Consider a Production Line with Five Stations

question 64

Multiple Choice

Consider a production line with five stations.Station 1 can produce a unit in 9 minutes.Station 2 can produce a unit in 10 minutes.Station 3 has two identical machines,each of which can process a unit in 12 minutes (each unit only needs to be processed on one of the two machines.Station 4 can produce a unit in 5 minutes.Station 5 can produce a unit in 8 minutes.Which station is the bottleneck station?

• A)Station 1
• B)Station 2
• C)Station 3
• D)Station 4
• E)Station 5

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Definitions:

DCF Analysis

Discounted Cash Flow Analysis, a valuation method used to estimate the value of an investment based on its expected future cash flows, adjusted for time value of money.

NPV

Net Present Value is a financial metric that calculates the difference between the present value of cash inflows and outflows over a period of time for an investment.

Real Option Valuation

A technique in finance that calculates the value of future investment decisions, including the choices and flexibility in business projects.

Real Options

The value of additional decision-making opportunities available to a business when investing, likened to financial options.