One Disadvantage of Process-Oriented Layouts Arises from

question 9

Multiple Choice

One disadvantage of process-oriented layouts arises from

• A) the use of special purpose equipment
• B) machine maintenance, which tends to seriously degrade the capacity of the entire system
• C) the use of specialized material handling equipment
• D) the need for stable demand
• E) the use of the general purpose machines and equipment

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Definitions:

Fixed Costs

Costs that do not change with the level of output or production volume, such as rent, salaries, and insurance premiums.

Margin of Safety

The difference between actual sales and the break-even point, indicating how much sales can drop before the company incurs a loss.

Break-Even Point

The level of sales at which total revenues equal total costs, and the business makes no profit but also no loss.

Sensitivity Analysis

A financial modeling technique that determines how different values of an independent variable affect a particular dependent variable under a given set of assumptions.