30 Questions
What should be considered when deciding between incremental expansion and single step expansion?
All of the above, including costs and availability of funds
What is the primary goal of constraint management?
To achieve the maximum benefit despite the constraint
According to the theory of constraints, what is the first step in resolving constraint issues?
Identify the most pressing constraint
What type of constraint occurs when there is insufficient demand for a product or service?
Market constraint
Which of the following is NOT a category of constraint?
Technology
What is the benefit of leading in expansion, despite the higher risk?
It may have greater potential for rewards
Why might an organization prefer to outsource work to specialists?
To combine orders from multiple sources and offset individual buyer fluctuations
What should be considered when evaluating the cost of buying or making an item?
The cost of the item, transportation cost, and fixed costs associated with making the item
What is a potential risk of buying goods or services from other companies?
Loss of direct control over operations and potential damage to an organization's reputation
Why might a firm choose to perform part of the work itself and outsource the rest?
To hedge against loss of a subcontractor and maintain flexibility
What is a key factor to consider when deciding whether to buy or make an item?
The cost savings achievable from buying or making
What is a consequence of outsourcing if the products or services of other companies cause harm to customers or the environment?
The organization's reputation is damaged and liability is a tremendous risk
What is the purpose of evaluating alternatives for future capacity?
To examine economic considerations and feasibility
What is a common approach to ranking investment proposals?
Using financial analysis to consider the time value of money
What is cash flow in financial analysis?
The difference between cash inflow and outflow
What is the primary goal of identifying and addressing constraints?
To achieve acceptable levels of constraints
What is present value in financial analysis?
The current value of all future cash flows
What is a constraint in a process or system?
A limitation that affects performance
What is the primary goal of bottleneck management?
To achieve maximum utilization of bottleneck operations
What is the main advantage of the WAIT-AND-SEE strategy?
Higher capacity utilization and accurate matching of supply and demand
What is a potential risk of the EXPAND-EARLY STRATEGY?
Underutilized equipment
Why is asset disposal important in capacity contraction?
To consider the cost benefit of disposal
What is a potential reason for capacity contraction?
Replace aging equipment with newer equipment
What is the primary goal of capacity expansion strategies?
To maximize capacity utilization
What are the three most commonly used methods of financial analysis?
PAYBACK, PRESENT VALUE, and INTERNAL RATE OF RETURN
What does flexibility in capacity decisions reduce dependence on?
Long-range forecasts
What is a potential advantage of maintaining a capacity cushion?
Blocking entry into the market by new competitors
What can provide capacity increases?
EFFICIENCY IMPROVEMENTS and UTILIZATION IMPROVEMENTS
Why do some organizations maintain a capacity cushion?
To block entry into the market by new competitors
What is a potential drawback of maintaining a capacity cushion?
Higher-than-necessary unit costs
This quiz assesses knowledge of make or buy decisions in supply chain management, considering factors such as demand fluctuations, cost savings, and fixed costs. Test your understanding of outsourcing and procurement strategies.
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