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:

Next Month's Performance

Predictive financial or operational metric projections that estimate a company's activities or financial status for the upcoming month.

Accrual Basis

An accounting method where income and expenses are recorded when they are earned or incurred, regardless of when cash is exchanged.

Accounting Records

The documentation of all the financial transactions and positions of a business, kept for the purpose of financial reporting and auditing.

Cash Basis

An accounting method where revenues and expenses are recognized only when cash is received or paid out.