  increased total production capacity
B)  potential to lower fixed costs
C)  supplier may have greater expertise to do the outsourced work
D)  disclosure of proprietary information to supplier
E)  supplier cost may be lower

F) A) and E)
G) A) and B)

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Question 53

Multiple Choice

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A Virginia county is considering whether to pay $50,000 per year to lease a prisoner transfer facility in a prime location near Washington, D.C. They estimate it will cost $50 per prisoner to process the paperwork at this new location. The county is paid a $75 commission for each new prisoner they process. How many prisoners would they have to process annually to make a profit of $100,000 at this new location?

A Virginia county is considering whether to pay $50,000 per year to lease a prisoner transfer facility in a prime location near Washington, D.C. They estimate it will cost $50 per prisoner to process the paperwork at this new location. The county is paid a $75 commission for each new prisoner they process. If their holding area at this new location has design and effective capacities of 10,000 and 7,500 prisoners processed annually, respectively, and they plan to be 80 percent efficient in their use of this space, how many prisoners does the county plan to process per year?

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. If this new blood analysis machine has design and effective capacities of 6,000 and 5,000 blood analyses per year, respectively, and Dr. J. expects to be 80 percent efficient in his use of this machine, how many HIV blood analyses does he plan to perform each year?