PRODUCTION

1. When you sell capacity what percentage of your

original investment do you receive? 65%
2. For each point of change in automation, your company
is charged $4 per unit of capacity

FINANCE
1. One way to finance expansion is through issuing bonds.
When this happens, your company is charged a ____5___
% brokerage fee for issuing the bonds
2. Which of the following reports can be used to diagnose
problems on a product-by-product basis? Income
Statement

TQM
1. Investing in the same TQM Initiative round after round will
create
    A.  ever increasing returns
    B.  diminishing returns      A.  QIT (Quality Initiative Training)
    C.  the same amount of return
 With sufficient investment, initiatives will improve processes
and quality to the greatest extent possible, however, each
initiative will reach a point where no further improvement is
possible, therefore the investments create no additional returns.
2. According to the S-Shaped curve, diminishing returns for a
single year budget become noticeable at
    A.  $1,000,000
    B.  $1,500,000
    C.  $2,000,000  are for
 The S-Shaped curve predicts return on investment. Depending
on the slope of the curve, the return on investment can be small
or large. For example, suppose a project is budgeted at
$500,000. This project might go through a planning stage that
produces a set of recommendations, but there is no money left to
implement the recommendations. At $1,000,000, sufficient
funds are available to plan, and begin implementing the
recommendations. At $1,500,000, the budget is sufficient to
plan and put in place most of the recommendations. At
$2,000,000, all of the recommendations have been
implemented, and additional money beyond that level has little
or no effect.
3. If a company with low automation wanted to invest in a
single area that exclusively lowers labor costs, they would
select:
 
    B.  Concurrent Engineering
    C.  Vendor/JIT (Just in Time [Inventory])
 The TQM area allows teams with an established strategy to
invest in areas which will benefit them the most. For example, if
a team formulates a strategy that sacrifices labor cost so it can
complete R&D projects faster, it would want to invest in QIT,
which reduces labor costs.
4. The exact outcome of TQM efforts appear on the TQM
Report, and as bar charts on the TQM spreadsheet. These results
    A.  the previous round only
    B.  the upcoming round only
    C.  cumulative for the previous and all remaining rounds
(assuming no additional investment is made) 
 TQM investments take effect the year they are made, and are
cumulative, paying off year after year.
5. The TQM report can be accessed from
    A.  The Capstone(r) Courier 
    B.  The Decisions menu.
 The TQM information appears on the last page of the Capstone
Courier.

HR
1. Production runs can be scheduled in 6. Recruiting Costs are incurred when
    A.  only one shift     A.  Automation levels increase
    B.  always two shifts     B.  Production runs increase and teams match hiring to
    C.  one or two shifts  Needed Complement
    D.  up to three shifts
 Up to twice the production line's First Shift Capacity can be
scheduled for each individual product. Production runs that
exceed the First Shift Capacity result in either Overtime and/or a
Second Shift, depending on the Worker Complement.
2. Hiring the Needed Complement will always eliminate
    A.  Overtime 
    B.  worker layoffs
    C.  a Second Shift
    D.  strikes
 Hiring the Needed Complement eliminates all Overtime. The
Second Shift workers are paid the same as workers on
Overtime, however, Second Shift workers are more efficient and
do not seek work elsewhere, therefore reducing turnover.
3. Management should strive to
    A.  increase Turnover
    B.  decrease Turnover 
 Lowering Turnover reduces Recruitment costs.
4. Increasing Capacity tends to
    A.  reduce the Needed Complement
    B.  reduce the number of workers on Second Shift   Teams can choose to enter 0 in the Recruiting Spend cell on the
    C.  reduce Overtime
 Increasing Capacity tends to reduce the number of workers on
the Second Shift. As an example, a production order of 1,200
units on a line with a Capacity of 800 units (numbers in
thousands) will require 400 units to be produced by the Second
Shift. Increasing Capacity to a total of 1,000 units will result in
1,000 units manufactured by First Shift labor, and only 200
units produced by more expensive Second Shift labor.
5. Increasing Training Hours tends to
    A.  increase the Needed Complement
    B.  decrease the Needed Complement
    C.  neither increase nor decrease the Needed Complement
    D.  both increase and decrease the Needed Complement  of units produced from one year to the next will decrease the
 In the short term, increasing Training Hours will increase the
Needed Complement-- Workers are taken off the production
line and put in the classroom. However, as time goes on,
investing in Training Hours increases worker productivity, and
therefore tends to decreases the Needed Complement.
Advanced MKT
1. Product prices are set on the Marketing Budget Detail
spreadsheet
    A.  True
    B.  False      B.  Segment
 When the Advanced Marketing Module is activated, marketing
activities are divided between two spreadsheets. Prices and
forecasts are entered on the Pricing & Forecasting spreadsheet.
2. Each market segment responds to different types of media
(e.g. print, direct mail, etc.) to a varying degree. It follows then
that each product must be identified with its target segment.
 
    C.  workers are assigned to a Second Shift
 Increasing production and then matching the Needed
Complement will result in new hires, and therefore increase
Recruiting Costs.
7. Assuming the Productivity Index is greater than 100%,
adding Overtime will
    A.  increase the Productivity Index
    B.  decrease the Productivity Index 
 While the Productivity Index can never fall below 100%, it is
possible for teams to increase the Index by investing in a higher
quality of worker (Recruiting Spend) and in education (Training
Hours). However, scheduling Overtime will decrease the Index
because workers will become tired and disgruntled.
8. Worker training is entered by the
    A.  Hour 
    B.  Dollar
 Hours are entered on the HR Screen. Training costs $20.00 per
hour per worker.
9. Teams can eliminate all Recruiting Costs if they wish
    A.  True
    B.  False 
Human Resources screen, however that number is in addition to
a base Recruiting Cost of $1,000 per worker. A Recruiting
Spend entry facilitates recruiting a better quality of worker.
10. Generally, Separation Costs will be incurred when
    A.  Production levels increase
    B.  Automation Levels increase
    C.  Production Levels decrease
    D.  Production levels decrease and / or Automation levels
increase 
 The Needed Complement is determined by a combination of: a)
the number of units ordered into production; and b) the
Automation level of the assembly lines. Decreasing the number
Needed Complement. Similarly, increases in Automation will
decrease the Needed Complement. If teams adjust the This Year
cell to match the Needed Complement, Separation Costs will be
incurred
4. The Marketing Budget Detail asks teams to determine
budgets by
    A.  Product
    C.  Both 
 On the Marketing Budget Detail, the Promotion Budget
Resource sections asks teams to assign budgets by product, but
the section also asks teams to assign a target segment for each
product. This facilitates products that might start the year in one
segment, then as an R&D project completes, moves to another
Product target segments are identified by
    A.  their placement on the Perceptual Map
    B.  entering their status on the Pricing and Forecasting
spreadsheet
    C.  entering the target segment on the Marketing Budget
Detail  teams have two products in one segment, the Product
 The Marketing Budget Detail includes a combo box for each
product that allows teams to define the product's target segment.
If teams anticipate moving a product from one segment to
another (perhaps an R&D project completes in mid year) they
can define the target segment at the beginning of the year.
3. Each additional advertisement increases customer Awareness
by the same amount of the first
    A.  True
    B.  False   The scenario utilizes business to business media outlets that
 Increasing the number of advertisements does not linearly
increase Awareness. When the advertisement runs a second
time, a percentage of people who saw it the first time will see it
again. Those who see the ad twice do not become aware of the
product when the see it the second time. Therefore, the second
placement does not add as much Awareness as the first-- the
result, diminishing returns apply.
7. In the Sales Budget Resource, the outside sales force meets
with customers face-to-face. The cost of each salesperson
includes which of the following?
    A.  Salary and Wardrobe
    B.  Commission and Support 
    C.  Travel and Brochures
 Each salesperson costs $125,000, which includes salary,
commission, travel and support.
segment. Teams can begin promoting in the new segment prior
to the move. The same holds true for a product that will have a
new segment drift over it. In the Sales Budget Resource, Sales
budgets are allocated by Segment. However, Sales budgets can
be fine tuned with the Product Allocations box. For example, if
Allocations box can be used to prioritize one product over the
other.
5. In the Promotion Budget Resource, teams can select which of
the following media areas
    A.  Print Media and Direct Mail 
    B.  Email and Telephone Contact
    C.  Trade and Road Shows
    D.  Web Media and Television
reach Original Equipment Manufacturers (OEMs). Television,
for example, is not an efficient way to reach OEMs.
6. The Target Segment selection lets teams move their products
from one location on the Perceptual Map to another
    A.  True
    B.  False 
 The Target Segment selection pertains exclusively to
Promotion, and allows teams to select which segment their
promotion efforts should be directed towards.
8. Each inside salesperson costs $50,000.
    A.  True 
    B.  False
 The inside sales staff works the existing customer list. Each
inside salesperson costs $50,000.
. Distributors are
    A.  support staff for the outside sales force
    B.  a separate Sales channel 
    C.  Original Equipment Manufacturers
 Distributors place your product in their own showrooms. You
pay each distributor $100,000 per year to stock your product
line.