and services in-house, All activities associated with the flow and transformation of goods and services from the raw material stage to the end user, together with the corresponding flows of monetary funds and information When capacity is inadequate, customers can be lost. Related Diversification iv. Determine the term being described or defined by the following statement: The amount of production possible under ideal conditions with no time for maintenance, breakdowns, or absenteeism. Determine the profit maximizing levels of labor abd output. The amount of production possible under normal working conditions, including planned downtime and scheduled vacations, is called: A. actual capacity. If the system?s design capacity is 300 units a day, how efficient is the use of this s Corazon Manufacturing Company has a purchasing department staffed by five purchasing agents. During a three-day period, the bakery made 850 loaves per day. Direct Labor Rate and Efficiency Variances The Woods Enterprises prepared the following standard costs for the production of one stuffed bear: Actual production costs for the production of 1,000 stuff, Volume-based rates produce inaccurate product cost when: a) A large share of factory overhead costs is volume-based. Simplifies the production process When companies tend to have various production facilities, they tend to prefer or favor one particular production facility Our experts can answer your tough homework and study questions. The beer facility has a system efficiency of 90 percent, and the utilization is 80 percent. The electricity generated by centralized generation is distributed through the electric power grid to multiple end-users. It takes a nurse 1.5 hours to complete one patient visit (including travel times and breaks). 11.One production facility will usually be favored when a. b. demand is higher than the minimum efficient scale. Q=K^1/4 L^3/4 a.) What is the measured capacity of the work center? 5. infrastructure that the country offers ie seaports, airports, roads, electricity, and water access Browse through all study tools. d. fixed costs are low. a) most expensive resource b) least expensive resource c) non bottleneck d) bottleneck. State true or false and justify your answer: For a food-processing plant such as Kraft Foods, capacity refers to the number of employees working on an assembly line. the system that businesses use to produce products, a production system in which goods dominate the value of the product, a production system in which services dominate the value of the product, suppliers > inputs > production process > outputs > customers, goods and services that integrate a product, the management of the direct resources that are involved in the production system of a business organization, When all production system direct resources of a firm originate from and reside in only one country, When one or more of the production system direct resources originate from or are located in more than one country. A Printed Circuit Board (PCB) machine installs integrated circuits onto a board. Each agent is paid $28,000 per year and is able to process 4,000 purchase orders. 5. secures the supply source A shift is 8 hours long, and the average patient requires 20 minutes in the exam room. The company needs to raise $48,000,000,000 to expand its factory. Go ahead and submit it to our experts to be answered. Alter Bridge Mfg., Inc., is currently operating at only 88 percent of fixed asset capacity. In a job shop, effective capacity is only 49 percent of design capacity, and actual output is 64 percent of effective output. Theoretical capacity |b. Solved One production facility will usually be favored - Chegg Step 1: 34 minutes per uni Flagstaff Company has budgeted production units of 7,900 for July and 8,100 for August. Capacity Planning Questions and Answers | Homework.Study.com 100,000 shares are maintained as treasury stock and 1,400,000 shares are currently in circulation. In 2015, the hospital copy office's planned capacity for photocopying was based on 350 days per year of operation. Cost of regular production = 60 $/u Cost of overtime production = 90 $/u Inventory holding cost =, A company uses a standard costing system. 6. trade policies Assume that shortages. c. unemployment is very low. Long-term capacity decisions that confront managers include all of the following except: a. workforce size b. capital c. equipment. If the design capacity is 15 furnaces a day and the effective capacity is 13 furnaces a day, what is the utilization of the system? b. Some water may also be lost to evaporation. From here, the librarie Battonkill Company, operating at full capacity, sold 124,200 units at $63/unit in 2014. Discuss the major considerations related to developing capacity alternatives. C) below normal economic performance. Assume that the repetitive process of production line-1 of the company operates 16 hours per day with a cycle time of 2 minutes; while production line-2 operates 8 hours per day with cycle time of What is the maximum utilization a resource can achieve? chantyreys. Centralized generation facilities include fossil-fuel-fired power plants, nuclear power plants, hydroelectric dams, wind farms, and more. C) Price is below minimum average total costs. The normal production capacity for the Fabrication Department is 10,000, A firm combines labor (L) and capital (K) to produce output (Q). The process currently is: a) Capacity constrained b) Demand constrained c) Unconstrained d) Linearly constrained. According to conversations with its investment bankers, the firm will receive$60 per share from the sale of new common stock. Water used for steam production or cooling may be returned at warmer temperatures to water bodies and may contain contaminants. The actual price per pound of material is $78; the standard. Making components in-house also allows the company more control over deliveries - any problems global businesses face are due to scandals regarding their products originated in substandard supply chains, because some companies in the supply chain could not trace back to suppliers the faulty components in the defective products. 7. financial considerations 8. What are some of the pros and cons of pursuing identified community needs as part of a strategic planning process? The rate of inflation in the economy over that year period is which of the following? Long-range capacity planning should be the responsibility of: a. analysts b. middle management c. top management d. marketing management. A furnace repair team services an average of 10 furnaces a day. b. is just breaking even. The price of one unit of labor is 20 and the price of one unit of capital is 10. - When components and raw materials involve intellectual property, making affords complete protection of the intellectual property. However, its fixed assets were used at only 75% of capacity. Why? One production facility will usually be favored when a. fixed costs are low. What is the recommended production rate if a level strategy is adopted with no back orders or stockout? - control over quality. 11one production facility will usually be favored - Course Hero A local bakery had a design capacity of 1,000 loaves per day, and an effective capacity of 700 loaves per day. This strategy also changes the organizational structures of companies. Indicate whether, The demand for a major product is 320, 380, 350, 430, for quarters 1,2,3,4, respectively. The company has a lower specification limit of 23 mm and an upper specification limit of 23.6 mm. Each desk uses four units of wood, and each chair uses three units of wood. Share sensitive information only on official, secure websites. 1. procurement Large power plants require space for their operations. B. The Dahlia Medical Center has 33 labor rooms,15 combination labor and delivery rooms, and 22 delivery rooms. United Industries manufactures a number of products at its highly automated factory. When a firm buys goods and services, it is relying upon suppliers on important dimensions such as quality, delivery, and cost; the profits that the company could earn by producing the goods and services in-house now go to the suppliers; Buying may also tip the balance of power in favor of suppliers. Argue why capacity analysis is important in a health services environment. If the plant efficiency is 75?%, then its effective capacity? You also know that the wage rate for w, Depreciation on Abel Manufacturing Company's factory machinery is classified as which of the following? Financial considerations such as transactions risk, translation risk, and economic risk, and government incentives are also important. Assume that the initial inventory has no holding cost in the first period and backorders are not permitted. 2a- Proximity to customer markets, suppliers, (b) demand is higher than the minimum efficient scale. c. has no impact on the unemployment rate. Allocating production capacity to meet demand at a minimum cos, Flip had sales of $10,000 (100 units at $100 per). Large international firms deal in considerable volumes of goods and often must obtain a(n) _____ from a group of banks known as a syndicate.. a.call option b.commercial loan c.open account, What is chapter 7 about? What was their capacity utilization rate last month? Gross margin. a. The standard price for a unit of material is $2.00. A computer repair service has a design capacity of 80 repairs per day. What design capacity would be needed to achieve an actual output of 17 Material delays have routinely limited production of household sinks to 400 units per day, plant efficiency is 80%, what is effective capacity? A) facilitating the achievement of the competitive plan of th Indicate whether the statement is true or false. a. Production cost: $1 per item Hourly holding cost: $0.10 per item Set-up cost: $270. \end{matrix} A surface production facility is the system in charge of the separation of the well stream fluids into their three single-phase componentsoil, gas, and waterand of their transport and processing into marketable products and/or their disposal in an environmentally acceptable manner. Each machine requires two operators. c) are low in proportion to variable costs in the short run. d. the price r, A firm manufactures a product according to the production function: . Why isn't the lag of second movers necessarily detrimental? A .gov website belongs to an official government organization in the United States. Insect, Mite, and Nematode Pests of Commercial Mushroom Production Determine the profit-maximizing levels of labor, In the end, firms allocate scarce resources toward the production of goods and services most valued by society because: a) the opportunity costs of not producing those goods become too high. Overhead cost is applied on the basis of standard direct labor-hours. c. goods have a low value-to-weight ratio. A. C&A clinic has a design capacity of 60 patients per hour and an effective capacity of 40 patients per hour. Because of scheduled maintenance of their equipment, management feels that only 2,500 pounds of clothes can be washed in Last year, Wei Guan Inc. had $350 million of sales, and it had $270 million of fixed assets that were used at 65 percent of capacity. After evaluating Null Company's manufacturing process, management decides to establish standards of 2 hours of direct labor per unit of product and $15.70 per hour for the labor rate. a. Get access to this video and our entire Q&A library, Capacity & Facilities Planning: Definition & Objectives. A. direct materials cost B. direct labor cost C. manufacturing overhead cost D. period cost, Assume a firm produces 500 units of a good by using two inputs, capital and labor, whose per unit prices are $10 and $4. C. practical capacity. Last year saw 15,000 customer orders at the mill and the manager has a new John Battle Creek Cereal Company has four main products: Corn Flakes, Frosted Flakes, Bran Flakes and Strawberry Flakes. Explain the process of aggregate capacity planning in service businesses. A) Expected capacity B) Effective capacity C) Projected capacity D) Extended capacity. c. the price a person pays to own that factor of production indefinitely. - Another consideration is the notion of the minimum efficient scale and its comparison to demand. Product B only visits machines 1 and 3. The Advantages of Decentralized Manufacturing - Chron a) What is the Economic Prod, Consider a product with a daily demand of 400 units, a setup cost per production run of $100. A) There are more opportunities for advancement and promotion. The cost of an aerobic digester system with a capacity of 140 million gallons per day (MGD) is $2.1 million. $148,148 B. A manufacturing plant costs approximately $500 million to construct and requires a highly skilled work force. What is the probab A manufacturing shop is designed to operate most efficiently at an output of 950 units per day. 3. However, the same materials are available from the Components Div A loan processing operation has a design capacity of 66 loans per day and an effective capacity of 56 loans per day. The Best Beer Corporation has a beer-processing facility located in Columbus, Ohio. Decreases customer response times b. What is the utilization rate? Secure .gov websites use HTTPS 7. Some impacts vary based on the energy resourcefor example, whether the power plant uses fossil fuel or a renewable resource. 3. All rights reserved. _____ refers to the management of the direct resources that are involved in the production system of a business, Tipton Manufacturing is based in Lexington, Kentucky. In a job shop, effective capacity is only 45 percent of design capacity, and actual output is 63 percent of effective output. How easily can product use be made? Centralized Generation of Electricity and its Impacts on the A manufacturer of a printed circuit boards has a design capacity of 1000 boards per day. Under what conditions would Zona Co.'s subsidiary consider using a lagging Can you think of any ways in which a short-term shortage of production facilities of a manufacturer might be overcome? How mu (a) What is the fundamental distinction between design capacity and effective capacity? The average monthly fixed cost per site is RM 25,500, while each unit cost RM 78 to produce and selling price is RM 180 per unit. B) normal economic performance. Item B is a component part of Item A which is a finished product ready for retail sales. 3- Location of the production facility can affect the customer's image of the product's tangible and intangible qualities. In addition to the impacts from power generation, there are also impacts associated with extracting, producing, and transporting certain fuels such as coal and natural gas. International Business CH 13 Flashcards | Quizlet Determine the monthly breakeven volume. A new facility has a design capacity of 2,200 units per week and an expected utilization of 96%. e. goods have a low value-to-weight ratio. True or false? hmoyes. The comparison of the expected cost of production against the actual cost of production typically occurs in the A. investment center. These facilities are usually located away from end-users and connected to a network of high-voltage transmission lines. The tariffs prevailing in this industry are currently low. At the beginning of the year, budgeted (estimated) manufacturing overhead costs totaled $400,000, budg, A firm whose price is below its average cost: a. is earning positive economic profit. b. Deriv, A company makes a product at a constant cost of $70 per unit and sells the product at $100 per unit. Maximum capacity refers to the upper limit of : Select one : a. supplies b. rate of output c. demand d. inventories e. finances. b. the average produc, Sholette Manufacturing Corporation has a standard cost system in which it applies manufacturing overhead to products on the basis of standard machine-hours (MHs) at $5.00 per MH. 1 percent. An adjustable-rate mortgage contract should specify what? Very high assets and turnover. a. (a) a company is extremely profitable (b) demand is higher than the minimum efficient scale (c) unemployment is very low (d) fixed. Explain the distinction, A cost minimizing firm has the following production function for its product. C. full employment and actual employment. One production facility will usually be favored when _______. (a) a The motor on a gas-fired furnace in a small factory is to be replaced. An unused unit of product has a salvage value of $50. Fill in the blank. c. its average revenue is greater than $9. Last year, 17,800 purc A company manufactures a product using machine cells. Th, A firm has a production function given by Q=10K^{0.25}L^{0.25}. As volume increases, unit costs decrease due to economies of scale and scope and learning curve effects. d. a company is extremely profitable. The legislation was rushed through Congress and enacted without any delay. End of preview Want to read all 25 pages? Match each of the following items with one or more of the denominator-level capacity concepts by putting the appropriate letter(s) by each item: |a. $10,800 C. $40,000 Based upon the information provided, what level of sales could Johnson's have obtained if it had been operating at full capacity? 0.6667 c Zytel Corporation produces cleaning compounds and solutions for industrial and household use. When fixed costs are high, one production facility will be favored. What are the disadvantages? Find the firm's short run cost function, if Ki is fixed at $10. A. Explore capacities and facilities planning, the importance of planning, and a deeper look at facility planning. Now what? The price of output is $75, the wage rate is $8, and the rental rate for capital is $2 per unit. The longest task is 2.4 minutes, and the total time for all tasks is 18 minutes. The vast majority of the electricity that Americans use is from centralized generation. JavaScript appears to be disabled on this computer. Multinational Corporation (MNC) - Overview, Characteristics, Advantages e. a company is extremely profitable. During the month the company purchased and used 600 units of this material at a price of $2.25 per unit. The Best Beer Corporation has a beer-processing facility in Columbus, Ohio. AlwaysRain Irrigation, Inc., would like to determine capacity requirements for the next four years. The firm is currently producing 52 units of output, marginal cost is $17, average total cost is $15 and average va, If a competitive firm is selling 1,000 units of its product at a price of $9 per unit and earning a positive profit, then: a. its total cost is less than $9,000. Which of the following is a correct statement? - One consideration for the one-versus-many production facilities decision is fixed costs. Consider various definitions of capacity, such as theoretical, practical, normal, and actual capacity. The longest task takes 2.8 minutes to complete, and the total time for all tasks is 22.7 minutes. Let the cost function c (w, r, y) of a firm give the minimum cost of producing y units of output using labor input, L, and capital input, K, when w is the wage (i.e. What is this rate equivalent to in U.S. dollars per gallon? The wage rate in this area is w = $15, and the cost of capital is r = .05. a. Most developing countries offer very competitive labor costs and availability, but many lack the infrastructure of developed countries. - In-house production is sometimes the only option for components and raw materials that are highly specialized, particularly as a matter of trust The firm is a price taker and the market price of the product is $14. How much capacity does the restaurant have on a weekly basis and an annual basis in hours? Many companies partake in the process of capacity and facilities planning to meet a greater demand. b. Goods with high value-to weight ratios favor a single location to use advantages of centralized production, while with low value-to-weight products it's best to have many production facilities close to the places were these components are needed, Location production facilities for Products: 3 major considerations. A) absorption B) break-even, 1.A profit-maximizing firm will base its decision to hire workers on the additional costs and benefits of each worker. Store each piece of data only once in an enterprise-wide database product (or assembly-line) layout At present, actual output averages 200. A desk contributes $400 to profit, and a chair contributes $250. Access the answers to hundreds of Capacity planning questions that are explained in a way that's easy for you to understand. The machine can pack 500 units on $200 cost. (e) goods have a low value to weight ratio. - design the system as a collection of business processes and not functions, a property of ERP systems to simultaneously operate in multiple languages, a property of ERP systems to handle the accounting standards of multiple countries, a property of ERP systems to handle multiple currencies, Fundamentals of Financial Management, Concise Edition, Marketing Essentials: The Deca Connection, Carl A. Woloszyk, Grady Kimbrell, Lois Schneider Farese. It costs Garner Company $12 of variable and $5 of fixed costs to produce one bathroom scale which normally sells for $35. One production facility will usually be favored when a. unemployment is very low. It has received a huge order to supply water for a five-day convention that is taking place in the city. Can your father do so? A doctor's office charges no-show patients $30 if they do not cancel their appointment 24 hours prior to the appointment. Currently, two production lines are in place for making bronze plastic sprinklers. The company's targets are high, and they are able to generate substantial profits. The line operates 450 minutes per day. The unit hiring cost is $150/FTE and the unit firing cost is $320/FTE. The wage rate in this area is w = $15, and the cost of capital is r = .05. a. A) Unevenly distributed demands B) Requests for quick customer services C) High penalty costs for overtime usage D) Large, infrequent jumps in capacity are characteristic of companies that: A) have an expansionist strategy B) have a wait-and-see strategy C) have high utilization D) have low utilization. An area in a production facility consisting of one or more workers and machines with similar capabibies that can be considered one unit for the purpose of scheduling is a: OA) work centre. b. its marginal revenue is less than $9. When evaluating a firm with excess capacity, what is true? The majority of electricity generation in the United States today is coordinated by regional system operators to ensure reliability. Waste Incineration: Advantages & Disadvantages | Greentumble A firm produces three goods (x,y,z) in a fixed proportions (0.5,0.3,0.2). The table shows the Total Physical Product of Labor (TPP) for various numbers of workers. -most of the activities can be grouped into 4 business functions 40% b. 2. control over quality Ford's famous response was "They [customers] can have any color they want as long as its black." - represent each business function by a module (accounting module, finance, operations, HR, Marketing) Consider the following two mutually exclusive alternatives, related to an improvement project, and recommend which one should be implemented. \text{End of the year} \ldots\ldots\ldots & \text{105,000} & \text{36,000}\\ The firm has cash of $12,000 and office equipment of$13,000. A firm's production function is qi = 4*Ki.2Li.4. e. transportation costs. e. buildings. To maximize profit, management should rank products based on their: \\ a. Enforcing contracts with foreign suppliers b. convenience for customers. Marketing. Which of the following correctly describes "capacity"? Trade policies vary greatly from country to country and also should be considered. a) Find the equation for the firm's, Suppose that you are in the short-run and the production function for your firm is given as: F(L,K)=K^1/2 L^1/2 Also, in the short-run capital is fixed at K=16. Competing against other competitors for the attention of critical component suppliers Current sales are $640,000. What are the advantages and disadvantages of incremental versus one-step expansion? A firm that earns its cost of capital is said to be earning A) above 1- If a product can serve all customers worldwide,then production facilities can be in one country. At 24 years old Dominy helped build, 1. Consider the four-step serial process with processing times given in the list below. At present, your company only makes metal components. What kind of staffing approach is being used by Dubai? the price of labor input) and r is, 1. Three sub-facilities are used 1) How does capacity utilization influence the intensity of rivalry? when a firm has been making goods and services in-house, and then decides to buy these goods and services from suppliers, when the firm doing the outsourcing and the supplier that will provide the outsourced goods and services are located in the same country, when the firm doing the outsourcing and the supplier that will provide the outsourced goods and services are located in different countries; also called offshoring, when a firm and the supplier are located in different countries, a company that only completes product design and outsources all other production process functions, when the firm has been buying goods and services from suppliers, and then decides to make these goods and services in-house.