1. Two containers on the same ship may be charged different prices for various reasons, including the location that they are placed on the ship. (8 Points)
2. Which of the below is an example of a firm focusing more on efficiency than effectiveness? (8 Points)
o Shipping same-day to avoid losing a customer
o Consolidating orders until a full truck-load is obtained, even if that leads to longer lead times for the customer
o Introducing innovative new products every quarter
o Offering a free gift with purchase
3. Which of the following is an example of diseconomies of scale? (8 Points)
o A hotel increasing in size from 100 to 105 rooms and needing to hire more staff to clean rooms
o Getting a discount from your supplier because of increasing your order size
o Advertising during the Super Bowl
4. Cross-training workers is one way to increase capacity flexibility. (8 Points)
5. If you are focused on sustainability, the idea of triple bottom line in about more than just profit for the firm but also provides lasting economic benefit to society. (8 Points)
6. An example of bullwhip could be Amazon announcing that prices for their “Prime” membership will be going up by $20 next month. 5% of their customers drop the service but Amazon still increases their profits. (8 Points)
7. Which of the following is not true about air travel? (8 Points)
o All fuel costs are fixed costs
o There is typically a short period of time to load and unload cargo while the aircraft is idle on the ground
o There are special containers available to make use of the rounded shape of the air cargo hold
o Some airlines use a hub-and-spoke model and others do not
8. You have the option to add a new product line to your facility with capacity to produce 1000 widgets per month. Initial analysis shows that the breakeven point is 500 widgets per month. Monthly demand at a sales price of $30 per widget is 400 widgets per month. What should you do? (9 Points)
o Do not add the new line
o Add the new line and produce approximately 400 widgets per month
o Add the new line and produce approximately 500 widgets per month
o Add the new line and produce approximately 1000 widgets per month
9. Suppose your company sells ice cream, and your competitive strategy involves introducing innovative new flavors to market frequently. Would you recommend using private or public warehouses? Defend your answer.
10. Consider McDonald’s fast food chain. Using chapter 2 concepts, what would you say that their overarching competitive strategy is? Defend your answer in 3 or 4 sentences. (15 Points)
11. A Peanut butter cracker plant company turns our 170,000 snack packs per week. The plant’s EFFECTIVE capacity is 190,000 per week. Per hour, the design capacity is 1700 snack packs per hour. The plant can only produce two 8 hour shifts per day 7 days a week. What is the peanut butter cracker design capacity per week for the plant? (5 points)
a) 285,600 units per week
b) 140,140 units per week
c) 190,400 units per week
d) 71,400 units per week
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