The King's College Capstone Simulation Quiz #3 Capacity

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| By Dawn Fotopulos

Dawn Fotopulos

Community Contributor

Quizzes Created: 2 | Total Attempts: 351

Questions: 10 | Attempts: 170 | Updated: Mar 21, 2023

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This is quiz #3 testing students on their understanding of Capacity and Margin Potential taken directly from their situation analysis.

Questions and Answers

1.

If you reduce MTBF from 21000 to 14000 (the low end of the range) you save $2.80 in direct materials per unit
- A.
  
  True
- B.
  
  False
Correct Answer
B. False

Explanation
Reducing the Mean Time Between Failures (MTBF) from 21000 to 14000 does not result in any direct savings in terms of $2.80 in direct materials per unit. The given statement is false because there is no correlation or direct relationship between the MTBF and the cost savings in direct materials per unit.

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2.

If you increase MTBF from 17000 to 23000 (high end of the range) how much will it cost you per unit?
- A.
  
  $1.80
- B.
  
  $2.10
Correct Answer
A. $1.80

Explanation
Increasing the MTBF (Mean Time Between Failures) from 17000 to 23000 means that the product will have a longer average lifespan before it fails. This increase in reliability will result in lower maintenance and repair costs per unit, hence reducing the overall cost. Therefore, the cost per unit will remain the same at $1.80.

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3.

How much do you save in direct labor per unit if you increase automation from 0 to 1?
- A.
  
  20%
- B.
  
  $1.01 Per Unit
Correct Answer
B. $1.01 Per Unit

Explanation
Increasing automation from 0 to 1 results in a saving of $1.01 per unit in direct labor. This means that by implementing automation, the cost of labor required to produce each unit is reduced by $1.01.

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4.

If a production line has a capacity to produce 1,000,000 units and you change the automation from 1 to 3, what is the total cost?
- A.
  
  $2,000,000
- B.
  
  $8,000,000
Correct Answer
B. $8,000,000

Explanation
By changing the automation from 1 to 3, the production capacity of the line is increased threefold. Since the original capacity was 1,000,000 units, the new capacity will be 3,000,000 units. The total cost is not provided in the question, so we cannot determine the exact cost. Therefore, the correct answer cannot be determined based on the given information.

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5.

Changes in capacity and automation happen immediately.
- A.
  
  True
- B.
  
  False
Correct Answer
B. False

Explanation
The given statement is false because changes in capacity and automation do not happen immediately. Implementing changes in capacity and automation requires planning, decision-making, and implementation processes. These processes can take time and involve various factors such as budgeting, resource allocation, training, and coordination. Therefore, it is not accurate to say that changes in capacity and automation happen immediately.

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6.

If you add 800,000 units of capacity at an automation rating of 3, what will it cost you?
- A.
  
  $14,400,000
- B.
  
  $7,600,000
Correct Answer
A. $14,400,000

Explanation
Adding 800,000 units of capacity at an automation rating of 3 will cost $14,400,000.

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7.

If you reduce automation, you will incur etooling costs.
- A.
  
  True
- B.
  
  False
Correct Answer
A. True

Explanation
If you reduce automation, it means that you are decreasing the level of automation in a process or system. This reduction in automation would require more manual labor and human intervention, which in turn would lead to incurring additional costs for acquiring and implementing the necessary tools and equipment for manual work, also known as etooling costs. Therefore, the statement "If you reduce automation, you will incur etooling costs" is true.

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8.

Selling capacity happens immediately. Buying capacity takes a year.
- A.
  
  True
- B.
  
  False
Correct Answer
A. True

Explanation
The statement suggests that selling capacity can be achieved instantly, while buying capacity takes a year to develop. This implies that one can start selling their products or services right away, but it takes time to build the necessary resources and capabilities for purchasing. Therefore, the answer "True" indicates that selling capacity can be established immediately, while buying capacity requires a longer timeframe.

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9.

Each new unit of capacity costs $5 per unit for floor space and $4 per unit of automation.
- A.
  
  True
- B.
  
  False; $6 per unit of floor space
Correct Answer
B. False; $6 per unit of floor space

Explanation
The given statement states that each new unit of capacity costs $5 per unit for floor space and $4 per unit of automation. However, the correct answer is False; $6 per unit of floor space. This means that the cost per unit of floor space is actually $6, not $5 as stated in the statement.

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10.

The market is growing at 10% per year your unit sales are growing at 20% per year. What is happening to your market share?
- A.
  
  Your market share will increase versus your competition because marketshare is determined (in the simulation) by unit sales
- B.
  
  Your market share will be determined by dollar sales we can't predict what will happen to marketshare.
Correct Answer
A. Your market share will increase versus your competition because marketshare is determined (in the simulation) by unit sales

Explanation
Since the unit sales are growing at a faster rate (20% per year) compared to the market growth rate (10% per year), it means that your company is gaining a larger portion of the market. This indicates that your market share will increase in relation to your competition.

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Current Version
Mar 21, 2023

Quiz Edited by
ProProfs Editorial Team
Aug 24, 2009

Quiz Created by
Dawn Fotopulos

The King's College Capstone Simulation Quiz #3 Capacity

If you reduce MTBF from 21000 to 14000 (the low end of the range) you save $2.80 in direct materials per unit

If you increase MTBF from 17000 to 23000 (high end of the range) how much will it cost you per unit?

How much do you save in direct labor per unit if you increase automation from 0 to 1?

If a production line has a capacity to produce 1,000,000 units and you change the automation from 1 to 3, what is the total cost?

Changes in capacity and automation happen immediately.

If you add 800,000 units of capacity at an automation rating of 3, what will it cost you?

If you reduce automation, you will incur etooling costs.

Selling capacity happens immediately. Buying capacity takes a year.

Each new unit of capacity costs $5 per unit for floor space and $4 per unit of automation.

The market is growing at 10% per year your unit sales are growing at 20% per year. What is happening to your market share?