In class test

Question 1

What happens when orders can’t be delivered (from stock) ?

Answer 1

sales are permanently lost. Theres no backlog. Customers may resent their inability to deliver and company will be affected negatively.

Question 2

What are the impact of quality decisions ?

Answer 2

Facility usable capacity and

Product recalls for quality issues

Question 3

How can quality be improved?

Answer 3

Investing in HR & Quality at corporate level

Designing the cars for quality

Question 4

How can we adjust capacity?

Answer 4

Invest in buildings, machines and equipment.

Question 5

How to maintain capacity?

Answer 5

Investment is needed, equivalent to depreciation to compensate for the deterioration .

Question 6

Conditions for bank loans ?

Answer 6

Max loan amount is 5 times previous period/ $2000/period
Actual rate depends on the leverage ratio
Once contracted a loan remains on the BS

Question 7

Novelty/new parts means

Answer 7

the percentage of new parts that will be found in the new generation of cars

Question 8

Carryover means

Answer 8

the percentage of car parts that are reused from the previous generation of cars

Question 9

What does carryover impact?

Answer 9

Carryover impacts cost, capex and field failure rate because the parts that are re-used have already been designed and tested

Question 10

when customers like novelty they

Answer 10

are looking to buy a new model and not one similar to the previous one (carryover)

Question 11

What volume can be manufactured in one period?

Answer 11

there is a max volume calculated by current capacity, capex per unit and HR&Quality level

Question 12

what is capex per unit impacted by?

Answer 12

decisions made by engineering department

Question 13

can you manufacture more than capacity?

Answer 13

no, but you can choose to manufacture less than capacity

Question 14

How is the available for sale volume calculated?

Answer 14

previous period inventory PLUS the volume produced during the current period

Question 15

What is the actual cost to invest in capacity?

Answer 15

It’s reevaluated each period by dividing value of the facility by the new capex per unit

Question 16

How to close down a facility

Answer 16

sell the facility by entering a 1 behind decision to sell the facility. Incur a loss of 20%.

Question 17

How to stop the facility for one period

Answer 17

by manufacturing 0 units, you’ll then incur a non operating loss equivalent to fixed costs

Question 18

How can you stop a line of business?

Answer 18

sell the facility, put a 0 on every engineering and marketing decision.

Question 19

How to transfer funds from one region to another

Answer 19

use the transfer cash sheet to take cash out of the lender and make it available to the borrower

Question 20

What do we know about engineering characteristics of the market?

Answer 20

By comparing real appeal and forecast appeal you can evaluate how valid your perceptions are

Question 21

What is the field failure rate

Answer 21

ffr is the percentage of product returned for quality issue, can be reduced through investments in HR&Quality

Question 22

How is the cost of non quality calculated?

Answer 22

FFR times Sales Revenue times 1/3

Question 23

How is ROCE calculated?

Answer 23

ROCE = EBIT / (facility value +inventory)

Question 24

What happens if a company is short of cash?

Answer 24

the government rescues it by providing a loan of enough for it to continue it’s activities

Question 25

customer expectations and changes

Answer 25

other than consumption they remain unchanged and unknown.

Question 26

how to get an evaluation of the clients perceptions relevance?

Answer 26

in global sheet line of business the % of evolution of product and market appeal is shown (compare previous to actual to improve perception of customer)

Question 27

How can the marketing budget change when you havent changed any marketing decisions?

Answer 27

the engineering dept modifies number of models commercialized which will impact marketing budget and appeal .

Question 28

If you transfer cars between regions, when are they available for sale?

Answer 28

immediately

Question 29

When are the loans available?

Answer 29

Bank loans available next period. I/C loan is available immediately .

Question 30

What is the impact of change in CAPEX decided by engineering dept?

Answer 30

impact occurs in the next period . the facility capacity will be recalculated .

Question 31

How will the Capex evolve in region 2?

Answer 31

after the merger the capex in region 2 will be modified to match the capex in region 1 as both engineering depts have been merged

Question 32

Accumulated Retained Earnings

Answer 32

earnings of a business that have been piled up, dividends that arent given out

Question 33

CAPEX

Answer 33

capital expenditure , money spent on maintaining fixed assets e.g. land/equipment

Question 34

leverage

Answer 34

borrowed capital for investment

total loans / shareholders equity

Question 35

Facility capacity

Answer 35

facility investment/ capex per unit

Question 36

can you upload a decision with negative cash flow?

Answer 36

never

Question 37

impact of high variable cost

Answer 37

less flexibility in capacity utilization

Question 38

importing cars has no impact on

Answer 38

cost of goods sold

Question 39

decrease inventory by

Answer 39

improve customer value proposition

Question 40

EBIT isnt influenced by

Answer 40

dividend payment

Question 41

changing car specifications has no impact on

Answer 41

FFR

Question 42

paying dividends

Answer 42

decreases ARE

Question 43

what has a positive impact on cashflow

Answer 43

positive EBIT

Question 44

when selling a plant theres no direct impact on

Answer 44

customer satisfaction

Question 45

do dividends impact cash?

Answer 45

yes they decrease cash

Question 46

impact of increasing the number of the model

Answer 46

high increase of engineering budget