Cost of Direct Labor Question

4

  1. Cost of direct labor goes up whenever labor content goes up.     True    False
  1. Takt time matches cycle time if supply matches demand.           True    False
  1.       

True    False

Automating some activities at a nonbottleneck resource simply increases the amount of idle time for that resource without making the process more efficient.

  1. Line balancing can only be applied to activities with a fixed sequence.             True    False
  1. Specialization reduces processing times by making it easier to balance the line.           True    False
  1. Revenue cannot be increased with an efficiency improvement on a demand constrained process.     

True    False

Activity

Processing time per customer

Greet customer

2 seconds

Take order

30 seconds

Process order

60 seconds

Deliver order

5 seconds

Assume demand is unlimited. If each employee is paid $7.50 per hour, what is the cost of direct labor associated with serving one customer?

  1. $0.80
  2. $7.50
  3. $0.50
  4. $0.125

Activity

Processing time per customer

Greet customer

2 seconds

Take order

30 seconds

Process order

60 seconds

Deliver order

5 seconds

Assume demand is unlimited. What is the labor content associated with serving one customer?

  1. 60 seconds per customer
  2. 25 seconds per customer
  3. 97 seconds per customer D. 388 seconds per customer.

Activity

Processing time per customer

Greet customer

2 seconds

Take order

30 seconds

Process order

60 seconds

Deliver order

5 seconds

Assume demand is unlimited. What is the average labor utilization?

  1. 62
  2. 68
  3. 50
  4. 40
  1.   

Four employees at a fast-food restaurant each perform one of the four activities in serving a customer:

greet customer, take order, process order, and deliver order. The processing time for each activity is given as follows:

Activity

Processing time per customer

Greet customer

2 seconds

Take order

30 seconds

Process order

60 seconds

Deliver order

5 seconds

Assume demand is unlimited. What is the total idle time?

  1. 75 seconds
  2. 60 seconds
  3. 97 seconds
  4. 143 seconds
  1.   

There are four employees at a fast-food restaurant. Each employee performs ALL four activities related to serving a customer: greet customer, take order, process order, and deliver order. The processing time for each activity is given as follows:

Activity

Processing time per customer

Greet customer

2 seconds

Take order

30 seconds

Process order

60 seconds

Deliver order

5 seconds

Assume demand is unlimited. If each employee is paid $7.50 per hour, what is the cost of direct labor associated with serving one customer?

A.

$7.55

B.

$0.81

C.

$0.51

  1. $0.125
  1. Which of the following statements about process efficiency is FALSE?            

A process is efficient if it is able to achieve a high flow rate with few resources.

  1. Cost of direct labor goes up if flow rate goes up.
  2. Revenue goes up if flow rate goes up.
  3. Cycle time goes up if flow rate goes down.
  1. What will be the percentage change in cost of direct labor if flow rate goes up by 25% while other factors remain unchanged?    Goes up by 20%
    1. Goes down by 20%
    2. Goes up by 80%
    3. Goes down by 80%

A physician will then consult with the patient and prescribe appropriate treatments. The patient will then visit the checkout station to settle payment and schedule the next appointment, if needed. Processing times and other information on the process are presented in the table below:

Resource

Process

Processing time (minutes per patient)

Number of workers

Wage rate ($per hour)

Self-service

Check in

1

n/a

n/a

Receptionist

Update information

5

2

15

Nurse

Record vital signs

10

3

30

Physician

Treat patient

30

5

100

Checkout

Collect payment

10

2

15

What is the cost of direct labor per patient if demand is unlimited?

A.

$6500/patient

B.

$1950/patient

C.

$65/patient

D.

$217/patient

A physician will then consult with the patient and prescribe appropriate treatments. The patient will then visit the checkout station to settle payment and schedule the next appointment, if needed. Processing times and other information on the process are presented in the table below:

Resource

Process

Processing time (minutes per patient)

Number of workers

Wage rate ($per hour)

Self-service

Check in

1

n/a

n/a

Receptionist

Update information

5

2

15

Nurse

Record vital signs

10

3

30

Physician

Treat patient

30

5

100

Checkout

Collect payment

10

2

15

What is the labor content?

  1. 2 min/patient
  2. 75 min/patient
  3. 55 min/patient
  4. 56 min/patient

A physician will then consult with the patient and prescribe appropriate treatments. The patient will then visit the checkout station to settle payment and schedule the next appointment, if needed. Processing times and other information on the process are presented in the table below:

Resource

Process

Processing time (minutes per patient)

Number of workers

Wage rate ($per hour)

Self-service

Check in

1

n/a

n/a

Receptionist

Update information

5

2

15

Nurse

Record vital signs

10

3

30

Physician

Treat patient

30

5

100

Checkout

Collect payment

10

2

15

What would be the best process improvement idea from the following proposals, assuming an unlimited demand?

  1. Increase check-in capacity
  2. Increase the pay for the receptionists
  3. Hire more physicians
  4. Move some work from the receptionist to the checkout clerk
  1. If _________ is constrained, we should _______ the staffing level to raise capacity.    demand, lower
    1. demand, raise
    2. capacity, raise
    3. capacity, lower
  1. If _________ is constrained, we should __________ the staffing level to lower capacity.    demand, lower
    1. demand, raise
    2. capacity, raise
    3. capacity, lower
  1.   

C&A operates three eight-hour shifts to produce 600 gallons of a chemical per day. It requires 12 minutes of labor to produce a gallon of the chemical. What is C&A’s takt time in minutes per gallon and target manpower?

  1. 3, 40
  2. 8, 15
  3. 04, 5
  4. 4, 5
  1. Which of the following statements about takt time is FALSE?               
    1. Takt time is the ratio between the time available and the quantity that has to be produced to serve
    2. Takt time is dependent on demand rate.
    3. Takt time tells us how much time actually elapses between completing two consecutive units.
    4. Takt time tells us how much time should elapse between completing two consecutive units.
  1. Which of the following statements about target manpower is TRUE?   
    1. Target manpower gives the maximum number of resources required to meet demand.
    2. The only way to compute target manpower is through cycle time.
    3. The target manpower calculation assumes that all resources are utilized at 100%.
    4. The target manpower calculation accounts for idle time in the process.
  1. Which of the following statements about takt time and cycle time is TRUE?    If takt time is longer than cycle time, more employees are needed.
    1. If takt time is longer than cycle time, fewer employees are needed.
    2. Supply matches demand when takt time is shorter than cycle time.
    3. Supply is less than demand when takt time is equal to cycle time.
  1. What happens to takt time if demand rate is doubled?   
    1. Increases by 50%
    2. Decreases by 50%
    3. No change
    4. Cannot be determined
  1. Labor content is increased by 10% while takt time remains the same. What is the percentage change in target manpower?              Increases by 10%
    1. Decreases by 10%
    2. No change
    3. Cannot be determined
  1. Both takt time and labor content are increased by 10%. What happens to target manpower?    Increases by 10%
    1. Decreases by 10%
    2. No change
    3. Cannot be determined
  1. Which of the following strategies is NOT able to off-load the bottleneck?         Outsource some of the activities consuming time at the bottleneck.
    1. Automate some of the activities consuming time at the bottleneck.
    2. Reassign activities consuming time at the bottleneck to other resources with more capacity.
    3. Slow down work at resources with more capacity to match that of the bottleneck.

Activity

Processing time per customer

Greet customer

2 seconds

Take order

30 seconds

Process order

60 seconds

Deliver order

5 seconds

Assume demand is unlimited. To which activity should C&A assign an additional employee in order to increase process capacity?

  1. Take order
  2. Process order
  3. Deliver order
  4. Greet customer

Activity

Processing time per customer

Greet customer

2 seconds

Take order

30 seconds

Process order

60 seconds

Deliver order

5 seconds

Assume demand is unlimited. If one additional employee is added to the bottleneck activity, what will be the percentage change in process capacity?

A.

100%

B.

50%

  1. 2%
  2. Cannot be determined

Activity

Processing time per customer

Greet customer

2 seconds

Take order

30 seconds

Process order

60 seconds

Deliver order

5 seconds

Assume demand is unlimited. Each employee is paid $7.50 per hour. If one additional employee is added to the bottleneck activity, what will be the cost of direct labor in $ per customer?

  1. 50
  2. 3125
  3. 25
  4. 125
  1.   

C&A Fast Food has four activities in serving a customer: greet customer, take order, process order, and deliver order. Each activity is staffed by one employee (for a total of four employees). The processing time for each activity is given as follows:

Activity

Processing time per customer

Wage rate ($ per hour)

Greet customer

2 seconds

5

Take order

30 seconds

5

Process order

60 seconds

15

Deliver order

5 seconds

8

Assume demand is unlimited. If one additional employee is added to the bottleneck activity, what will be the cost of direct labor in $ per customer?

  1. 275
  2. 3125
  3. 40
  4. 50

Assume demand is unlimited. Which of the following conclusions can be drawn?

A.

    Adding two employees at the bottleneck activity is the minimum change in manpower necessary to increase process capacity.

B

Activity

Processing time per customer

Wage rate ($ per hour)

Greet customer

2 seconds

5

Take order

30 seconds

5

Process order

60 seconds

15

Deliver order

5 seconds

8

. Adding one employee at a nonbottleneck activity will cause a larger decrease in the cost of direct labor than adding one employee at the bottleneck activity.

C.

    Adding two employees at the bottleneck activity will increase average labor utilization more than adding one employee.

D.

 Adding two employees at the bottleneck activity will not increase the process capacity that was created by adding one employee.

Activity

Processing time per customer

Wage rate ($ per hour)

Greet customer

2 seconds

5

Take order

30 seconds

5

Process order

60 seconds

15

Deliver order

5 seconds

8

Assume demand is unlimited. If two additional employees are added to the current bottleneck activity, what will be the cost of direct labor in $ per customer?

0.525

0.50

0.40

0.3125

Activity

Processing time per customer

Wage rate ($ per hour)

Greet customer

2 seconds

5

Take order

30 seconds

5

Process order

60 seconds

15

Deliver order

5 seconds

8

Assume demand is unlimited. If two additional employees are added to the current bottleneck activity, what will be the average labor utilization?

0.400

0.475

0.558

Cannot be determined.

There are five activities in making one toy: cutting, sewing, stuffing, assembling, and packaging. The activities have to be carried out in this order. The processing time of each activity is given below:

Activity

Processing Time  (minutes per toy)

Cutting

10

Sewing

10

Stuffing

5

Assembling

5

Packaging

25

Demand rate is 4 toys per hour. Currently we have worker A in charge of cutting, worker B in charge of sewing and stuffing, and worker C in charge of assembling and packaging. Which of the following strategies will increase the process capacity by balancing the line?

Adding one additional worker to assembling.

Adding two additional workers to assembling.

Moving packaging to worker A.

Moving assembling to worker B.

There are five activities in making one toy: cutting, sewing, stuffing, assembling, and packaging. The activities have to be carried out in this order. The processing time of each activity is given below:

Activity

Processing Time  (minutes per toy)

Cutting

10

Sewing

10

Stuffing

25

Assembling

5

Packaging

5

Demand rate is 4 toys per hour. Currently we have worker A in charge of cutting, worker B in charge of sewing and stuffing, and worker C in charge of assembling and packaging. Which of the following strategies will increase the process capacity by balancing the line?

  1. Adding one additional worker to assembling.
  2. Adding two additional workers to assembling.
  3. Moving packaging to worker A.
  4. Moving sewing to worker A.
  1. Line balancing is the act of allocating activities of a process across the process resources as ________ as possible so that all resources have a comparable __________.               
    1. irregularly, inventory level
    2. evenly, utilization level
    3. irregularly, utilization level
    4. evenly, inventory level
  1. A process can be balanced by moving work away from the _______ to unused capacity elsewhere in the process.   
    1. most expensive resource
    2. least expensive resource
    3. nonbottleneck

D.

bottleneck

  1. Which of the following statements about line balancing is TRUE?        
    1. A process can be balanced without involving the bottleneck resource.
    2. Process capacity can be increased by balancing a process.
    3. A process can be balanced by defining a fixed sequence of activities.
    4. The average labor utilization cannot be increased by balancing a process.
  1. Which of the following is NOT a benefit of specialization?        
    1. Reduced idle time B. Lower wage rates

C.

Elimination of setups

  1. Reduced equipment replication
  1. Which of the following is a drawback of specialization?            

Increased processing time

B.

Increased wage rates

C.

Demotivated workers

D.

Increased setup times

  1.   

Which of the following ways to assign employees to activities will more likely lead to a higher labor utilization? Assume demand is unlimited.

  1. Each employee takes care of all activities involved in the process.
  2. Each employee specializes in one activity.
  3. One employee is in charge of all activities; the rest will help out whenever they feel like it.

D.

One employee takes care of the bottleneck activity and the rest tend to the nonbottleneck activities.

  1. Which of the following is a way to address some of the shortcomings of specialization?           Each employee further develops his/her area of specialization.
    1. Each employee brings his/her own equipment or tool to work.
    2. Each employee is assigned to a team to perform a job.
    3. Each employee takes care of one activity only.
  1. A possible drawback of having one employee in charge of all activities involved in serving customers at a coffee shop is:   

Low labor utilization.

B.

Unbalanced process.

C.

High idle time.

D.

Increased setups.

  1. A possible drawback of having each employee specialize in one or several activities in serving customers at a coffee shop is:        increased idle time.
    1. higher direct labor costs.
    2. increased equipment replication.

D.

increased processing time.

  1. Which of the following is NOT a way to improve process efficiency?
    1. Staffing to supply
    2. Line balancing
    3. Off-loading the bottleneck
    4. Specialization
  1. Which of the following is a fixed cost in operating a dental clinic?        
    1. Advertising in the local newspaper
    2. Cost of dental checkup per patient
    3. Health insurance coverage of each patient
    4. Materials needed for procedures
  1. Which of the following is a variable cost in operating a dental clinic?               

Hourly wages for full-time dental assistants

B.

Utility costs for the office building

C.

Material cost for metal fillings

D.

Annual salary for the dentist

  1. In what situations is labor cost considered a fixed cost?              
    1. Making staffing decisions to match demand
    2. Paying employees according to the units of products made or number of customers served
    3. Paying employees by the hour even when they are idle
    4. Paying suppliers for materials used in the production of products or services
  1. In what situations is labor cost considered a variable cost?          Making short-term staffing decisions to match resource availability
    1. Making longer-term staffing decisions to match demand
    2. Paying employees by the hour even when they are idle
    3. Paying suppliers for materials used in the production of products or services
  1. Which of the following is NOT a process variable that has an impact on profits?          

Demand-constrained vs. capacity-constrained

B.

High margin vs. low margin.

C.

High rate vs. low rate of interest on loans.

D.

Bottleneck resource vs. nonbottleneck resource.

  1. Consider a capacity constrained process producing a high profit margin product. What will the impacts on revenue and profits be if processing time for the bottleneck resource is reduced by 10% while everything else remains the same?            No impact on revenue or profits
    1. Higher revenue and profits
    2. Lower revenue and profits
    3. Higher profits with no change in revenue
  1. Process improvements can help increase revenues if the process is ___________ constrained.    supply
    1. demand
    2. capacity
    3. resource
  1. Consider a demand constrained process producing a high profit margin product. What will the impacts on revenue be if processing time for the bottleneck resource is reduced by 10% while everything else remains the same?             No impact on revenue
    1. 10% increase in revenue
    2. 10% decrease in revenue
    3. 5% increase in revenue
  1.   

C&A sells T-shirts for $15 each. Material costs are $2 per shirt and fixed costs are $300 per hour. C&A currently employs two workers, each of whom takes two minutes to make one shirt. Assume demand is unlimited. How much profit does C&A make per hour? The wage rate is $15 per hour.

  1. $75
  2. $450
  3. $480
  4. $570
  1.   

Among other products, C&A sells T-shirts for $15 each. Material costs are $2 per shirt and fixed costs are $300 per hour. C&A currently employs two workers, each of whom takes two minutes to make one shirt. Assume demand is unlimited. What will be the impact on C&A’s profit per hour for shirts if one additional worker is moved from elsewhere in the company to make shirts? Assume the new worker also takes two minutes to make one shirt. The wage rate is $15 per hour.

A.

81.3% decrease

B.

81.3% increase

  1. No impact on profit
  2. Cannot be determined
  1.   

C&A uses two steps to make a toy. Step 1 takes 20 seconds. Step 2 takes 15 seconds. Each step is staffed by one worker, for a total of two workers. Each worker is paid $15 per hour. Each toy is sold for $20. Material costs are $5 per toy and fixed costs are $500 per hour. Assume demand is unlimited. How much profit does C&A make per hour?

  1. $3070
  2. $2170
  3. $1870
  4. $1270
  1.   

C&A uses two steps to make a toy. Step 1 takes 20 seconds. Step 2 takes 15 seconds. Each step is staffed by one worker, for a total of two workers. Each worker is paid $15 per hour. Each toy is sold for $20. Material costs are $5 per toy and fixed costs are $500 per hour. Assume demand is unlimited. What will be the impact on C&A’s profit per hour if the processing time of step 2 is reduced to 10 seconds?

  1. No impact on profit
  2. 124% increase
  3. 124% decrease
  4. Cannot be determined
  1.   

C&A uses two steps to make a toy. Step 1 takes 20 seconds. Step 2 takes 15 seconds. Each step is staffed by one worker, for a total of two workers. Each worker is paid $15 per hour. Each toy is sold for $20. Material costs are $5 per toy and fixed costs are $500 per hour. Demand rate is 120 toys per hour. How much profit does C&A make per hour? Assume the worker's pay is a variable cost.

  1. $3070
  2. $2170
  3. $1870
  4. $1270
  1.   

C&A uses two steps to make a toy. Step 1 takes 20 seconds. Step 2 takes 15 seconds. Each step is staffed by one worker, for a total of two workers. Each worker is paid $15 per hour. Each toy is sold for $20. Material costs are $5 per toy and fixed costs are $500 per hour. Demand rate is 120 toys per hour. What will be the impact on C&A’s profit per hour if the processing time of step 1 is reduced by 5 seconds? Assume the worker's pay is a variable cost.

  1. No impact on profit
  2. Cannot be determined
  3. 41% increase
  4. 373% increase
  1.   

C&A uses two steps to make a toy. Step 1 takes 20 seconds. Step 2 takes 15 seconds. Each step is staffed by one worker, for a total of two workers. Each worker is paid $15 per hour. Each toy is sold for $20. Material costs are $5 per toy and fixed costs are $500 per hour. Assume demand is unlimited. What will be the impact on C&A’s profit per hour if the processing time of step 1 is reduced by 5 seconds? Assume the worker’s pay is a variable cost.

  1. No impact on profit
  2. Cannot be determined
  3. 41% increase
  4. 373% increase

4 Key

  1. Cost of direct labor goes up whenever labor content goes up.      

FALSE

Cost of direct labor goes up only if labor content goes up only when the processing time of the bottleneck activity goes up.

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

Blooms: Analyze

Cachon - Chapter 04 #1

Difficulty: 3 Hard

Gradable: automatic Learning Objective: 04-01 Compute the costs of direct labor, labor content, idle time, and average labor utilization.

Topic: Measures of Process Efficiency

  1. Takt time matches cycle time if supply matches demand.               

TRUE

Takt time matches cycle time when we produce (or supply) exactly the amount to meet demand.

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

Blooms: Understand

Cachon - Chapter 04 #2

Difficulty: 2 Medium

Gradable: automatic Learning Objective: 04-02 Compute the takt time of a process and translate this to a target manpower.

Topic: How to Choose a Staffing Level to Meet Demand

  1. TRUE

Automating some activities at a nonbottleneck resource simply increases the amount of idle time for that resource without making the process more efficient.

Activity automation should be applied to the bottleneck resource to increase process capacity.

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

Blooms: Remember

Cachon - Chapter 04 #3

Difficulty: 1 Easy

Gradable: automatic Learning Objective: 04-03 Find ways to improve the process efficiency by off-loading the bottleneck.

Topic: Off-Loading the Bottleneck

  1. Line balancing can only be applied to activities with a fixed sequence.        

FALSE

Line balancing can be applied to activities with or without a fixed sequence.

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

Blooms: Understand

Cachon - Chapter 04 #4

Difficulty: 2 Medium

Gradable: automatic Learning Objective: 04-04 Balance a process by reallocating work from one step to another.

Topic: How to Balance a Process

  1. Specialization reduces processing times by making it easier to balance the line.      

FALSE

Specialization usually reduces labor utilization and makes it harder to balance the line.

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

Blooms: Remember

Cachon - Chapter 04 #5

Difficulty: 1 Easy

Gradable: automatic Learning Objective: 04-05 Explain the benefits and limitations of specialization.

Topic: The Pros and Cons of Specialization

  1. Revenue cannot be increased with an efficiency improvement on a demand constrained process.               

TRUE

Efficiency improvement on a demand constrained process will not change flow rate and thus brings no change in revenue.

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

Blooms: Remember

Cachon - Chapter 04 #6

Difficulty: 1 Easy

Gradable: automatic Learning Objective: 04-06 Evaluate the financial benefits of process improvements.

Topic: Understanding the Financial Impact of Process Improvements

Activity

Processing time per customer

Greet customer

2 seconds

Take order

30 seconds

Process order

60 seconds

Deliver order

5 seconds

Assume demand is unlimited. If each employee is paid $7.50 per hour, what is the cost of direct labor associated with serving one customer?

  1. $0.80 B. $7.50
  2. $0.50
  3. $0.125

AACSB: Analytical Thinking

Blooms: Understand

Cachon - Chapter 04 #7

Difficulty: 3 Hard

Gradable: automatic

Learning Objective: 04-01 Compute the costs of direct labor, labor content, idle time, and average labor utilization.

Topic: Measures of Process Efficiency

Activity

Processing time per customer

Greet customer

2 seconds

Take order

30 seconds

Process order

60 seconds

Deliver order

5 seconds

Assume demand is unlimited. What is the labor content associated with serving one customer?

  1. 60 seconds per customer
  2. 25 seconds per customer
  3. 97 seconds per customer
  4. 388 seconds per customer.

AACSB: Analytical Thinking

Blooms: Remember

Cachon - Chapter 04 #8

Difficulty: 1 Easy

Gradable: automatic Learning Objective: 04-01 Compute the costs of direct labor, labor content, idle time, and average labor utilization.

Topic: Measures of Process Efficiency

Activity

Processing time per customer

Greet customer

2 seconds

Take order

30 seconds

Process order

60 seconds

Deliver order

5 seconds

Assume demand is unlimited. What is the average labor utilization?

  1. 1.62 B. 0.68 C. 0.50
  2. 0.40

AACSB: Analytical Thinking

Blooms: Understand

Cachon - Chapter 04 #9

Difficulty: 3 Hard

Gradable: automatic Learning Objective: 04-01 Compute the costs of direct labor, labor content, idle time, and average labor utilization.

Topic: Measures of Process Efficiency

Activity

Processing time per customer

Greet customer

2 seconds

Take order

30 seconds

Process order

60 seconds

Deliver order

5 seconds

Assume demand is unlimited. What is the total idle time?

  1. 75 seconds
  2. 60 seconds
  3. 97 seconds
  4. 143 seconds

AACSB: Analytical Thinking

Blooms: Understand

Cachon - Chapter 04 #10

Difficulty: 3 Hard

Gradable: automatic Learning Objective: 04-01 Compute the costs of direct labor, labor content, idle time, and average labor utilization.

Topic: Measures of Process Efficiency

There are four employees at a fast-food restaurant. Each employee performs ALL four activities related to serving a customer: greet customer, take order, process order, and deliver order. The processing time for each activity is given as follows:

Activity

Processing time per customer

Greet customer

2 seconds

Take order

30 seconds

Process order

60 seconds

Deliver order

5 seconds

Assume demand is unlimited. If each employee is paid $7.50 per hour, what is the cost of direct labor associated with serving one customer?

A.

$7.55

B.

$0.81

C.

$0.51

  1. $0.125

AACSB: Analytical Thinking

Blooms: Understand

Cachon - Chapter 04 #11

Difficulty: 3 Hard

Gradable: automatic Learning Objective: 04-01 Compute the costs of direct labor, labor content, idle time, and average labor utilization.

Topic: Measures of Process Efficiency

  1. Which of the following statements about process efficiency is FALSE?      

A process is efficient if it is able to achieve a high flow rate with few resources.

  1. Cost of direct labor goes up if flow rate goes up.
  2. Revenue goes up if flow rate goes up.
  3. Cycle time goes up if flow rate goes down.

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

Blooms: Understand

Cachon - Chapter 04 #12

Difficulty: 2 Medium

Gradable: automatic Learning Objective: 04-01 Compute the costs of direct labor, labor content, idle time, and average labor utilization.

Topic: Measures of Process Efficiency

  1. What will be the percentage change in cost of direct labor if flow rate goes up by 25% while other factors remain unchanged?              
    1. Goes up by 20%
    2. Goes down by 20%
    3. Goes up by 80%
    4. Goes down by 80%

AACSB: Understand

Accessibility: Keyboard Navigation

Blooms: Remember

Cachon - Chapter 04 #13

Difficulty: 2 Medium

Gradable: automatic Learning Objective: 04-01 Compute the costs of direct labor, labor content, idle time, and average labor utilization.

Topic: Measures of Process Efficiency

  1.       

Patients use a self-serve kiosk to confirm their arrival at an outpatient clinic. They then proceed to the receptionist to update any personal information. After that, a nurse will record the patient’s vital signs. A physician will then consult with the patient and prescribe appropriate treatments. The patient will then visit the checkout station to settle payment and schedule the next appointment, if needed. Processing times and other information on the process are presented in the table below:

  

5

Resource

Process

Processing time (minutes per patient)

Number of workers

Wage rate ($per hour)

Self-service

Check in

1

n/a

n/

Receptionist

Update information

5

2

1

Nurse

Record vital signs

10

3

3

Physician

Treat patient

30

5

10

Checkout

Collect payment

10

2

1


0

0

5

What is the cost of direct labor per patient if demand is unlimited?

A.

$6500/patient

B.

$1950/patient

C.

$65/patient

D.

$217/patient

AACSB: Analytical Thinking

Blooms: Understand

Cachon - Chapter 04 #14

Difficulty: 3 Hard

Gradable: automatic Learning Objective: 04-01 Compute the costs of direct labor, labor content, idle time, and average labor utilization.

Topic: Measures of Process Efficiency

  1.       

Patients use a self-serve kiosk to confirm their arrival at an outpatient clinic. They then proceed to the receptionist to update any personal information. After that, a nurse will record the patient’s vital signs. A physician will then consult with the patient and prescribe appropriate treatments. The patient will then visit the checkout station to settle payment and schedule the next appointment, if needed. Processing times and other information on the process are presented in the table below:

5

0

0

Resource

Process

Processing time (minutes per patient)

Number of workers

Wage rate ($per hour)

Self-service

Check in

1

n/a

n/

Receptionist

Update information

5

2

1

Nurse

Record vital signs

10

3

3

Physician

Treat patient

30

5

10

Checkout

Collect payment

10

2

1


5

What is the labor content?

  1. 2 min/patient
  2. 75 min/patient
  3. 55 min/patient
  4. 56 min/patient

AACSB: Analytical Thinking

Blooms: Remember

Cachon - Chapter 04 #15

Difficulty: 1 Easy

Gradable: automatic Learning Objective: 04-01 Compute the costs of direct labor, labor content, idle time, and average labor utilization.

Topic: Measures of Process Efficiency

  1.       

Patients use a self-serve kiosk to confirm their arrival at an outpatient clinic. They then proceed to the receptionist to update any personal information. After that, a nurse will record the patient’s vital signs. A physician will then consult with the patient and prescribe appropriate treatments. The patient will then visit the checkout station to settle payment and schedule the next appointment, if needed. Processing times and other information on the process are presented in the table below:

5

0

0

5

What would be the best process improvement idea from the following proposals, assuming an unlimited demand?

  1. Increase check-in capacity
  2. Increase the pay for the receptionists

Resource

Process

Processing time (minutes per patient)

Number of workers

Wage rate ($per hour)

Self-service

Check in

1

n/a

n/

Receptionist

Update information

5

2

1

Nurse

Record vital signs

10

3

3

Physician

Treat patient

30

5

10

Checkout

Collect payment

10

2

1


  • Hire more physicians
  1. Move some work from the receptionist to the checkout clerk

AACSB: Analytical Thinking

Blooms: Understand

Cachon - Chapter 04 #16

Difficulty: 2 Medium

Gradable: automatic Learning Objective: 04-01 Compute the costs of direct labor, labor content, idle time, and average labor utilization.

Topic: Measures of Process Efficiency

  1. If _________ is constrained, we should _______ the staffing level to raise capacity.    demand, lower
    1. demand, raise
    2. capacity, raise
    3. capacity, lower

AACSB: Analytical Thinking

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Blooms: Remember

Cachon - Chapter 04 #17

Difficulty: 1 Easy

Gradable: automatic Learning Objective: 04-02 Compute the takt time of a process and translate this to a target manpower.

Topic: How to Choose a Staffing Level to Meet Demand

  1. If _________ is constrained, we should __________ the staffing level to lower capacity.    demand, lower
    1. demand, raise
    2. capacity, raise
    3. capacity, lower

AACSB: Analytical Thinking

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Blooms: Remember

Cachon - Chapter 04 #18

Difficulty: 1 Easy

Gradable: automatic Learning Objective: 04-02 Compute the takt time of a process and translate this to a target manpower.

Topic: How to Choose a Staffing Level to Meet Demand

19.

operates three eight-hour shifts to produce 600 gallons of a chemical per day. It requires 12

minutes of labor to produce a gallon of the chemical. What is C&A’s takt time in minutes per gallon and target manpower?

  1. 0.3, 40 B. 0.8, 15
  1. 04, 5
  2. 4, 5

AACSB: Analytical Thinking

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Blooms: Remember

Cachon - Chapter 04 #19

Difficulty: 2 Medium

Gradable: automatic Learning Objective: 04-02 Compute the takt time of a process and translate this to a target manpower.

Topic: How to Choose a Staffing Level to Meet Demand

  1. Which of the following statements about takt time is FALSE?         
    1. Takt time is the ratio between the time available and the quantity that has to be produced to serve
    2. Takt time is dependent on demand rate.
    3. Takt time tells us how much time actually elapses between completing two consecutive units.
    4. Takt time tells us how much time should elapse between completing two consecutive units.

AACSB: Analytical Thinking

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Blooms: Remember

Cachon - Chapter 04 #20

Difficulty: 1 Easy

Gradable: automatic Learning Objective: 04-02 Compute the takt time of a process and translate this to a target manpower.

Topic: How to Choose a Staffing Level to Meet Demand

  1. Which of the following statements about target manpower is TRUE?          
    1. Target manpower gives the maximum number of resources required to meet demand.
    2. The only way to compute target manpower is through cycle time.
    3. The target manpower calculation assumes that all resources are utilized at 100%.
    4. The target manpower calculation accounts for idle time in the process.

AACSB: Analytical Thinking

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Blooms: Understand

Cachon - Chapter 04 #21

Difficulty: 2 Medium

Gradable: automatic Learning Objective: 04-02 Compute the takt time of a process and translate this to a target manpower.

Topic: How to Choose a Staffing Level to Meet Demand

  1. Which of the following statements about takt time and cycle time is TRUE?            If takt time is longer than cycle time, more employees are needed.
    1. If takt time is longer than cycle time, fewer employees are needed.
    2. Supply matches demand when takt time is shorter than cycle time.
    3. Supply is less than demand when takt time is equal to cycle time.

AACSB: Analytical Thinking

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Blooms: Analyze

Cachon - Chapter 04 #22

Difficulty: 3 Hard

Gradable: automatic Learning Objective: 04-02 Compute the takt time of a process and translate this to a target manpower.

Topic: How to Choose a Staffing Level to Meet Demand

  1. What happens to takt time if demand rate is doubled?           
    1. Increases by 50%
    2. Decreases by 50%
    3. No change
    4. Cannot be determined

AACSB: Analytical Thinking

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Blooms: Remember

Cachon - Chapter 04 #23

Difficulty: 1 Easy

Gradable: automatic Learning Objective: 04-02 Compute the takt time of a process and translate this to a target manpower.

Topic: How to Choose a Staffing Level to Meet Demand

  1. Labor content is increased by 10% while takt time remains the same. What is the percentage change in target manpower?    Increases by 10%
    1. Decreases by 10%
    2. No change
    3. Cannot be determined

AACSB: Analytical Thinking

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Blooms: Remember

Cachon - Chapter 04 #24

Difficulty: 1 Easy

Gradable: automatic Learning Objective: 04-02 Compute the takt time of a process and translate this to a target manpower.

Topic: How to Choose a Staffing Level to Meet Demand

  1. Both takt time and labor content are increased by 10%. What happens to target manpower?            Increases by 10%
    1. Decreases by 10%
    2. No change
    3. Cannot be determined

AACSB: Analytical Thinking

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Blooms: Remember

Cachon - Chapter 04 #25

Difficulty: 1 Easy

Gradable: automatic Learning Objective: 04-02 Compute the takt time of a process and translate this to a target manpower.

Topic: How to Choose a Staffing Level to Meet Demand

  1. Which of the following strategies is NOT able to off-load the bottleneck?                Outsource some of the activities consuming time at the bottleneck.
    1. Automate some of the activities consuming time at the bottleneck.
    2. Reassign activities consuming time at the bottleneck to other resources with more capacity.
    3. Slow down work at resources with more capacity to match that of the bottleneck.

AACSB: Analytical Thinking

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Blooms: Remember

Cachon - Chapter 04 #26

Difficulty: 1 Easy

Gradable: automatic Learning Objective: 04-03 Find ways to improve the process efficiency by off-loading the bottleneck.

Topic: Off-Loading the Bottleneck

processing time for each activity is given as follows:

Activity

Processing time per customer

Greet customer

2 seconds

Take order

30 seconds

Process order

60 seconds

Deliver order

5 seconds

Assume demand is unlimited. To which activity should C&A assign an additional employee in order to increase process capacity?

  1. Take order
  2. Process order
  3. Deliver order
  4. Greet customer

AACSB: Analytical Thinking

Blooms: Remember

Cachon - Chapter 04 #27

Difficulty: 1 Easy

Gradable: automatic Learning Objective: 04-03 Find ways to improve the process efficiency by off-loading the bottleneck.

Topic: Off-Loading the Bottleneck

Activity

Processing time per customer

Greet customer

2 seconds

Take order

30 seconds

Process order

60 seconds

Deliver order

5 seconds

Assume demand is unlimited. If one additional employee is added to the bottleneck activity, what will be the percentage change in process capacity?

A.

100%

B.

50%

  1. 2%
  2. Cannot be determined

AACSB: Analytical Thinking

Blooms: Analyze

Cachon - Chapter 04 #28

Difficulty: 3 Hard

Gradable: automatic Learning Objective: 04-03 Find ways to improve the process efficiency by off-loading the bottleneck.

Topic: Off-Loading the Bottleneck

processing time for each activity is given as follows:

Activity

Processing time per customer

Greet customer

2 seconds

Take order

30 seconds

Process order

60 seconds

Deliver order

5 seconds

Assume demand is unlimited. Each employee is paid $7.50 per hour. If one additional employee is added to the bottleneck activity, what will be the cost of direct labor in $ per customer?

  1. 50
  2. 3125
  3. 25
  4. 125

AACSB: Analytical Thinking

Blooms: Understand

Cachon - Chapter 04 #29

Difficulty: 3 Hard

Gradable: automatic Learning Objective: 04-03 Find ways to improve the process efficiency by off-loading the bottleneck.

Topic: Off-Loading the Bottleneck

Activity

Processing time per customer

Wage rate ($ per hour)

Greet customer

2 seconds

5

Take order

30 seconds

5

Process order

60 seconds

15

Deliver order

5 seconds

8

Assume demand is unlimited. If one additional employee is added to the bottleneck activity, what will be the cost of direct labor in $ per customer?

  1. 275
  2. 3125
  3. 40
  4. 50

AACSB: Analytical Thinking

Blooms: Analyze

Cachon - Chapter 04 #30

Difficulty: 3 Hard

Gradable: automatic Learning Objective: 04-03 Find ways to improve the process efficiency by off-loading the bottleneck.

Off-Loading the Bottleneck

Assume demand is unlimited. Which of the following conclusions can be drawn?

A.

    Adding two employees at the bottleneck activity is the minimum change in manpower necessary to increase process capacity.

B

Activity

Processing time per customer

Wage rate ($ per hour)

Greet customer

2 seconds

5

Take order

30 seconds

5

Process order

60 seconds

15

Deliver order

5 seconds

8

. Adding one employee at a nonbottleneck activity will cause a larger decrease in the cost of direct labor than adding one employee at the bottleneck activity.

C.

    Adding two employees at the bottleneck activity will increase average labor utilization more than adding one employee.

D.

    Adding two employees at the bottleneck activity will not increase the process capacity that was created by adding one employee.

AACSB: Analytical Thinking

Blooms: Analyze

Cachon - Chapter 04 #31

Difficulty: 3 Hard

Gradable: automatic Learning Objective: 04-03 Find ways to improve the process efficiency by off-loading the bottleneck.

Topic: Off-Loading the Bottleneck

Assume demand is unlimited. If two additional employees are added to the current bottleneck activity, what will be the cost of direct labor in $ per customer?

  1. 525

Activity

Processing time per customer

Wage rate ($ per hour)

Greet customer

2 seconds

5

Take order

30 seconds

5

Process order

60 seconds

15

Deliver order

5 seconds

8

  1. 50
  2. 40
  3. 3125

AACSB: Analytical Thinking

Blooms: Analyze

Cachon - Chapter 04 #32

Difficulty: 3 Hard

Gradable: automatic Learning Objective: 04-03 Find ways to improve the process efficiency by off-loading the bottleneck.

Off-Loading the Bottleneck

Assume demand is unlimited. If two additional employees are added to the current bottleneck activity, what will be the average labor utilization?

Activity

Processing time per customer

Wage rate ($ per hour)

Greet customer

2 seconds

5

Take order

30 seconds

5

Process order

60 seconds

15

Deliver order

5 seconds

8

  1. 0.400 B. 0.475
  2. 558
  3. Cannot be determined.

AACSB: Analytical Thinking

Blooms: Analyze

Cachon - Chapter 04 #33

Difficulty: 3 Hard

Gradable: automatic Learning Objective: 04-03 Find ways to improve the process efficiency by off-loading the bottleneck.

Off-Loading the Bottleneck

There are five activities in making one toy: cutting, sewing, stuffing, assembling, and packaging. The activities have to be carried out in this order. The processing time of each activity is given below:

Activity

Processing Time  (minutes per toy)

Cutting

10

Sewing

10

Stuffing

5

Assembling

5

Packaging

25

Demand rate is 4 toys per hour. Currently we have worker A in charge of cutting, worker B in charge of sewing and stuffing, and worker C in charge of assembling and packaging. Which of the following strategies will increase the process capacity by balancing the line?

  1. Adding one additional worker to assembling.
  2. Adding two additional workers to assembling.
  3. Moving packaging to worker A.
  4. Moving assembling to worker B.

AACSB: Analytical Thinking

Blooms: Analyze

Cachon - Chapter 04 #34

Difficulty: 3 Hard

Gradable: automatic Learning Objective: 04-04 Balance a process by reallocating work from one step to another.

How to Balance a Process

There are five activities in making one toy: cutting, sewing, stuffing, assembling, and packaging. The activities have to be carried out in this order. The processing time of each activity is given below:

Activity

Processing Time  (minutes per toy)

Cutting

10

Sewing

10

Stuffing

25

Assembling

5

Packaging

5

Demand rate is 4 toys per hour. Currently we have worker A in charge of cutting, worker B in charge of sewing and stuffing, and worker C in charge of assembling and packaging. Which of the following strategies will increase the process capacity by balancing the line?

  1. Adding one additional worker to assembling.
  2. Adding two additional workers to assembling.
  3. Moving packaging to worker A.
  4. Moving sewing to worker A.

AACSB: Analytical Thinking

Blooms: Analyze

Cachon - Chapter 04 #35

Difficulty: 3 Hard

Gradable: automatic Learning Objective: 04-04 Balance a process by reallocating work from one step to another.

Topic: How to Balance a Process

  1. Line balancing is the act of allocating activities of a process across the process resources as ________ as possible so that all resources have a comparable __________.     
    1. irregularly, inventory level
    2. evenly, utilization level
    3. irregularly, utilization level
    4. evenly, inventory level

AACSB: Analytical Thinking

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Blooms: Remember

Cachon - Chapter 04 #36

Difficulty: 1 Easy

Gradable: automatic Learning Objective: 04-04 Balance a process by reallocating work from one step to another.

Topic: How to Balance a Process

  1. A process can be balanced by moving work away from the _______ to unused capacity elsewhere in the process.      
    1. most expensive resource
    2. least expensive resource
    3. nonbottleneck
    4. bottleneck

AACSB: Analytical Thinking

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Blooms: Remember

Cachon - Chapter 04 #37

Difficulty: 1 Easy

Gradable: automatic Learning Objective: 04-04 Balance a process by reallocating work from one step to another.

Topic: How to Balance a Process

  1. Which of the following statements about line balancing is TRUE?               
    1. A process can be balanced without involving the bottleneck resource.
    2. Process capacity can be increased by balancing a process.
    3. A process can be balanced by defining a fixed sequence of activities.
    4. The average labor utilization cannot be increased by balancing a process.

AACSB: Analytical Thinking

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Blooms: Remember

Cachon - Chapter 04 #38

Difficulty: 1 Easy

Gradable: automatic Learning Objective: 04-04 Balance a process by reallocating work from one step to another.

Topic: How to Balance a Process

  1. Which of the following is NOT a benefit of specialization?              
    1. Reduced idle time Lower wage rates

C.

Elimination of setups

  1. Reduced equipment replication

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

Blooms: Remember

Cachon - Chapter 04 #39

Difficulty: 1 Easy

Gradable: automatic Learning Objective: 04-05 Explain the benefits and limitations of specialization.

Topic: The Pros and Cons of Specialization

  1. Which of the following is a drawback of specialization?       

Increased processing time

B.

Increased wage rates

C.

Demotivated workers

D.

Increased setup times

AACSB: Analytical Thinking

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Blooms: Remember

Cachon - Chapter 04 #40

Difficulty: 1 Easy

Gradable: automatic Learning Objective: 04-05 Explain the benefits and limitations of specialization.

Topic: The Pros and Cons of Specialization

  1.       

Which of the following ways to assign employees to activities will more likely lead to a higher labor utilization? Assume demand is unlimited.

  1. Each employee takes care of all activities involved in the process.
  2. Each employee specializes in one activity.
  3. One employee is in charge of all activities; the rest will help out whenever they feel like it.

D.

One employee takes care of the bottleneck activity and the rest tend to the nonbottleneck activities.

AACSB: Analytical Thinking

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Blooms: Remember

Cachon - Chapter 04 #41

Difficulty: 1 Easy

Gradable: automatic Learning Objective: 04-05 Explain the benefits and limitations of specialization.

Topic: The Pros and Cons of Specialization

  1. Which of the following is a way to address some of the shortcomings of specialization?    Each employee further develops his/her area of specialization.
    1. Each employee brings his/her own equipment or tool to work.
    2. Each employee is assigned to a team to perform a job.
    3. Each employee takes care of one activity only.

AACSB: Analytical Thinking

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Blooms: Remember

Cachon - Chapter 04 #42

Difficulty: 1 Easy

Gradable: automatic Learning Objective: 04-05 Explain the benefits and limitations of specialization.

Topic: The Pros and Cons of Specialization

  1. A possible drawback of having one employee in charge of all activities involved in serving customers at a coffee shop is:             

Low labor utilization.

B.

Unbalanced process.

C.

High idle time.

D.

Increased setups.

AACSB: Analytical Thinking

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Blooms: Remember

Cachon - Chapter 04 #43

Difficulty: 1 Easy

Gradable: automatic Learning Objective: 04-05 Explain the benefits and limitations of specialization.

Topic: The Pros and Cons of Specialization

  1. A possible drawback of having each employee specialize in one or several activities in serving customers at a coffee shop is:         increased idle time.
    1. higher direct labor costs.
    2. increased equipment replication.
    3. increased processing time.

AACSB: Analytical Thinking

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Blooms: Remember

Cachon - Chapter 04 #44

Difficulty: 1 Easy

Gradable: automatic Learning Objective: 04-05 Explain the benefits and limitations of specialization.

Topic: The Pros and Cons of Specialization

  1. Which of the following is NOT a way to improve process efficiency?         
    1. Staffing to supply
    2. Line balancing
    3. Off-loading the bottleneck
    4. Specialization

AACSB: Analytical Thinking

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Blooms: Remember

Cachon - Chapter 04 #45

Difficulty: 1 Easy

Gradable: automatic Learning Objective: 04-05 Explain the benefits and limitations of specialization.

Topic: The Pros and Cons of Specialization

  1. Which of the following is a fixed cost in operating a dental clinic?               Advertising in the local newspaper
    1. Cost of dental checkup per patient
    2. Health insurance coverage of each patient
    3. Materials needed for procedures

AACSB: Analytical Thinking

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Blooms: Remember

Cachon - Chapter 04 #46

Difficulty: 1 Easy

Gradable: automatic Learning Objective: 04-06 Evaluate the financial benefits of process improvements.

Topic: Understanding the Financial Impact of Process Improvements

  1. Which of the following is a variable cost in operating a dental clinic?          

Hourly wages for full-time dental assistants

B.

Utility costs for the office building

C.

Material cost for metal fillings

D.

Annual salary for the dentist

AACSB: Analytical Thinking

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Blooms: Remember

Cachon - Chapter 04 #47

Difficulty: 1 Easy

Gradable: automatic Learning Objective: 04-06 Evaluate the financial benefits of process improvements. Topic: Understanding the Financial Impact of Process Improvements

  1. In what situations is labor cost considered a fixed cost?        
    1. Making staffing decisions to match demand
    2. Paying employees according to the units of products made or number of customers served
    3. Paying employees by the hour even when they are idle
    4. Paying suppliers for materials used in the production of products or services

AACSB: Analytical Thinking

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Blooms: Remember

Cachon - Chapter 04 #48

Difficulty: 1 Easy

Gradable: automatic Learning Objective: 04-06 Evaluate the financial benefits of process improvements.

Topic: Understanding the Financial Impact of Process Improvements

  1. In what situations is labor cost considered a variable cost?   
    1. Making short-term staffing decisions to match resource availability
    2. Making longer-term staffing decisions to match demand
    3. Paying employees by the hour even when they are idle
    4. Paying suppliers for materials used in the production of products or services

AACSB: Analytical Thinking

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Blooms: Remember

Cachon - Chapter 04 #49

Difficulty: 1 Easy

Gradable: automatic Learning Objective: 04-06 Evaluate the financial benefits of process improvements.

Topic: Understanding the Financial Impact of Process Improvements

  1. Which of the following is NOT a process variable that has an impact on profits?   

Demand-constrained vs. capacity-constrained

B.

High margin vs. low margin.

C.

High rate vs. low rate of interest on loans.

D.

Bottleneck resource vs. nonbottleneck resource.

AACSB: Analytical Thinking

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Blooms: Remember

Cachon - Chapter 04 #50

Difficulty: 1 Easy

Gradable: automatic Learning Objective: 04-06 Evaluate the financial benefits of process improvements.

Topic: Understanding the Financial Impact of Process Improvements

  1. Consider a capacity constrained process producing a high profit margin product. What will the impacts on revenue and profits be if processing time for the bottleneck resource is reduced by 10% while everything else remains the same?        
    1. No impact on revenue or profits
    2. Higher revenue and profits
    3. Lower revenue and profits
    4. Higher profits with no change in revenue

AACSB: Analytical Thinking

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Blooms: Remember

Cachon - Chapter 04 #51

Difficulty: 1 Easy

Gradable: automatic Learning Objective: 04-06 Evaluate the financial benefits of process improvements.

Topic: Understanding the Financial Impact of Process Improvements

  1. Process improvements can help increase revenues if the process is ___________ constrained.    supply
    1. demand
    2. capacity
    3. resource

AACSB: Analytical Thinking

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Blooms: Remember

Cachon - Chapter 04 #52

Difficulty: 1 Easy

Gradable: automatic Learning Objective: 04-06 Evaluate the financial benefits of process improvements.

Topic: Understanding the Financial Impact of Process Improvements

  1. Consider a demand constrained process producing a high profit margin product. What will the impacts on revenue be if processing time for the bottleneck resource is reduced by 10% while everything else remains the same?        No impact on revenue
    1. 10% increase in revenue
    2. 10% decrease in revenue
    3. 5% increase in revenue

AACSB: Analytical Thinking

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Blooms: Remember

Cachon - Chapter 04 #53

Difficulty: 2 Medium

Gradable: automatic Learning Objective: 04-06 Evaluate the financial benefits of process improvements.

Topic: Understanding the Financial Impact of Process Improvements

54.

sells T-shirts for $15 each. Material costs are $2 per shirt and fixed costs are $300 per hour. C&A currently employs two workers, each of whom takes two minutes to make one shirt. Assume demand is unlimited. How much profit does C&A make per hour? The wage rate is $15 per hour.

  1. $75
  2. $450 $480
  3. $570

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Blooms: Remember

Cachon - Chapter 04 #54

Difficulty: 1 Easy

Gradable: automatic Learning Objective: 04-06 Evaluate the financial benefits of process improvements.

Topic: Understanding the Financial Impact of Process Improvements

  1.       

Among other products, C&A sells T-shirts for $15 each. Material costs are $2 per shirt and fixed costs are $300 per hour. C&A currently employs two workers, each of whom takes two minutes to make one shirt. Assume demand is unlimited. What will be the impact on C&A’s profit per hour for shirts if one additional worker is moved from elsewhere in the company to make shirts? Assume the new worker also takes two minutes to make one shirt. The wage rate is $15 per hour.

A.

81.3% decrease

B.

81.3% increase

  1. No impact on profit
  2. Cannot be determined

AACSB: Analytical Thinking

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Blooms: Understand

Cachon - Chapter 04 #55

Difficulty: 3 Hard

Gradable: automatic Learning Objective: 04-06 Evaluate the financial benefits of process improvements.

Topic: Understanding the Financial Impact of Process Improvements

  1.       

C&A uses two steps to make a toy. Step 1 takes 20 seconds. Step 2 takes 15 seconds. Each step is staffed by one worker, for a total of two workers. Each worker is paid $15 per hour. Each toy is sold for $20. Material costs are $5 per toy and fixed costs are $500 per hour. Assume demand is unlimited. How much profit does C&A make per hour?

  1. $3070 B. $2170 C. $1870
  2. $1270

AACSB: Analytical Thinking

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Blooms: Remember

Cachon - Chapter 04 #56

Difficulty: 2 Medium

Gradable: automatic Learning Objective: 04-06 Evaluate the financial benefits of process improvements.

Topic: Understanding the Financial Impact of Process Improvements

57.

uses two steps to make a toy. Step 1 takes 20 seconds. Step 2 takes 15 seconds. Each step is

staffed by one worker, for a total of two workers. Each worker is paid $15 per hour. Each toy is sold for $20. Material costs are $5 per toy and fixed costs are $500 per hour. Assume demand is unlimited. What will be the impact on C&A’s profit per hour if the processing time of step 2 is reduced to 10 seconds?

  1. No impact on profit
  2. 124% increase
  3. 124% decrease
  4. Cannot be determined

AACSB: Analytical Thinking

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Blooms: Remember

Cachon - Chapter 04 #57

Difficulty: 1 Easy

Gradable: automatic Learning Objective: 04-06 Evaluate the financial benefits of process improvements.

Topic: Understanding the Financial Impact of Process Improvements

  1.       

C&A uses two steps to make a toy. Step 1 takes 20 seconds. Step 2 takes 15 seconds. Each step is staffed by one worker, for a total of two workers. Each worker is paid $15 per hour. Each toy is sold for $20. Material costs are $5 per toy and fixed costs are $500 per hour. Demand rate is 120 toys per hour. How much profit does C&A make per hour? Assume the worker's pay is a variable cost.

  1. $3070 B. $2170 C. $1870
  2. $1270

AACSB: Analytical Thinking

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Blooms: Remember

Cachon - Chapter 04 #58

Difficulty: 2 Medium

Gradable: automatic Learning Objective: 04-06 Evaluate the financial benefits of process improvements.

Topic: Understanding the Financial Impact of Process Improvements

  1.       

C&A uses two steps to make a toy. Step 1 takes 20 seconds. Step 2 takes 15 seconds. Each step is staffed by one worker, for a total of two workers. Each worker is paid $15 per hour. Each toy is sold for $20. Material costs are $5 per toy and fixed costs are $500 per hour. Demand rate is 120 toys per hour. What will be the impact on C&A’s profit per hour if the processing time of step 1 is reduced by 5 seconds? Assume the worker's pay is a variable cost.

  1. No impact on profit
  2. Cannot be determined
  3. 41% increase
  4. 373% increase

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

Blooms: Remember

Cachon - Chapter 04 #59

Difficulty: 1 Easy

Gradable: automatic Learning Objective: 04-06 Evaluate the financial benefits of process improvements.

Topic: Understanding the Financial Impact of Process Improvements

60.

uses two steps to make a toy. Step 1 takes 20 seconds. Step 2 takes 15 seconds. Each step is

staffed by one worker, for a total of two workers. Each worker is paid $15 per hour. Each toy is sold for $20. Material costs are $5 per toy and fixed costs are $500 per hour. Assume demand is unlimited. What will be the impact on C&A’s profit per hour if the processing time of step 1 is reduced by 5 seconds? Assume the worker’s pay is a variable cost.

  1. No impact on profit
  2. Cannot be determined
  3. 41% increase
  4. 373% increase

AACSB: Analytical Thinking

Accessibility: Keyboard Navigation

Blooms: Remember

Cachon - Chapter 04 #60

Difficulty: 2 Medium

Gradable: automatic Learning Objective: 04-06 Evaluate the financial benefits of process improvements.

Topic: Understanding the Financial Impact of Process Improvements

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