For each question below, choose the BEST answer. For problems, choose the CLOSEST multiple-choice answer. Use this scenario for questions 2-4 A firm is considering three capacity alternatives: A, B, and C. Alternative A would have an annual fixed cost of $100,000 and variable costs of $22 per unit. Alternative B would have annual fixed costs of $120,000 and variable costs of $20 per unit. Alternative C would have fixed costs of $80,000 and variable costs of $30 per unit. Revenue is expected to be $50 per unit. 2 Which alternative has the lowest break-even quantity? A A B B C C 3 Which alternative will produce the highest profits for an annual output of 10,000 units? A A B B C C 4 180k 180k 120k Which alternative would require the lowest volume of output to generate an annual profit of $50,000? A A B B C C 5 3571 4000 4000 5357 5667 6500 If the unit cost to buy something is less than the variable cost to make it, should you make or buy? A make B buy 6 Doctor J. is considering purchasing a new blood analysis machine to test for HIV; it will cost $60,000. He estimates that he could charge $25.00 for an office visit to have a patient's blood analyzed, while the actual cost of a blood analysis would be $5.00. What would be his profit if he were to perform 5,000 HIV blood analyses? A B C D E 7 $0 $25,000 $40,000 $60,000 $100,000 The break-even quantity can be determined by dividing the fixed costs by the difference between the revenue per unit and the variable cost per unit. A true B false 8 Which of the following is not a component of the General System Model (GST) A B C D input output process hypothesis 9 The Management Science process includes A input, process, feedback B observation, hypothesis testing, implementation C model construction, solution, implementation D feedback, control, measurement Use this scenario for questions 10-11 The owner of a greenhouse and nursery is considering whether to spend $6,000 to acquire the licensing rights to grow a new variety of rosebush, which she could then sell for $6 each. Per-unit variable cost would be $3. 10 How many rosebushes would she have to produce and sell in order to make a profit of $6,000? A B C D E 1,600 2,400 3,000 1,000 4,000 11 What would the profit be if she were to produce and sell 5,000 rosebushes? A B C D E $0 $9,000 $10,000 $15,000 $30,000 12 In a project network (i.e., a PERT network), the actual project completion time will never exceed the expected duration of the activities on the critical path. A true B false 13 The objective of project scheduling is to A minimize project cost. B minimize project duration. C maximize project profit. D maximize customer satisfaction. 14 Which of the following statements is not true? A PERT and CPM were developed at about the same time, in the 1950s. B CPM uses a single time estimate for activities. C In PERT, activities are represented by arcs or arrows between nodes (\"activity on arrow\"). D There is no difference between PERT and CPM. 15 \"Project Management\" is usually interpreted to include which of the following elements? A objectives, project scope, schedules B material forecasts, computers, contract requirements C schedules, resources, publicity D contract requirements, control, re-work 16 A \"green\" project is one which may not have a tangible dollar ROI, but can protect a company against regulatory infractions and improve the company's public image. A true B false 17 Assignment to a project team is usually A permanent B temporary C a form of punishment D a form of reward 18 Return on investment (ROI) is a measure of performance, and can be used to compare a number of different projects. A true B false 19 Projects with \"soft\" returns or benefits are especially easy to measure with ROI. A true B false 20 A work breakdown structure (WBS) is a type of A Gantt Chart B PERT or CPM diagram C organization chart D responsibility assignment matrix 21 An inventory is defined as a a warehouse or terminal where goods are stored b a list of customer orders c a stock of items kept on hand to meet customer demand d a plan or schedule for production operations 22 A company keeps an inventory so that it can a satisfy anticipated customer demand b satisfy unexpected variations in excess of anticipated customer demand c satisfy seasonal or cyclical demand d all of the above 23 Suppose an automobile company decides to produce 1,000 automobiles and therefore orders 5,000 wheels and tires. The number 5,000 is an example of a dependent demand b independent demand c multiplicative inventory d raw material demand 24 Inventory costs include a shortage costs b carrying costs c ordering costs d all of the above 25 The purpose of inventory management is to decide a when to order b how much to order c both a and b d none of the above