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Practice Q&A
Gross margin is calculated by subtracting what direct labor and direct materials from unit price.
True / False
If you reduce MTBF from 21000 to 14000 (the low end of the range) you save $2.80 in direct
materials per unit. True / False
If you increase MTBF from 17000 to 23000 (high end of the range) how much will it cost, you per
unit? $1.80 / $2.10
How much do you save in direct labor per unit if you increase automation from 0 to 1? 20% /
$1.01 Per Unit
For each point of change in automation, what is the cost or savings per unit? $6 / $4
If a production line has a capacity to produce 1,000,000 units and you change the automation
from 1 to 3, what is the total cost? $2,000,000 / $8,000,000
If you sell all your capacity, Foundation will sell your remaining inventory for half the average cost
of production. If you keep one unit of capacity, you can sell all inventory at full price. True / False
If you add 800,000 units of capacity at an automation rating of 3, what will it cost you?
$14,400,000 / $7,600,000
If you reduce automation, you will incur etooling costs. True / False
Selling capacity happens immediately. Buying capacity takes a year. True / False
Each new unit of capacity costs $5 per unit for floor space and $4 per unit of automation. True /
False; $6 per unit of floor space
The market is growing at 10% per year your unit sales are growing at 20% per year. What is
happening to your market share? Your market share will increase versus your competition because
market share is determined (in the simulation) by unit sales / Your market share will be
determined by dollar sales we cant predict what will happen to market share
Price guidelines for products remain the same round after round. True / False
All companies in the sensor market start out with a market share of 16%. True / False
1. Stock price is a direct function of dividends, EPS, and ______ along with emergency loans?
3. On the perceptional map, where is the sweet/ideal spot in the High End segment?
a. in the center of the circle c. there is no sweet spot in High End
b. on the trailing edge of the circle d. on the leading edge of the circle
5. Higher automation leads to lower production costs and has what effect on repositioning a product
on the perceptual map?
a. makes it more difficult and
expensive
b. makes it easier and cheaper
c. no effect
d. eliminates repositioning
6. What is the approximate overall average growth rate for all five segments industry?
a. 14%
b. 19%
c. 4%
d. 9%
7. When you sell capacity what percentage of your original investment do you receive?
a. 65% c. 50%
b. 25% d. 10%
8. One way to finance expansion is through the issuing of bonds. When this happens, your company is
charged a _____% brokerage fee for issuing the bonds.
a. 2% c. No fee is charged
b. 5% d. 7.5%
9. For each point of change in automation, your company is charged ______ per unit of
capacity.
a. $6.00 c. $4.00
b. $5.00 d. $7.00
10. Which of the following reports can be used to diagnose problems on a product-
by-product basis?
a. stock market summary c. cash flow
statement
b. income statement d. balance sheet
2. If there are two identical products, one that has 100% accessibility and one that has 0%
accessibility,
a. the one with 0% accessibility will not sell at all because consumers cant find it.
b. the product with 100% accessibility will outsell the other 2 to 1 providing all
other attributes are identical.
c. the one with 0% accessibility will not sell at all because consumers do not know of it.
d. the product with 0% accessibility will only sell after all other products have sold in that
segment.
e. the product with 100% accessibility will outsell the other 3 to 1 providing all other
attributes are identical.
6. What is the difference between the market segments at the beginning of the round to the
final round?
a. They all drift at an average rate of .7; down and to the right.
b. The fine cuts overlap in the beginning and in year 8; only the rough cuts
overlap.
c. The fine and rough cuts overlap in the beginning and by round 8 neither the fine nor
rough cuts overlap.
d. The traditional and low segment rough cuts overlap but all the remaining segments do
not.
e. The High, Traditional and Low segment rough cuts overlap but all the remaining
segments do not.
8. After you have uploaded your decisions to the website, you can change your official decisions
as many times as you want prior to the processing date and time of the round.
a. True
b. False
9. Once you upload your official decisions during a round, how many times can you change
them before the end of the round?
a. 0
b. 1
c. 2
d. 5
e. As many times as you want
10. What trend can be explicitly observed in the industry in which your company is operating?
a. More and more products are sold directly to the private end consumer.
b. Products become more and more expensive.
c. Products become smaller and smaller.
d. Customers show less and less brand loyalty.
e. All of the above.
11. The economic environment for this simulation game will include
a. a favorable environment featuring limited growth, high inflation, and reasonable interest
rates.
b. a favorable environment featuring modest growth, low inflation, and
reasonable interest rates.
c. a highly variable environment featuring significant changes in growth, inflation, and
drastic fluctuations in interest rates.
d. a constant environment featuring measurable growth, constant inflation rates, and
constant interest rates.
e. economic downturn and other surprises.
13. Customers that want low prices and are willing to sacrifice miniaturization and performance
are in the
a. traditional segment.
b. high End segment.
c. low End segment.
d. performance segment.
e. size segment.
14. Customers that want small products and are willing to sacrifice performance are in the
a. traditional segment.
b. high End segment.
c. low End segment.
d. performance segment.
e. size segment.
16. In the Rough Cut buying stage, reliability is expressed in terms of:
a. Mean Time Between Failure.
b. how long the product will last.
c. years.
d. months.
e. Mean Time Before Failure.
18. The two characteristics that the perceptual map evaluates are
a. Performance and Size.
b. Performance and Price.
c. Size and Price.
d. Reliability and Performance.
e. none of the above.
20. The segments all drift to the lower-right section of the perceptual map. Why does this drift
take place?
a. Customers want smaller and less expensive products.
b. Customers want reliable and affordable products.
c. Customers want smaller and faster products.
d. Customers want newer and faster products.
e. None of the above.
21. Over time, the segments will drift in which direction on the Perceptual Map?
a. up; left
b. up; right
c. down; left
d. down; right
e. will remain still and constant
22. When tracking market segments on the performance and size perceptual map, which
segment moves or drifts the slowest?
a. Low
b. Traditional
c. Size
d. Performance
e. High
23. What happens to a product priced at $1 above or below the segment guideline when a
segments product supply outstrips demand?
a. It loses 25% of its appeal.
b. It loses 10% of its appeal.
c. It loses 20% of its appeal.
d. It loses 15% of its appeal.
e. None of the above.
25. At what dollar amount above the segment guidelines is all consumer appeal lost?
a. $3
b. $5
c. $10
d. $20
e. None of the above
28. Which of the following are not considered in the Fine Cut?
a. Positioning
b. Automation
c. Age
d. Reliability
e. Price
31. Increasing a products reliability will result in which of the following changes to production
costs?
a. Lower material cost
b. Higher material cost
c. Higher labor costs
d. Lower labor costs
e. Reducing MTBF has no effect on costs of production
34. The preferred product perceived age for each sector peaks at:
a. one year for high end and five years for low end.
b. one year for high end and three years for low end.
c. zero years for high end and seven years for low end.
d. zero years for high end and three years for low end.
e. each segment wants a perceived age of zero.
35. At which point does the perceived age of a traditional product peak?
a. 2
b. 1.5 to 2.5 years
c. 7
d. 0.5 to 2 years
e. whenever its positioned
36. Pricing plays a role
a. when repositioning a product.
b. in the rough cut stage of the purchase decision.
c. in neither stage of the purchase decision.
d. in the fine cut stage of the purchase decision.
e. in both b and d.
37. What are the top buying criteria that low end customers most value?
a. Age
b. Price
c. Quality
d. Positioning
e. Time
39. The top two buying criteria for each segment is:
a. Positioning for low end and Price for high end.
b. Reliability for low end and Performance for high end.
c. Price for low end and Performance for high end.
d. Price for low end and Positioning for high end.
e. Positioning for low end and MTBF for high end.
43. What is the most important criterion to a Low End Segment customer?
a. Price
b. Age
c. MTBF
d. Positioning
e. Performance
44. If you are marketing to High End customers, which criteria are most important to them in
order of importance?
a. Positioning, Age, Price, MTBF
b. Price, Age, MTBF, Positioning
c. Age, Price, Positioning, MTBF
d. MTBF, Positioning, Age, Price
e. Positioning, Age, MTBF, Price
45. Which one is not an area in which Capstone separates company activities?
a. Marketing
b. Production
c. R&D
d. Logistics
e. TQM
46. The following represent core company activities that must be addressed each year except:
a. Research and Development.
b. Marketing.
c. Finance.
d. Labor Negotiations.
e. Production.
47. Which of the following is not addressed by R&D?
a. Age
b. Reliability
c. Number of products in each segment
d. Placement of each product inside a market segment
e. Workforce Complement
48. In the Marketing Plan, Research and Development addresses all but the:
a. placement of each product inside a market segment circle.
b. number of products in each segment.
c. age of your products.
d. automation of assembly lines.
e. reliability of each product.
49. When an R&D effort started in 2001 completes on September 15, 2002, the product revision
kicks in
a. October 1, 2002.
b. immediately upon completion.
c. January 1, 2003.
d. R&D has no effect on product revisions.
e. September 15, 2003.
53. Which Automation rating requires the longest time to reposition a product?
a. 1
b. 3
c. 7
d. 9
e. 10
54. In Capstone
a. the terms age and perceived age are not used interchangeably.
b. the term MTBF means multiple transient business format.
c. the terms age and perceived age are used interchangeably.
d. all products will eventually have to be retired.
e. none of the above.
55. When a product is moved to a new location on the Perceptual Map, the Perceived Age (or
Age) is:
a. not affected.
b. doubled.
c. divided in half.
d. tripled.
e. other.
58. If your team decides to introduce a new product, when should capacity and automation be
purchased?
a. Two rounds prior to product release
b. One round prior to product release
c. The round of product release
d. The round after product release
e. Purchase of capacity and automation is not necessary for new product release
63. What effect do increases in the Promotion Budget have on a products Awareness?
a. Increasing returns
b. Constant returns
c. Proportionally increasing returns
d. Diminishing returns
e. None of the above
64. Assuming no additional product promotion, what percent of customers, reached through last
years marketing campaign will carry over into the current year?
a. 33%
b. 50%
c. 67%
d. 0%
e. None of the above
66. If you drop your sales budget to zero, accessibility drops to 0% in how many years?
a. 1
b. 2
c. 3
d. 4
e. 5
67. If your company has a sales budget of $3 million and drops it to zero,
a. accessibility drops by $1 million every year.
b. awareness drops to zero.
c. accessibility drops to 0% in three years.
d. sales will drop to zero.
e. all of the above.
68. All of the following are direct implications of hiring a second shift except:
a. increased production capacity.
b. paying higher wages to second shift.
c. training costs.
d. increased MTBF.
e. recruitment costs.
70. If you increase automation from 2.0 to 5.0, the cost is:
a. $12 per unit of capacity.
b. $15 per unit of capacity.
c. $9 per unit of capacity.
d. $6 per unit of capacity.
e. Cannot determine with this information.
71. What is one drawback of increasing automation?
a. The product requires increased time/expense for subsequent short-move
repositioning.
b. Operating second shift becomes more expensive.
c. Automation causes large leaps in repositioning.
d. Automation slows production capability.
e. It requires more employees for the production line.
72. If you reduce automation in the production component of Marketing, you will:
a. slow down R&D designs.
b. incur a retooling cost.
c. lose the game.
d. none of the above.
73. If you want to add 500,000 units of capacity to an assembly line with an automation rating of
5, how much will it cost?
a. 1,200,000
b. 1,300,000
c. 13,000,000
d. 24,000,000
e. 26,000,000
74. If a line has a capacity of 100,000 units, the cost of changing the automation level 1 unit
either up or down is
a. $60,000.
b. $40,000.
c. $400,000.
d. $600,000.
e. none of the above.
77. If current wages are set at $10/hour, what would be the minimum starting pay that your
company would offer?
a. $6/hour
b. $8/hour
c. $10/hour
d. $12/hour
e. none of the above
78. In the current contract, the workers wage rate is $20.00. Which of the following negotiation
positions would be outside the starting and ceiling amounts?
a. $16.00 to $25.00
b. $18.00 to $30.00
c. $18.00 to $35.00
d. $16.00 to $20.00
e. Both a and d would be outside the rules.
79. For Wages, the negotiation Starting Position cannot be less than ____% or more than ____% of
the current contract.
a. 75; 125
b. 75; 150
c. 80; 125
d. 80; 150
e. none of the above
82. Your workers go on strike because they have demanded $20/hour and your wage negotiation
ceiling is at $18/hour. Assuming that there are no other labor demands, how long will the
strike last?
a. 2 weeks
b. 4 weeks
c. 8 weeks
d. 16 weeks
e. There is no way to determine how long the strike will last.
83. In the Human Resources section, workers will strike one week for:
a. every 1% your Annual Raise Negotiations Ceiling is beneath Labors demand.
b. every $300 your Benefits Negotiations Ceiling is beneath Labors demand.
c. every 1% your Profit Sharing Negotiations Ceiling is beneath Labors demand.
d. every $1 your Wage Negotiation Ceiling is beneath Labors demand.
e. all of the above.
84. The Finance Department can use which of the following methods to acquire capital for
company activities?
a. Current Debt, Stock Issues, Bond Issues, and Profits
b. Profits, Current Debt, Withholding Pensions, and Stock Issues
c. Liquidating Inventory, Stock Issues, Bond Issues and Profits
d. Credit Lines, Bond Issues, Stock Issues, and Profits
e. Current Debt, Stock Issues, Bond Issues, and cooking the books
89. What is your bond rate? The prime rate is 10%; your current bond rating slipped one
category (from AAA to AA).
a. 12.1%
b. 10.5%
c. 11.4%
d. 11.2%
90. Given a prime rate of r and a short term interest rate of r+2.5, the rating is B.
a. True
b. False
91. If your interest rate is 12.1%, and when you issue new bonds, the bond interest rate is:
a. 10.7%.
b. 12.1%.
c. 13.5%.
d. 6.1%.
e. 12%.
92. Given a prime rate of r and a short term interest rate of r+2.5, the Bond rate is equal to
(r+3.9%).
a. True
b. False
94. In Capstone what would the bond number be for a bond with an interest rate of 6.5% that
matures in 2003?
a. 6.5S03
b. 2003S6.5
c. 6.5S2003
d. .03S6.5
e. 6.5.2003
95. You are charged a ____ brokerage fee to issue stock and ____ brokerage fee to retire stock.
a. 5%; 0%
b. 5%; 1.5%
c. 1.5%; 5%
d. 0%; 5%
e. 5%; 5%
97. Budgeting money to Quality initiative will lead to these outcomes except:
a. decrease R&D time.
b. increase Demand.
c. increase Labor Costs.
d. increase efficiency.
e. produce administrative savings.
107.Which three customer groups ride the wave of technology and are considered to be in the
high technology segments?
a. Performance, High End, and Size
b. Performance, Traditional, and High End
c. Performance, Low End, and Size
d. Traditional, High End, and Size
e. Traditional, Low End, and Size
112.If you are currently producing 100,000 units and your automation level is 10, how much will it
cost you to double your capacity?
a. $1,000,000
b. $4,600,000
c. $100,000
d. $10,000
e. none of the above
114.If your current capacity is 10,000 units and your automation level is 5.0, what is the
difference of the investment between doubling your capacity and doubling your automation
level?
a. $60,000
b. $20,000
c. $10,000
d. $520,000
e. $260,000
115.If you are currently producing 100,000 units at an automation level of 5, how much would it
cost to maximize automation?
a. $500,000
b. $50,000
c. $2,000,000
d. $5,000,000
e. none of the above
116.As a manager you need to change the automation level of your segment from 2 to 5. The
line has a capacity of $2 million. How much would it cost?
a. $12 million
b. $24 million
c. $10 million
d. $6 million
e. none of the above
119.If the price/product is $10 and the material cost/product is $2 and the labor cost/product is
$3, what is the gross margin/product?
a. $6
b. $2
c. $4
d. $3
e. none of the above
120.In the Capstone simulation, what are the components of a products material cost?
a. Cost of Inventory on hand and the cost to store it
b. Reliability component cost and positioning component cost
c. The costs associated with inventory, shipping and handling
d. Level of automation and product reliability
e. None of the above
121.The reliability component cost of a product with a 17,000 hour MTBF rating is:
a. $5.10.
b. $17.00.
c. $51.00.
d. $170.
e. cost cannot be determined with information given.
122.The best case margin potential for a product with a top price of $30 and a minimum cost of
goods sold of $15 is:
a. $45.
b. $2.
c. $450.
d. $.50.
e. none of the above.
123.A point or some points you consider for your strategy are
a. strive to give your customers the top two buying criteria.
b. the perceptual map is more important as a rough cut consideration than a fine cut
distinction.
c. maximize the effectiveness of R&D, to achieve higher demand you must have a
substantially better offer, it does not matter how good your product is if you stock out.
d. all of the above.
e. none of the above.
124.In Capstone, the spreadsheets allow team members to
a. make changes to variables.
b. observe the results of changes made to variables.
c. design their own performance criteria with which to compare market segments.
d. all of the above.
e. both a and b.
125.Each of the spreadsheets
a. work independently.
b. depend on values entered in other spreadsheets.
c. work simultaneously.
d. all of the above.
e. both a and b.
127.Using the R&D Spreadsheet to design your products, you have which of the following projects
to choose from?
a. Repositioning
b. Invention
c. Reliability adjustment
d. All of the above
e. None of the above
128.What is the minimum amount of time that it takes to create a new product?
a. 3 months
b. 6 months
c. 1 year
d. 2 years
e. 5 years
135.Negotiation Ceilings which represent the maximum management is willing to pay are always
a. 12% above the starting positions.
b. 5% above the starting positions.
c. 10% above the starting positions.
d. unlimited.
e. none of the above.
136.Maximum issue is
a. the upper limit in thousands of dollars that teams can issue in stock this year.
b. amount in thousands of dollars that teams wish to issue in stock.
c. upper limit of stock that can be bought back in thousands of dollars.
d. amount of stock, if any, to buy back.
e. none of the above.
137.Cash position is
a. the cash position at the beginning of the round.
b. a projection of the cash position at the end of the round.
c. the cash position at the beginning of the round and a projection of the cash
position at the end of the round.
d. the financial position of the company.
e. none of the above.
140.Which customer group or market segment seeks proven products using current technology?
a. Traditional customers
b. Low End customers
c. High End customers
d. Performance customers
e. Size customers
141.Which customer group or market segment seeks proven products, are indifferent to
technological sophistication, and are price motivated?
a. Traditional customers
b. Low End customers
c. High End customers
d. Performance customers
e. Size customers
142.Which customer group or market segment seeks cutting edge technology in both size and
performance?
a. Traditional customers
b. Low End customers
c. High End customers
d. Performance customers
e. Size customers
143.Which customer group or market segment seeks high reliability, advanced technology
products that emphasize high performance?
a. Traditional customers
b. Low End customers
c. High End customers
d. Performance customers
e. Size customers
144.Which customer group or market segment seeks advanced technology products that focus on
small size?
a. Traditional customers
b. Low End customers
c. High End customers
d. Performance customers
e. Size customers
145. Repositioning moves a product on the Perceptual Map from its old location to a new one.
When does the new location become active?
a. The day the R&D project completes
b. The following year the R&D project completes
c. The month the R&D project completes
d. The day capacity and automation is purchased
e. The day capacity is purchased
147. There is ______ lag in buying new Capacity and ______ lag in changing Automation.
a. 0; 0
b. 1 year; 0
c. 0; 1 year
d. 1 year; 1 year
e. year; year
148. Which of the following is not a primary concern for your Finance Department?
a. Acquiring capital
b. Setting credit policies for customers and suppliers
c. Employee turnover
d. Establishing a dividend policy
e. Capital structure of the firm
149. This strategy attempts to gain a competitive advantage by keeping R&D costs, production
costs and raw material costs to a minimum in order to compete on the basis of price. The
product life cycle focus will enable sales for many years on each new product introduced into
the High End segment. Products will begin their lives in the High End, mature into Traditional
and finish as Low End products before they are retired and their assets harvested.
a. Broad Cost Leader
b. Niche Cost Leader
c. Cost Leader with Product Life Cycle Focus
d. Differentiation strategy with a Product Life Cycle Focus
e. Broad Differentiation
150. This strategy will allow us to maintain a presence in every market segment. Competitive
advantage will be gained by keeping R&D costs, Production costs and raw material costs to a
minimum, enabling us to compete on the basis of price. We will price below average. We will
increase automation levels to improve our margins and to make it acceptable to run second
shift/overtime.
a. Broad Cost Leader
b. Niche Cost Leader
c. Cost Leader with Product Life Cycle Focus
d. Differentiation Strategy with a Product Life Cycle Focus
e. Broad Differentiation
151. This strategy will allow us to maintain a presence in every market segment. Competitive
advantage will be gained by distinguishing our product with an excellent design, high
awareness, and easy accessibility. We will develop an R&D competency that keeps our
designs fresh and exciting. Our products will keep pace with the market, offering improved
size and performance. The price of the products will be above average and capacity will
expand as we generate higher demand.
a. Niche Differentiation
b. Niche Cost Leader
c. Cost Leader with Product Life Cycle Focus
d. Differentiation Strategy with a Product Life Cycle Focus
e. Broad Differentiation
152. This strategy will concentrate on the Traditional and Low End segment. Competitive
advantage will be gained by keeping R&D costs, Production costs, and raw materials costs to
a minimum, enabling us to compete on the basis of price (low prices). The product will be
priced below average and automation levels will be increased to improve contribution
margins and make it acceptable to run second shift/overtime.
a. Broad Cost Leader
b. Niche Cost Leader
c. Cost Leader with Product Life Cycle Focus
d. Differentiation Strategy with a Product Life Cycle Focus
e. Broad Differentiation
153. This strategy will focus on the high technology segments (High End, Performance and Size).
Competitive advantage will be gained by distinguishing our products with excellent design,
high awareness, easy accessibility, and product extenders. Our R&D competency will keep
our designs fresh and exciting. Our products will keep pace with the market, offering
improved size and performance. The prices of our products will be above average and we will
expand capacity as we generate higher demand.
a. Niche Differentiation
b. Niche Cost Leader
c. Cost Leader with Product Life Cycle Focus
d. Differentiation Strategy with a Product Life Cycle Focus
e. Broad Differentiation
155. When working with inside sales, each inside salesperson costs
a. $35,000.
b. $100,000.
c. $50,000.
d. $125,000.
e. $110,000 plus a commission of 1%.
158. In only one product segment, diminishing returns for distributors is reached at
a. 75.
b. 12.
c. 15.
d. 45.
e. 30.
159. In only one product segment, diminishing returns for inside sales is reached at
a. 75.
b. 12.
c. 15.
d. 45
e. 30.
160. In only one product segment, diminishing returns for outside sales is reached at
a. 75.
b. 12.
c. 15.
d. 45.
e. 30.
161.The marketing budget detail sales screen allows companies to allocate their promotion
budget to different media channels. These media channels are:
a. Print Media, Outside Sales, Direct Mail, Trade Shows, and E-Mail.
b. Print Media, Direct Mail, Trade Shows, E-Mail, and Web Media.
c. Inside Sales, Outside Sales, and Trade Shows.
d. Direct Mail, E-Mail, Web Media, Print Media, and Television.
e. E-Mail, Web Media, Print Media, and Inside Sales.
164.The potential reach for Trade Shows is rated as good for the
a. Traditional.
b. High End.
c. Performance and Low End.
d. Performance and High End.
e. Size and Performance.
165.The Promotion part of marketing in CapSim allows teams to allocate their time based on
a. market segments.
b. each Product.
c. promotion does not allow allocation of time.
d. each of the 5 designated promotional areas.
167.In forecasting, it is not likely that you will take half of the sales unless
a. the product positioning is ideal.
b. the product meets the top 2 buying criteria and the price is low.
c. the positioning, age and MTBF are superior.
d. the price is at the low end of the range and the positioning, age and MTBF are
superior.
168.Customer demand is driven by
a. price, product, promotion and TQM/Process Initiatives.
b. customer survey.
c. positioning and price.
d. market share.
e. market share, positioning and price.
171.TQM initiatives
a. improve business procedures, resulting in improved efficiencies and cost structures.
b. improve product quality while reducing the time and resources required to
design, manufacture, warehouse and ship products.
c. improve business procedures and product quality, resulting in improved efficiencies and
costs structures.
d. improve product quality resulting in improved cost structures.
e. improve product quality and business procedures.
172.This process management initiative reduces material cost and, to a lesser degree, labor
costs.
a. Concurrent Engineering (CCE)/Six Sigma
b. Benchmarking
c. Continuous Product Improvement systems (CPI)
d. Channel Support systems
e. Quality Initiative Training (QIT)
173.This process management initiative reduces material costs and administrative overhead.
a. Benchmarking
b. Vendor/Just-in-Time Inventory (JIT)
c. Continuous Product Improvement systems (CPI)
d. Channel Support systems
e. Quality Initiative Training (QIT)
174.This process management initiative reduces labor costs.
a. Benchmarking
b. Vendor/Just-in-Time Inventory (JIT)
c. Channel Support systems
d. Quality Initiative Training (QIT)
175.This process management initiative increases the effectiveness of the Sales Budget and
therefore demand.
a. Benchmarking
b. Vendor/Just-in-Time Inventory (JIT)
c. Continuous Product Improvement systems (CPI)
d. Channel Support systems
e. Quality Initiative Training (QIT)
177.These TQM initiatives reduce administrative overhead; reduces the R&D cycle time and
enhances the effectiveness of the promotion and sales budget.
a. Concurrent Engineering (CCE); Channel Support systems and Just-in-Time Inventory
b. Quality Function Deployment and Benchmarking
c. Continuous Product Improvement systems (CPI) and Just-in-Time Inventory
d. Channel Support systems and Six Sigma
e. Quality Initiative Training (QIT)
179.If there are 4 products listed in the Capstone Courier in the traditional segment that have a
customer survey scoring of 32, 28, 22 and 14, then the top products demand would be:
a. 32%.
b. 50%.
c. 64%.
d. 33%.
186.The potential reach for direct mail is rated as good for the
a. Performance and Low End.
b. Performance and High End.
c. Traditional and Low End.
d. High and Low End.
e. Size and Performance.
187.This strategy will gain competitive advantage by distinguishing our products with an excellent
design, high awareness, easy accessibility, and product extenders. We will develop R&D
competency that keeps our designs fresh and exciting. Our products will keep pace with the
market, offering improved size and performance. We will price above average. We will
expand capacity as we generate higher demand in our markets: High, Traditional and Low
End.
a. Cost Leader with Product Life Cycle Focus
b. Differentiation Strategy with a Product Life Cycle Focus
c. Broad Cost Leader
d. Niche Differentiation
e. Broad Differentiation
193.Customers that want proven products and current technology of moderate size and
performance are in the
a. traditional segment
b. high End segment
c. low End segment
d. performance segment
e. size segment.
194.Customers that are willing to pay for products with cutting edge technology that are fast
performing and small in size are in the
a. traditional segment.
b. high end segment
c. low end segment
d. performance segment
e. size segment
195.What two factors are considered in both the rough cut and fine cut of the customer buying
process?
a. Price and Reliability
b. Price and Age
c. Age and Performance
d. Reliability and age
196.When a segments product supply exceeds demand, how much appeal, to the customer, will
a product priced $1 above or below the segment price range lose?
a. 5%
b. 10%
c. 15%
d. 20%
e. 0%
197.What section of the perceptual map is considered ideal for the low end segment?
a. Middle
b. Upper Right
c. Lower Right
d. Upper Left
e. Lower Left
198.Increasing performance and shrinking size does what to the material cost?
a. Nothing
b. Increases
c. Decreases
d. Increases for traditional customers only.
e. Decreases for traditional customers only.
205.If you sell off a production line (capacity and automation), the amount of cash that the
company will receive will be
a. 65% of the original cost.
b. average cost of production for the previous year (market price).
c. 50% of the book value.
d. 50% of the acquisition cost.
e. 65% of the book value.
211.A new unit of capacity costs $6 for the floor space plus $4 times
a. hourly wage.
b. automation rating.
c. unit cost.
d. MTBF.
e. $0.65.
214.Customers go through a two-stage buying process: The Rough Cut and the Fine Cut. In the
Rough Cut, buyers focus on four product characteristics. Which one of the following is NOT
one of these four product characteristics?
a. Performance
b. Age
c. Size
d. Reliability
e. Price
219.The interest rate on a bond ______ by________ for each______ in the bond rating category.
a. Increases; 0.5%; Decrease
b. Decreases; 1.4%; Decrease
c. Increases; 0.5%; Increases
d. Decreases; 1.4%; Increase
e. Increases; 7.5% ; Decrease
220.You are charged a ______ brokerage fee to issue bonds and ______ brokerage fee if you retire
bonds prior to their maturation date.
a. 0%; 5%
b. 5%; 5%
c. 5%; 0%
d. 5%; 1.5%
e. 1.5%; 5%
222.Which of the following is not a Process Management Initiative available to your company?
a. Concurrent Engineering
b. GEMI Sustainability
c. Continuous Process Improvement
d. UNEP Green
e. Channel Support System
223.Which of the following is not one of the five parts to the Situation Analysis:
a. Perceptual Map.
b. Demand Analysis.
c. Capacity Analysis.
d. Consumer Report.
e. Forecasting Analysis.
224.Products must plot within ______ units from the center of the circle on the Perceptual Map to
survive the rough cut.
a. 3.0
b. 4.0
c. 1.0
d. 2.5
228.How much does it cost for MTBF per 1,000 hours of reliability?
a. $0.50
b. $0.40
c. $0.30
d. $0.20
e. $0.10
229.How are the Starting Position and the Negotiation Ceiling related?
a. The Negotiation Ceiling is always 15% above the Starting Position.
b. They are not related.
c. Their values are equal.
d. The Negotiation Ceiling is always 10% beyond the Starting Position.
e. The Negotiation Ceiling is always 10% above the Starting Position.
231.The sales channel effectiveness for the outside sales people is highest for
a. High End and Size.
b. Performance, High and Size.
c. Traditional and Low.
d. Low End and High End.
e. Size.
232.The potential reach for web media is rated as good for the
a. Performance and High End.
b. Size and Performance.
c. Traditional and Low End.
d. High and Low End.
e. Performance and Low End.
233.A 6 month project in R&D costs____________; while a 12 month project in R&D costs ________.
a. 1,000,000; 1,500,000
b. 650,000; 850,000
c. 500,000; 1,000,000
d. 750,000; 1,000,000
e. 1,000,000; 750,000
234.The potential reach for print media is rated as good for the
a. Performance and Low End.
b. Performance and High End.
c. Traditional and Low End.
d. High and Low End.
e. Size and Performance.
236.Which of the following is true about the Accounts Receivable Lag and its implications on
demand?
a. If you offer no credit, demand falls to about 60% of normal.
b. At 30 days, demand is 90%.
c. At 45 days, demand is 95%.
d. At 60 days, demand is 98.5%.
e. At 90 days, demand is 100%.
242.If the previous year you reached 100% customer awareness in your company, this year what
will you need to do to maintain this level?
a. There is nothing to do. I have already reached as much awareness as I could.
b. Spend the same amount of money spent the previous year to reach the same
percentage of awareness this year.
c. I would only need to create 33% new awareness to maintain 100% this year.
d. I need to spend at least half of the money spent the previous year to reach 75% of the
population.
e. None of these.
245.When purchasing increased Capacity and Automation, the new capacity becomes available
a. immediately.
b. in 1 year.
c. in 6 months.
d. in 2 years.
e. none of these.
246.Capacity is sold by
a. entering a zero in the Buy/Sell row on the Production Spreadsheet.
b. entering a null value in the Buy/Sell row on the Production Spreadsheet.
c. entering a negative number in the Buy/Sell row on the Marketing Spreadsheet.
d. entering a negative number in the Buy/Sell row on the Production
Spreadsheet.
e. entering a positive number in the Buy/Sell row on the Production Spreadsheet.
248.Emergency loans are made at what rate over the normal Current Debt interest rate?
a. 5%
b. 7.5%
c. 10%
d. 12%
e. 25%
255.If you see a red flag on one of your spreadsheets, what does it mean?
a. The cell is locked.
b. You need to surrender.
c. You have an error.
d. There is more information.
e. You need to reenter your data.
256.Which one of these criteria is not a top product characteristic of at least one segment?
a. Size
b. Performance
c. Price
d. Promotion
e. Age
262.With each year (round) customer awareness for each product decreases by:
a. 33%
b. 25%
c. 30%
d. 50%
e. none of the above
264.High end customers prefer a product age of 0, at what age exceeds the fine cut for the
product
a. 5 years.
b. 3 years.
c. 2 years.
d. 2.5 years.
e. 4 years.
266.In the High End Segment, price as a buying criteria is accounts for which percentage of the
consumer decision:
a. 53%.
b. 9%.
c. 23%.
d. 19%.
e. None of the above.
267.Companies with this strategy state their vision as follows: Low priced products for the whole
industry, our brands offer solid value. Our primary stakeholders and bondholders, customers,
stockholders and management.
a. Niche Cost Leader
b. Cost leader with Product Life Cycle Focus
c. Differentiation Strategy with a Product Life Cycle Focus
d. Broad Cost Leader
e. Broad Differentiation
268.In the Traditional Segment, age as a buying criteria is accounts for which percentage of the
consumer decision:
a. 53%.
b. 43%.
c. 47%.
d. 29%.
e. None of the above
270.How much higher are second shift wages than the first shift wages?
a. 0 %
b. 20 %
c. 40 %
d. 50 %
e. 60 %
271.The accounts payable lag has implications for production. At ________ days, suppliers withhold
all material.
a. 120
b. 150
c. 160
d. 170
e. none of the above
274.If you sell all the capacity on a production line, Capstone interprets this as
a. a liquidation instruction and will sell your remaining inventory for one third of the
average cost of production.
b. a liquidation instruction and will sell your remaining inventory for half the
average cost of production.
c. a liquidation instruction and will sell your remaining inventory for 65 percent of the
production cost.
d. a liquidation instruction and will sell your remaining inventory for 10 percent of the
production cost.
e. a liquidation instruction but will continue to sell your remaining inventory for 100 percent
of the production cost.
276.When the Human Resources module is activated, which areas must be addressed?
a. Complement (number of workers)
b. Caliber (recruitment of talent of workers)
c. Training (time workers spend in training)
d. Benefits (retirement planning for workers)
e. a, b, and c
277.A products __________ does not play a role in the rough cut
a. Positioning
b. Price
c. Reliability
d. Age
e. MBTF
279.The ______________ details sales volume in all segments, reporting each products actual and
potential sales.
a. Balance Sheet
b. Market Share Report
c. HR/TQM/Sustainability Report
d. Round Analysis
e. Annual Report
281.Which of the following will give your company an AAA bond rating:
a. Have contribution margins higher than 30%.
b. Have absolutely no debt.
c. Retire all of the current outstand stock.
d. Pay a dividend that is less than EPS.
e. Retire bonds before they are due.
285.In the December customer survey, a product would not receive a perfect score of 100 if
a. it was priced at the bottom of the expected range.
b. it was perfectly positioned.
c. it had an MTBF at the middle of the expected range.
d. it had 100% awareness.
e. it had ideal age for segment.
287.Which one of the following statements regarding preferred position in fine cut is false?
a. Traditional customers want products located in the center of the circle.
b. Low end customers want the newest technology at the cheapest price.
c. High end customers want high performance and small size.
d. Performance customers prefer higher performance levels.
e. Size customers want smaller size.
292.The inner fine cut circles on the perceptual map have a radius of ________ units.
a. 2
b. 2.5
c. 2.75
d. 1.5
e. 3
293.Every year the Traditional segment circle drifts ____ in performance and _____ in size.
a. +1.0, -0.7
b. +0.7, -0.7
c. -0.7, +0.7
d. +0.5, -0.5
e. +0.9, -0.9
294.The growth rate for industry demand in the _____ segment is 18.3%.
a. Traditional
b. Low End
c. High End
d. Performance
e. Size
297.The following describe the strategy of Differentiation with Product Lifecycle Focus, except:
a. develops an R&D competency to keep designs fresh and exciting.
b. concentrates on the High End, Traditional and Low End segments.
c. prices are below average.
d. products maintains pace with the market.
e. capacity is expanded as demand is increased.
298.One way to enter sales forecasts and production schedules is to develop a worst case/best
case scenario. Where would you enter your best case scenario and where would you enter
your worst case scenario?
a. On the Marketing spreadsheet enter your worst case forecast in Your Sales
Forecast cell, and on the Production spreadsheet enter your best case
forecast in the Production Schedule cell.
b. On the Marketing spreadsheet enter your best case forecast in Your Sales Forecast cell,
and on the Production spreadsheet enter your worst case forecast in the Production
Schedule cell.
c. Enter your best case forecast for both Your Sales Forecast cell on the Marketing
spreadsheet and in the Production Schedule cell on the Production spreadsheet.
d. Enter your worst case forecast for both Your Sales Forecast cell on the Marketing
spreadsheet and in the Production Schedule cell on the Production spreadsheet.
e. None of the above.
299.Which of the following statements is true about promo and sales budget?
a. From one year to the next, a third of those who knew about a product forgot about it.
b. If a product ended last year with an awareness of 50%, this year it will start with an
awareness of approximately 33%.
c. If you have two or more products that meet a segments fine cut criteria, the sales
budget for each product contributes to that segments accessibility percentage.
d. Companies must have at least two products in the segments fine cut to achieve 100%
accessibility.
e. All of the above.
300.Which of the following is not one of the primary concerns in the Finance Department?
a. Acquiring the capital needed for company activities.
b. Establishing a dividend policy that maximizes the return to shareholders.
c. Setting accounts payable and accounts receivable policies.
d. Driving the financial structure of the firm, its relationship between debt and equity.
e. Deciding promo and sales budget.
301.Which of the following is not the correct yearly drift rate for the corresponding segment?
a. In the traditional segment performance drifts by +0.7 and size by -0.7.
b. In the low segment performance drifts by +0.5 and size by -0.5.
c. In the high end segment performance drifts by +0.9 and size by -0.9.
d. In the performance segment performance drifts by +1.0 and size by -0.7.
e. In the size segment performance drifts by -0.7 and size by +1.0.
303.Your ___________ department controls the performance and size, therefore position of your
sensor products within the market.
a. Planning
b. Finance
c. R&D
d. Marketing
305.Account Receivables lag impacts sales. At no credit terms, the appeal falls to about ______ %,
at 30 days, appeal is _____ %, at 60 days, appeal is ______%.
a. 98.5, 92, 65
b. 65, 92, 98.5
c. 70, 85, 99
d. none of the above, there is no impact
306.Products with prices, MTBFs or positioning in the segments rough cut do contribute to the
segments accessibility.
a. True
b. False
309.In what circumstance would a company have a high market share relative to that of its
competitors, though it is not making best use of resources available to it?
a. Market share is the best yard stick for measuring how effectively and efficiently a
company is making use of its resources.
b. Where competitors underperform, a company may have a higher market share
than that of its competitors though it is not making best use of its resources.
c. There is no way a company would have a high market share when it is not making best
use of its resources.
d. A huge investment in customer awareness and accessibility is a smart way to increase
market share.
e. By selling your products at prices lower than those of your competitors, you are sure to
have a large market share.
310.A perfect product (with 100% awareness) starting with a survey score of 100, why is it that at
60% accessibility rating, 80% of customers have access to a product such that survey score
declines from 100 to 80?
a. Because accessibility for a product is dependent on how well competitors products
perform.
b. Of the 40% of customers without accessibility, 20% of them would make an
extra effort to acquire the product.
c. Because accessibility rating is not reliable.
d. All of the above.
311.What is most likely to happen on introduction of a new product, if you do not buy the
production line, in the year prior to the products introduction?
a. You cannot manufacture your new product.
b. If the product is moved close to existing products on the R&D spreadsheet, a few but
insufficient number of the new product would be produced.
c. The product would automatically cease to exist.
d. The new product would stock out and there would be a loss in sales revenue.
e. None of the above.
313.How best would you describe the financial position of the company, at the beginning of the
simulation when control of the company is handed over to you?
a. Of moderate excellence
b. Close to bankrupt
c. Bankrupt
d. Heavily indebted but not close to bankruptcy
e. Bad but with ample opportunity for improvement
315.The percentage of workers that left the company last year is the:
a. Complement.
b. Separated Employees.
c. Productivity Index.
d. Turnover rate.
e. None of the above.
316.At the start of the simulation, all assembly lines have an automation level between:
a. 2.0 and 4.0.
b. 3.0 and 5.0.
c. 4.0 and 6.0.
d. 5.0 and 7.0.
e. 6.0 and 8.0.
318.Each year the company receives bond ratings. The range of these bond ratings from best to
worse is:
a. A to F.
b. A to C.
c. D to AA.
d. D to AAA.
e. AAA to D.
325.Looking at the production, if the potential bar is higher than the actual one,
a. the company should spend more budget in sales.
b. the company over produced and missed sales opportunities.
c. the company produced the right amount and missed no sales opportunities.
d. the company under produced and missed sales opportunities.
e. the company should spend more budget in marketing.
327.Investing more than $5,000,000 in the same TQM initiative over a two or three year period
creates
a. little or no additional improvement.
b. high additional improvement.
c. the same improvement than last period.
d. diminishing returns.
329.Capstones definition of reach in the marketing module is defined by the potential number of
customers who would see the message. Based on this definition what segment has fair
reach with direct mailing?
a. High End
b. Traditional
c. Low End
d. Performance
e. Size
330.Where are the credit policies for customer and supplier set in Capstone.xls?
a. Marketing spreadsheet
b. Production spreadsheet
c. Finance spreadsheet
d. Credit spreadsheet
e. None of the above
331.The primary difference between the Proformas and annual reports is:
a. Proformas report on product information; annual reports report on financial data.
b. Proformas are projections of results for the upcoming year; annual reports are
results from the previous year.
c. Proformas are results from the previous year; annual reports are projections of results for
the upcoming year.
d. Proformas report on financial data; annual reports report on product data.
e. None of the above.
332.What is the most important element that ensures the accuracy of the Proformas reports?
a. Production capacity
b. Marketing sales forecasts
c. R & D decisions
d. Financial decisions
e. All of the above
333.When should you purchase the production line to produce a new product?
a. The year you create the product
b. The year after you create the product
c. The year prior to its introduction
d. The year of its introduction
e. The year after its introduction
334.Which tool can you use as a quick comparison tool when conducting a competitive analysis
concerning production?
a. Bond ratings
b. Stock price
c. Customer survey
d. Market share
e. None of the above
335.In the Perceptual Map each segment has a set of circles where:
a. The inner fine cut circles have a radius of 4 units.
b. The inner fine cut circles represent the heart of the segment where demand is
strong.
c. At the center of each inner fine cut circle is the ideal spot where demand is strongest.
d. a and b.
e. a, b and c.
337.Which screens are necessary to make a complete human resource decision when the
advance module has been activated?
a. Production & human resources
b. Marketing & human resources
c. Finance & marketing
d. Human resources & TQM
e. None of the above choices are correct
339.What happens if you increase the A/R lag days in the marketing screen?
a. Sales forecast increases
b. Collection time increases
c. Nothing
d. You pay a penalty
e. Both a and b are correct.
RMIT Quiz