Part III

Question 1

In an andon system:
a. inventory is reduced
b. small lot sizes are produced
c. five or fewer kanban cards are used
d. lights are used to signal problems

Answer 1

D

Question 2

Although elimination of all types of wastes is the primary concern of JIT, which muda is the one being given primary emphasis by JIT?
a. defects
b. transportation
c. inventory
d. motion

Answer 2

C

Question 3

The single-period model could be used for:
a. fresh vegetables
b. newspapers
c. cars
d. more than 1 answer

Answer 3

D

Question 4

Which of the following illustrates an activity that does not add value?
a. training employees
b. ordering parts from a supplier
c. making a part
d. accumulating parts in front of the next
work center

Answer 4

D

Question 5

Find the reliability of a system with the following reliabilities of subcomponent.

0.95 0.80
0.90 0.90
0.80 - 0.85 - 0.90

a. less than 85 % c. 87 % - 89 %
b. 85 % - 87 % d. more than 89%

Answer 5

D

Question 6

Southeastern Bell stocks a certain switch
connector at its central warehouse for supplying
field service offices. The yearly demand for these
connectors is 20,000 units. Southeastern
estimates its annual holding cost for this item to
be $30 per unit. The cost to place and process an order from the supplier is $70. The company operates 300 days per year and the lead time to
receive an order from the supplier is 8 working days. Find the total annual ordering and holding cost.
a. about $8,600
b. about $9,200
c. about $9,800
d. about $10,400

Answer 6

B

Question 7

For this set of forecasting errors: -1, -4, 0, +2, +3, MAD is:
a. 1.0
b. 1.6
c. 2.0
d. 2.5

Answer 7

C

Question 8

Radovilsky Manufacturing Company, in Hayward, California, makes flashing lights for toys. The company operates its production facility 300 days per year. It has orders for about 15,000 flashing lights per year and has the capability of
producing 110 per day. Setting up the light
production costs $50. The cost of each light is $1. The holding cost is $0.10 per light per year. Find the optimal production run size.
a. around 3,800
b. around 4,200
c. around 4,800
d. around 5,200

Answer 8

D

Question 9

JIT is being implemented in Newplus Co. Determine the number of 24-item containers
needed for a workstation that uses 80 parts per hour. The cycle time (move, wait, empty, return, fill) of a container use is 75 mins. Add an allowance of 15% as efficiency factor.
a. 4
b. 5
c. 6
d. 7

Answer 9

B

Question 10

Given the following information for Mustangs: Predicted demand = 142, Actual demand = 153,
Smoothing constant a = 0.20. Find the new
forecast of Ford Mustangs using exponential smoothing technique.
a. less than 145
b. 145 to 147
c. 147 to 149
d. more than 149

Answer 10

A

Question 11

Each time an equipment breaks down, the firm
estimates that they loss an average of $300 in
time and repair expenses. One alternative is to
obtain a PM service contract that would reduce
breakdown to 1/month at a cost of $150 per
month for the services only. Over the past 20
months, the frequency of breakdown is given by:
no breakdown, 2 mos; 1 breakdown, 8 mos; 2
breakdowns, 6 mos, and; 3 breakdowns, 4 mos.
Should the firm obtain the service contract? Find the savings, if any.
a. obtain PM service, less $40 monthly
b. obtain PM service, more than $40 monthly
c. do not, more expensive by < $40 monthly
d. do not, more expensive by > $40 monthly

Answer 11

A

Question 12

Simple exponential smoothing is being used to forecast demand. The previous forecast of 66 turned out to be six units less than actual demand. The next forecast is 66.9, implying a smoothing constant, alpha, equal to:
a. 0.01
b. 0.15
c. 0.10
d. 0.60

Answer 12

B

Question 13

Which principle states that the average number of inventory is equal to the product of inventory usage rate and the average waiting time of the
item before being used?
a. Bullwhip Effect
b. Little’s Law
c. ABC Classification
d. Inventory Turnover

Answer 13

B

Question 14

Which of the following is the characteristic of the cyclical component of demand?
a. Multiple years duration and often causal or associative relationships
b. Erratic, unsystematic, ‘residual’
fluctuations
c. Persistent, overall upward or downward
pattern.
d. Occurs within a single year

Answer 14

A

Question 15

Given below are types of E-commerce with
respect to market relationship, except for:
a. Business-to-consumer
b. Business-to-government
c. Peer-to-peer
d. Consumer-to-consumer

Answer 15

C

Question 16

Which of the following graphs of the inventory level (y) vs time (x) illustrates the economic production quantity (EPQ) or the production order quantity (POQ) model?
a. vertical-slant
b. slant-slant
c. slant-vertical
D vertical-horizontal

Answer 16

B

Question 17

A tshirt printing company buys white shirts from its supplier according to the price schedule as shown below.
Quantity - Price (PhP)
1 to 49 - 120
50 to 99 - 100
100 or more - 85
The company expects to use 2,000 white shirts in a 300-workday year. Ordering cost is set at
PhP300/order, while holding cost is estimated to be 15% of the shirt’s value. Estimate the expected number of workdays in between optimal order placement.
a. at most 30
b. 30 to 40
c. 40 to 50
d. at least 50

Answer 17

C

Question 18

A young entrepreneur wishes to prepare kites for sale in a kite flying event. The unit cost of making each kite is PhP 30, while the selling price is PhP
80. The demand, D, for the kite is expected to
follow the distribution below.
D 20 25 30 35 40
Prob 0.10 0.20 0.30 0.25 0.15
Find the optimal number of kites to be made.
Estimate the expected income (revenue less cost) from the said activity.
a. 30, less than PhP 1,300
b. 30, greater than PhP 1,300
c. 35, less than PhP 1,300
d. 35, greater than PhP 1,300

Answer 18

D

Question 19

Twenty electric fan engines are subject to a 500-hr accelerated failure testing. Of the total, 13 completed the test, five failed after the 400-hr mark, while two failed immediately at 100-hr mark. Estimate the expected number of failures that will occur in 100 engines that will be tested for 100-hrs.
a. 7.5
b. 8.0
c. 8.5
d. 9.0

Answer 19

B

Question 20

Which inventory tracking system is appropriate when the FOI model of inventory is being employed?
a. Perpetual
b. Periodic
c. cycle counting
d. two-bin

Answer 20

B

Question 21

One thousand dollars is deposited into an
account that pays interest monthly and allowed to remain in the account for three years. The balance at the end of the three years is $1,309.00. The nominal interest paid on this account is nearest to:
a. 0.75 %
b. 9.00 %
c. 9.38 %
d. 10.30 %

Answer 21

B

Question 22

John Buck opens a savings account by
depositing $1,000. The account pays 6% simple interest. After three years John deposits another $2,000. The amount in the account when John
withdraws the money eight years after the first deposit is nearest to:
a. $ 3,180
b. $ 4,080
c. $ 4,270
d. $ 4,520

Answer 22

B

Question 23

The effective interest rate is 19.56%. If there are 12 compounding periods per year, what is the nominal interest rate?
a. 15 %
b. 16 %
c. 17 %
d. 18 %

Answer 23

D

Question 24

The annual cost to maintain a cemetery plot is $75. If interest is 6% how much must be set aside to pay for perpetual maintenance?
a. $ 1,150
b. $ 1,200
c. $ 1,250
d. $ 1,300

Answer 24

C

Question 25

Henry Fuller purchases a used automobile for
$6,500. He wishes to limit his monthly payment to $200 for a period of two years. What down payment must he make to complete the purchase
if the interest rate is 9% compounded monthly on the loan?
a. $ 2,120
b. $ 2,220
c. $ 2,320
d. $ 2,420

Answer 25

A

Question 26

A project being considered by the XYZ Company will have $100,000 in Construction costs each of the first three years of the project. Income of $100,000 will begin flowing in year four and continue through year 10. The net present worth at 4% of the project is
a. $184,841
b. $188,513
c. $251,089
d. $256,078

Answer 26

D

Question 27

Deere Construction just purchased a new track hoe attachment costing $12,500. The CFO, John, expects the implement will be used for five years when it is estimated to have a salvage value of $4,000. Maintenance costs are estimated to be $0 the first year and will increase by $100 each year thereafter. If a 12% interest rate is used,
what is the equivalent uniform annual cost of the implement?
a. $ 2,925
b. $ 2,975
c. $ 3,015
d. $ 3,115

Answer 27

C

Question 28

An investment of $350,000 is made, followed by income of $200,000 each year for three years.
There is no residual value at the end of three years. The IRR of the investment is nearest to:
a. 15.3 %
b. 32.7 %
c. 41.7 %
d. 57.1 %

Answer 28

B

Question 29

Tires-R-Us is considering the purchase of new tire balancing equipment. The machine will cost $12,699 and have an annual savings of $1,500 with a salvage value at the end of 12 years of $250. If the MARR is 6%, determine the B/C ratio.
a. 0.8
b. 1.0
c. 1.2
d. 1.4

Answer 29

B

Question 30

What is the payback period for a project with the following characteristics, if the minimum attractive rate of return (MARR) is 10%?
First Cost, $20,000
Annual Benefits, $ 8,000
Annual Maintenance, $ 2,000 in year 1, then increasing by $ 500 per year
Salvage Value, $2,000
Useful Life, 10 years
a. about 3.0 years
b. about 3.5 years
c. about 4.0 years
d. about 4.5 years

Answer 30

C

Question 31

If two investors are considering the same project, the (simple) payback period will be ________ for the investor with the higher minimum attractive rate of return (MARR) relative to other investor with lower MARR.
a. longer
b. same
c. shorter
d. cannot ascertain

Answer 31

B

Question 32

Sales in the year ending December 31, 2015 were PhP 43,200. Identify the gross profit margin, as a percentage, if the gross profit for the year was PhP 5,400
a. 20.0 %
b. 25.0 %
c. 12.5 %
d. 15.0 %

Answer 32

C

Question 33

Which of the following ratio is known as the
primary ratio?
a. Earnings per share
b. Return on Capital Employed Ratio
c. Price Earnings ratio
d. Liquidity ratio

Answer 33

B

Question 34

As at December 31, 2014 a listed company had no Loan Notes in issue and its capital employed was PhP 3.9 million. Shown below are summaries of the liability side of its Statement of financial position as at December 31, 2015 and Statement of income for the year ended on that date. Which of the following is the correct calculation of its Return on Capital Employed ratio and the Return On Equity Ratio?
Ordinary shares - 2,500
Operating profit - 746
Share premium - 150 Interest on loan - (36)
Reserves - 1,450
Profit before tax - 710
4,100
Taxation - (150)
9% Loan notes - 400
Profit after tax - 560
Current liability - 1,500
Dividend paid - (120)
6,000
Retained profit - 440
a. ROCE = 17.76%; ROE = 17.75%
b. ROCE = 17.75%; ROE = 11%
c. ROCE = 18.65%; ROE = 17.32%
d. ROCE = 17.74%; ROE = 17.32%

Answer 34

A

Question 35

A company’s Statement of financial position
reports its current assets and current liabilities as shown below. Which of the following is the correct calculation of the company’s Working Capital ratio and Liquidity ratio?
Current assets
Inventory 548
Trade receivable 486
Pre-payments 12
Cash and bank 32
Current liability
Trade payable 392
Accrued expense 48
Taxation 118
Dividend declared 60
a. Working Capital = 1.9; Liquidity ratio = .9
b. Working Capital = .9; Liquidity ratio = 1.0
c. Working Capital = 1.7; Liquidity ratio = .9
d. Working Capital = 86%; Liquidity ratio = 1.9

Answer 35

C

Question 36

Bugong’s sales in the year ended 31st December 2015 were PhP 390,000. The sales produced a gross profit ratio of 30%. If the cost of inventory on 31st December 2014 was PhP 78,000 and that of 31st December 2015 was PhP 96,000, what would be the company’s inventory days?
a. 128 days
b. 120 days
c. 109 days
d. 101 days

Answer 36

B

Question 37

An electronic balance costs P90,000 and has an estimated salvage value of P8,000 at the end of its 10 years life time. What would be the book value, in PhP, after three years? Use the straight line method in solving for the depreciation.
a. less than 55K
b. 55K to 60K
c. 60K to 65K
d. more than 65K

Answer 37

D

Question 38

ABC Company purchases a machine for $100,000. It has an estimated salvage value of
$10,000 and a useful life of five years. Using sum of the years’ digits depreciation method, find the
accumulated depreciation at the end of two years.
a. less than 55K
b. 55K to 60K
c. 60K to 65K
d. more than 65K

Answer 38

A

Question 39

A milling machine was invoiced from Japan CIF
@ Php 250,000. Bank, custom’s duties, permits
totaled Php 120,000. it is believed that the machine can be sold for Php 50,000 at the end of its 10 year service life. Find the depreciation amount for the 2nd year using the double declining balance method.
a. less than 55K
b. 55K to 60K
c. 60K to 65K
d. more than 65K

Answer 39

B

Question 40

Star Commercial reported its sales in the year ended 30th June 2016 as PhP 511,000. If the receivable days are calculated to be 63 days, what is the trade receivables as of 30th June 2016?
a. PhP 88,200
b. PhP 321,930
c. PhP 126,400
d. PhP 214,560

Answer 40

A

Question 41

During which stage of product life cycle the
customer develops a tendency of indifference to the product?
a. growth
b. maturity
c. introduction
d. decline

Answer 41

B

Question 42

In which stage of product life cycle does sales volume peak?
a. growth
b. maturity
c. introduction
d. decline

Answer 42

B

Question 43

During which product life cycle stages are profits at its lowest and highest?
a. Growth and maturity
b. Decline and growth
c. Introduction and growth
d. Introduction and decline

Answer 43

C

Question 44

Service marketers have argued for a 7-Ps approach for their marketing mix. Which of the following are the 7 P’s?
a. Place, Product, Promotion, Planning, Price,
People, Process
b. Place, Product, People, Productivity,
Promotion, Process, Planning
c. People, Promotion, Price, Process,
Physical Evidence, Product, Place
d. People, Place, Price, Process, Planning,
Product, Physical Evidence

Answer 44

C

Question 45

What are distribution channels?
a. Distribution channels are promotional methods used to distribute advertising messages
b. Distribution channels are standardised vertical marketing systems, whereby a firm controls the distribution process
c. Distribution channels consist of transport providers who provide transport solutions
d. Distribution channels consist of
organizations such as retailers or wholesalers through which goods pass on their way to customers

Answer 45

D

Question 46

Control chart theory is based on the differences of the causes of variations in quality. Variations in quality may be produced by assignable causes. All of the following are examples of assignable causes except:
a. Differences among machines
b. Differences among workers
c. Differences among materials
d. Differences in each of these factors over
time

Answer 46

D

Question 47

In acceptance sampling, the producer’s risk is the risk of having a:
a. good lot rejected
b. bad lot rejected
c. bad lot accepted
d. good lot accepted

Answer 47

C

Question 48

The net weight of a 60-g mixed nuts snack, when monitored via control chart has 􀀁-double bar = 61, 􀀂-bar =0.50 and n=6. Find the upper control limit of Shewhart’s x-bar chart if c4 = 0.9515.
a. less than 61.5
b. 61.5 to 62.0
c. 62.0 to 62.5
d. more than 62.5

Answer 48

B

Question 49

A bottling company runs a filling process that should fill bottles with 12 plus or minus 0.04 ounces. A capability study reveals that the process mean is 12 ounces and the standard
deviation is 0.01 ounces. What is the capability of the bottling process?
a. 0.67
b. 1.33
c. 0.75
d. 1.50

Answer 49

B

Question 50

A box of 1000 parts is subjected to an acceptance
sampling plan that examines only 50 parts. The actual fraction defective in the box is 0.02 and the sampling plan has a 0.53 probability of accepting
a box of this quality. What is the average outgoing quality for this scenario?
a. 0.53
b. 0.51
c. 0.01
d. 0.02

Answer 50

C