Data regarding four different products manufactured by an organization are presented as follows. Direct material and direct labor are readily available from the respective resource markets.However, the manufacturer is limited to a maximum of 3,000 machine hours per month.Units Produced per Machine Hour: A: 3 B: 4 C: 2 D: 3The product that is the most profitable for the manufacturer in this situation is
Answer(s): B
Answer B is correct.When resources are limited, maximum profits are achieved by maximizing the dollar contribution margin per limited or constraining factor. In this situation, machine hours are the constraining factor. Product B has a contribution margin per machine hour of US $28 [A x (US $18 - $11)], which is greater than that of Product A [3 x (US $15 - $7) = US $24], Product C [2 x (US $20 - $10) = US $20], or Product D [3 x (US $25 - $16) = US $27].
Business process reengineering is most likely to:
Answer(s): A
Reengineering and TQM techniques eliminate many traditional controls. They exploit modern technology to improve productivity and decrease the number of clerical workers. Thus, controls should be automated and self-correcting and require minimal human intervention. Moreover, auditors must be prepared to encounter (and use) new technologies. The emphasis therefore shifts to monitoring so management can determine when an operation may be out of control and corrective action is needed.
One drawback of business process reengineenng (BPR), sometimes referred to as business process analysis, is:
Answer(s): D
Business process reengineering (BPR), or business process analysis, involves process innovation and process redesign. Instead of improving existing procedures, it finds new ways of doing things. One major drawback of BPR is that employees may be resistant due to fear of layoffs, being replaced, or insecurity about new required skills or tasks that the employee now has to perform.
A company has several departments that conduct technical studies and prepare reports for clients. Recently, there have been long delays in having these reports copied at the company's centralized copy center because of the dramatic increase in business. Management is considering decentralizing copy services to reduce the turnaround and provide clients with timely reports. An appropriate technique for minimizing turnaround time and the cost of providing copy services is:
Two basic costs are involved in queuing (waiting-line) models: (1) the cost of providing service (including facility costs and operating costs) and (2) the cost of idle resources waiting in line. The latter may be a direct cost if paid employees are waiting, or an opportunity cost in the case of waiting customers. The objective of queuing theory is to minimize the total cost of the system, including both service and waiting costs, for a given rate of arrivals. This minimization occurs at the point at which cost of waiting is balanced by the cost of providing service. This company wishes to reduce the total of waiting costs (turnaround time) and the cost of copy services.
The problem just described is best approached by use of which quantitative method?
Answer(s): C
Two basic costs are involved in queuing (waiting-line) models: (1) the cost of providing service (including facility costs and operating costs), and (2) the cost of idle resources waiting in line. The latter may be a direct cost if paid employees are waiting, or an opportunity cost in the case of waiting customers. The objective of the queuing theory is to minimize the total cost of the system, including both service and waiting costs, for a given rate of arrivals. This minimization occurs at the point where the cost of waiting is balanced by the cost of providing service.
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