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Operations And Supply Chain Management 14 Edition Jacobs – Test Bank
Chapter 06
Learning Curves
True / False Questions
1.  The learning curve states that the more experience you have in a particular activity; the less surprised you will be when something goes wrong.
TrueÂ Â Â Â False 
2.  When plotted on a graph, the learning curve can’t be expressed as logarithm.
TrueÂ Â Â Â False 
3.  Economies of scale and the learning curve have opposite effects on capacity.
TrueÂ Â Â Â False 
4.  The point at which the scale economy curve and the learning curve intersect is called the capacity optimum.
TrueÂ Â Â Â False 
5.  A learning curve is a line displaying the relationship between unit production time and the cumulative number of units produced.
TrueÂ Â Â Â False 
6.  A learning curve is a line displaying the way unit production time decreases as time passes.
TrueÂ Â Â Â False 
7.  On a learning curve plot, the time per unit is usually displayed on the vertical axis.
TrueÂ Â Â Â False 
8.  A learning curve shows the decrease in time required for each successive unit completed.
TrueÂ Â Â Â False 
9.  A learning curve shows the increase in time required for each successive unit completed.
TrueÂ Â Â Â False 
10.  An assumption of learning curves is that the time required to complete a unit will decrease at a decreasing rate as the cumulative number of units completed increases.
TrueÂ Â Â Â False 
11.  An assumption of learning curves is that the time required to complete a unit will increase at an increasing rate as the cumulative number of units completed increases.
TrueÂ Â Â Â False 
12.  An assumption of learning curves is that the time required to complete a unit will decrease at an increasing rate as the cumulative number of units completed increases.
TrueÂ Â Â Â False 
13.  You time someone completing a single task the first time at 10 minutes, and the second time they do the task it takes 9 minutes. You should use an 80 percent learning curve to estimate the length of time this worker will take to complete this task in the future.
TrueÂ Â Â Â False 
14.  You time someone completing a single task the first time at 100 minutes, and the second time they do the task it takes 90 minutes. You should use a 90 percent learning curve to estimate the length of time this worker will take to complete this task in the future.
TrueÂ Â Â Â False 
15.  You time someone completing a single task the first time at 120 minutes, and the second time they do the task it takes 108 minutes. You should use a 90 percent learning curve to estimate the length of time this worker will take to complete this task in the future.
TrueÂ Â Â Â False 
16.  You time someone completing a single task the first time at 100 minutes, and the fourth time they do the task it takes 81 minutes. You should use an 81 percent learning curve to estimate the length of time this worker will take to complete this task in the future.
TrueÂ Â Â Â False 
17.  You time someone completing a single task the first time at 100 minutes, and the fourth time they do the task it takes 81 minutes. You should use a 90 percent learning curve to estimate the length of time this worker will take to complete this task in the future.
TrueÂ Â Â Â False 
18.  The unit improvement factor for a 60 percent learning curve at 25 units is 0.0933. The first and second timings of a person doing a job are 5 minutes and 3 minutes, respectively. The learningadjusted time estimate for the unit number 25 is 0.0933 minute.
TrueÂ Â Â Â False 
19.  The unit improvement factor for a 60 percent learning curve at 25 units is 0.0933. The first and second timings of a person doing a job are 10 minutes and 6 minutes, respectively. The learningadjusted time estimate for the unit number 25 is 0.9330 minute.
TrueÂ Â Â Â False 
20.  The unit improvement factor is not as useful as arithmetic tabulation of learning curve statistics in adjusting time estimates for learning.
TrueÂ Â Â Â False 
21.  Learning curves have a wide range of business applications.
TrueÂ Â Â Â False 
22.  If a person performing a task has been achieving a 95 percent learning curve and you know that the task will end after the 100^{th} unit, the last unit produced will take 71.12 percent as much time as the first unit.
TrueÂ Â Â Â False 
23.  If a person performing a task has been achieving a 75 percent learning curve and you know that the task will end after the 80^{th} unit, the last unit produced will take 17.12 percent as much time as the first unit.
TrueÂ Â Â Â False 
24.  If a person performing a task has been achieving an 80 percent learning curve and it took 10 minutes to produce the first unit, the total time to produce 100 units will be 326.5 minutes.
TrueÂ Â Â Â False 
25.  If a person performing a task has been achieving an 85 percent learning curve and if it took 1 minute to produce the first unit, the total time to produce 1,000 units will be 437.5 minutes.
TrueÂ Â Â Â False 
26.  Learning curves can be applied to individuals and to organizations.
TrueÂ Â Â Â False 
Multiple Choice Questions
27.  An assumption of learning curve theory is which of the following?

28.  An assumption of learning curve theory is which of the following?

29.  Which of the following computational methods are used to calculate learning curve statistics?

30.  The unit improvement factor for a 60 percent learning curve at 25 units is 0.0933. The first and second timings of a person doing a job are 5 minutes and 3 minutes respectively. Which of the following is the learningadjusted time estimate for unit number 25?

31.  The unit improvement factor for an 80 percent learning curve at 100 units is 0.2271. The first and second timings of a person doing a job are 20 minutes and 16 minutes, respectively. What is the learningadjusted time estimate for unit number 100?

32.  You have just timed a person doing a job a few times. The first time it took the person 25 minutes, the second time it took 20 minutes, and the third time it took 17.55 minutes. Which learning curve unit improvement factor should you use?

33.  You have just timed a person doing a job a four times. The first time it took the person 120 minutes, the second time it took 90 minutes, the third time it took 76.1 minutes, and the fourth time it took 67.5 minutes. Which learning curve unit improvement factor should you use?

34.  You have determined that a 75 percent learning curve is appropriate for a task. If the initial timing of the person performing that job was 50 minutes, and if you need the job performed 500 times, how many minutes of work will be required?

35.  You have determined that a 60 percent learning curve is appropriate for a task. If your initial timing of person performing that task was 35 minutes and if you need the task performed 1,000 times, how many minutes of work will be required?

36.  You have just timed a person doing a hair cut for the first time. It took 50 minutes. What unit improvement factor learning curve would you use if the person took 35 minutes on the second hair cut?

37.  With an 80 percent unit improvement factor learning curve and an initial time of 100 minutes to do a job, at what number of repetitions will the job take less than 50 minutes?

38.  With a 70 percent unit improvement factor learning curve and an initial time of 100 minutes to do a job, at what number of repetitions does the job take less than 50 minutes?

39.  The 50^{th} repetition of a job is timed at 100 minutes. If the learning curve for this job is 90 percent, what is the estimated time for the 100^{th} repetition of this job?

40.  The 50^{th} repetition of a job is timed at 100 minutes. If the learning curve for this job is 90 percent, what is the estimated time for the 200^{th} repetition of this job?

41.  The 10^{th} repetition of job is timed at 100 minutes. If the learning curve for this job is 80 percent, what is the estimated time for the 100^{th} repetition of this job?

42.  A company can produce a small lot of products the first time at a cost of $2,000. If their 85 percent learning curve allows them to reduce their costs on each lot, what is the total cost of producing 5 lots?

43.  A company can produce a small lot of products the first time at a cost of $10,000. If their 75 percent learning curve allows them to reduce their costs on each lot, what is the total cost of producing 10 lots?

44.  A company can produce a small lot of products the first time at a cost of $3,000. If their 65 percent learning curve allows them to reduce their costs on each lot, what is the cost of producing the 12^{th} lot?

45.  You are a consultant called in to estimate the costs after the employees learn how to do a job more efficiently by repetition of new product. You find a company can produce a product the first time at a cost of $5,000. If their 90 percent learning curve allows them to reduce their costs on each unit, what is the total cost of producing 100 units of the new product?

46.  You are a consultant specializing in estimating the costs after the employees learn how to do a job more efficiently by repetition. Your client can produce a product the first time at a cost of $2,500. If their 65 percent learning curve allows them to reduce their costs on each product, what is the total cost of producing 400 units of the new product?

47.  A company can produce a small lot of products the first time at a cost of $3,000. If their 65 percent learning curve allows them to reduce their costs on each lot, what is the cost of producing the 20^{th} lot?

48.  A company’s production process has an 85 percent learning curve rate. The process has produced 1,000 units to date. A process refinement is estimated to allow a future learning curve rate for the identical product of 75 percent. However, the initial unit made using the new process will take the same amount of time as the very first unit produced using the old process. At what point, using the new process, will the production rate exceed the production rate achieved by the old process?

49.  A company’s production process has an 80 percent learning curve rate. The process has produced 1,000 units to date. A process refinement is estimated to allow a future learning curve rate for the identical product of 75 percent. However, the initial unit made using the new process will take the same amount of time as the initial unit produced using the old process. At what point, using the new process, will the production rate exceed the production rate achieved by the old process?

50.  Which of the following is a reason that there are disparities between a firm’s learning curve rate and that of its industry?

51.  The general guidelines provided in the textbook on improving individual learning based on learning curves do not include which of the following?

52.  The general guidelines provided in the textbook on improving individual learning based on learning curves include which of the following?

Fill in the Blank Questions
53.  If a person performing a task has been achieving an 85 percent learning curve and if it took 1 minute to produce the first unit, what will be the total time to produce 1,000 units? ______________________
________________________________________ 
54.  The 25^{th} repetition of a job is timed at 100 minutes. If the learning curve for this job is 90 percent, what is the estimated time for the 180^{th} repetition of this job? ________________________
________________________________________ 
55.  A company can produce a product the first time at a cost of $2,500. If its 85 percent learning curve allows the company to reduce its costs on each product, what is the total cost of producing 400 units of the new product? _________________
________________________________________ 
Essay Questions
56.  A company’s production process has a 90 percent learning rate. The process has produced 1,000 units to date. A process refinement is estimated to allow a future learning rate for the identical product of 70 percent. However, the initial unit made using the new process will take the same amount of time as the initial unit produced using the old process. At what point, using the new process, will the production rate exceed the production rate achieved by the old process?

57.  What is a learning curve?

58.  Why are learning curves useful in business?

59.  Describe an example of industrial learning where learning curve analysis might be useful.

60.  What are some of the factors that stimulate learning?

Chapter 06 Learning Curves Answer Key
True / False Questions
1.  The learning curve states that the more experience you have in a particular activity; the less surprised you will be when something goes wrong.
FALSE A learning curve is a line displaying the relationship between unit production time and the cumulative number of units produced. 
AACSB: Analytic Blooms: Remember Difficulty: 1 Easy Learning Objective: 0601 Describe the rational choice paradigm of decision making. Topic: Application of Learning Curves Â 
2.  When plotted on a graph, the learning curve can’t be expressed as logarithm.
FALSE In practice, learning curves are plotted using a graph with logarithmic scales. 
AACSB: Analytic Blooms: Remember Difficulty: 1 Easy Learning Objective: 0601 Describe the rational choice paradigm of decision making. Topic: Plotting Learning Curves Â 
3.  Economies of scale and the learning curve have opposite effects on capacity.
FALSE Learning curves are also an integral part in planning corporate strategy, such as decisions concerning pricing, capital investment, and operating costs based on experience curves. 
AACSB: Analytic Blooms: Remember Difficulty: 1 Easy Learning Objective: 0601 Describe the rational choice paradigm of decision making. Topic: Application of Learning Curves Â 
4.  The point at which the scale economy curve and the learning curve intersect is called the capacity optimum.
FALSE Capacity optimum is a meaningless term not referenced in the text. 
AACSB: Analytic Blooms: Remember Difficulty: 1 Easy Learning Objective: 0601 Describe the rational choice paradigm of decision making. Topic: Application of Learning Curves Â 
5.  A learning curve is a line displaying the relationship between unit production time and the cumulative number of units produced.
TRUE A learning curve is a line displaying the relationship between unit production time and the cumulative number of units produced. 
AACSB: Analytic Blooms: Remember Difficulty: 1 Easy Learning Objective: 0601 Describe the rational choice paradigm of decision making. Topic: Application of Learning Curves Â 
6.  A learning curve is a line displaying the way unit production time decreases as time passes.
FALSE A learning curve is a line displaying the relationship between unit production time and the cumulative number of units produced. 
AACSB: Analytic Blooms: Remember Difficulty: 2 Medium Learning Objective: 0601 Describe the rational choice paradigm of decision making. Topic: Application of Learning Curves Â 
7.  On a learning curve plot, the time per unit is usually displayed on the vertical axis.
TRUE See Exhibit 6A.1. 
AACSB: Analytic Blooms: Remember Difficulty: 1 Easy Learning Objective: 0601 Describe the rational choice paradigm of decision making. Topic: Plotting Learning Curves Â 
8.  A learning curve shows the decrease in time required for each successive unit completed.
TRUE There are two ways to think about the improved performance that comes with learning curves: time per unit (as in Exhibit 6.1A) or units of output per time period (as in6.1B). Time per unit shows the decrease in time required for each successive unit. Cumulative average time shows the cumulative average performance times as the total number of units increases. 
AACSB: Analytic Blooms: Remember Difficulty: 2 Medium Learning Objective: 0601 Describe the rational choice paradigm of decision making. Topic: Application of Learning Curves Â 
9.  A learning curve shows the increase in time required for each successive unit completed.
FALSE There are two ways to think about the improved performance that comes with learning curves: time per unit (as in Exhibit 6.1A) or units of output per time period (as in 6.1B). Time per unit shows the decrease in time required for each successive unit. Cumulative average time shows the cumulative average performance times as the total number of units increases. 
AACSB: Analytic Blooms: Remember Difficulty: 2 Medium Learning Objective: 0601 Describe the rational choice paradigm of decision making. Topic: Plotting Learning Curves Â 
10.  An assumption of learning curves is that the time required to complete a unit will decrease at a decreasing rate as the cumulative number of units completed increases.
TRUE Learning curve theory is based on three assumptions: 1. The amount of time required to complete a given task or unit of a product will be less each time the task is undertaken. 
AACSB: Analytic Blooms: Remember Difficulty: 1 Easy Learning Objective: 0601 Describe the rational choice paradigm of decision making. Topic: Application of Learning Curves Â 
11.  An assumption of learning curves is that the time required to complete a unit will increase at an increasing rate as the cumulative number of units completed increases.
FALSE Learning curve theory is based on three assumptions: 1. The amount of time required to complete a given task or unit of a product will be less each time the task is undertaken. 
AACSB: Analytic Blooms: Remember Difficulty: 1 Easy Learning Objective: 0601 Describe the rational choice paradigm of decision making. Topic: Application of Learning Curves Â 
12.  An assumption of learning curves is that the time required to complete a unit will decrease at an increasing rate as the cumulative number of units completed increases.
FALSE Learning curve theory is based on three assumptions: 1. The amount of time required to complete a given task or unit of a product will be less each time the task is undertaken. 
AACSB: Analytic Blooms: Remember Difficulty: 1 Easy Learning Objective: 0601 Describe the rational choice paradigm of decision making. Topic: Application of Learning Curves Â 
13.  You time someone completing a single task the first time at 10 minutes, and the second time they do the task it takes 9 minutes. You should use an 80 percent learning curve to estimate the length of time this worker will take to complete this task in the future.
FALSE The time for the first unit is multiplied by the learning percentage to obtain the time for the second unit. Hence, the time for the second unit divided by the time for the first unit times 100 is the appropriate learning curve and 9/10 Ã— 100 = 90 percent. 
AACSB: Analytic Blooms: Analyze Difficulty: 1 Easy Learning Objective: 0602 Explain why people differ from the rational choice paradigm when identifying problems/opportunities; evaluating/choosing alternatives; and evaluating decision outcomes. Topic: Plotting Learning Curves Â 
14.  You time someone completing a single task the first time at 100 minutes, and the second time they do the task it takes 90 minutes. You should use a 90 percent learning curve to estimate the length of time this worker will take to complete this task in the future.
TRUE The time for the first unit is multiplied by the learning percentage to obtain the time for the second unit. Hence, the time for the second unit divided by the time for the first unit times 100 is the appropriate learning curve and 9/10 Ã— 100 = 90 percent. 
AACSB: Analytic Blooms: Analyze Difficulty: 1 Easy Learning Objective: 0602 Explain why people differ from the rational choice paradigm when identifying problems/opportunities; evaluating/choosing alternatives; and evaluating decision outcomes. Topic: Plotting Learning Curves Â 
15.  You time someone completing a single task the first time at 120 minutes, and the second time they do the task it takes 108 minutes. You should use a 90 percent learning curve to estimate the length of time this worker will take to complete this task in the future.
TRUE The time for the first unit is multiplied by the learning percentage to obtain the time for the second unit. Hence, the time for the second unit divided by the time for the first unit times 100 is the appropriate learning curve and 108/120 Ã— 100 = 90 percent. 
AACSB: Analytic Blooms: Analyze Difficulty: 1 Easy Learning Objective: 0602 Explain why people differ from the rational choice paradigm when identifying problems/opportunities; evaluating/choosing alternatives; and evaluating decision outcomes. Topic: Plotting Learning Curves Â 
16.  You time someone completing a single task the first time at 100 minutes, and the fourth time they do the task it takes 81 minutes. You should use an 81 percent learning curve to estimate the length of time this worker will take to complete this task in the future.
FALSE Use Exhibit 6.4, where the fourth unit is 81 percent of the first unit is a 90 percent learning curve. 
AACSB: Analytic Blooms: Analyze Difficulty: 2 Medium Learning Objective: 0602 Explain why people differ from the rational choice paradigm when identifying problems/opportunities; evaluating/choosing alternatives; and evaluating decision outcomes. Topic: Plotting Learning Curves Â 
17.  You time someone completing a single task the first time at 100 minutes, and the fourth time they do the task it takes 81 minutes. You should use a 90 percent learning curve to estimate the length of time this worker will take to complete this task in the future.
TRUE Use Exhibit 6.4, where the fourth unit is 81 percent of the first unit is a 90 percent learning curve. 
AACSB: Analytic Blooms: Analyze Difficulty: 2 Medium Learning Objective: 0602 Explain why people differ from the rational choice paradigm when identifying problems/opportunities; evaluating/choosing alternatives; and evaluating decision outcomes. Topic: Plotting Learning Curves Â 
18.  The unit improvement factor for a 60 percent learning curve at 25 units is 0.0933. The first and second timings of a person doing a job are 5 minutes and 3 minutes, respectively. The learningadjusted time estimate for the unit number 25 is 0.0933 minute.
FALSE Use Exhibit 6.4, where the first unit is 1 and the 25^{th} unit is 0.0933 of the first unit is a 60 percent learning curve. In this case, however, the first unit was 5, so the 25^{th} unit will be 5 times 0.0933 or 0.4665 minute. 
AACSB: Analytic Blooms: Analyze Difficulty: 2 Medium Learning Objective: 0602 Explain why people differ from the rational choice paradigm when identifying problems/opportunities; evaluating/choosing alternatives; and evaluating decision outcomes. Topic: Plotting Learning Curves Â 
19.  The unit improvement factor for a 60 percent learning curve at 25 units is 0.0933. The first and second timings of a person doing a job are 10 minutes and 6 minutes, respectively. The learningadjusted time estimate for the unit number 25 is 0.9330 minute.
TRUE Use Exhibit 6.4, where the first unit is 1 and the 25^{th} unit is 0.0933 of the first unit is a 60 percent learning curve. In this case, however, the first unit is 10, so the 25^{th} unit will be 10 times 0.0933 or 0.933 minute. 
AACSB: Analytic Blooms: Analyze Difficulty: 2 Medium Learning Objective: 0602 Explain why people differ from the rational choice paradigm when identifying problems/opportunities; evaluating/choosing alternatives; and evaluating decision outcomes. Topic: Plotting Learning Curves Â 
20.  The unit improvement factor is not as useful as arithmetic tabulation of learning curve statistics in adjusting time estimates for learning.
FALSE Although the arithmetic tabulation approach is useful, direct logarithmic analysis of learning curve problems is generally more efficient because it does not require a complete enumeration of successive timeoutput combinations. Moreover, where such data are not available, an analytical model that uses logarithms may be the most convenient way of obtaining output estimates. 
AACSB: Analytic Blooms: Understand Difficulty: 1 Easy Learning Objective: 0602 Explain why people differ from the rational choice paradigm when identifying problems/opportunities; evaluating/choosing alternatives; and evaluating decision outcomes. Topic: Plotting Learning Curves Â 
21.  Learning curves have a wide range of business applications.
TRUE Learning (or experience) curve theory has a wide range of applications in the business world. 
AACSB: Analytic Blooms: Remember Difficulty: 1 Easy Learning Objective: 0601 Describe the rational choice paradigm of decision making. Topic: Application of Learning Curves Â 
22.  If a person performing a task has been achieving a 95 percent learning curve and you know that the task will end after the 100^{th} unit, the last unit produced will take 71.12 percent as much time as the first unit.
TRUE Using Exhibit 6.4, with a 95 percent learning curve where the first unit is 1, the 100^{th} unit is 0.7112 or 71.12 percent of the first unit. 
AACSB: Analytic Blooms: Analyze Difficulty: 2 Medium Learning Objective: 0602 Explain why people differ from the rational choice paradigm when identifying problems/opportunities; evaluating/choosing alternatives; and evaluating decision outcomes. Topic: Plotting Learning Curves Â 
23.  If a person performing a task has been achieving a 75 percent learning curve and you know that the task will end after the 80^{th} unit, the last unit produced will take 17.12 percent as much time as the first unit.
FALSE Using Exhibit 6.4, with a 75 percent learning curve where the first unit is 1, the 80^{th} unit is 0.1622 or 16.22 percent of the first unit. 
AACSB: Analytic Blooms: Analyze Difficulty: 2 Medium Learning Objective: 0602 Explain why people differ from the rational choice paradigm when identifying problems/opportunities; evaluating/choosing alternatives; and evaluating decision outcomes. Topic: Plotting Learning Curves Â 
24.  If a person performing a task has been achieving an 80 percent learning curve and it took 10 minutes to produce the first unit, the total time to produce 100 units will be 326.5 minutes.
TRUE Using Table 6.5, with an 80 percent learning curve, where the first unit is 1, the cumulative time to produce 100 units is 32.65 or, when the first unit takes 10 minutes, it will take 326.5 minutes for the entire 100 units. 
AACSB: Analytic Blooms: Analyze Difficulty: 2 Medium Learning Objective: 0602 Explain why people differ from the rational choice paradigm when identifying problems/opportunities; evaluating/choosing alternatives; and evaluating decision outcomes. Topic: Plotting Learning Curves Â 
25.  If a person performing a task has been achieving an 85 percent learning curve and if it took 1 minute to produce the first unit, the total time to produce 1,000 units will be 437.5 minutes.
FALSE Using Table 6.5, with an 85 percent learning curve, where the first unit is 1, the cumulative time to produce 1,000 units is 257.9 minutes to produce the entire 100 units. 
AACSB: Analytic Blooms: Analyze Difficulty: 2 Medium Learning Objective: 0601 Describe the rational choice paradigm of decision making. Topic: Plotting Learning Curves Â 
26.  Learning curves can be applied to individuals and to organizations.
TRUE Learning curves can be applied to individuals or organizations. 
AACSB: Analytic Blooms: Remember Difficulty: 1 Easy Learning Objective: 0601 Describe the rational choice paradigm of decision making. Topic: Application of Learning Curves Â 
Multiple Choice Questions
27.  An assumption of learning curve theory is which of the following?
Learning curve theory is based on three assumptions: 1. The amount of time required to complete a given task or unit of a product will be less each time the task is undertaken. 
AACSB: Analytic Blooms: Remember Difficulty: 1 Easy Learning Objective: 0601 Describe the rational choice paradigm of decision making. Topic: Application of Learning Curves Â 
28.  An assumption of learning curve theory is which of the following?
Learning curve theory is based on three assumptions: 1. The amount of time required to complete a given task or unit of a product will be less each time the task is undertaken. 
AACSB: Analytic Blooms: Remember Difficulty: 1 Easy Learning Objective: 0601 Describe the rational choice paradigm of decision making. Topic: Application of Learning Curves Â 
29.  Which of the following computational methods are used to calculate learning curve statistics?
Although the arithmetic tabulation approach is useful, direct logarithmic analysis of learning curve problems is generally more efficient because it does not require a complete enumeration of successive timeoutput combinations. Moreover, where such data are not available, an analytical model that uses logarithms may be the most convenient way of obtaining output estimates. 
AACSB: Analytic Blooms: Understand Difficulty: 1 Easy Learning Objective: 0601 Describe the rational choice paradigm of decision making. Topic: Plotting Learning Curves Â 
30.  The unit improvement factor for a 60 percent learning curve at 25 units is 0.0933. The first and second timings of a person doing a job are 5 minutes and 3 minutes respectively. Which of the following is the learningadjusted time estimate for unit number 25?
Use Exhibit 6.4, where the first unit is 1 and the 25^{th} unit is 0.0933 of the first unit is a 60 percent learning curve. In this case, however, the first unit was 5, so the 25^{th} unit will be 5 times 0.0933 or 0.4665 minute. 
AACSB: Analytic Blooms: Analyze Difficulty: 2 Medium Learning Objective: 0602 Explain why people differ from the rational choice paradigm when identifying problems/opportunities; evaluating/choosing alternatives; and evaluating decision outcomes. Topic: Plotting Learning Curves Â 
31.  The unit improvement factor for an 80 percent learning curve at 100 units is 0.2271. The first and second timings of a person doing a job are 20 minutes and 16 minutes, respectively. What is the learningadjusted time estimate for unit number 100?
Use Exhibit 6.4, where the first unit is timed at 20 minutes and the second unit is timed at 16 minutes is a 16/20 Ã— 100 = 80 percent learning curve. The learningadjusted time estimate for unit number 100, then, is 20 minutes times the unit improvement factor of 0.2271 or 4.542 minutes. 
AACSB: Analytic Blooms: Analyze Difficulty: 2 Medium Learning Objective: 0602 Explain why people differ from the rational choice paradigm when identifying problems/opportunities; evaluating/choosing alternatives; and evaluating decision outcomes. Topic: Plotting Learning Curves Â 
32.  You have just timed a person doing a job a few times. The first time it took the person 25 minutes, the second time it took 20 minutes, and the third time it took 17.55 minutes. Which learning curve unit improvement factor should you use?
Where the first unit is timed at 25 minutes and the second unit is timed at 20 minutes, 20/25 Ã— 100 = 80 percent learning curve. To confirm, from Exhibit 6.4, the third unit should have a learning factor of 0.7021 and 25 minutes times 0.7021 = 17.55 minutes. 
AACSB: Analytic Blooms: Analyze Difficulty: 2 Medium Learning Objective: 0602 Explain why people differ from the rational choice paradigm when identifying problems/opportunities; evaluating/choosing alternatives; and evaluating decision outcomes. Topic: Plotting Learning Curves Â 
33.  You have just timed a person doing a job a four times. The first time it took the person 120 minutes, the second time it took 90 minutes, the third time it took 76.1 minutes, and the fourth time it took 67.5 minutes. Which learning curve unit improvement factor should you use?
Where the first unit is timed at 120 minutes and the second unit is timed at 90 minutes, 90/120 Ã— 100 = 75 percent learning curve. To confirm, from Exhibit 6.4, the third unit should have a learning factor of 0.6338 and 120 minutes times 0.6338 = 76.056 minutes and the fourth unit, at 67.5 minutes is 0.75 times 90 minutes, the time it took for the second unit, which is 67.5 minutes. 
AACSB: Analytic Blooms: Analyze Difficulty: 2 Medium Learning Objective: 0602 Explain why people differ from the rational choice paradigm when identifying problems/opportunities; evaluating/choosing alternatives; and evaluating decision outcomes. Topic: Plotting Learning Curves Â 
34.  You have determined that a 75 percent learning curve is appropriate for a task. If the initial timing of the person performing that job was 50 minutes, and if you need the job performed 500 times, how many minutes of work will be required?
Using Table 6.5, with a 75 percent learning curve, where the first unit is 1, the cumulative time to produce 500 units is 63.68 minutes. In a situation where the first unit took 50 minutes, the total time will be 50 times 63.68 or 3,184 minutes. 
AACSB: Analytic Blooms: Analyze Difficulty: 2 Medium Learning Objective: 0602 Explain why people differ from the rational choice paradigm when identifying problems/opportunities; evaluating/choosing alternatives; and evaluating decision outcomes. Topic: Plotting Learning Curves Â 
35.  You have determined that a 60 percent learning curve is appropriate for a task. If your initial timing of person performing that task was 35 minutes and if you need the task performed 1,000 times, how many minutes of work will be required?
Using Table 6.5, with a 60 percent learning curve, where the first unit is 1, the cumulative time to produce 1,000 units is 20.15 minutes. In a situation where the first unit took 35 minutes, the total time will be 35 times 20.15 or 705.25 minutes. 
AACSB: Analytic Blooms: Analyze Difficulty: 2 Medium Learning Objective: 0602 Explain why people differ from the rational choice paradigm when identifying problems/opportunities; evaluating/choosing alternatives; and evaluating decision outcomes. Topic: Plotting Learning Curves Â 
36.  You have just timed a person doing a hair cut for the first time. It took 50 minutes. What unit improvement factor learning curve would you use if the person took 35 minutes on the second hair cut?
The time for the first unit is multiplied by the learning percentage to obtain the time for the second unit. Hence, the time for the second unit divided by the time for the first unit times 100 is the appropriate learning curve and 35/50 Ã— 100 = 70 percent. 
AACSB: Analytic Blooms: Analyze Difficulty: 1 Easy Learning Objective: 0602 Explain why people differ from the rational choice paradigm when identifying problems/opportunities; evaluating/choosing alternatives; and evaluating decision outcomes. Topic: Plotting Learning Curves Â 
37.  With an 80 percent unit improvement factor learning curve and an initial time of 100 minutes to do a job, at what number of repetitions will the job take less than 50 minutes?
Using Exhibit 6.4, move down the 80 percent learning curve column until you find the first number below 0.5. That number is 0.4930 at unit number nine. 
AACSB: Analytic Blooms: Analyze Difficulty: 2 Medium Learning Objective: 0602 Explain why people differ from the rational choice paradigm when identifying problems/opportunities; evaluating/choosing alternatives; and evaluating decision outcomes. Topic: Plotting Learning Curves Â 
38.  With a 70 percent unit improvement factor learning curve and an initial time of 100 minutes to do a job, at what number of repetitions does the job take less than 50 minutes?
Using Exhibit 6.4, move down the 70 percent learning curve column until you find the first number below 0.5 (which is 50/100). That number is 0.4900 at unit number four. 
AACSB: Analytic Blooms: Analyze Difficulty: 2 Medium Learning Objective: 0602 Explain why people differ from the rational choice paradigm when identifying problems/opportunities; evaluating/choosing alternatives; and evaluating decision outcomes. Topic: Plotting Learning Curves Â 
39.  The 50^{th} repetition of a job is timed at 100 minutes. If the learning curve for this job is 90 percent, what is the estimated time for the 100^{th} repetition of this job?
Using Exhibit 6.4, the improvement factor for the 50^{th} unit on a 90 percent learning curve is 0.5518. For the 100^{th} unit, the improvement factor is 0.4966. If the 50^{th} unit took 100 minutes, the 100^{th} unit should take (0.4966/0.5518) or 90 minutes. This confirms the simpler way to arrive at this conclusion: on a 90 percent learning curve, the time for the X^{th} unit will be 90 percent of the time for the X/2^{th} unit. 
AACSB: Analytic Blooms: Analyze Difficulty: 2 Medium Learning Objective: 0602 Explain why people differ from the rational choice paradigm when identifying problems/opportunities; evaluating/choosing alternatives; and evaluating decision outcomes. Topic: Plotting Learning Curves Â 
40.  The 50^{th} repetition of a job is timed at 100 minutes. If the learning curve for this job is 90 percent, what is the estimated time for the 200^{th} repetition of this job?
Using Exhibit 6.4, the improvement factor for the 50^{th} unit on a 90 percent learning curve is 0.5518. For the 200^{th} unit, the improvement factor is 0.4469. If the 50^{th} unit took 100 minutes, the 200^{th} unit should take (0.4469/0.5518) or 81 minutes. This confirms the simpler way to arrive at this conclusion: on a 90 percent learning curve, the time for the Xth unit will be 81 percent (0.9 squared) of the time for the X/4^{th} unit. 
AACSB: Analytic Blooms: Analyze Difficulty: 2 Medium Learning Objective: 0602 Explain why people differ from the rational choice paradigm when identifying problems/opportunities; evaluating/choosing alternatives; and evaluating decision outcomes. Topic: Plotting Learning Curves Â 
41.  The 10^{th} repetition of job is timed at 100 minutes. If the learning curve for this job is 80 percent, what is the estimated time for the 100^{th} repetition of this job?
Using Exhibit 6.4, the improvement factor for the 10^{th} unit on an 80 percent learning curve is 0.4765. For the 100^{th} unit, the improvement factor is 0.2271. If the 10^{th} unit took 100 minutes, the 100^{th} unit should take (0.2271/0.4765) or 47.66 minutes. 
AACSB: Analytic Blooms: Analyze Difficulty: 3 Hard Learning Objective: 0602 Explain why people differ from the rational choice paradigm when identifying problems/opportunities; evaluating/choosing alternatives; and evaluating decision outcomes. Topic: Plotting Learning Curves Â 
42.  A company can produce a small lot of products the first time at a cost of $2,000. If their 85 percent learning curve allows them to reduce their costs on each lot, what is the total cost of producing 5 lots?
Using Table 6.5, with an 85 percent learning curve, where the first unit costs $1, the cumulative cost to produce 5 units is $4.031. In a situation where the first unit cost $2,000, the total cost for 5 units will be $2,000 times 4.031 or $8,062. 
AACSB: Analytic Blooms: Analyze Difficulty: 2 Medium Learning Objective: 0602 Explain why people differ from the rational choice paradigm when identifying problems/opportunities; evaluating/choosing alternatives; and evaluating decision outcomes. Topic: Plotting Learning Curves Â 
43.  A company can produce a small lot of products the first time at a cost of $10,000. If their 75 percent learning curve allows them to reduce their costs on each lot, what is the total cost of producing 10 lots?
Using Table 6.5, with a 75 percent learning curve, where the first unit costs $1, the cumulative cost to produce 10 units is $5.589. In a situation where the first unit cost $10,000, the total cost for 10 units will be $10,000 times 5.589 or $55,890. 
AACSB: Analytic Blooms: Analyze Difficulty: 2 Medium Learning Objective: 0602 Explain why people differ from the rational choice paradigm when identifying problems/opportunities; evaluating/choosing alternatives; and evaluating decision outcomes. Topic: Plotting Learning Curves Â 
44.  A company can produce a small lot of products the first time at a cost of $3,000. If their 65 percent learning curve allows them to reduce their costs on each lot, what is the cost of producing the 12^{th} lot?
Using Exhibit 6.4, with a 65 percent learning curve, where the first unit costs $1, the cost to produce the 12^{th} unit will be 0.2135. In a situation where the first unit cost $3,000, the total of the 12^{th} unit will be $3,000 times 0.2135 or $640.50. 
AACSB: Analytic Blooms: Analyze Difficulty: 2 Medium Learning Objective: 0602 Explain why people differ from the rational choice paradigm when identifying problems/opportunities; evaluating/choosing alternatives; and evaluating decision outcomes. Topic: Plotting Learning Curves Â 
45.  You are a consultant called in to estimate the costs after the employees learn how to do a job more efficiently by repetition of new product. You find a company can produce a product the first time at a cost of $5,000. If their 90 percent learning curve allows them to reduce their costs on each unit, what is the total cost of producing 100 units of the new product?
Using Table 6.5, with a 90 percent learning curve, where the first unit costs $1, the cumulative cost to produce 100 units is $58.14. In a situation where the first unit cost $5,000, the total cost for 100 units will be $5,000 times 58.14 or $55,890. 
AACSB: Analytic Blooms: Analyze Difficulty: 2 Medium Learning Objective: 0602 Explain why people differ from the rational choice paradigm when identifying problems/opportunities; evaluating/choosing alternatives; and evaluating decision outcomes. Topic: Plotting Learning Curves Â 
46.  You are a consultant specializing in estimating the costs after the employees learn how to do a job more efficiently by repetition. Your client can produce a product the first time at a cost of $2,500. If their 65 percent learning curve allows them to reduce their costs on each product, what is the total cost of producing 400 units of the new product?
Using Table 6.5, with a 65 percent learning curve, where the first unit costs $1, the cumulative cost to produce 400 units is $23.44. In a situation where the first unit cost $2,500, the total cost for 400 units will be $2,500 times 23.44 or $58,600. 
AACSB: Analytic Blooms: Analyze Difficulty: 2 Medium Learning Objective: 0602 Explain why people differ from the rational choice paradigm when identifying problems/opportunities; evaluating/choosing alternatives; and evaluating decision outcomes. Topic: Plotting Learning Curves Â 
47.  A company can produce a small lot of products the first time at a cost of $3,000. If their 65 percent learning curve allows them to reduce their costs on each lot, what is the cost of producing the 20^{th} lot?
Using Exhibit 6.4, with a 65 percent learning curve, where the first unit costs $1, the cost to produce, the 20^{th} unit will be 0.1554. In a situation where the first unit cost $3,000, the total of the 20^{th} unit will be $3,000 times 0.1554 or $466.20. 
AACSB: Analytic Blooms: Analyze Difficulty: 2 Medium Learning Objective: 0602 Explain why people differ from the rational choice paradigm when identifying problems/opportunities; evaluating/choosing alternatives; and evaluating decision outcomes. Topic: Plotting Learning Curves Â 
48.  A company’s production process has an 85 percent learning curve rate. The process has produced 1,000 units to date. A process refinement is estimated to allow a future learning curve rate for the identical product of 75 percent. However, the initial unit made using the new process will take the same amount of time as the very first unit produced using the old process. At what point, using the new process, will the production rate exceed the production rate achieved by the old process?
Using Exhibit 6.4, the original process, with an 85 percent learning rate by the 1000^{th} unit, will have achieved a production rate of 19.80 percent of the original rate. At a 75 percent learning rate, the production rate exceeds (unit improvement factor is less than) 19.80 at the 50^{th} unit, where the improvement factor is 0.1972 or 19.72 percent of the initial unit. 
AACSB: Analytic Blooms: Analyze Difficulty: 3 Hard Learning Objective: 0602 Explain why people differ from the rational choice paradigm when identifying problems/opportunities; evaluating/choosing alternatives; and evaluating decision outcomes. Topic: Plotting Learning Curves Â 
49.  A company’s production process has an 80 percent learning curve rate. The process has produced 1,000 units to date. A process refinement is estimated to allow a future learning curve rate for the identical product of 75 percent. However, the initial unit made using the new process will take the same amount of time as the initial unit produced using the old process. At what point, using the new process, will the production rate exceed the production rate achieved by the old process?
Using, the original process with an 80 percent learning rate, by the 1000^{th} unit, the company will have achieved a production rate of 10.82 percent of the original rate. At a 75 percent learning rate, the production rate exceeds (unit improvement factor is less than) 10.82 at the 250^{th} unit, where the improvement factor is 0.1011or 10.11 percent of the initial unit. 
AACSB: Analytic Blooms: Analyze Difficulty: 3 Hard Learning Objective: 0602 Explain why people differ from the rational choice paradigm when identifying problems/opportunities; evaluating/choosing alternatives; and evaluating decision outcomes. Topic: Plotting Learning Curves Â 
50.  Which of the following is a reason that there are disparities between a firm’s learning curve rate and that of its industry?
There are two reasons for disparities between a firm’s learning rate and that of its industry. First, differences in operating characteristics between any two firms, stemming from the equipment, methods, product design, plant organization, and so forth, are inevitable. Second, procedural differences are manifested in the development of the learning percentage itself, such as whether the industry rate is based on a single product or on a product line, and the manner in which the data were aggregated. 
AACSB: Analytic Blooms: Understand Difficulty: 1 Easy Learning Objective: 0601 Describe the rational choice paradigm of decision making. Topic: General Guidelines for Learning Â 
51.  The general guidelines provided in the textbook on improving individual learning based on learning curves do not include which of the following?
Some general guidelines to improve individual performance based on learning curves include the following: 1. Proper selection of workers. 
AACSB: Analytic Blooms: Remember Difficulty: 2 Medium Learning Objective: 0603 Discuss the roles of emotions and intuition in decision making. Topic: General Guidelines for Learning Â 
52.  The general guidelines provided in the textbook on improving individual learning based on learning curves include which of the following?
Some general guidelines to improve individual performance based on learning curves include the following: 1. Proper selection of workers. 
AACSB: Analytic Blooms: Remember Difficulty: 2 Medium Learning Objective: 0603 Discuss the roles of emotions and intuition in decision making. Topic: General Guidelines for Learning Â 
Fill in the Blank Questions
53.  If a person performing a task has been achieving an 85 percent learning curve and if it took 1 minute to produce the first unit, what will be the total time to produce 1,000 units? ______________________
257.9 minutes Using Table 6.5, with an 85 percent learning curve, where the first unit takes 1 minute, the cumulative time to produce 1,000 units is 257.9 minutes. 
AACSB: Analytic Blooms: Analyze Difficulty: 2 Medium Learning Objective: 0602 Explain why people differ from the rational choice paradigm when identifying problems/opportunities; evaluating/choosing alternatives; and evaluating decision outcomes. Topic: Plotting Learning Curves Â 
54.  The 25^{th} repetition of a job is timed at 100 minutes. If the learning curve for this job is 90 percent, what is the estimated time for the 180^{th} repetition of this job? ________________________
74.06 minutes Using Exhibit 6.4, the improvement factor for the 25^{th} unit on a 90 percent learning curve is 0.6131. For the 180^{th} unit, the improvement factor at 90 percent is 0.4541. If the 25^{th} unit took 100 minutes, the 180^{th} unit should take (0.4541/0.6131) or 74.06 minutes. 
AACSB: Analytic Blooms: Analyze Difficulty: 2 Medium Learning Objective: 0602 Explain why people differ from the rational choice paradigm when identifying problems/opportunities; evaluating/choosing alternatives; and evaluating decision outcomes. Topic: Plotting Learning Curves Â 
55.  A company can produce a product the first time at a cost of $2,500. If its 85 percent learning curve allows the company to reduce its costs on each product, what is the total cost of producing 400 units of the new product? _________________
$319,000 Using Table 6.5, with an 85 percent learning curve, where the first unit costs $1, the cumulative cost to produce 400 units is $127.60. In a situation where the first unit cost $2,500, the total cost for 400 units will be $2,500 times 127.60 or $319,000. 
AACSB: Analytic Blooms: Analyze Difficulty: 2 Medium Learning Objective: 0602 Explain why people differ from the rational choice paradigm when identifying problems/opportunities; evaluating/choosing alternatives; and evaluating decision outcomes. Topic: Plotting Learning Curves Â 
Essay Questions
56.  A company’s production process has a 90 percent learning rate. The process has produced 1,000 units to date. A process refinement is estimated to allow a future learning rate for the identical product of 70 percent. However, the initial unit made using the new process will take the same amount of time as the initial unit produced using the old process. At what point, using the new process, will the production rate exceed the production rate achieved by the old process?
By the 8^{th} unit 
AACSB: Analytic Blooms: Analyze Difficulty: 3 Hard Learning Objective: 0602 Explain why people differ from the rational choice paradigm when identifying problems/opportunities; evaluating/choosing alternatives; and evaluating decision outcomes. Topic: Plotting Learning Curves Â 
57.  What is a learning curve?
The textbook answer is: “A learning curve is a line displaying the relationship between unit production time and the cumulative number of units produced.” (p. 91). A satisfactory answer does not need to be word for word but must express the notion of decreasing cost (or changes in other factors such as yield) related to the cumulative number of units produced. A common incorrect answer relates learning to time. 
AACSB: Analytic Blooms: Create Difficulty: 2 Medium Learning Objective: 0601 Describe the rational choice paradigm of decision making. Topic: Application of Learning Curves Â 
58.  Why are learning curves useful in business?
A brief discussion of this question is found in the first paragraph on page 91. Successful answers will often include examples of learning curve applications as described in the textbook or discussed in class. 
AACSB: Analytic Blooms: Create Difficulty: 2 Medium Learning Objective: 0601 Describe the rational choice paradigm of decision making. Topic: Application of Learning Curves Â 
59.  Describe an example of industrial learning where learning curve analysis might be useful.
The text has several examples describing the utility of learning curves. A less successful response would be one relating to, for example, the decline in morbidity from heart transplant surgery. The argument here is that, unless the decision situation is carefully couched in terms of national health care policy, for example, the improvements in morbidity results are merely interesting and not particularly useful. 
AACSB: Analytic Blooms: Create Difficulty: 1 Easy Learning Objective: 0603 Discuss the roles of emotions and intuition in decision making. Topic: General Guidelines for Learning Â 
60.  What are some of the factors that stimulate learning?
A successful answer to this question will identify both individual and organizational learning by name and will provide one or more appropriate factors that relate to each. 
AACSB: Analytic Blooms: Remember Difficulty: 2 Medium Learning Objective: 0603 Discuss the roles of emotions and intuition in decision making. Topic: General Guidelines for Learning Â 
Chapter 07
Manufacturing Processes
True / False Questions
1.  Process selection refers to the strategic decision of choosing the volume of output to produce in a manufacturing facility depending upon the way that facility produces.
TrueÂ Â Â Â False 
2.  Process selection refers to the strategic decision of selecting which kind of production processes to use to produce a product or provide a service.
TrueÂ Â Â Â False 
3.  A continuous process indicates production of discrete parts moving from workstation to workstation at a controlled rate.
TrueÂ Â Â Â False 
4.  One difference between an assembly line process flow and a continuous process flow is that on the assembly line the flow is discrete rather than continuous.
TrueÂ Â Â Â False 
5.  One tradeoff illustrated by the productprocess matrix is between flexibility and cost.
TrueÂ Â Â Â False 
6.  The volume requirements for the product are one determinant of the choice of which process structure to select.
TrueÂ Â Â Â False 
7.  One methodology used to evaluate equipment investment decisions where the investment entails an initial investment, fixed costs, and variable costs is breakeven analysis.
TrueÂ Â Â Â False 
8.  Breakeven analysis can only be used in production equipment decision making when dealing solely with fixed costs, not variable costs.
TrueÂ Â Â Â False 
9.  A generalpurpose machine is less capable than a specialpurpose machine in certain tasks but can perform a broader variety of tasks.
TrueÂ Â Â Â False 
10.  Breakeven analysis can be used to help decide whether to perform a task with a specialpurpose machine or with a generalpurpose machine.
TrueÂ Â Â Â False 
11.  The productprocess matrix shows the relationship between process structures and product volume and variety characteristics.
TrueÂ Â Â Â False 
12.  The term “assembly line” refers to progressive assembly linked by some material handling device.
TrueÂ Â Â Â False 
13.  Workcenter layouts allocate dissimilar machines into cells to work on products that have dissimilar processing requirements.
TrueÂ Â Â Â False 
14.  A project layout is characterized by a relatively low number of production units in comparison with process and product layout formats.
TrueÂ Â Â Â False 
15.  A project layout is characterized by a high degree of task ordering.
TrueÂ Â Â Â False 
16.  The closer the customer is to the customer order decoupling point, the longer it takes the customer to receive the product.
TrueÂ Â Â Â False 
17.  The closer the customer is to the customer order decoupling point, the more quickly the customer receives the product.
TrueÂ Â Â Â False 
18.  Engineertoorder firms will work with the customer to design the product and then make it from purchased materials, parts, and components.
TrueÂ Â Â Â False 
19.  A maketoorder firm will work with the customer to design the product and then make it from purchased materials, parts, and components.
TrueÂ Â Â Â False 
20.  The time needed to respond to a customer’s order is called the customer response time.
TrueÂ Â Â Â False 
21.  The focus in the maketostock environment is on providing finished goods where and when the customers want them.
TrueÂ Â Â Â False 
22.  An example of an assembletoorder firm is Dell Computer.
TrueÂ Â Â Â False 
23.  The essential issue in satisfying customers in the maketostock environment is to balance the level of finished inventory against the level of service to the customer.
TrueÂ Â Â Â False 
24.  The essential issue in satisfying customers in the maketostock environment is to balance the cost of the finished item against the willingness of the consumer to pay for it.
TrueÂ Â Â Â False 
25.  Assembletoorder means moving the customer order decoupling point from finished goods to components.
TrueÂ Â Â Â False 
26.  A highlevel map or diagram of a supply chain process can be useful to understand how material flows and where inventory is held.
TrueÂ Â Â Â False 
Multiple Choice Questions
27.  Which of the following is not a step in developing a manufacturing cell layout?

28.  Which of the following is not considered a major work flow structure?

29.  A difference between project and continuous flow categories of process flow structures is which of the following?

30.  Assume a fixed cost for a process of $15,000. The variable cost to produce each unit of product is $10, and the selling price for the finished product is $25. Which of the following is the number of units that has to be produced and sold to break even?

31.  Assume a fixed cost for a process of $120,000. The variable cost to produce each unit of product is $35, and the selling price for the finished product is $50. Which of the following is the number of units that has to be produced and sold to break even?

32.  You are hired as a consultant to decide if your client should purchase a new, highly specialized piece of equipment. The product to be produced by this equipment is forecast to have a total worldwide demand of 15,000 units over the entire product life. The initial investment to acquire and install the equipment is $256,000. The variable cost to produce each unit will be $15, and the selling price for the finished product will be $30. Which of the following best describes the situation the firm is facing?

33.  In a work center, machine A has a 10minute setup time per batch and a 2minute per unit run time. Machine B performs the identical function but has a setup time of 30 minutes and a 1minute run time per unit. The work center makes products in batches ranging from 1 unit to 100 units. Assuming capacity is not a limitation on either machine, in order to minimize the total processing time, on which batches should machine B be used?

34.  Which of the following is a basic type of process structure?

35.  Which of the following is not a basic type of process structure?

36.  Which of the following basic types of process structures is one in which equipment or work processes are arranged according to the progressive steps by which the product is made?

37.  Which of the following basic types of process structures is one in which similar equipment or functions are grouped together?

38.  The placement of which of the following is not determined by production process organization decisions?

Fill in the Blank Questions
39.  Assume a fixed cost for a process of $100,000. The variable cost to produce each unit of product is $10, and the selling price for the finished product is $50. Ignoring inventory, how many units must the firm sell to break even? ______________________
________________________________________ 
40.  Give an example of a project layout. ______________________
________________________________________ 
Essay Questions
41.  Describe the implications of the productprocess matrix for process design in a competitive situation.

42.  Distinguish between a work center and a manufacturing cell.

43.  Assume that you are offered a new piece of equipment for $10,000. The equipment will produce 10,000 units per year with a margin of $6.00 per unit. Demand for the product being produced has been 2,000 units per year. Your current equipment is fully depreciated and can produce the 2,000 units per year at but at a margin of only $4.00 per unit. Should you purchase the new equipment? Under what conditions?

44.  A manufacturer has identified the options for acquiring a machined part. It can make the part on a standard lathe for $250 per unit (including materials). It can make the part on a numerically controlled lathe for $150 per unit (including materials). It can make the part on a machining center for $50 per unit (also including materials). The manufacturer can acquire a standard lathe for $10,000. It could acquire a numerically controlled lathe for $100,000. A machining center would cost $350,000. It has also found that it can purchase the part for $350 per unit. What are the ranges in demand for which each method of procuring a part described above will be most economical?

Chapter 07 Manufacturing Processes Answer Key
True / False Questions
1.  Process selection refers to the strategic decision of choosing the volume of output to produce in a manufacturing facility depending upon the way that facility produces.
FALSE Process selection refers to the strategic decision of selecting which kind of production processes to use to produce a product or provide a service. 
AACSB: Analytic Blooms: Remember Difficulty: 1 Easy Learning Objective: 0702 Outline the team effectiveness model and discuss how task characteristics; team size; and team composition influence team effectiveness. Topic: How Production Processes Are Organized Â 
2.  Process selection refers to the strategic decision of selecting which kind of production processes to use to produce a product or provide a service.
TRUE Process selection refers to the strategic decision of selecting which kind of production processes to use to produce a product or provide a service. 
AACSB: Analytic Blooms: Remember Difficulty: 1 Easy Learning Objective: 0702 Outline the team effectiveness model and discuss how task characteristics; team size; and team composition influence team effectiveness. Topic: How Production Processes Are Organized Â 
3.  A continuous process indicates production of discrete parts moving from workstation to workstation at a controlled rate.
FALSE A continuous process is similar to an assembly line in that production follows a predetermined sequence of steps, but the flow is continuous such as with liquids, rather than discrete. 
AACSB: Analytic Blooms: Remember Difficulty: 2 Medium Learning Objective: 0702 Outline the team effectiveness model and discuss how task characteristics; team size; and team composition influence team effectiveness. Topic: How Production Processes Are Organized Â 
4.  One difference between an assembly line process flow and a continuous process flow is that on the assembly line the flow is discrete rather than continuous.
TRUE A continuous process is similar to an assembly line in that production follows a predetermined sequence of steps, but the flow is continuous such as with liquids, rather than discrete. 
AACSB: Analytic Blooms: Remember Difficulty: 1 Easy Learning Objective: 0702 Outline the team effectiveness model and discuss how task characteristics; team size; and team composition influence team effectiveness. Topic: How Production Processes Are Organized Â 
5.  One tradeoff illustrated by the productprocess matrix is between flexibility and cost.
TRUE To produce nonstandard products at relatively low volumes, work centers (flexible) should be used. A highly standardized product (lowcost commodity) produced at high volumes should be produced using an assembly line or a continuous process. 
AACSB: Analytic Blooms: Remember Difficulty: 1 Easy Learning Objective: 0702 Outline the team effectiveness model and discuss how task characteristics; team size; and team composition influence team effectiveness. Topic: How Production Processes Are Organized Â 
6.  The volume requirements for the product are one determinant of the choice of which process structure to select.
TRUE Two dimensions (of the product/process matrix, Exhibit 7.2) are shown. The first dimension relates to the volume of a particular product or group of standardized products. Standardization is shown on the vertical axis and refers to variations in the product that is produced. These variations are measured in terms of geometric differences, material differences, and so on. Standardized products are highly similar from a manufacturing processing point of view, whereas low standardized products require different processes. 
AACSB: Analytic Blooms: Remember Difficulty: 1 Easy Learning Objective: 0702 Outline the team effectiveness model and discuss how task characteristics; team size; and team composition influence team effectiveness. Topic: How Production Processes Are Organized Â 
7.  One methodology used to evaluate equipment investment decisions where the investment entails an initial investment, fixed costs, and variable costs is breakeven analysis.
TRUE A standard approach to choosing among alternative processes or equipment is breakeven analysis. 
AACSB: Analytic Blooms: Remember Difficulty: 1 Easy Learning Objective: 0703 Discuss how the four team processesteam development; norms; cohesion; and trustinfluence team effectiveness. Topic: BreakEven Analysis Â 
8.  Breakeven analysis can only be used in production equipment decision making when dealing solely with fixed costs, not variable costs.
FALSE Breakeven analysis is most suitable when processes and equipment entail a large initial investment and fixed cost, and when variable costs are reasonably proportional to the number of units produced. 
AACSB: Analytic Blooms: Remember Difficulty: 2 Medium Learning Objective: 0703 Discuss how the four team processesteam development; norms; cohesion; and trustinfluence team effectiveness. Topic: BreakEven Analysis Â 
9.  A generalpurpose machine is less capable than a specialpurpose machine in certain tasks but can perform a broader variety of tasks.
TRUE Less specialized equipment is referred to as “general purpose,” meaning that it can be used easily in many different ways if it is set up in the proper way. More specialized equipment, referred to as “special purpose,” is often available as an alternative to a generalpurpose machine. For example, if we need to drill holes in a piece of metal, the generalpurpose option may be to use a simple hand drill. An alternative specialpurpose drill is a drill press. Given the proper setup, the drill press can drill holes much quicker than the hand drill can. 
AACSB: Analytic Blooms: Remember Difficulty: 1 Easy Learning Objective: 0703 Discuss how the four team processesteam development; norms; cohesion; and trustinfluence team effectiveness. Topic: BreakEven Analysis Â 
10.  Breakeven analysis can be used to help decide whether to perform a task with a specialpurpose machine or with a generalpurpose machine.
TRUE A standard approach to choosing among alternative processes or equipment is breakeven analysis. 
AACSB: Analytic Blooms: Remember Difficulty: 1 Easy Learning Objective: 0703 Discuss how the four team processesteam development; norms; cohesion; and trustinfluence team effectiveness. Topic: BreakEven Analysis Â 
11.  The productprocess matrix shows the relationship between process structures and product volume and variety characteristics.
TRUE See Exhibit 7.2, ProductProcess Matrix: Framework Describing Layout Strategies. 
AACSB: Analytic Blooms: Remember Difficulty: 1 Easy Learning Objective: 0702 Outline the team effectiveness model and discuss how task characteristics; team size; and team composition influence team effectiveness. Topic: How Production Processes Are Organized Â 
12.  The term “assembly line” refers to progressive assembly linked by some material handling device.
TRUE An assembly line is a layout design for the special purpose of building a product by going through a progressive set of steps. The assembly steps are done in areas referred to as “stations,” and typically the stations are linked by some form of material handling device. 
AACSB: Analytic Blooms: Remember Difficulty: 1 Easy Learning Objective: 0703 Discuss how the four team processesteam development; norms; cohesion; and trustinfluence team effectiveness. Topic: Designing a Production System Â 
13.  Workcenter layouts allocate dissimilar machines into cells to work on products that have dissimilar processing requirements.
FALSE A workcenter layout, sometimes referred to as a job shop, is where similar equipment or functions are grouped together. 
AACSB: Analytic Blooms: Remember Difficulty: 1 Easy Learning Objective: 0702 Outline the team effectiveness model and discuss how task characteristics; team size; and team composition influence team effectiveness. Topic: How Production Processes Are Organized Â 
14.  A project layout is characterized by a relatively low number of production units in comparison with process and product layout formats.
TRUE See Exhibit7.2, ProductProcess Matrix: Framework Describing Layout Strategies. 
AACSB: Analytic Blooms: Remember Difficulty: 1 Easy Learning Objective: 0702 Outline the team effectiveness model and discuss how task characteristics; team size; and team composition influence team effectiveness. Topic: How Production Processes Are Organized Â 
15.  A project layout is characterized by a high degree of task ordering.
TRUE In a project layout, a high degree of task ordering is common. 
AACSB: Analytic Blooms: Remember Difficulty: 1 Easy Learning Objective: 0703 Discuss how the four team processesteam development; norms; cohesion; and trustinfluence team effectiveness. Topic: Designing a Production System Â 
16.  The closer the customer is to the customer order decoupling point, the longer it takes the customer to receive the product.
FALSE Selection of decoupling points is a strategic decision that determines customer lead times and can greatly affect inventory investment. The closer this point is to the customer, the quicker the customer can be served. 
AACSB: Analytic Blooms: Remember Difficulty: 1 Easy Learning Objective: 0701 Explain why employees join informal groups and discuss the benefits and limitations of teams. Topic: Production Processes Â 
17.  The closer the customer is to the customer order decoupling point, the more quickly the customer receives the product.
TRUE Selection of decoupling points is a strategic decision that determines customer lead times and can greatly affect inventory investment. The closer this point is to the customer, the quicker the customer can be served. 
AACSB: Analytic Blooms: Remember Difficulty: 1 Easy Learning Objective: 0701 Explain why employees join informal groups and discuss the benefits and limitations of teams. Topic: Production Processes Â 
18.  Engineertoorder firms will work with the customer to design the product and then make it from purchased materials, parts, and components.
TRUE An engineertoorder firm will work with the customer to design the product and then make it from purchased materials, parts, and components. 
AACSB: Analytic Blooms: Remember Difficulty: 1 Easy Learning Objective: 0701 Explain why employees join informal groups and discuss the benefits and limitations of teams. Topic: Production Processes Â 
19.  A maketoorder firm will work with the customer to design the product and then make it from purchased materials, parts, and components.
FALSE Firms that make the customer’s product from raw materials, parts, and components are maketoorder firms. 
AACSB: Analytic Blooms: Remember Difficulty: 1 Easy Learning Objective: 0701 Explain why employees join informal groups and discuss the benefits and limitations of teams. Topic: Production Processes Â 
20.  The time needed to respond to a customer’s order is called the customer response time.
FALSE The time needed to respond to a customer order is called the lead time. 
AACSB: Analytic Blooms: Remember Difficulty: 1 Easy Learning Objective: 0701 Explain why employees join informal groups and discuss the benefits and limitations of teams. Topic: Production Processes Â 
21.  The focus in the maketostock environment is on providing finished goods where and when the customers want them.
TRUE The focus in the maketostock environment is on providing finished goods where and when the customers want them. 
AACSB: Analytic Blooms: Remember Difficulty: 1 Easy Learning Objective: 0701 Explain why employees join informal groups and discuss the benefits and limitations of teams. Topic: Production Processes Â 
22.  An example of an assembletoorder firm is Dell Computer.
TRUE In the assembletoorder environment, a primary task is to define a customer’s order in terms of alternative components and options because it is these components that are carried in inventory. A good example is the way Dell Computer makes desktop computers. 
AACSB: Analytic Blooms: Remember Difficulty: 1 Easy Learning Objective: 0701 Explain why employees join informal groups and discuss the benefits and limitations of teams. Topic: Production Processes Â 
23.  The essential issue in satisfying customers in the maketostock environment is to balance the level of finished inventory against the level of service to the customer.
TRUE The essential issue in satisfying customers in the maketostock environment is to balance the level of finished inventory against the level of service to the customer. 
AACSB: Analytic Blooms: Remember Difficulty: 1 Easy Learning Objective: 0701 Explain why employees join informal groups and discuss the benefits and limitations of teams. Topic: Production Processes Â 
24.  The essential issue in satisfying customers in the maketostock environment is to balance the cost of the finished item against the willingness of the consumer to pay for it.
FALSE The essential issue in satisfying customers in the maketostock environment is to balance the level of finished inventory against the level of service to the customer. 
AACSB: Analytic Blooms: Remember Difficulty: 1 Easy Learning Objective: 0701 Explain why employees join informal groups and discuss the benefits and limitations of teams. Topic: Production Processes Â 
25.  Assembletoorder means moving the customer order decoupling point from finished goods to components.
TRUE Assembletoorder derives significant advantages from moving the customer order decoupling point from finished goods to components. 
AACSB: Analytic Blooms: Remember Difficulty: 1 Easy Learning Objective: 0701 Explain why employees join informal groups and discuss the benefits and limitations of teams. Topic: Production Processes Â 
26.  A highlevel map or diagram of a supply chain process can be useful to understand how material flows and where inventory is held.
TRUE A highlevel map of a supply chain process can be useful to understand how material flows and where inventory is held. 
AACSB: Analytic Blooms: Remember Difficulty: 1 Easy Learning Objective: 0701 Explain why employees join informal groups and discuss the benefits and limitations of teams. Topic: Production Processes Â 
Multiple Choice Questions
27.  Which of the following is not a step in developing a manufacturing cell layout?
Shifting to a cellular layout entails three steps: 1. Grouping parts into families that follow a common sequence of steps. 
AACSB: Analytic Blooms: Remember Difficulty: 1 Easy Learning Objective: 0703 Discuss how the four team processesteam development; norms; cohesion; and trustinfluence team effectiveness. Topic: Cells Â 
28.  Which of the following is not considered a major work flow structure?
The formats by which a facility is arranged are defined by the general pattern of work flow; there are five basic structures (project, work center, manufacturing cell, assembly line, and continuous process). 
AACSB: Analytic Blooms: Remember Difficulty: 1 Easy Learning Objective: 0702 Outline the team effectiveness model and discuss how task characteristics; team size; and team composition influence team effectiveness. Topic: How Production Processes Are Organized Â 
29.  A difference between project and continuous flow categories of process flow structures is which of the following?
In a project layout, the product (by virtue of its bulk or weight) remains in a fixed location. Continuous processes are usually highly automated and, in effect, constitute one integrated machine. 
AACSB: Analytic Blooms: Remember Difficulty: 2 Medium Learning Objective: 0702 Outline the team effectiveness model and discuss how task characteristics; team size; and team composition influence team effectiveness. Topic: How Production Processes Are Organized Â 
30.  Assume a fixed cost for a process of $15,000. The variable cost to produce each unit of product is $10, and the selling price for the finished product is $25. Which of the following is the number of units that has to be produced and sold to break even?
$25 – $10 = $15; $15,000/$15 = 1,000 units. 
AACSB: Analytic Blooms: Analyze Difficulty: 2 Medium Learning Objective: 0703 Discuss how the four team processesteam development; norms; cohesion; and trustinfluence team effectiveness. Topic: BreakEven Analysis Â 
31.  Assume a fixed cost for a process of $120,000. The variable cost to produce each unit of product is $35, and the selling price for the finished product is $50. Which of the following is the number of units that has to be produced and sold to break even?
$50 – $35 = $15; $120,000/$15 = 8,000 units. 
AACSB: Analytic Blooms: Analyze Difficulty: 2 Medium Learning Objective: 0703 Discuss how the four team processesteam development; norms; cohesion; and trustinfluence team effectiveness. Topic: BreakEven Analysis Â 
32.  You are hired as a consultant to decide if your client should purchase a new, highly specialized piece of equipment. The product to be produced by this equipment is forecast to have a total worldwide demand of 15,000 units over the entire product life. The initial investment to acquire and install the equipment is $256,000. The variable cost to produce each unit will be $15, and the selling price for the finished product will be $30. Which of the following best describes the situation the firm is facing?
Margin per unit = $30 – $15 = $15; $15 x 15,000 units = $225,000. Because $225,000 < $256,000, the total projected margin for this product will be less than the investment required. 
AACSB: Analytic Blooms: Analyze Difficulty: 2 Medium Learning Objective: 0703 Discuss how the four team processesteam development; norms; cohesion; and trustinfluence team effectiveness. Topic: BreakEven Analysis Â 
33.  In a work center, machine A has a 10minute setup time per batch and a 2minute per unit run time. Machine B performs the identical function but has a setup time of 30 minutes and a 1minute run time per unit. The work center makes products in batches ranging from 1 unit to 100 units. Assuming capacity is not a limitation on either machine, in order to minimize the total processing time, on which batches should machine B be used?
Total processing time for a batch of size Q: In Machine A: 10 + 2Q. In Machine B: 30 + 1Q. Point of indifference is where 10 + 2Q = 30 + Q or Q = 20. That is, for batches of size less than 20, total processing time is smaller in Machine A and for batches of size greater than 20, total processing time is smaller in Machine B. Thus, B is the most correct answer. 
AACSB: Analytic Blooms: Analyze Difficulty: 2 Medium Learning Objective: 0703 Discuss how the four team processesteam development; norms; cohesion; and trustinfluence team effectiveness. Topic: BreakEven Analysis Â 
34.  Which of the following is a basic type of process structure?
The formats by which a facility is arranged are defined by the general pattern of work flow; there are five basic structures (project, work center, manufacturing cell, assembly line, and continuous process). 
AACSB: Analytic Blooms: Remember Difficulty: 2 Medium Learning Objective: 0702 Outline the team effectiveness model and discuss how task characteristics; team size; and team composition influence team effectiveness. Topic: How Production Processes Are Organized Â 
35.  Which of the following is not a basic type of process structure?
The formats by which a facility is arranged are defined by the general pattern of work flow; there are five basic structures (project, work center, manufacturing cell, assembly line, and continuous process). 
AACSB: Analytic Blooms: Remember Difficulty: 1 Easy Learning Objective: 0702 Outline the team effectiveness model and discuss how task characteristics; team size; and team composition influence team effectiveness. Topic: How Production Processes Are Organized Â 
36.  Which of the following basic types of process structures is one in which equipment or work processes are arranged according to the progressive steps by which the product is made?
An assembly line is where work processes are arranged according to the progressive steps by which the product is made. 
AACSB: Analytic Blooms: Remember Difficulty: 1 Easy Learning Objective: 0702 Outline the team effectiveness model and discuss how task characteristics; team size; and team composition influence team effectiveness. Topic: How Production Processes Are Organized Â 
37.  Which of the following basic types of process structures is one in which similar equipment or functions are grouped together?
A workcenter layout is where similar equipment or functions are grouped together. 
AACSB: Analytic Blooms: Remember Difficulty: 1 Easy Learning Objective: 0702 Outline the team effectiveness model and discuss how task characteristics; team size; and team composition influence team effectiveness. Topic: How Production Processes Are Organized Â 
38.  The placement of which of the following is not determined by production process organization decisions?
Emergency exits are determined by safety concerns, not by production process organization decisions. 
AACSB: Analytic Blooms: Create Difficulty: 2 Medium Learning Objective: 0702 Outline the team effectiveness model and discuss how task characteristics; team size; and team composition influence team effectiveness. Topic: BreakEven Analysis Â 
Fill in the Blank Questions
39.  Assume a fixed cost for a process of $100,000. The variable cost to produce each unit of product is $10, and the selling price for the finished product is $50. Ignoring inventory, how many units must the firm sell to break even? ______________________
2,500 units Contribution margin per unit = $50 – $10 = $40. Break even = $100,000/$40 = 2,500. 
AACSB: Analytic Blooms: Analyze Difficulty: 2 Medium Learning Objective: 0703 Discuss how the four team processesteam development; norms; cohesion; and trustinfluence team effectiveness. Topic: BreakEven Analysis Â 
40.  Give an example of a project layout. ______________________
A construction project like a building, a ship, a bridge or a highway. Construction sites (houses and bridges) and movie shooting lots are examples of this format. 
AACSB: Analytic Blooms: Remember Difficulty: 1 Easy Learning Objective: 0702 Outline the team effectiveness model and discuss how task characteristics; team size; and team composition influence team effectiveness. Topic: How Production Processes Are Organized Â 
Essay Questions
41.  Describe the implications of the productprocess matrix for process design in a competitive situation.
The productprocess matrix is represented as Exhibit 7.7 on page 181 and is discussed on pages 180181 of the text. A successful answer will focus on matching the process selected to characteristics of the product and will discuss the tradeoff between flexibility and low cost. For example, in a commoditytype marketing segment, there is a strong imperative to push toward the lower righthand corner of the matrix, abandoning flexibility to achieve low cost. For products that are maturing, this is a very strong imperative, and the firm that reaches the lowcost position first has substantial competitive advantage through its ability to achieve low cost and high volume. 
AACSB: Analytic Blooms: Create Difficulty: 3 Hard Learning Objective: 0702 Outline the team effectiveness model and discuss how task characteristics; team size; and team composition influence team effectiveness. Topic: How Production Processes Are Organized Â 
42.  Distinguish between a work center and a manufacturing cell.
A successful response should include the notion that work centers contain similar equipment, while manufacturing cells are organized around similarities in processing requirements of products and may contain a collection of quite diverse equipment. In other words, a work center is organized around technical aspects of the equipment, while a manufacturing cell is organized around the processing needs of the product. 
AACSB: Analytic Blooms: Analyze Difficulty: 2 Medium Learning Objective: 0702 Outline the team effectiveness model and discuss how task characteristics; team size; and team composition influence team effectiveness. Topic: How Production Processes Are Organized Â 
43.  Assume that you are offered a new piece of equipment for $10,000. The equipment will produce 10,000 units per year with a margin of $6.00 per unit. Demand for the product being produced has been 2,000 units per year. Your current equipment is fully depreciated and can produce the 2,000 units per year at but at a margin of only $4.00 per unit. Should you purchase the new equipment? Under what conditions?
Yes. At 2,000 units per year the equipment will pay for itself through increased margin in two and onehalf years. If demand is expected to increase and the product life is expected to be greater than 2.5 years, it is a good buy. Otherwise stick with the old equipment. Current machine: $4 x 2,000/year = $8,000/year. 
AACSB: Analytic Blooms: Analyze Difficulty: 3 Hard Learning Objective: 0703 Discuss how the four team processesteam development; norms; cohesion; and trustinfluence team effectiveness. Topic: BreakEven Analysis Â 
44.  A manufacturer has identified the options for acquiring a machined part. It can make the part on a standard lathe for $250 per unit (including materials). It can make the part on a numerically controlled lathe for $150 per unit (including materials). It can make the part on a machining center for $50 per unit (also including materials). The manufacturer can acquire a standard lathe for $10,000. It could acquire a numerically controlled lathe for $100,000. A machining center would cost $350,000. It has also found that it can purchase the part for $350 per unit. What are the ranges in demand for which each method of procuring a part described above will be most economical?
If the quantity required is less than 100, purchase the part for $350 per unit. If the quantity needed is between 100 and 900, use the standard lathe. If the quantity needed is more than 900 but less than 2,500, use the numerically controlled lathe. If the quantity needed is greater than 2,500, the machining center is best. Buy vs. Std: $350 x D = $10,000 + 250 x D; $100 x D = $10,000; D = 100 
AACSB: Analytic Blooms: Analyze Difficulty: 3 Hard Learning Objective: 0703 Discuss how the four team processesteam development; norms; cohesion; and trustinfluence team effectiveness. Topic: BreakEven Analysis Â 