A Well-Educated Operations Manager Used the Capacity Requirements Equation to Determine

question 87

Multiple Choice

A well-educated operations manager used the capacity requirements equation to determine the number of crackerbox welders to purchase for the shop, given the standard time per unit, hours available per machine, among other relevant parameters. He studied the answer, 2.2, and concluded that:

• A) he had made a mistake, since it isn't possible to purchase a fractional welder.
• B) he needed to decrease his desired capacity cushion to bring him up to exactly three welders.
• C) he should buy two welders and authorize 10% overtime to reach the 2.2 figure.
• D) he should buy two welders and reduce the time per part by 10% to reduce the capacity need to two welders.

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Definitions:

Less Risky

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Treasury Stock

Shares that were issued and subsequently reacquired by the company, reducing the amount of outstanding stock on the open market.

Undervalued

A situation where a securities price is considered to be below its intrinsic value, making it an appealing investment opportunity.

Net Income

The amount of money a company earns after subtracting all expenses, taxes, and losses, indicating the company's profitability over a time period.