Taller

General Things
What does your company manufacture?
Sensors
How was your company created?
It was created when the government split a monopoly into identical competitors.
What is FastTrack? What does it include?
It is an extensive year-end report of the sensor industry.
It includes customer buying patterns, product positioning, public financial records and other
info that will help you get ahead.
What is a Customer Survey Score?
It is a rating that can determine sales distribution.
(Higher scores = better sales)
What is FastTrack? What does it include?
It is an extensive year-end report of the sensor industry.
What is Situation Analysis?
It enables you to understand current market conditions and how the industry will evolve in
the next few years. (Assists with operational planning)
What are Proformas? How will they help you?
They are projections for the upcoming year.
They will help you envision the impacts of your pending decisions and sales forecasts.
What are annual reports? How will they help you?
They are results from the previous year.

They will help you analyze last year's results.
What is Foundation Spreadsheet?
It's the nerve center of your company where you formulate and finalize management
decisions for every department.
What are the four departments?
-R&D
-Marketing
-Production
-Finance
What is Research and Development?
They design your product line. They invent and revise products that appeal to your
customers changing needs.
-Changes size and performance on the Perceptual Map.
What is Marketing?
They price and promote your products. Also responsible for sale forecasts.
What is Production?
They determine how many units will be manufactured during the year. They are also
responsible for buying and selling production lines.
What is Finance?
Makes sure your company has financial resources (i.e. bonds, stock issues)
Inter-Department Coordination: R&D + Marketing
Work together to make sure products meet customer expectations.
Inter-Department Coordination: R&D + Production

Work together to ensure assembly lines are purchased for new products. (If production
discontinues a product, it should notify R&D)
Inter-Department Coordination: Marketing and Production
Work together to make sure manufacturing quantities are in line with forecasts.
Inter-Department Coordination: Marketing + Finance
Work together to project revenues for each product and to set the Accounts Receivable
policy.
Accounts Receivable Policy
The amount of time customers can take to pay for their purchases.
Inter-Department Coordination: Finance and Production
Production tells Finance if they need additional equipment.
What is a Decision Audit? How does it help you?
It is a complete trail of all team decisions.
It helps you identify your decision making strengths and weaknesses.
What does the Industry Conditions Report do?
It lists market segment sales percentages and projected growth rates unique to your
simulation.
Summarize the Low Tech buying criteria.
-Price (41%) $15-35)
-Age (29%) 3yrs
-MTBF (21%) 14,000-20,000
-Ideal Position (9%) Center segment
Summarize the High Tech buying criteria.
-Ideal Position (33%) Leading edge
-Age (29%) 0 yrs
-Price (25%) $25-45
-Reliability (13%) 17,000-23,000

Define Mean Time Before Failure (MTBF). What does the high tech prefer? Low tech?
A rating of reliability measured in hours.
High tech prefers higher MTBF
Low tech prefers lower MTBF
Why do segments drift a little each month? Which segment demands greater
improvement?
-Your customers expect products that are smaller and faster.
-High tech
What are the drift rates for the Low Tech and High Tech?
Pfmn. Size.
LT +0.5 -0.5
HT +0.7 -0.7
Define ideal spots.
The size and performance most desired by customers in the segment.
What are the ideal spots for the Low Tech and High Tech?
Pfmn. Size
Low Tech -0.0 +0.0 (Segment Center)
High Tech +1.4 -1.4
What are the segment centers for rounds 1, 4 and 8? (In High Tech and Low Tech)
Low Tech High Tech
Round Pfmn. Size Pfmn. Size
1: 5.3 14.7 / 6.7 13.3 (BASICALLY JUST NEED TO KNOW THIS)
4: 6.8 13.2 / 8.8 11.2
8: 8.8 11.2 / 11.6 8.4
In regards to buying criteria by segment, what changes and what remains the same?
Positioning changes every year.
Price, age, MTBF always remains the same.
How many times a year is a customer survey score calculated?
12 times (one per month)
Explain the rough cut circle. What's its radius?
"I will NOT purchase a product outside this boundary."
-Radius is 4.0 units.
Explain the fine cut circle. What's its radius?
Prefers products within the circle.
What is the price in the rough cut? Explain how this relates to the customer survey
score.
Sensors are priced at $10.
Sensors priced $1.00 above or below the segment guidelines lose about 10% of their
customer survey score.
_______ hours of realiability (MTBF) adds __________ to the ________. 1,000,

$0.30, material cost.
---IGNORE THIS ONE IS PLAIN WRONGGGG ow much does the Low Tech segment circle
move on the Perceptual Map per year? High tech? Low tech = 0.7 units/year
High tech = 1.0 units/year
Accounts Receivable Policy The amount of time customers can take to pay for their
purchases.
Assets on balance sheet Divided into two sections: Current and fixed.
Automation & R&D - the time required for a one unit change in size or performance at
automation level of ___ requires _____: 1; < .5 years
5; .6 years
10; 1.4 years
Balance sheet Assets = Liabilities + Equity
Broad Cost Leader Strategy maintains a presence in both segments.
-Keeps R&D, production and material costs to a minimum.
-Increases automation
Broad Differentiator Strategy maintains a presence in both segments.
-Excellent design, high awareness and easily accessible.
-Prices are above average
Common stock The money received from the sale of shares.
CSS base score: High tech -Position 33%
-Age 29%
-Price 25%
-MTBF 13%
CSS base score: Low tech importance -Price 41%
-Age 29%
-MTBF 21%
-Position 9%
Current assets Assets that can be quickly converted (generally less than a year)
Ex. Inventory, accounts receivable and cash
Define dividend. The amount of money paid per share to stockholders each
year.
Define first shift capacity. The number of units that can be produced on an
assembly line in a single year with a daily eight hour shift. (QUANTITY)
Define ideal spots. The size and performance most desired by customers in the
segment.
Define Mean Time Before Failure (MTBF). What does the high tech prefer? Low tech? A
rating of reliability measured in hours.
High tech prefers higher MTBF
Low tech prefers lower MTBF
Define the market share report Details sales volume in both segments, reporting each
product's actual and potential sales
Describe credit ratings. When do the ratings slip to the next category? Range from AAA
(best) to D (worst)
They slip for each additional .5% in current debt interest.
Equation for demand in any given month. (Customer's demand/Sum of scores)
Explain A/R at 90 days? 60 days? 30 days? 0 days in terms of CCS? -90 days --> no
reduction to the base score.
-60 days --> reduced .7%
-30 days --> reduced 7%
-0 days --> 40%
Explain how to read the bond: 12.6S2017 The first three digits of the bond, the
series number, reflect the interest rate. The last four digits indicate the year in which the
bond is due. The numbers are separated by the letter S which stands for "series."
So the interest rate is 12.6% and it is due December 31, 2017.
Explain MTBF in the fine cut. Material costs increase $0.30 for every additional 1,000
hours of reliability.
Explain MTBF in the rough cut. Products continue to lose appx. 20% of their customer
survey score for every 1,000 hours below the guideline.
Explain the fine cut circle. What's its radius? Prefers products within the circle.
Explain the price in the fine cut. As price goes up, the price score goes up.
(Follows a classic economic demand curve)
Explain the rough cut circle. What's its radius? "I will NOT purchase a product outside this
boundary."
Fixed assets Assets that cannot be easily converted.
(In the simulation, fixed assets are limited to the value of the plant and equipment)
For how much does $1,500 buys you for awareness? How much would an additional $1500
buy you? 36%
14%
How are do customers feel if the MTBF is above the segment range? Indifferent. (They
don't care)
How can you change a products age? Repositioning it.
How can you indicate if a competitor might drop the prices of their products? An
increase in automation can reduce labor costs.
How can you indicate if a competitor reduces capacity? Selling capacity reduces assets.
-Running capacity at 150%-200% can improve ROA.
How could you reach 100% accessibility? Must have two products in the fine cut.
(VERY difficult)
How do you calculate earnings per share (EPS)? Net Profit / Outstanding Shares
How does awareness change per year? It decreases by 33%
How is accessibility built over time? Sales budget.
How is awareness built over time? Promotion budget.
How is the dollar value limit of capacity and automation purchases determined? By
the maximum amount of capital that can be raised through stock and bond issues plus
excess working capital.
How long are bonds? How much are the brokerage fees? 10 year notes
5%
How long does it take for change in automation to take effect? One full year
How many hours does each segment set their MTBF for? 6000 hours
How many times a year is a customer survey score calculated? 12 times (one per month)
How much accessibility does $2,000 buy you? How much does $3,000? 22%
32%
How much awareness does a new product have at launch for the first year? 25%
How much can capacity be sold at for the beginning of the year? $.65 on the dollar
value of the original investment
How much contribution margin do you need to have a decent profit? What is the minimum
recommended? 30% or higher
20%
How much do supplier withhold if there is an accounts payable lag for 30 days? 60 days? 90
days? 120 days? 150 days? -30 days = 1%
-60 days = 8%
-90 days = 26%
-120 days = 63%
-150 days = all material is withheld.
How much does a company pay for issuing stock? How much is the limit on new stocks?
5% brokerage fee
Limited to 20% of company's outstanding shares in that year.
How much does a sixth month project cost? A one year project? -6 month =
$500,000
-one year = $1,000,000
How much does each unit for plant capacity cost? $6.00/unit for the floor space
How much does the simulation charge for a carrying cost? 12%
How much is a company charged to raise or lower automation? $4.00 per unit of
capacity
They do not recommend reducing automation level (inefficient)
How much is does A/R affect the CSS at 30 days? 60 days? 90 days? 90 days- no
reduction
60 days- 0.7% reduction
30 days- 7% reduction
How much will bankers loan current debt? Up to 75% of your A/R and 50% of the
year's inventory.
Also increase your borrowing limit by 20% since they know you'll expand.
How much will bankers loan for current debt? -Up to 75% of accounts receivable
-50% of this years inventory
-20% growth
How much will bondholders lend? Up to 80% of the value of your plant and
equipment.
How was your company created? It was created when the government split a
monopoly into identical competitors.
If there are two products in a segment and 100% accessibility, how much does it cost to
maintain that? $3,500
If you're discontinuing a sensor, how can you sell it at full price? Sell all but one
unit.
In Marketing, R&D addresses: -The positioning of each product.
-The number of products in each segment.
-The age of your products.
-The MTBF rating of each product.

In Production, R&D addresses: -Cost of material
-Purchase of new facilities to build new products
-Automation levels (the higher, the longer it takes)
In regards to buying criteria by segment, what changes and what remains the same?
Positioning changes every year.
Price, age, MTBF always remains the same.
Inter-Department Coordination: Finance and Production Production tells Finance if

they need additional equipment.
Inter-Department Coordination: Marketing + Finance Work together to project

revenues for each product and to set the Accounts Receivable policy.
Inter-Department Coordination: Marketing and Production Work together to make

sure manufacturing quantities are in line with forecasts.
Inter-Department Coordination: R&D + Marketing Work together to make sure

products meet customer expectations.
Inter-Department Coordination: R&D + Production Work together to ensure

assembly lines are purchased for new products. (If production discontinues a product, it
should notify R&D)
Key levels and costs of accessibility? 10% costs $1,250,000
20% costs $1,800,000
30% costs $2,800,000
Material costs = MTBF costs + Position Cost
Names of teams in industry -Andrews (me)
-Baldwin
-Chester
-Digby
-Ferris
Niche Cost Leader (Low Technology) Concentrates on low tech segment.

-Keeps R&D, production and material costs to a minimum.
-Increase automation
Niche Differentiator (High Technology) Focuses on the high tech.
-Excellent design, high awareness and easily accessible.
Overtime labor rate Straight time labor rate * 1.5
Perks of a second shift? Cons? The perks are that it can produce up to twice the first shift
capacity.
The cons is that labor costs are 50% higher than the first shift.
Position cost between the trailing edge of low tech and leading edge of high tech
$5.75/unit
Position cost for leading edge high tech $10/unit
Position cost for trailing edge low tech $1.50/unit
Retained earnings The portion of profits that was not distributed back to
shareholders as dividends, but was instead reinvested into the company.
(Under stockholder's equity)
Segment's accessibility percentage Indicates the number of customers who can

easily interact with your company via salespeople, customer support, etc.
-Applies to segment, NOT product.
Straight time labor rate $12.50-(Automation Level * $1.25)
Successful managers will: -Analyze the market and its competing products.
-Create and execute a strategy.
-Coordinate company activities.
Summarize the High Tech buying criteria. -Ideal Position (33%) Leading edge
-Age (29%) 0 yrs
-Price (25%) $25-45
-Reliability (13%) 17,000-23,000

Summarize the Low Tech buying criteria. -Price (41%) $15-35)
-Age (29%) 3yrs
-MTBF (21%) 14,000-20,000
-Ideal Position (9%) Center segment
The Production Analysis will report the release date of a new product if: -
Production capacity is purchased
-A promotion budget is entered
-Sales budget is entered
What are annual reports? How will they help you? They are results from the
previous year.
They will help you analyze last year's results.
What are brokerage fees for current debt? There are none
What are Proformas? How will they help you? They are projections for the upcoming year.
They will help you envision the impacts of your pending decisions and sales forecasts.
What are the approximate labor costs: Autmn level Appx. LC/unit
1 $12.75
5 $7.64
10 $1.25
What are the drift rates for the Low Tech and High Tech? Pfmn. Size.
LT +0.5 -0.5
HT +0.7 -0.7
What are the five issues that the finance department is primarily concerned with? -
Acquiring capital needed to expand assets, particularly plant and equipment.
--> Can be acquired through: Current Debt,
Stock issues, Bond issues, Profits.
-Establishing a dividend policy that maximizes return to shareholders.

-Setting accounts payable policy and accounts receivable policy.
-Driving the financial structure of the firm and its relationship between the debt and equity.
-Selecting and monitoring performance measures that support your strategy.
What are the four basic buying criteria? -Price
-Age
-MTBF
-Positioning
What are the four departments? -R&D
-Marketing
-Production
-Finance
What are the four P's of marketing? -Price
-Product
-Promotion
-Place (Sales budget)
What are the ideal spots for the Low Tech and High Tech? Pfmn. Size
Low Tech -0.0 +0.0 (Segment Center)
High Tech +1.4 -1.4
What are the interest rates for current debt? Interest rates are a function of your debt
level. The more debt you have relative to your assets, the more risk you present to debt
holders and the higher the current debt rates.
What are the key levels and costs for awareness? 10% costs $550,000
20% costs $900,000
30% costs $1,250,000

40% costs $1,700,000
What are the segment centers for rounds 1, 4 and 8? (In High Tech and Low Tech)
Low Tech High Tech
Round Pfmn. Size Pfmn. Size
1 5.3 14.7 6.7 13.3 (BASICALLY JUST NEED TO KNOW THIS)
4 6.8 13.2 8.8 11.2
8 8.8 11.2 11.6 8.4
What does book value equal? Equity / Outstanding Shares
What does depreciation decrease? The firm's tax liability by reducing net profits.
What does it mean if your potential bar is higher than it's actual? The company
under produced and missed sales opportunity.
What does it mean if your potential bar is lower than it's actual? The company
picked up sales because other companies under produced and stocked out.
What does positioning affect? Material Cost
What does promotion and sales budget affect? Customer awareness and accessibility.
-And customer survey score.
What does the Industry Conditions Report do? It lists market segment sales percentages
and projected growth rates unique to your simulation.
What does your company manufacture? Sensors
What happens to age when size/performance is changed? It gets cut in half
What happens to your bond after the end of the year? If a bond remains on December 31 of
the year it becomes due, your banker lends you current debt to pay off the bond principal.
This, in effect, converts the bond to current debt. This amount is combined with any other
current debt due at the beginning of the next year.
What is a Customer Survey Score? It is a rating that can determine sales

distribution.
(Higher scores = better sales)
What is a Decision Audit? How does it help you? It is a complete trail of all team
decisions.
It helps you identify your decision making strengths and weaknesses.
What is a good customer survey score? Scores 50 or above
What is automation? The robot to worker ratio. As automation levels increase, the number
of labor hours required to purchase each unit decreases.
When automation is at 1.0, labor costs are highest.
When automation is at 10, labor costs are lowest.
What is FastTrack? What does it include? It is an extensive year-end report of the

sensor industry.
What is Finance? Makes sure your company has financial resources (i.e. bonds,
stock issues)
What is Foundation Spreadsheet? It's the nerve center of your company where you
formulate and finalize management decisions for every department.
What is Marketing? They price and promote your products. Also responsible for sale
forecasts.
What is Production? They determine how many units will be manufactured during the year.
They are also responsible for buying and selling production lines.
What is Research and Development? They design your product line. They invent and
revise products that appeal to your customers changing needs.
-Changes size and performance on the Perceptual Map.
What is Situation Analysis? It enables you to understand current market conditions

and how the industry will evolve in the next few years. (Assists with operational planning)
What is the demand for each segment for year 1, 4 and 8? (High tech and low tech)
Low Tech (10%) High Tech (20%)
Rounds
1 4260 2160 (BASICALLY JUST NEED TO KNOW THIS)

4 6149 3732
8 9003 7740
What is the interest rate for bonds? 1.4% over current debt interest rates.
What is the issue with increasing capacity? it becomes increasingly difficult for R&D
to reposition products short distances on the Perceptual Map.
What is the max spending for sales budget for one product? How much for two products?
$3,000
$4,500
What is the minimum and maximum amount of products we can have? Minimum = 1
Maximum = 5
What is the price in the rough cut? Explain how this relates to the customer survey score.
Sensors are priced at $10.
Sensors priced $1.00 above or below the segment guidelines lose about 10% of their
customer survey score.
What is the problem with emergency loans? They add a 7.5% penalty fee.
They depress stock prices, even when you are profitable.
What is your grade on the simulation based on? -cumulative profits (30%)
-ending market capitalization (30%)
-average ROE across the 8 rounds (25%)
average ROA across the 8 rounds (15%)
(Compared to the computer teams in your industry)
What's the fee for buying back outstanding bonds PRIOR to their due date? 1.5%
When are bond issues used? How much will they lend? To fund long term investments.
They will lend up to 80% of the value of your plant and equipment.
When does a seller's market emerge? What will customers accept? If a segment's
demand exceeds the supply of products available for sale.
Customers will accept low scoring products as long as they fall within the segment's rough
cut limits.
When does one have an emergency loan? When the last year's sales forecast was
higher than actual sales.
When is last years debt paid off? January 1st
When should the finance decisions be made? After all other decisions.
Why do segments drift a little each month? Which segment demands greater improvement?
-Your customers expect products that are smaller and faster.
-High tech
Questions.
1. When opening the Excel version of Capstone®, you should do what to Macros?
Enable
2. If there are two identical products, one that has 100% accessibility and one that has
0% accessibility,
the product with 100% accessibility will outsell the other 2 to 1 providing all other attributes
are identical.
3. How many products does every team start with?
Five products
4. What are three of the five Segments?
a. Traditional, Low End, Performance
5. A segment manager's task is to
b. verify the products entering and leaving a segment, the margin potential for those
products, capacity level and the distribution system as compared to competitors.
6. What is the difference between the market segments at the beginning of the round
to the final round?
b. The fine cuts overlap in the beginning and in year 8 only the rough cuts overlap.
7. Successful managers will:
a. Create a strategy
b. Coordinate company activities
c. Analyze the market and its competing products
8. After you have uploaded your decisions to the website, can you change your
official decisions as many times as you want prior to the processing date and time of
the round?
Yes
9. Once you upload your official decisions during a round, how many times can you
change them before the end of the round?
e. As many times as you want
10. What trend can be explicitly observed in the industry in which your company is
operating?
c. Products become smaller and smaller.
11. On perceptual map, the percentage of customers interested in a product

positioned outside of the rough cuts of that product is
0%
12. MTBF is measured in
b. hour increments.
13. Customers that want low prices and are willing to sacrifice miniaturization and
performance are in the
c. low End segment.
14. Customers that want small products and are willing to sacrifice performance are in
the
e. size segment.
15. In Capstone©, pricing standards are set by:
a. Customers (Market Segment).
16. "Reliability" is expressed in terms of:
a. Mean Time Between Failure.
17. MTBF measures what?

c. Reliability
8. The two characteristics that the perceptual map evaluates are
a. Performance and Size.
19. The Perceptual Map is
a. a marketing tool used to track the position of the company's products against those of the
competitors.
20. The segments all drift to the lower-right section of the perceptual map. Why does
this drift take place?
c. Customers want smaller and faster products.
21.
d. down; right
22. When tracking market segments on the performance and size perceptual map,
which segment moves or "drifts" the slowest?
b. Traditional
23. What happens to a product priced at $1 above or below the segment guideline
when a segment's product supply outstrips demand?
c. It loses 20% of its appeal.
24. What's the measure for product reliability?
c. Expected time a product lasts
25. At what dollar amount above the segment guidelines is all consumer appeal lost?
b. $5
26. The prices in each segment
a. drop by $0.50 each year.
27. MTBF in the segments should be
MTBF (Performance) > MTBF (High End)., and MTBF (Low End) < MTBF (Size).
28. Which of the following are not buying criteria?
b. Automation
29. Inside each fine cut circle,

a. segments have an ideal spot where demand is at its highest.
30. The Traditional ideal spot is
c. near the center of its circle.
31. Increasing a product's reliability will result in which of the following changes to
production costs?
b. Higher material cost
32. Age refers to:
b. Product Age.
33. What happens to a product's Perceived Age when it is repositioned in R&D?
a. It is reduced by 50%.
34. The preferred product perceived age for each sector peaks at:
c. zero years for high end and seven years for low end.
35.
a. 2
36. Pricing plays a role
in the rough cut stage of the purchase decision and in the fine cut stage of the purchase
decision.
37. What are the top buying criteria that low end customers most value?
b. Price
38. Which of the following is not a type of market segment in CapSim?
c. Standard
39. What is the correct answer concerning the top buying criteria for the following
segment:
d. Price for low end and Positioning for high end.
40. Low End customers emphasize buying criteria in which order?
a. Price, Age, Positioning, Reliability
41. Each segment places
b. a different emphasis on features of the 4 buying criteria.

42. Which market segment places the most importance on price?
c. Low End
43. What is the most important criterion to a "Low End Segment" customer?
a. Price
44. If you are marketing to High End customers, which criteria are most important to
them in order of importance?
e. Positioning, Age, MTBF, Price
45. Which one is not an area in which Capstone® separates company activities?
d. Logistics
46. The following represent core company activities that must be addressed each year
except:
d. Labor Negotiations.
47. Which of the following is not addressed by R&D?
e. Workforce Complement
48. In the Marketing Plan, Research and Development addresses all but the:
d. automation of assembly lines.
49. When an R&D effort started in 2001 completes on September 15, 2002, the product
revision kicks in
b. immediately upon completion.
50. The relative cost of a product's material cost increases as:
c. MTBF is raised.
51. R&D completion time can be shortened
d. when a company takes advantage of existing technology.
52. R&D completion time depends on
a. number of projects in R&D.
b. automation rating.
c. the age of the product.
53. Which Automation rating requires the longest time to reposition a product?
e. 10
54. In Capstone®
c. the terms age and perceived age are used interchangeably.
55. When a product is moved to a new location on the Perceptual Map, the Perceived
Age (or Age) is:
56. Changing MTBF will:
1. When opening the Excel version of Capstone®, you should do what to Macros?
Enable
If there are two identical products, one that has 100% accessibility and one that has
0% accessibility, the product with 100% accessibility will outsell the other 2 to 1
providing all other attributes are identical.
3. How many products does every team start with? Five products
4. What are three of the five Segments? a. Traditional, Low End, Performance
5. A segment manager's task is to b. verify the products entering and leaving a

segment, the margin potential for those products, capacity level and the distribution system
as compared to competitors.
6. What is the difference between the market segments at the beginning of the round
to the final round? b. The fine cuts overlap in the beginning and in year 8 only
the rough cuts overlap.
7. Successful managers will: a. Create a strategy
b. Coordinate company activities
c. Analyze the market and its competing products
After you have uploaded your decisions to the website, can you change your official
decisions as many times as you want prior to the processing date and time of the
round? yes
9. Once you upload your official decisions during a round, how many times can you
change them before the end of the round? e. As many times as you want
10. What trend can be explicitly observed in the industry in which your company is
operating? c. Products become smaller and smaller.
11. On perceptual map, the percentage of customers interested in a product

positioned outside of the rough cuts of that product is 0%
12. MTBF is measured in b. hour increments.

13. Customers that want low prices and are willing to sacrifice miniaturization and
performance are in the c. low End segment.
14. Customers that want small products and are willing to sacrifice performance are in
the e. size segment.
15. In Capstone©, pricing standards are set by: a. Customers (Market

Segment).
16. "Reliability" is expressed in terms of: a. Mean Time Between Failure.
17. MTBF measures what? c. Reliability
18. The two characteristics that the perceptual map evaluates are a. Performance
and Size.
19. The Perceptual Map is a. a marketing tool used to track the position of the
company's products against those of the competitors.
20. The segments all drift to the lower-right section of the perceptual map. Why does
this drift take place? c. Customers want smaller and faster products.
c. Customers want smaller and faster products. d. down; right
22. When tracking market segments on the performance and size perceptual map,
which segment moves or "drifts" the slowest? b. Traditional
23. What happens to a product priced at $1 above or below the segment guideline
when a segment's product supply outstrips demand? c. It loses 20% of its appeal.
24. What's the measure for product reliability? c. Expected time a product
lasts
25. At what dollar amount above the segment guidelines is all consumer appeal lost?
b. $5
26. The prices in each segment a. drop by $0.50 each year.
27. MTBF in the segments should be MTBF (Performance) > MTBF (High End).,
and MTBF (Low End) < MTBF (Size).
28. Which of the following are not buying criteria? b. Automation
29. Inside each fine cut circle, a. segments have an ideal spot where demand is at its
highest.
30. The Traditional ideal spot is c. near the center of its circle.
31. Increasing a product's reliability will result in which of the following changes to
production costs? b. Higher material cost
32. Age refers to: b. Product Age.
33. What happens to a product's Perceived Age when it is repositioned in R&D?

a. It is reduced by 50%.
34. The preferred product perceived age for each sector peaks at: c. zero years for
high end and seven years for low end.
c. zero years for high end and seven years for low end. a. 2
36. Pricing plays a role in the rough cut stage of the purchase decision and in the fine
cut stage of the purchase decision.
37. What are the top buying criteria that low end customers most value? b. Price
38. Which of the following is not a type of market segment in CapSim? c.

Standard
39. What is the correct answer concerning the top buying criteria for the following
segment: d. Price for low end and Positioning for high end.
40. Low End customers emphasize buying criteria in which order? a. Price,
Age, Positioning, Reliability
41. Each segment places b. a different emphasis on features of the 4 buying

criteria.
42. Which market segment places the most importance on price? c. Low End
43. What is the most important criterion to a "Low End Segment" customer? a. Price
44. If you are marketing to High End customers, which criteria are most important to
them in order of importance? e. Positioning, Age, MTBF, Price
45. Which one is not an area in which Capstone® separates company activities?
d. Logistics
46. The following represent core company activities that must be addressed each year
except: d. Labor Negotiations.
47. Which of the following is not addressed by R&D? e. Workforce Complement
48. In the Marketing Plan, Research and Development addresses all but the: d.
automation of assembly lines.
49. When an R&D effort started in 2001 completes on September 15, 2002, the product
revision kicks in b. immediately upon completion.
50. The relative cost of a product's material cost increases as: c. MTBF is raised.
51. R&D completion time can be shortened d. when a company takes advantage
of existing technology.
52. R&D completion time depends on
a. number of projects in R&D.
b. automation rating.
c. the age of the product.
53. Which Automation rating requires the longest time to reposition a product?
e. 10
54. In Capstone® c. the terms age and perceived age are used
interchangeably.
55. When a product is moved to a new location on the Perceptual Map, the Perceived
Age (or Age) is: c. divided in half.
56. Changing MTBF will: a. have no impact on Perceived Age.
57. R&D projects can change a product's:
a. size.
b. age.
c. reliability.
d. performance.
58. If your team decides to introduce a new product, when should capacity and
automation be purchased? b. One round prior to product release
59. If you purchase production capacity and automation: c. it is available in the

next year.
60. Marketing is concerned with 4 things. What are they? c. Price, Place,
Promotion, and Product
61. An increase in promotional budgets have: c. decreasing returns over time.
62. Promotion efforts are subject to c. diminishing returns.
63. What effect do increases in the Promotion Budget have on a product's

Awareness? d. Diminishing returns
64. Assuming no additional product promotion, what percent of customers, reached

through last year's marketing campaign will carry over into the current year? c. 67%
65. How is the strength of the sales channel measured? b. Accessibility on a
scale of 0 to 100%
66. If you drop your sales budget to zero, accessibility drops to 0% in how many
years? 3
67. If your company has a sales budget of $3 million and drops it to zero, c.
accessibility drops to 0% in three years.
68. All of the following are direct implications of hiring a second shift except: d.
increased MTBF.
69. How can assembly lines double their capacity? b. Add a second shift.
70. If you increase automation from 2.0 to 5.0, the cost is: a. $12 per unit of
capacity.
71. What is one drawback of increasing automation? a. The product requires

increased time/expense for subsequent short-move repositioning.
72. If you reduce automation in the production component of Marketing, you will:
b. incur a retooling cost.
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? c. 13,000,000
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 c. $400,000.
75. Depreciation is calculated: e. over a straight line 15-year period.
76. Which three factors drive labor cost? b. Wage and benefit rates
c. Automation levels
d. Second shift/Overtime costs
77. If current wages are set at $10/hour, what would be the minimum starting pay that
your company would offer? b. $8/hour
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? c.
$18.00 to $35.00
79. For Wages, the negotiation Starting Position cannot be less than ____% or more
than ____% of the current contract. d. 80; 150
80. Labor Negotiation includes: a. hourly wage.
b. benefits.
c. profit sharing.
d. annual raise.
81. To run perfectly, all HR department managers should know that c. all strike
settlements should be halfway between the demand and the negotiation ceiling.
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
83. In the Human Resources section, workers will strike one week for: a. every 1%
your Annual Raise Negotiation Ceiling is beneath Labor's demand.
b. every $300 your Benefits Negotiation Ceiling is beneath Labor's demand.
c. every 1% your Profit Sharing Negotiation Ceiling is beneath Labor's demand.
d. every $1 your Wage Negotiation Ceiling is beneath Labor's demand.
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
85. Your finance department is primarily concerned with a. acquiring the capital
needed for company activities.
b. establishing a dividend policy that maximizes the return to shareholders.
c. setting credit policies for customers and suppliers.
d. profits.
86. Capital needed for company activities cannot be acquired through: d.

arbitrarily firing employees.
87. Which financial obligation is best satisfied with Bond Issues? b.

Increased production capacity
88. What happens to a company when its debt-to-assets ratio increases? c.

Its short term interest rates increase.
d. Its bond rating is reduced.
89. What is your bond rate? The prime rate is 10%; your current bond rating slipped
one category (from AAA to AA). b. 10.5%
90. An AAA rating bond with a given prime rate at r, the bond rating slips to B if the
current debt interest rate is charged at a. R+2.5%
91. If your interest rate is 12.1%, and when you issue new bonds, the bond interest
rate is: c. 13.5%.
92. Given a prime rate of r and a short term interest rate of r+2.5, is the bond rate for
issuing a new bond is equal to (r+3.9%). yes
93. You pay no brokerage fee if you: d. Allow bonds to mature to their due date.
94. In Capstone® what would the bond number be for a bond with an interest rate of
6.5% that matures in 2003? c. 6.5S2003
95. You are charged a ____ brokerage fee to issue stock and ____ brokerage fee to
retire stock. b. 5%; 1.5%
96. The Credit Policy Lag has implications for: a. Customer survey score.
c. Production
97. Budgeting money to Quality initiative will lead to these outcomes except: c.
increase Labor Costs.
98. How can the R&D cycle time be reduced? b. Budgeting money to quality
initiatives
99. Investing in CPI can c. reduce material costs and labor costs to a lesser degree.
100. Investing in CCE/Six Sigma can c. reduce labor and material costs.
101. Within the Process Management Initiatives, channel support systems c.

increase demand.
102. Benchmarking reduces d. Administrative Cost.
103. Which of the following is an example of a TQM initiative? c. Quality

Function Deployment Effort
104. Within the process management initiatives, concurrent engineering d. reduces

R&D cycle time.
105. The situation analysis consists of ______ parts. 5
106. The situation analysis is a. a team exercise.
b. designed to help your group understand the current market conditions.
c. designed to help your group understand how the industry will evolve over the next
8 years.
d. a five part analysis.

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
108. When plotting the segment locations for each round a. the goal is to
determine the ideal spot location for each segment during the 8 years.
109. Which of the following questions is answered by the demand analysis? c.

Are the market segments growing at the same rate?
110. Two points that should be considered in your strategy are c. it is easy to
confuse unit market size with dollar market size.
111. What is the total cost in dollars for adding 1.0 million units of capacity to a
production line with an automation level of 1.0 and floor space costs per unit of $6?
Assume automation costs per unit of $4. b. $10 million
1 000 000 (6 +4*1) = 10 000 000
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? b. $4,600,000
100 000 (6 + 4*10) = 4 600 000
113. What is the right formula for capacity investment? d. Investment =

Capacity x [$6 + ($4 x Automation)]
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
10 000* (6+4*5) = 260 000, 10 000 * 4 *(10-5)=200 000, 260 000 - 200 000 = 60 000
115. If you are currently producing 100,000 units at an automation level of 5, how
much would it cost to maximize automation? c. $2,000,000
100 000 * 4 *(10 -5) = 2 000 000
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? b. $24 million
2 000 000 * (5-2) *4 = 24 000 000
117. Rapid movement of an existing product on the Perceptual Map requires b. low
automation levels.
118. If a product's Price was $20, its Material $8, and its Labor $7, the Margin Per Unit
would be: d. $5.
20 - (8 + 7) = 5
119. If the price/product is $10 and the material cost/product is $2 and the labor
cost/product is $3, what is the margin/product? e. none of the above
10 - (2 + 3) = 5
120. In the Capstone® simulation, what are the components of a product's minimum
material cost? b. Reliability component cost and positioning component cost
121. The reliability component cost of a product with a 17,000 hour MTBF rating is:
a. $5.10.
17 000 * 0.3 /1 000 = 5.1
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.
124. In Capstone®, the spreadsheets allow team members to a. make changes to
variables.
b. observe the results of changes made to variables.
125. Each of the spreadsheets a. work independently.
b. depend on values entered in other spreadsheets.
126. New products are created on which spreadsheet? b. Research and

Development
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
128. What is the minimum amount of time that it takes to create a new product? c. 1
year
129. What are the drivers of Material Costs? a. Higher performance
b. Smaller size
c. Higher Mean Time Between Failure (MTBF)
130. The marketing spreadsheet is used to set which of the following: a. prices.
b. promotion budgets.
c. sales budgets.
131. The A/R lag is a. a marketing spreadsheet definition.
b. the accounts receivable lag (in days).
c. the time between customers receiving products and when they are expected to pay
for them.
132. What happens to a company when it increases the A/P lag? a. It improves its
cash position.
d. Its suppliers withhold material for production.
133. The automation level b. causes you to require more manpower with
lower ratings.
c. causes you to require less manpower with higher ratings.
134. When going to a new automation level a. there is a 1 year lag.

135. Negotiation Ceilings which represent the maximum management is willing to pay
are always c. 10% above the starting positions.
136. Maximum issue is a. the upper limit in thousands of dollars that teams can issue
in stock this year.
137. Cash position is c. the cash position at the beginning of the round and a
projection of the cash position at the end of the round.
138. What effects do Process Management Initiatives have? a. Administrative

savings
b. Higher production efficiency
c. Increase in demand
d. Reduction of R&D times
139. Your team will make decisions for a. Marketing.
b. Finance.
c. Human Resources.
d. Production.
140. Which customer group or market segment seeks proven products using current
technology? b. Low End customers
141. Which customer group or market segment seeks proven products, are indifferent
to technological sophistication, and are price motivated? b. Low End customers
142. Which customer group or market segment seeks cutting edge technology in both
size and performance? c. High End customers
143. Which customer group or market segment seeks high reliability, advanced
technology products that emphasize high performance? d. Performance
customers
144. Which customer group or market segment seeks advanced technology products
that focus on small size? 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
146. If a product's Automation rating is substantially increased, it will: a.

take longer to move the product across the Perceptual Map.
147. There is ______ lag in buying new Capacity and ______ lag in changing
Automation. d. 1 year; 1 year
148. Which of the following is not a primary concern for your Finance Department?
c. Employee turnover
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. c. Cost Leader with Product Life Cycle
Focus
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
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. 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. b. Niche Cost Leader
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
154. The resources used in the Sales Budget are d. Outside Sales, Distributors,
and Inside Sales.
155. When working with inside sales, each inside salesperson costs c. $50,000.
156. When working with Distributors, each distributor costs b. $100,000.
157. When working with Outside Sales, each salesperson costs d.

$125,000.
158. In only one product segment, diminishing returns for distributors is reached at
c. 15
159. In only one product segment, diminishing returns for inside sales is reached at
e. 30
160. In only one product segment, diminishing returns for outside sales is reached at
b. 12
161. The marketing budget detail sales screen allows companies to allocate their
promotion budget to different media channels. These media channels are: b. Print
Media, Direct Mail, Trade Shows, E-Mail, and Web Media.
162. When investing in print media, diminishing returns apply after a. $700,000 per
product.
163. The potential reach for E-mail is rated as good for the e. Size and
Performance.
164. The potential reach for Trade Shows is rated as good for the b. High End.
165. The Promotion part of advanced marketing allows teams to allocate their time
based on b. each Product.
166. The time allocation on the advanced marketing module can be used to b. make a
greater effort by the sales staff which translates into increased demand for that
product.
167. In forecasting, it is not likely that you will take half of the sales unless d.
the price is at the low end of the range and the positioning, age and MTBF are
superior.
168. A product's demand is driven by b. customer survey.
169. The customer survey score is driven by c. 4Ps.
170. Process Management Initiatives a. improve business procedures, resulting in

improved efficiencies and cost structures.
171. TQM initiatives b. improve product quality while reducing the time and
resources required to design, manufacture, warehouse and ship products.
172. This process management initiative reduces material cost and, to a lesser
degree, labor costs. c. Continuous Process Improvement systems (CPI)
173. This process management initiative reduces material costs and administrative
overhead. b. Vendor/Just-in-Time Inventory (JIT)
174. This process management initiative reduces labor costs. d. Quality Initiative
Training (QIT)
175. This process management initiative increases the effectiveness of the Sales
Budget and therefore demand. d. Channel Support systems
176. This process management initiative reduces R&D cycle time, a. Concurrent
Engineering (CCE)
177. These TQM initiatives reduce administrative overhead; reduces the R&D cycle
time and enhances the effectiveness of the promotion and sales budget. b. Quality
Function Deployment and Benchmarking
178. The TQM initiative reduces material costs and labor costs. a. Concurrent
Engineering (CCE)/Six Sigma
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 product's
demand would be: d. 33%.
180. One of the ways of calculating the top product's demand is by c. divide the top
product segment's score by the sum of all other scores in that segment (not counting
fringe products).
181. Combining size and performance creates a product attribute known as c.

positioning.
182. Which statement is true? b. Increases in capacity and changes in automation

take a full year to implement. Sales of capacity are immediately effective.
183. The traditional market segment is expected d. to make up 27.5% of the

electronic sensor market in five years from now.
184. The sales channel effectiveness for the distributors is highest for c. Traditional
and Low.
185. When investing in direct mail, diminishing returns apply after c. $800,000 per
product.
186. The potential reach for direct mail is rated as good for the c. Traditional and
Low End.
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. b. Differentiation Strategy with
a Product Life Cycle Focus
188. Sales channel effectiveness for inside salespeople is highest for d.

Performance
189. The performance segment places more importance on b. reliability and
positioning.
190. Which market segment places the most importance on reliability? b.

Performance
191. What product attributes do Performance customers value the most? d.

Reliability
192. At what rate is inventory carrying cost charged? d. 12%
193. Customers that want proven products and current technology of moderate size
and performance are in the a. traditional 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 b. high end segment
195. What two factors are considered in both the rough cut and fine cut of the
customer buying process? a. Price and Reliability
196. When a segment's product supply exceeds demand, how much appeal, to the
customer, will a product priced $1 above or below the segment price range lose?
d. 20%
197. What section of the perceptual map is considered ideal for the low end segment?
d. Upper Left
198. Increasing performance and shrinking size does what to the material cost?
b. Increases
199. The promotion budget affects: a. awareness
200. What is the starting awareness percentage of a new product? d. 25%
201. When investing in web media, diminishing returns apply after a. $500,000 per
product.
202. When investing in Trade Shows, diminishing returns apply after d. $300,000 per
product.
203. In order to achieve 100% accessibility, a team must: b. have at least two
products in the same segment's fine cut.
204. At the start of the simulation, your production plant has ___lines with room for
____more d. 5, 3
205. If you sell off a production line (capacity and automation), the amount of cash
that the company will receive from the sales of capacity will be a. 65% of the
original value.
206. Inventory Carrying Cost is ___% of the average cost of production. e.
12
207. Traditional customers consider this buying criteria to be the most important
d. Age
208. What is the most important criteria to a "High End Segment" customer? a.
Positioning
209. Size Segment customer consider this buying criteria to be the most important
a. Positioning
210. It takes ______ years to invent a product. c. at least one year
211. A new unit of capacity costs $6 for the floor space plus $4 times b. automation
rating.
212. A functional manager is responsible for coordinate strategy and tactics across all
functional areas of the company exemplified by b. R&D, Marketing, Production,
Finance, Human Resources & TQM.
213. How many market segments are there? 5
214. Which of the following buying criteria does not have a rough cut? age
215. When investing in E-mail, diminishing returns apply after b. $600,000 per product.
216. What is a market segment? c. Group of customers with similar

purchasing concerns
217. The company's negotiation starting position for wages a. is never more than
150% of the current contract.
218. Labor will strike for a maximum: b. 84 days.
219. The interest rate on a bond ______ by________ for each______ in the bond rating
category. a. Increases; 0.5%; Decrease
220. You are charged a ______ brokerage fee to issue bonds and ______ brokerage
fee if you retire bonds prior to their maturation date. d. 5%; 1.5%
221. EPS (Earning Per Share) is calculated by d. dividing net profit by the number of
shares outstanding.
222. Which of the following is not a Process Management Initiative available to your
company? b. GEMI Sustainability
223. Which of the following is not one of the five parts to the Situation Analysis:
e. Forecasting Analysis.
224. Products that are halfway between the fine and rough cut circle will experience a
drop in customer survey score by: 50%
225. Quality Initiative Training can d. decrease labor costs.
226. Investing in Vendor Just In Time can d. reduce material costs and
administrative costs.
227. Adding one additional unit of capacity costs b. $6 + ($4 x Current

Automation Level).
228. How much does it cost for MTBF per 1,000 hours of reliability? c. $0.30
229. How are the Starting Position and the Negotiation Ceiling related? e.
The Negotiation Ceiling is always 10% above the Starting Position.
e. The Negotiation Ceiling is always 10% above the Starting Position. a. Wage and
benefit rates
b. Automation levels
c. Second shift
d. TQM investment
231. The sales channel effectiveness for the outside sales people is highest for
a. High End and Size.
232. The potential reach for web media is rated as good for the b. Size and
Performance.
233. A 6 month project in R&D costs____________; while a 12 month project in R&D

costs ________. c. 500,000; 1,000,000
234. The potential reach for print media is rated as good for the c. Traditional and
Low End.
235. Stock price is a function of: e. Book value, Earnings per Share, and
Dividend.
236. Which of the following is true about the Accounts Receivable Lag and its
implications on customer survey score? a. If you offer no credit, customer
survey score falls to about 60% of maximum.
237. If your company offers 90 days Account Payable policy, suppliers will start to
withhold material for production at d. 26%.
238. A bond with the number 12.6S2005, indicates that: e. the interest rate is
12.6%; due on December 31, 2005.
239. Investing in Quality Function Deployment Effort can d. reduce R&D cycle
time and enhance the effectiveness of the promo and sales Budgets.
240. Investing in Concurrent Engineering can a. reduce R&D cycle time and lower
R&D costs
241. Investing in Channel Support Systems can a. increase demand.
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? c. I would only need to
create 33% new awareness to maintain 100% this year.
243. Teams can produce up to ______ products. 8
244. A production line with 1000 units of capacity has a max production capability of:
d. 2000.
245. When purchasing increased Capacity and Automation, the new capacity
becomes available b. in 1 year.
246. Capacity is sold by d. entering a negative number in the Buy/Sell row on the
Production Spreadsheet.
247. Your inventory for a product will be automatically liquidated at half average cost
of production if you a. Sell all the capacity on the corresponding production
line
248. Emergency loans are made at what rate over the normal Current Debt interest
rate? b. 7.5%
249. The Ideal Spot c. drifts at same pace as the segment.
250. Ideal Spot is particularly important for d. high technology segments.
251. What is the size of the plant at the start of the simulation? b. 5 assembly
lines with space to add 3 more.
252. What are the Process Management Initiatives? d. CPI, UNEP Green, JIT, QIT,
Channel Support Systems, Concurrent Engineering
253. Each round is the equivalent of c. one year.
254. The Consumer Report rates product attributes of price, reliability, age,
positioning, awareness and accessibility using: a. Three levels (such as Good,
Fair, or Poor)
255. If you see a red flag on one of your spreadsheets, what does it mean? d. There is
more information.
256. Which one of these criteria is not a top product characteristic of at least one
segment? d. Promotion
257. Customer Awareness Reports: c. percentage of Customers who knew about
the product.
258. For positioning in the fine cut, which one is not right? c. High End preferred
Position is located in the lower left of the circle.
c. High End preferred Position is located in the lower left of the circle. b. T-Bills
260. Price accounts for _________customers' decision-making in the low end sector.
53%
261. What does not drive length of R&D project? e. The labor strike.
262. With each year (round) customer awareness for each product decreases by:
33%
263. Diminishing returns for a single year and a single initiative on TQM budgets
become noticeable at c. $2.0M.
264. High end customers prefer a product age of 0, at what age exceeds the fine cut
for the product 2 years
265. For non-advanced marketing module, promotion expenditures reach diminishing

returns at a. about $3M
266. In the High End Segment, price as a buying criteria accounts for: b. 9% of
decision.
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. d. Broad Cost Leader
268. In the Traditional Segment, age as a buying criteria accounts for: c. 47% of
decision.
269. An accessibility of 60% means that ________. a. only 60% of customers have
an easy time finding a product, talking to a salesperson and taking delivery.
b. of the customers who cannot easily locate the product, they will seek it out.
270. How much higher are second shift wages than the first shift wages? d.
50 %
271. The accounts payable lag has implications for production. At ________ days,
suppliers withhold all material. 150
272. The center spot of traditional products drifts _______ each year. a. +0.7
performance, -0.7 size
273. Finance Decisions should be made c. after the other departments have
entered their decisions.
274. If you sell all the capacity on a production line, Capstone interprets this as
b. a liquidation instruction and will sell your remaining inventory for half the
average cost of production.
275. Customers evaluate the sensor industry based on: a. Positioning.
b. Reliability.
c. Age.
d. Price.
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)
277. A product's __________ does not play a role in the rough cut age
278. In CapSim, a product's demand is driven by its _________________. b.

Customer Survey Score
279. The ______________ details sales volume in all segments, reporting each
product's actual and potential sales. b. Market Share Report
280. Automation levels are given on a scale of _____ to _____. d. 1.0; 10.0
281. Which of the following will give your company an AAA bond rating: b.
Have absolutely no debt.
282. Products that are modified through R&D: d. Are perceived to be half the age as
before entering R&D.
283. The order of the 4 buying criteria is the same for the following two segments:
c. Size and High End.
284. Which of the following will result in the highest interest rate: d. Emergency
Loan.
285. In the December customer survey, a product would not receive a perfect score of
100 if c. it had an MTBF at the middle of the expected range.
286. Each product can be promoted by a. Print media.
b. Direct mail.
c. Web media.
d. Trade shows.
287. Which one of the following statements regarding preferred position in fine cut is
false? b. Low end customers want the high performance and large sized product.
288. The turnover rate a. is the percentage of workers who left the company last year,
excluding down-sizing.
d. includes unavoidable factors like retirement, relocation and weeding out poor
workers (about 5%).
289. Workers will not strike approximately 7 days for d. 1 hour difference in training.
290. In promo budget of the advanced marketing module, the term "reach" refers to a.
the potential number of customers who would see the advertisement message.
291. Capital used for financing activities can be acquired through_______________.

a. Current debt
b. Stock issues
c. Bond issues
d. Profits
292. The inner fine cut circles on the perceptual map have a radius of ________ units.
b. 2.5
293. Every year the Traditional segment circle drifts ____ in performance and _____ in
size. b. +0.7, -0.7
294. The growth rate for industry demand in the _____ segment is 18.3%. e. Size
295. The cost to increase automation to 8.0 is equal to c. First Shift Capacity X
[$4 X (8 - Automation Level).
296. Companies can enter a Recruiting Spend budget up to an additional ____.

a. $5,000
297. The following describe the strategy of Differentiation with Product Lifecycle
Focus, except: c. prices are below average.
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.
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 segment's fine cut criteria, the sales
budget for each product contributes to that segment's accessibility percentage.
d. Companies must have at least two products in the segment's fine cut to achieve
100% accessibility.
300. Which of the following is not one of the primary concerns in the Finance
Department? e. Deciding promo and sales budget.
301. Which of the following is not the correct yearly drift rate for the corresponding
segment? e. In the size segment performance drifts by -0.7 and size by +1.0.
302. The CAPSIM simulation is based on which industry? a. sensor industry
303. Your ___________ department controls the performance and size, therefore
position of your sensor products within the market. c. R&D
304. Customers go through ________________stage(s) as they make their purchase

decisions. c. fine cut and rough cut
305. Account Receivables lag impacts sales. At no credit terms, the customer survey
score falls to about ______ % of maximum, at 30 days, the score is _____ %, at 60
days, the score is ______%. b. 60, 93, 99.3
306. Do decisions on a product's prices and MTBFs in its segment's rough cut affect
the product's demand? yes
307. Which module in CAPSTONE allows investment in workforce training? a.

HR
308. Investments in training leads to a __________ and _________. b. higher

productivity, lower turnover
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? 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.
310. A perfect product (with 100% awareness) starting with a survey score of 100,
what is the survey score if the accessibility rate is only 60%? d.
((1+accessibility)/2)*base score = 20
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 product's introduction? a. You
cannot manufacture your new product.
312. R&D project length can be as long as ___________. d. 3 years

313. Your company was formed ______________ c. When a former monopoly
was broken up into identical competitor
314. How is Contribution Margin calculated? c. Price - (Material cost + Labor cost)
315. The percentage of workers that left the company last year is the: d. Turnover rate.
316. At the start of the simulation, all assembly lines have an automation level
between: b. 3.0 and 5.0.
317. Segment price ranges drop _____ per year. d. $0.50
318. Each year the company receives bond ratings. The range of these bond ratings
from best to worse is: e. AAA to D.
319. The December Customer Survey indicates b. how customers perceived the
products in the segment.
320. Period costs include a. R&D.
b. promotion.
c. sales and administration expenses.
321. Lowering the automation level will result in c. a charge.
322. If all of the capacity on a production line is sold a. all remaining inventory is
sold for half the average cost of production.
b. a loss is written off on the income statement.
c. Capstone interprets the action as a liquidation instruction.
d. the company will receive a cash payment of 65% the original investment on
capacity.
323. As a general rule, stock issues are used to: c. Fund long term investments
in capacity and automation.
324. Which segment has the highest growth rate? d. Performance
325. Looking at the production, if the potential bar is higher than the actual one,
d. the company under produced and missed sales opportunities.
326. Looking at the production, if the potential bar is lower than the actual, c. the
company picked up sales because other companies under produced.
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.
328. According to Capstone, Complement is best defined as: a. the number of
workers in your workforce this year.
329. Capstone's 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
330. Where are the credit policies for customer and supplier set in Capstone.xls?
a. Marketing spreadsheet
331. The primary difference between the Proformas and annual reports is: b.
Proformas are projections of results for the upcoming year; annual reports are results
from the previous year.
332. What is the most important element that ensures the accuracy of the Proformas
reports? b. Marketing sales forecasts
333. When should you purchase the production line to produce a new product?
c. The year prior to its introduction
334. Which tool can you use as a quick comparison tool when conducting a
competitive analysis concerning production? c. Customer survey
335. In the Perceptual Map each segment has a set of circles where: b. The inner fine
cut circles represent the heart of the segment where demand is strong.
336. Different customer demands impact the drifting speed of the segments such that:
b. High End, Performance and Size drift at a faster rate than the other
segments.
337. Which screens are necessary to make a complete human resource decision when
the advance module has been activated? a. Production & human resources
338. What is working capital? a. Current asset minus current liability
339. What happens if you increase the A/R lag days in the marketing function?
a. Sales forecast increases
b. Collection time increases
340. Which of the following is an important about working capital in Capsim? a.

Emergency loans are closely linked to your working capital policy
b. Shows the liquidity situation of your firm
c. Can be calculated using numbers from the balance sheet under the headings
current assets and current liabilities
d. Shows how much equity is in use

341. Which is false about production in Capsim? a. Teams cannot produce
beyond 100% capacity.
Company Chester is going to reposition Cake and the change has a revision date of August
12th of the coming year (August 12th is about 7/10 of a year). What will Cakes perceived
age be as soon as the revision takes place on August 13th? (Refer to the Round 2
Foundation FastTrack Report available both on Blackboard and in Appendix 1 of "An
Introduction to Business.")
2.0 years
To best serve the High Tech market, why should Ferris reposition Fast this year? (Refer to
the Round 2 Foundation FastTrack Report available both on Blackboard and in Appendix 1
of "An Introduction to Business.")
Both a. and b.; position and age are both very important in managing a high tech product.
Assume that your product Able is only going to sell to the Low Tech market and will not have
any sales to the High Tech market segment. Using the most appropriate market share
method available, Able should sell ______ units in the Low Tech market next year. (Refer to
of "An Introduction to Business.")
between 1,710 and 1,744
12th of the coming year (August 12th is about 7/10 of a year). What will Cakes perceived
age be as soon as the revision takes place on August 13th? (Refer to the Round 2
Introduction to Business.") 2.0 years
To best serve the High Tech market, why should Ferris reposition Fast this year? (Refer to
of "An Introduction to Business.") Both a. and b.; position and age are both very important in
managing a high tech product.
Assume that your product Able is only going to sell to the Low Tech market and will not have
any sales to the High Tech market segment. Using the most appropriate market share
method available, Able should sell ______ units in the Low Tech market next year. (Refer to
of "An Introduction to Business.") between 1,710 and 1,744
Which product has the best MTBF for the Low Tech Segment? (Refer to the Round 2
Introduction to Business.") Able
The demand in the Low Tech Market for next year is 10,000 units. Your product AZTEC had
a December Customer Survey Score of 32. There are 6 products available in this segment
and their DCS scores are 32 (AZTEC) and 28, 25, 25, 25, and 25. What is Aztec's sales
forecast using DCS method? 2,000
Which company has the greatest market share in the Low Tech Market? (Refer to the Round
2 Foundation FastTrack Report available both on Blackboard and in Appendix 1 of "An
Introduction to Business.") Andrews
Which company has the product with the greatest market share in the High Tech Market?
(Refer to the Round 2 Foundation FastTrack Report available both on Blackboard and in
Appendix 1 of "An Introduction to Business.") Ferris
Anything of value that is used or leased by a firm for periods longer than one year is
considered to be a: fixed asset
An account payable is the same as: a current liability
Excess inventory well beyond what is need for the year ahead may: tie up cash and
cause cash flow problems
Depreciation expense is the: dollar value that accounts for the use of equipment and
buildings-wear and tear over time.
Consumer Power bills the Diaz Company for gas used during the month of December. Until
they pay their gas bill to Consumer Power, Diaz Company would consider the amount owed
to be: an account payable
If the Maxwell Company has $300,000 in assets and $180,000 in owner's equity, the
liabilities must account to: $120,000
Fixed assets include: all of the above (things the company owns that they will use for
more than one year, equipment, vehicles, and buildings)
Owner's Equity accounts include owner's investment and: retained earnings
Using the Balance Sheet Survey (FastTrack page 3), which company has brought in the
most money by issuing stock? (Refer to the Round 2 Foundation FastTrack Report available
both on Blackboard and in Appendix 1 of "An Introduction to Business.") Andrews
Using the Income Statement Survey (FastTrack page 3), how much did Chester pay in
interest last year? (Refer to the Round 2 Foundation FastTrack Report available both on
Blackboard and in Appendix 1 of "An Introduction to Business.") $1,938
Using the Income Statement Survey (FastTrack page 3), if Digby had one product and
charged $30, how many sensors did they sell last year? (Refer to the Round 2 Foundation
FastTrack Report available both on Blackboard and in Appendix 1 of "An Introduction to
Business.") 2,403
Using the Income Statement Survey (FastTrack page 3), how much did Baldwin spend to
manufacture all of the sensors they produced last year? (Refer to the Round 2 Foundation
Business.") Can't tell with the information provided
Using the Balance Sheet Survey (FastTrack page 3), how much money (cash) has Erie
borrowed that has to be paid back in the next year? (Refer to the Round 2 Foundation
Business.") $5,679
From the FastTrack report, at the end of December, which product would the Low Tech
customers' perceive as having the most attractive price? (Refer to the Round 2 Foundation
Business.") Cake
If company Ferris wanted product Fast to be positioned on the "ideal" spot for the High Tech
Market for n(Refer to the Round 2 Foundation FastTrack Report available both on
Blackboard and in Appendix 1 of "An Introduction to Business.")ext year, what changes
would they make? Pfmn-9.5; Size-10.5
How many sensors could be sold in the Low Tech Market segment next year? (Refer to the
Round 2 Foundation FastTrack Report available both on Blackboard and in Appendix 1 of
"An Introduction to Business.") 6,708
You have a perfect new High Tech product coming out on July 1st of the coming year. The
market is expected to grow to 3,000 units next year and you estimate you will do as well as
the current best competitor who has 33% of the market. Your sales forecast should be:
(This question does not require a FastTrack report.) 500
Looking at the Low Tech Market Segment's Market Share Actual vs Potential Chart, what
does Andrews know about its product Able? (Refer to the Round 2 Foundation FastTrack
Report available both on Blackboard and in Appendix 1 of "An Introduction to Business.")
Andrews should have lowered Able's price to meet their potential market share
Using the information in the Round 2 FastTrack, Andrews has one product, Able. What is
Able's POTENTIAL market share sales forecast for next year for both the Low Tech and
High Tech Segments? Assume that the Low Tech potential is 25.5% and the High Tech
potential is 9.1% as shown on page 7 of the FastTrack report. (Refer to the Round 2
Introduction to Business.") Approximately 2,050
An accounting term for profit is: net income
Which of the following statement best defines the term retained earnings? Profit
reinvested back into company
Who benefits from accounting information? all of the above (managers inside
business, employees, owners, and stakeholders)
What is a dividend? a payment out of profits to the shareholders of company
The financial statement that shows the financial position of a company as if it were a
"snapshot" of information on a particular date is the: balance sheet
Insufficient inventory may: not allow product to be available to customers causing a
stockout situation
Using the Income Statement Survey (FastTrack page 3), which company created the most
wealth last year? (Refer to the Round 2 Foundation FastTrack Report available both on
Blackboard and in Appendix 1 of "An Introduction to Business.") Andrews
Using the Balance Sheet Survey (FastTrack page 3), how much is Ferris' factory and
machinery worth today? (Refer to the Round 2 Foundation FastTrack Report available both
on Blackboard and in Appendix 1 of "An Introduction to Business.") $18,100
Using the Income Statement Survey (FastTrack page 3), what is the value of machinery that
Andrews used up in making their products last year? (Refer to the Round 2 Foundation
Business.") $1,920
Using the Income Statement Survey (FastTrack page 3), how much did Baldwin spend to
manufacture all of the sensors they sold last year? (Refer to the Round 2 Foundation
Business.") $49,914
Using the Income Statement Survey (FastTrack page 3), what is company Baldwin's
contribution margin? (Refer to the Round 2 Foundation FastTrack Report available both on
Company Erie is going to change Eat's MTBF to 20,000 hours and the change has a
revision date of February 12th (about 2/10 of a year). What will Eat's perceived age be on
February 13th? (Refer to the Round 2 Foundation FastTrack Report available both on
Blackboard and in Appendix 1 of "An Introduction to Business.") 3.5 years old
Looking at the Low Tech Market Segment's "Market Share Actual vs. Potential" chart, what
is a priority for company Andrews in the next round for product Able to maximize sales
volumes? (Refer to the Round 2 Foundation FastTrack Report available both on Blackboard
and in Appendix 1 of "An Introduction to Business.") Produce more product
What percentage of the High Tech Market has access to Digby's products and has been
contacted by Digby's sales staff? (Refer to the Round 2 Foundation FastTrack Report
available both on Blackboard and in Appendix 1 of "An Introduction to Business.")
52%
The difference between contribution margin and gross margin is: gross margin
includes depreciation expenses
Variable costs are the: costs of making products the company sells
An accounting term for sales is: revenues

If Raja owns a truck, $1000 in cash, and plumbing supplies these are all considered:
assets
The terms of a loan state that this debt is paid within the next 12 months. Therefore, it is
considered to be a: current liability
Who had the greatest deb burden last year? (Refer to the Round 2 Foundation FastTrack
Digby
Using the Balance Sheet Survey (FastTrack page 3), what is the total value that Erie has in
outstanding bonds? (Refer to the Round 2 Foundation FastTrack Report available both on
Using the Balance Sheet Survey (FastTrack page 3), if Digby has disbursed a total of
$10,000 in dividends since the start of the company, how much net income has the company
generated since they began doing business? Remember Dividends + Retained Earrings=
Cumulative Profit
(Refer to the Round 2 Foundation FastTrack Report available both on Blackboard and in
Appendix 1 of "An Introduction to Business.") $30,191
Using the Income Statement Survey (FastTrack page 3), which company paid the most in
taxes last year? (Refer to the Round 2 Foundation FastTrack Report available both on
Blackboard and in Appendix 1 of "An Introduction to Business.") Andrews
In the "fishing" story, what prevents Dave from killing evil Ralph or cutting his nets?
Loss of trust leading to no one being willing to trade with him, societal mores, and
potential consequences
Efficient means: Doing things right
What is the "fifth" aspect of the marketing mix? service
The marketing mix includes: all of the above (price, promotion, product, placement,
and service)
Market segmentation identifies customer group on the basis of their needs regarding: all of
the above (geography, demographics, and pyschographics)
What does target marketing involve? Concentrating marketing efforts on one or a few
key markets most likely to buy your product.
What is a priority for company Andrews in the next round for product Able to maximize sales
volumes? (Refer to the Round 2 Foundation FastTrack Report available both on Blackboard
and in Appendix 1 of "An Introduction to Business.") Produce more product
How many sensors could be sold in the High Tech Market segment next year? (Refer to the
The contribution margin is calculated by this formula: total revenue - variable costs
Which of the following statements best defines the term retained earnings? Profit
reinvested back into company
_______________ is used by individuals external to the organization to understand its

performance. Financial accounting
You have calculated the following forecasts for Fast based primarily on information about
Fast's performance in the High Tech Market:
Market Growth: 1,360
Market Share Actual: 1,320
Market Share Potential: 1,280
Which of the following would be the most realistic or "safest" number to have available for
sale if Ferris wants to meet its inventory management targets? Assume 20% growth rate for
High Tech: 1,400
Based on the FastTrack in the reported year, did Baldwin meet its inventory management
goal with the product Baker in the last year? (Refer to the Round 2 Foundation FastTrack
Yes
Chester decided to have 1,700 units of Cake available for sale next year. What is the most
they can sell and still meet their inventory management goal next year? 1,699
New employees reflect the replacement of workers lost during the course of the year due to:
Turnover
___________________ is the extra amount budgeted per worker to attract high caliber
workers. Recruiting Spend
From the "fishing" story, what is an example of a procedural innovation? Get up

earlier and fish with three poles instead of one
Measuring performance, comparing outcomes to the established plan, and then adjusting for
future success is the process of: Controlling
What is market segmentation? Identifying and grouping potential customers by geographic,

demographic, and psychographic attributes according to common characteristics and needs
Secondary market research involves: conducting research through online and

published information
Price, promotion, placement and product (the four P's) are aspects of what? Marketing
What does target marketing involve? Concentrating marketing effects on one or few
key markets most likely to buy your product
If a product has stocked out in the previous year, using the actual market share from the
FastTrack report can be deceptive. To illustrate this point, from the choices below, what is
Able's the best range of sales forecast units for the High Tech market based on ACTUAL
market share? (Refer to the Round 2 Foundation FastTrack Report available both on
Blackboard and in Appendix 1 of "An Introduction to Business.") between 298 and
307 units
Which product has the best MTBF for the Low Tech Segment? (Refer to the Round 2
Introduction to Business.") Able
The market is expected to grow to 3,000 units next year and you estimate you will do as well
as the current best competitor who has 33% of the market. Your sales forecast should be
approximately:
(This question does not require a FastTrack Report). approximately 495
If a firm's liabilities are $90,000 and its assets are $150,000 what is the owner's equity?
$60,000
Examples of fixed costs are: depreciation expenses, R & D expenses, and

administrative expenses
Cost analysis is best described as: the process defining the costs of specific
products or activities within a company.
Owners' Equity accounts include owners' investment and: retained earrings
Based on the FastTrack in the reported year, what is the least that Fast could have sold and
still meet their inventory management goal? (Refer to the Round 2 Foundation FastTrack
1,118
_________________ increases turnover, increases labor costs, and drags down

productivity. Overtime
What is a market? Any mechanism that facilitates exchange of goods and

services between buyers and sellers
What does the research and development department do? Creates new products
and changes specifications on existing products based on customer needs
Using the information in the Round 2 FastTrack, Andrews has one product. What is Able's
POTENTIAL market share sales forecast for next year for both the Low Tech and High Tech
segments? Assume that the Low Tech potential is 25.5% and the High Tech potential is
9.1% as shown on page 7 of the FastTrack Report. (Refer to the Round 2 Foundation
Business.") Approximately 1,555
Using the information in the Round 2 FastTrack, Andrews has one product, Able. Last year,
Able sold in both the Low Tech and High Tech markets. What are Able's total sales forecast
based on ACTUAL market share for next year? (Refer to the Round 2 Foundation FastTrack
1,841
Liabilities are: all of the above (a contract of debt, buying on credit, short term buying, and
long term borrowing)
Imagine that Baker just completed the sales forecast for the coming year and set their
production schedule. The results are now in. Based on the number of units, they had
PRODUCED from the FastTrack report, what is the most Baker could have left in inventory
and still met their invetory management goal? (Refer to the Round 2 Foundation FastTrack
285
Using the information from page 4 of the FastTrack report, how many new products will be
entering the markets in Round 3? (Refer to the Round 2 Foundation FastTrack Report
available both on Blackboard and in Appendix 1 of "An Introduction to Business.") 4
Looking at page 4 of the FastTrack report, the product Cent had no units left in inventory and
Cake has 126 units left in inventory. Did Chester meet its inventory management goal lat
year? (Refer to the Round 2 Foundation FastTrack Report available both on Blackboard and
in Appendix 1 of "An Introduction to Business.") Yes-Cent was not available in that year
and Cake fell within the acceptable range.
The number of workers in the workforce is referred to as the: Complement.
In the "fishing" story, a transaction is: an agreed upon exchange of goods or services
What statement illustrates the concept of "risk"? Invest a lot of resources (money)
in a developing new product that-if it fails-will cause the company to lose money
From Andrew's perspective, which product is the strongest competitor (will be the next most
desirable product) in the Low Tech Market on January 1st? (Refer to the Round 2
Introduction to Business.") Baker
Chester's product Cake sold in both the high and low tech markets last year. Using the
Market growth (or basic forecasting) method, how many units will they sell next year? (Refer
to the Round 2 Foundation FastTrack Report available both on Blackboard and in Appendix
1 of "An Introduction to Business.") 1,510
Using the information in Round 2 FastTrack, Andrews has one product, Able. Last year, Able
sold in both the Low Tech and High Tech market. What are Able's total sales forecast based
on ACTUAL market share for next year? (Refer to the Round 2 Foundation FastTrack Report
available both on Blackboard and in Appendix 1 of "An Introduction to Business.")
1,841
Based on the FastTrack in the reported year, did Andrews meet their performance target for
inventory? (Refer to the Round 2 Foundation FastTrack Report available both on Blackboard
and in Appendix 1 of "An Introduction to Business.") Yes
Based on the FastTrack in the reported year, what is the least that Daze could have left in
inventory and still met their inventory management goal? (Refer to the Round 2 Foundation
Business.") 1
The concept of the "talent" of workers, which produces higher productivity levels and lower
turnover, is captured in the form: Caliber
In the "fishing" story, when Dave went fishing he was investing energy to create something
of value for Dave and his family. This is an example of: work
One attribute of competing in a private enterprise is that competitors are motivated to offer
customers: value
Sales forecasting is often challenging due to the: many unpredictable variables

that influence your target market's decision to buy product
How many sensors could be sold in the High Tech Market segment next year? (Refer to the
Accumulated depreciation represents: the total depreciation over the life of the company's
assets
From the information on the FastTrack Report, did Dabble meet its inventory management
goal in the last year? (Refer to the Round 2 Foundation FastTrack Report available both on
Blackboard and in Appendix 1 of "An Introduction to Business.") Yes
Based on the FastTrack in the reported year, approximately how many months will product
Cent be available for sale in Round 3, the year 2012? (Refer to the Round 2 Foundation
Business.") about 8 months
Which product will be most attractive to Low Tech customers as of January 1 next
year? able
The promotion budget follows in a pattern that if $1 million buys 30% awareness, then
$2 million buys less than 60% awareness. This is called: diminishing returns
Company Erie is going to change Eat's MTBF to 20,000 hours and the change has a
revision date of February 12th (about 2/10 of a year). What will Eat's perceived age be
on February 13th? 3.5 years old
Using the December Customer Survey Scores, forecast for Daze's sales in the Low
Tech Market (first) and the High Tech market (second). How many units does the DCS
method predict that Daze will sell next year? 1624
The demand in the Low Tech market for next year is 10,000 units. Your product
AZTEC had a December Customer Survey Score of 32. There are 6 products available
in this segment and their DCS scores are 32 (Aztec) and 28, 25, 25, 25, and 25. What is
Aztec's sales forecast using DCS method? 2000
Capacity involves: production facilities, technology, machinery, and

equipment used to produce products
production schedule. The results are now in. Based on the number of units they had
PRODUCED from the FastTrack report, what is the most that Baker could have left in
inventory and still met their inventory management goal? 285
Using information from the FastTrack Report from Round 2, Chester forecasts Cake's
sales and decides to have 1,750 units for sale in Round 3. If Chester's goal is to have
at least 80 percent of Cake's products made in the first shift in the future, should
Chester add capacity for Cake? Assume: 10% growth rate for Low Tech and 20%
growth rate for High Tech. yes
(This question is hypothetical and not from FastTrack)
Able is currently selling for $34. They expect to sell 1,000 units. Andrew's factory for
Able has a capacity of 1,000 units and an automation rating of 6. The material cost per
unit is $12.40. Assuming no overtime (and no inventory carrying costs), what will
Able's total Variable Cost (as a total dollar amount) be if they sell 1,000 units?
18000
What is the "ideal" position for a High Tech product next year? Pfmn- 9.5; Size-
10.5
The strength of the promotional investment is measured by: awareness
To best serve the Low Tech market, why should Baldwin reposition Baker this year?
They should NOT reposition the product this year.
Using the December Customer Survey Scores, what is your forecast for Daze's sales
in the High Tech Market? 415
What does the term "economies of scale" mean? The higher the volume
produced, the lower the per unit cost.
Using the information from page 4 of the FastTrack report, how many new products
will be entering the markets in Round 3? 4
Which of the following is true of the different methods of forecasting Able's sales?
all of the above are true
If (in a couple of years) company Digby wanted to revise product Dabble to serve the
Low Tech market, what changes would they want to make to the MTBF? Change it
to 20,000; that is the top the range for Low Tech customers and anything beyond this
increases cost and does not add perceived customer value.
In the "fishing" story, what prevents Dave from killing evil Ralph or cutting his nets?
Loss of trust leading to no one being willing to trade with him, societal mores, and
potential consequences
You have evaluated product Acrid (a made up product) against the Buying Criteria of
the High Tech market and gotten the following "attractiveness" scores: MTBF 100,
Price 19, Age 44, and Position 38. What is the Customer Survey Score for this month?
43
Reliability perceptions are expressed as: mean time before failure - MTBF
Company Chester is going to reposition Cake and the change has a revision date of
August 12th of the coming year (August 12th is about 7/10 of a year). What will Cakes
perceived age be at the end of the year on December 31st? 2.3 years old
Using the December Customer Survey Scores, what is your forecast for Daze's sales
in the Low Tech Market? 1,209
Should Baldwin reposition product Baker for the next round? No, Baker will not be
improved by repositioning it - leave it as is!
How many sensors could be sold in the High Tech Market segment next year? 3,732
Production involves: the actual process of creating goods and services
You have calculated the following forecasts for Eat based primarily on information
about Eat's performance in the Low Tech Market:
Which of the following would be the "safest" and most realistic number to have
available for sale if Erie wants to meet its inventory management targets? Assume:
10% growth rate for Low Tech. 1,400
The capacity for Able is 1,000 units with an automation level of 3. The per-unit cost of
adding capacity is $6 for floor space and $4 per level of automation. If you increase
the automation from 3 to 6 for the current capacity, what will that cost (in thousands)?
$12,000
(This question is hypothetical and does NOT involve a FastTrack Report)
You are creating a new product ABLER and want to build a very efficient factory to
produce it. Since ABLER will compete in the High Tech market, you think that an
automation level of 4 would be the best. You want your factory to have a capacity of
800(000) units. What will the labor cost per unit be for each unit produced on overtime
(or on the second shift)? $11.76
___________ increases turnover, increases labor costs, and drags down productivity.
Overtime
What is the "ideal" position for a Low Tech product next year? Pfmn- 6.3; Size-
13.7
In Foundation, which market segment makes up the greatest percentage of sales in

dollars? low Tech
To best serve the High Tech market, why should Ferris reposition Fast this year?
Both a. and b.; position and age are both very important in managing a high
tech product
Which company has the greatest market share in the High Tech Market? Digby
Assume that your product Able is only going to sell to the Low Tech market and will
not have any sales to the High Tech market segment. Using the most appropriate
market share method available, Able should sell ____ units in the Low Tech market
next year. between 1,710 and 1,744
Chester decided to have 1,700 units of Cake available for sale next year. What is the
most they can have left in inventory and still meet their inventory management goal
next year? 283
Based on the FastTrack in the reported year, what is the least that Daze could sell and
still meet their inventory management goal? 1,372
in Foundation, the decisions you are making are for the year 2010. One set of
decisions gives you a revision date of October 2010. A second set of decisions gives
you a revision date of April 2011. Based on these revision dates, what do you know
about the decisions? The April set of decisions are more radical and will take
longer to get through R&D
800(000) units. How much will you have to invest for this complete investment in
capacity (the whole factory - the floor space and the equipment together)? $17,600
What is your overtime labor cost per unit at an automation rating of 6? $ 8.40
in the broadest sense, Total Quality Management enables companies to improve

_________ and _________ . efficiency; productivity
Which product has the best position for the Low Tech market for the coming year in
Round 3? Daze
Which product will be most attractive to High Tech customers as of January 1 next
year? Fast
What is Able's sales forecast for the High Tech market based on ACTUAL market
share? 299
Looking at the Low Tech Market Segment's "Market Share Actual vs. Potential" chart,
what is a priority for company Andrews in the next round for product Able to
maximize sales volumes? Produce more product
Based on the FastTrack in the reported year, what is the least that Fast could have
sold and still meet their inventory management goal? 1,118
Based on the FastTrack in the reported year, did Andrews meet their performance
target for inventory? no
Which business activity requires funding the business and using its resources
effectively? finance
800(000) units. What will the labor cost per unit be if you produce 800 units?
7.84
You have a perfect new High Tech product coming out on July 1st of the coming year.
The market is expected to grow to 3,000 units next year and you estimate you will do
as well as the current best competitor who has 33% of the market. Your sales forecast
should be:
(This question does not require a FastTrack Report.) 500
What is your overtime labor cost per unit at an automation rating of 5? $10.08
___________ is the extra amount budgeted per worker to attract high caliber workers.
recruitment spend
800(000) units. How much will you have to invest in the building (only) for ABLER's
factory? $4800
Based on the FastTrack in the reported year, what is the least that Baker could have
sold and still met their inventory management goal? 1582
What does a PERT chart seek to accomplish? It depicts the production process,
maps out the anticipated time required, and attempts to identify potential problems in
the process.
Based on the FastTrack in the reported year, what is the most that Daze could sell and
still meet their inventory management goal? 1645
Based on the FastTrack in the reported year, what is the least that Baker could have
sold and still met their inventory management goal? 1,582
In Foundation, when you decrease the MTBF it results in: a decrease in material
costs
(This question is hypothetical and not from FastTrack) Able is currently selling for
$34. They expect to sell 1,000 units. Andrew's factory for Able has a capacity of 1,000
units and an automation rating of 7. The material cost per unit is $11.52. Assuming no
overtime (and no inventory carrying costs), what will Able's Total Revenue (as a total
dollar amount) be if they sell 1,000 units? 34000
Based on the FastTrack in the reported year, what is the most that Baker could have
sold and still met their inventory management goal?(Refer to the Round 2 Foundation
FastTrack Report- available both on Blackboard and in Appendix 1 of AnIntroduction
To Business.)Answer : 1,427
Selected Answer:1,711
Which of the following statements about a company's "book value" is false?
a)All of the selections are true.
b) It is the value of the company's assets on its balance sheet.
c)It equals Owners Equity divided by the number of shares outstanding.
d) It includes customer loyalty, intellectual property, and human capital.
e) It reflects a company's tangible assets. d) It includes customer loyalty,

intellectual property, and human capital.
Which of the following is an effective tip for practicing a presentation?
a)All of the selections are appropriate.
b)Practice in front of a "live" audience.
c)Write out your presentation in full.
d)Time yourself during practicing.

e)Read your draft out loud several times to ensure the words flow. a)All of the
selections are appropriate.
When valuing a company for potential purchase, a "multiplier":
a)All of the selections are appropriate.
b)Is usually higher for a company that, if purchased, would be a strategic fit.
c)Is used to estimate the total value of a company beyond EBIT
d) Helps analysts determine what a company is worth in an economic sense.
e)Increases the value of a company beyond its estimated profitability. a)All of the selections
are appropriate.
What is a way to make presentations more memorable? Use pictures and graphs
What is the main idea behind the rule of three? Effective presentations are
organized into three main parts
Why is it important to understand the different views/theories of business ethics? It

forces you to see a problem or decision from multiple view points.
Which of the following is the most consistent to a "utilitarian" view of business

ethics?
a)The primary goal is to avoid actions that infringe on the rights of others.
b)The primary goal is to determine if an action is consistent to the kind of person one wants
to be.
c)The primary goal is to ensure the benefits of an action for the society as a whole.
d)The primary goal is to achieve the greatest good for the greatest number of people.
e) The primary goal is to treat everyone equally unless there is a just cause for unequal
treatment. The primary goal is to achieve the greatest good for the greatest
number of people
Which of the following is an example of an ethics issue relating to the field of accounting?
Keeping and reporting accurate financial statements
Which of the following is the most consistent to a "virtue" view of business ethics? The
primary goal is to determine if an action is consistent with the kind of person one wants to be
Which of the following is the most consistent to an "individual rights" view of business
ethics? The primary goal is to avoid actions that infringe on the rights of others.
The idea that an organization or individual has an obligation to society at large?

Social Contract
Which of the following is NOT a step in the ethical decision making process? Interpret
the impact on company profitability
Which of the following is the most consistent to a "fairness" view of business ethics? The
primary goal is to treat everyone equally unless there is a just reason for unequal treatment
An example of ethics issue relating to the field of human resource management

Global standards to protect against child labor and occupational safety and health
issues
Which of the following is the most consistent to a "common good" view of business ethics?
To ensure the benefits of an action to the society as a whole.
T/F In a SWOT analysis, Opportunities and Threats are external factors True
SMART goals are: Specific, Measurable, Attainable, Relevant, and Time-Bound
Which is true of a SWOT analysis? Strengths refer to internal factors
T/F Operational effectiveness means performing different or similar activities from your
competitors in different ways. Strategic positioning means performing similar activities better
than your rivals. False
A customer deciding to rent a movie from home instead of going to the movie theater
illustrates which of Porters Five Forces: Threat of substitute products
T/F Strategic efforts are often determined between two overall focuses: Cost Leadership and
Differentiation: True
A way companies gain competitive advantage through differentiating their products is:
a)All of these are correct
b) New products offered regularly
c)Excellent designs
d)Easy accessibility to customers
e)High awareness a)All of these are correct
The Balanced Scorecard consists of which four overall metrics? Financial, The Customer,
Learning & Growth, and Internal Business Processes
If the company Apple began prototyping a driver-less car, which of Porters Five Forces is
present to the automotive industry? Threat of new entrants to a market
Which best describes a company vision and mission? A company vision is aspirational
and long-term, a company mission is descriptive of its current values and beliefs.
Which of the following describes a market in which there are a few sellers offering a similar
product or service? oligopoly
Which of the following factors is most responsible for the high price of tickets in strong sports
markets? strong demand
When a hockey team hires a back-up goalie, it is adding: labor input
Every Sunday, from September through January, millions of TV viewers watch pro football.
Why? Because they get a certain amount of pleasure or satisfaction from consuming the
NFL's product. It's an example of: utility (a highly subjective term describing
satisfaction of a specified want)
Calculate the Current Ratio for the Digby company 1.91 (current assets/current
debts)
How is the acquisition of capital managed through the finance department? Purchase
inventory on credit, arrange for a short term loan to be paid back in one year, issue bonds for
a long term loan and issue stock.
What ratio measures how much profit was created for every dollar of sales? ROS
In Foundation, what decisions can you make to improve your contribution margin without
having a negative impact on the number of units you sell? increase your automation
what interest rate is company Baldwin paying on their bond that is due in 2021?
11% (# before the serial number)
How much net income has Digby earned since it began operations? $6,210
who is the least risky company to loan money to? Andrews (has the highest rating,
AA)
Net Present Value is the difference between: the present value of the future cash
flows from an investment and the cost of that investment.
Using the Cash Flow Statement which company relied most heavily on owner's investments
to finance their growth this year? Chester (sales of common stock)
Using the Cash Flow Statement which company relied most heavily on borrowing to finance
their growth this year? Ferris (cash from long term debt issued)
Arrow sells for $35.00. Your material cost per unit is $14.00 and labor costs per unit are
$10.00. Your fixed costs are $4,500. Assuming everything else remains the same, if you
were to decrease your price by $2.00, how many do you have to sell to break even? 35-2 =
33 - (14+10) = 9; 4,500/9= 500
What form of business ownership restrict the number and type of shareholders? S
Corporation
Which of the following is an example of a conflict of interest? Choosing actions that
promote personal interest at the cost of others.
________ is the difference between the price a seller charges in a competitive market and
the higher price a seller charges for the same product in a monopoly market. monopoly
rent
Marginal utility refers to the amount of satisfaction or benefit we gain from consuming one
more unit of something. true
Markets develop when: buyers and sellers freely come into contact with one another
What ratio considers current assets and current debt but places no market value on
inventory? Quick/acid ratio
What ratio measure how much profit was created with owner's investments? ROE
What ratio measures how much profit was created in relation to the accumulated assets?
ROA
how was Baldwin EPS calculated? Net Income / 2,220,036
which company's owners had the greatest loss of wealth last year? Ferris (stock
market change is greatest, -.44)
which company had the most profit? Digby (greatest closing cash position)
Using the Cash Flow Statement if Chester has only one product with an average unit cost of
$20, how many more sensors do they have left in inventory this year than last year?
1,038 (000): this is because the inventory was negative number in cash flow,
therefore it is a cash flow out aka a greater cost of storage (a positive number would mean
that they sold more of their inventory than they did last year)
Which of the following is an example of an ethics issue relating to the field of human
resource management? Privacy issues
Which of the following is an example of an ethics issue relating to the field of sales and
marketing? ...
What is an example of an ethics issue relating to the field of accounting? Keeping

and reporting accurate financial statements
What is an example of an ethics issue relating to the field of international business?

Global standards to protect against child labor
Corporations distribute profits to their owners in the form of: dividends
The legal document that identifies the basic agreements between partners is called the:
Partnership Agreement
What is a potential competitive ramification to U.S. businesses that do not offer bribes when
competing in the internationally? It can be a potential competitive disadvantage.
Economists Quirk and Fort believe _______ is responsible for much of the economic tension
in pro sports. the market power of leagues
Salary decisions made by owners and players help to determine the overall level of salaries
in the sports labor market. True
This measurement calculates how profitable the company is in relation to the number of
outstanding shares and may be an important consideration for future investors
EPS
Leverage is calculated by: Total Assets / Total Owners' Equity
measures how "big" of a company the managers have created using the owners' investment
how would you calculate Erie's Net Income? 2,226,367 * $0.78 (number of shares x
EPS)
Calculate the Current Ratio for the Digby company. 1.91 (current assets/ current
debts)
Which company created the most profit in this year with their owners' investments?
Andrews (ROE: net income/total owner's equity)
how was Ferris' EPS calculated? Net Income / 2,054,656 (number of shares)
How is increasing the Accounts Receivable lag an investment in your company?

Increasing your Accounts Receivable lag is a form of "promotion" and will attract
customers because they may have longer time frame before they need to pay you compared
to your competitors.
Using the Cash Flow Statement which company has the greatest value in Plant and
Equipment? Chester (largest depreciation on non-cash items)
which company relied most heavily on borrowing to finance their growth this year?
Ferris (greatest cash from long-term debt issued)
This is the point where total revenues equal total expenses and the next dollar of revenue
will result in a profit. This is the: Break-even point
What is one of the disadvantages of a partnership? Mutual agency
What are some supporting views to corporate policies that govern ethical conduct?
People need to understand the organization's ethical standards so they have a
standard to behave accordingly.
Large metropolitan areas provide the _______ that every successful team needs
concentration of potential fans
When substitute products are plentiful, demand is more likely to be ______ because
consumers have more freedom to adjust their spending decisions. elastic
A profit-oriented team owner will be guided by the following principle: marginal revenue =
marginal cost
One assessment of the general financial health of a business is to look at how much debt
the business has in relation to the assets it controls. The ratio that determines this is the:
Total-Debt-to-Total-Assets Ratio
How was Digby's market capitalization calculated? 2,137,845 * $23.60 (Shares x

closing price aka stock price
What is Andrew's Total Debt-to-Total Asset Ratio? 0.27
how is Andrew's "P/E" of the stock table calculated? $27.48 / $3.66 (close price/EPS)
which company retired stock this year? Digby (purchase of common stock)
which company has the largest increase in sensors remaining in inventory this year than last
year? Chester
Public corporations must file reports with the: state
What form of business ownership is limited by the life of its owner? Sole
Proprietorship
Which stockholders usually have the right to vote for the board of directors? common
stockholders
A Limited Liability Company (LLC) is an attractive choice for many business owners because
it offers: key advantages of a corporation and the simplicity of a partnership.
The hometown team has won seven division titles in the past ten years, and yet there are
still tickets available for this year's championship series. Which concept helps to explain why
the postseason games aren't attracting sellout crowds? diminishing marginal utility
A league protects the value of individual teams by limiting the total number of teams and
limiting the number of teams in a market area. true
What company has the most money available in current assets in relation to their current
debt? In other words, what company has the highest Current Ratio? Andrews (current
assets/current debt)
__________ is a ratio that calculates profit per share and can be an important number for
potential investors. Earnings Per Share
If I wanted to buy one of company Baldwin's series 13.0S2015 bonds (face value $1,000) on
the secondary market, how much would I have to pay? $1,058.80 (it is the price of the bond
x 10)
Which department, or working group within a business, is concerned with stocks and bonds?
Finance
which company issued bonds this year? Ferris (cash from issuing long-term debt)
which company had the least profit? Ferris (net income)
which company took an emergency loan this year? Chester and Ferris
Conflict of interest involves: Choosing actions that promote your personal interest at the
cost of others.
The group of individuals elected by the stockholders to oversee the general operation of a
corporation is known as the: Board of Directors
Why is the effectiveness of Ethics Officers inconclusive? relatively new, not that
much data, hard to measure quality
Consequences of unethical behavior may include: Increasing pollution problems,

increasing obstacles to resolve long-term issues (such as reducing the use of fossil fuel with
clean renewable energy), mistreatment of workers, and health risks
When leagues expand, superstar salaries can be expected to: increase
Competition often puts pressure on sellers to provide their customers with a better quality
product at an attractive price. true
Which company created the most revenue in the past year? Digby (highest sales)
Using the Round 2 FastTrack Bond Table (page 2), how is Digby's "yield" calculated for their
10.0S2020 bond? Bond Interest / Trading Price aka 10/93.41
which company has the least long term debt? Andrews (add all the face values of the
bond stock together)
If you sell product on credit, the transaction is recorded in: Accounts receivable
which team took an emergency loan because they didn't completely finance their
investments in Plant and Equipment? Ferris
A corporation is a separate legal entity created by the state and is obligated to: (not be
ethical in all activities)
Is it against the law for U.S. companies to offer bribes when doing business with other
countries where bribery is acceptable? yes
__________ is an ethical or ideological theory that an entity or individual has a responsibility

to society at large. Social responsibility
Team owners make salary offers based on how much revenue they think a player will add to
the team. And players make salary decisions based on: how much they think their talents
are worth in the labor market
Price elasticity of demand relates to the question of how consumers respond to a change in
price. true
Individual team owners often give league officials the authority to negotiate joint agreements
with outside vendors because: teams have more bargaining power when they are
united in a league.
if company Baldwin had declared a dividend of $2 per share, how would their "Yield" have
been calculated? $2.00 / $19.98 (dividend/ close price)
If your Foundation bond series number is 13.1S2012, what do you know about that bond?
The bond has an interest rate of 13.1 percent, it is an "S" series bond, and it is due
(mature) in the year 2012.
What company has a Total Debt-to-Total Asset Ratio that represents the greatest debt
compared to assets? Ferris
how would you calculate Erie's Total Owners' Equity? (not 2,226,367 * $12.43 aka
close price)
which company has exactly the same number of sensors remaining in inventory this year
than last year? Digby ($0 on the cash statement in inventory)
Which of these statements best describes social contracts theory? Employers and
stakeholders have a consensus-oriented and collaborative approach to solve business
problems.
Which of the following was the primary purpose of the Sarbanes-Oxley Act?
Establishes new and enhanced standards with stricter requirements for corporations
"Whistleblowers" are protected by the: 2002 Sarbanes-Oxley Act
It is easier to raise funds in a partnership than in a sole proprietorship because:

more than one person owns the business and potentially has access to additional
resources.
A sports franchise is an asset. This is a form of property that has value to its owner. true
From the stock table, such as found in FastTrack on page 2, what is the best measurement
of the greatest increase in wealth last year? Change in stock price
which team took an emergency loan because they had too much inventory left at the end of
the year? Chester
What advantage(s) do corporations offer owners? limited liability

The four steps of social responsibility are presented in a specific order because:
First and foremost, businesses need to be profitable or they will not continue to exist.
The four steps of social responsibility are: 1.) Economic responsibilities / profit
2.) Legal responsibilities
3.) Ethical responsibilities
4.) Philanthropy responsibilities
What is a "social contract" and how might that impact the behavior of business? It is
when a business is more democratic and there are universal principles and actual
agreements among the parties involved.
How would you describe Milton Friedman's view of the role of business in society?
"There is one and only one social responsibility of business—to use its resources
and engage in activities designed to increase its profits so long as it stay in the rules of the
game"
In its most simplistic form, social responsibility involves four steps in this order: Be
profitable, obey the law, be ethical, and be a good corporate citizen.
What business entity requires the owner to perform the most functions and possess the
broadest range of skills to manage the business? Sole Proprietorship
What are the advantages unique to a sole proprietorship? ease of formation
A disadvantage of the break-even analysis is that break-even: does not specify a time
frame, considers that all products have the same price, considers that all products have the
same variable costs and does not account for the Net Present Value.
"Talent" of the workforce (produces higher productivity levels and lower turnover)
caliber
Employees lost because of downsizing or increases in automation may incur: separation

costs
The money a team spends on an electronic scoreboard represents: a capital

investment
What ratio measures how much profit was created for each share of stock? Earnings
per share- EPS
A group of people are creating a new business. The group has an aggressive growth
strategy, they expect to be able to take on new owners easily, they have an unlimited
number of stockholders, and they demand that the business offers them limited liability.
What form of ownership would best meet their immediate and long-term needs? C
Corporation
Asset turnover sales/ total assets (measures how well you are using all assets to generate
revenue (sales)), measures activity
What types of disputes does civil law address? Disputes between two individuals
How to calculate yield (for a bond) Bond interest / trading price
The minimum salary a player would be willing to accept is often determined by his or her
next-best employment opportunity. Economists refer to it as the player's: reservation
wage
A demand schedule and a demand curve offer two ways of looking at the relationship
between _______ and the quantity of tickets demanded by fans. the price of tickets
During the 1880s, the reserve clause became a standard feature of every major league
baseball player's contract, and for the next 90 years it shaped the economics of baseball by
forcing players to: stay with the same team and accept whatever salary the team
offered
A(n) _______ typically occurs when one party makes an offer and the other accepts.
contract
Only contracts that meet certain requirements called ________ are enforceable by the
courts. elements
What is one opposing view to corporate policies governing ethical conduct? Ethics
cannot be mandated and a business is not a "mini-state" or a platform for social justice.
Chris and Kelly want to open a business in the most efficient way possible with the least
interference from government regulation. Which choice might they consider as the most
attractive? Partnership or Limited Liability Company
How would you describe the concept of scarcity? Our wants are greater than the
resources available to satisfy them
Most pro sports teams are: privately-held businesses
A purposeful unlawful act to deceive or manipulate in order to damage others is called:

fraud
What best describes the term ethicism? The demand for ethical business
processes and actions
A ________ is created when two or more individuals agree to create a business and jointly
own the assets, be responsible for the liabilities, and share both the profits and the losses.
partnership
If your ROA is 15% and your competitor's ROA is 10%, what does that say about the
efficiency of your company? Your company made more profit on every dollar of
assets than your competitor did
In Major League Baseball, more than 50 percent of total league revenues go to cover player
costs - salaries, benefits, and other forms of compensation. true
When the quantity of tickets demanded by fans is equal to the quantity of tickets supplied by
team owners, the market for sports tickets is said to be in: equilibrium
All sales are covered by ________ warranty. the implied
What is a disadvantage of a sole proprietorship? unlimited liability
The primary purpose of a business is to: create wealth for its owners
Money or something of value given in return for fulfilling a contract is called:

consideration
Alternative legal resolution options Arbitration (binding or non binding) and mediation (non-
binding)
The Foundation simulation's unit sales "computer" forecast is generally NOT accurate. True
Resource: You can refer to the TQM PDF on Canvas to find the answer.
TQM expenditures beyond ______ over two or three years on a particular initiative push well
into ________ . Therefore, investing beyond this point is questionable. $2,000,000;
diminishing returns
(This question is hypothetical and not from FastTrack) Able is currently selling for $34. They
expect to sell 1,000 units. Andrew's factory for Able has a capacity of 1,000 units and an
automation rating of 7. The material cost per unit is $11.52. Assuming no overtime (and no
inventory carrying costs), what will Able's Total Revenue (as a total dollar amount) be if they
sell 1,000 units? $34,000
Using the Round 2 FastTrack Bond Table (page 2), which company has the greatest long
term debt? idk
Report available both on Canvas and in Appendix 1 of "An Introduction to Business.") yes
Which of the following is true of the different methods of forecasting Able's sales? all
of the above are true
Production involves: idk
The costs associated with remaining number of products in inventory (stored in the
warehouse) at the end of the year are: carrying costs
What does a PERT chart seek to accomplish? It depicts the production process, maps
out the anticipated time required, and attempts to identify potential problems in the process.
Looking at page 4 of the FastTrack report, the product Cent had no units left in inventory and
Cake has 126 units left in inventory. Did Chester meet its inventory management goal last
year? (Refer to the Round 2 Foundation FastTrack Report available both on Canvas and in
Appendix 1 of "An Introduction to Business.") Yes - Cent was not available in
that year and Cake fell within the acceptable range.
FastTrack Report available both on Canvas and in Appendix 1 of "An Introduction to
Business.") 285
From the in-class video, also available on Canvas, how are workers treated at Lincoln
Electric? (How would you describe the type of interpersonal interaction) respectful
based on work performance
turnover
Using the Round 2 FastTrack Stock Table (page 2), how would you calculate Erie's Total
Owners' Equity? idk
Using the Round 2 FastTrack Stock Table (page 2), how would you calculate Chester's Total
Owners' Equity? idk
Using the Round 2 FastTrack Stock Table (page 2), which company has sold the most
shares of stock? Andrews
Additional investments in training each year leads to _______ productivity and _______
turnover. higher; lower
Based on the FastTrack in the reported year, using the actual market share method, how
many units will Able sell just to the Low Tech market next year? Assume: 22.5% market
share with a 10% growth rate for Low Tech. (Refer to the Round 2 Foundation FastTrack
Report available both on Canvas and in Appendix 1 of "An Introduction to Business.") idk
From the in-class video, also available on Canvas, what is (are) the primary benefit(s) that
workers realize from being employed by Lincoln Electric? Piece rate production
compensation system with annual bonuses
If you spend too much or too little, the returns in TQM may be modest. true
Human resources includes: employees and their skills involved in the production
process
The capacity is for 1,000 units with an automation level of 4. The per-unit cost of adding
capacity is $6 for floor space and $4 per level of automation. If you double your current
capacity at the same automation level, what will that cost? IDK
Operations involves: multiple job sectors
Which company ran out of cash? (Refer to the Round 2 Foundation FastTrack Report
available both on Canvas and in Appendix 1 of "An Introduction to Business.") IDK
Able is currently selling for $34. They expect to sell 1,000 units. Andrew's factory for Able
has a capacity of 1,000 units and an automation rating of 7. The material cost per unit is
$11.52. Assuming no overtime (and no inventory carrying costs), what will Able's
Contribution Margin (as a total dollar amount) be if they sell 1,000 units? 34,000
If you spend more than _______ in an initiative in a single round, the return on the
investment over _______ offers decreasing returns. idk
Using the Round 2 FastTrack Stock Table (page 2), which company has sold the fewest
shares of stock? Ferris
Which company has the smallest fixed costs as a percentage of sales? (Refer to the Round
2 Foundation FastTrack Report available both on Canvas and in Appendix 1 of "An
Introduction to Business.") Baldwin
Assuming there are sufficient workers (Complement), investment in Recruiting and Training,
________ the ________, which in turn ________ per until labor costs. raises; Productivity
Index; lowers
What statement best describes Total Quality Management (TQM)? Investing in a

formalized process that includes advanced production operations, training, software and
systems improves product quality and reduces product failures.
What is a disadvantage to the company when employees work overtime? Increased

labor cost
What is your overtime labor cost per unit at an automation rating of 6? $8.40
What is your overtime labor cost per unit at an automation rating of 5? (Refer to Foundation
Exercise 8 in "An Introduction to Business.") $10.08
Using the Round 2 FastTrack Stock Table (page 2), how would you calculate Erie's Net
Income? 2,226,367 * $0.78
Which company had the smallest unit cost as a percentage of their sales dollar? (Refer to
the Round 2 Foundation FastTrack Report available both on Canvas and in Appendix 1 of
"An Introduction to Business.") idk
The number of workers in the workforce is referred to as the complement
How much will your labor cost per unit be reduced if you increase your automation from 3 to
5? (Every level of higher automation decreases labor costs by $1.12 per level. Assume there
is no overtime.) $2.24
From the in-class video, also available on Canvas, which of these phrases best describes
how tasks are structured at Lincoln Electric? a focused, driven and task-oriented work
structure
Using the Round 2 FastTrack Stock Table (page 2), how would you calculate Erie's Net
Income 2,226,367 * $0.78

Based on the FastTrack in the reported year, what is the least that Daze could sell and still
meet their inventory management goal? (Refer to the Round 2 Foundation FastTrack Report
available both on Canvas and in Appendix 1 of "An Introduction to Business.") 1,372
Which company relied least on debt to finance their assets? (Refer to the Round 2
Foundation FastTrack Report available both on Canvas and in Appendix 1 of "An
From the in-class video, also available on Canvas, what is (are) the primary benefit(s) that
workers realize from being employed by Lincoln Electric? Piece rate production
compensation system with annual bonuses
is no overtime.) $3.36
What does the term "economies of scale" mean? The higher the volume produced,
the lower the per unit cost.
Using information from the FastTrack Report from Round 2, Chester forecasts Cake's sales
and decides to have 1,750 units for sale in Round 3. If Chester's goal is to have at least 80
percent of Cake's products made in the first shift in the future, should Chester add capacity
for Cake? Assume: 10% growth rate for Low Tech and 20% growth rate for High Tech.
(Refer to the Round 2 Foundation FastTrack Report available both on Canvas and in
Appendix 1 of "An Introduction to Business.") yes
___________ is the extra amount budgeted per worker to attract high caliber workers.
Recruiting Spend
If you have the capacity for 800 units in a product line that you want to discontinue. You
have built up inventory of 600 products. If you sell 799 units the capacity with one unit of
capacity remaining for that line, what will occur? (Refer to Foundation Exercise 8 in "An
Introduction to Business.") You will receive cash from the sale of the capacity
(equipment) and you may sell the 600 products at whatever price you set in the future.
How much net income did Digby generate last year? (Answer in thousands ...drop the last
three digits!) (Refer to the Round 2 Foundation FastTrack Report available both on Canvas
and in Appendix 1 of "An Introduction to Business.") $ 6,210
What FastTrack Report (primarily from performance in the High Tech segment) from Round
2, Ferris forecasts Fast sales and decides to have 1,680 units for sale in Round 3. (It is
unclear what process they used to generate this number). Remembering that it takes a year
to come on-line, does Ferris have to add capacity for Fast in Round 3? (Refer to the Round
2 Foundation FastTrack Report available both on Canvas and in Appendix 1 of "An
Introduction to Business.") yes
What benefits might Total Quality Management offer a manufacturing company? all
of the above
Using the Round 2 FastTrack Stock Table (page 2), how would you calculate Chester's Total
Owners' Equity? 2,160,748 * $8.89
From the information on the FastTrack Report, did Dabble meet its inventory management
goal in the last year? (Refer to the Round 2 Foundation FastTrack Report available both on
Canvas and in Appendix 1 of "An Introduction to Business.") yes
From the in-class video, also available on Canvas, how is employee performance assessed?
Productivity level and an annual "report card"
The full value of an investment in TQM will be realized the next year. False
Report available both on Canvas and in Appendix 1 of "An Introduction to Business.") yes
The percentage of workers who left the company last year, excluding downsizing, is
captured in the: Turnover Rate.
Based on the FastTrack in the reported year, what is the least that Daze could have left in
Business.") 1
The most aggressive and effective TQM schedule is to invest _________ in one year,
________ in the next year, and ________ in the third year for a total investment not
exceeding $2,500,000 in any single category for the entire Foundation experience.
$750,000; $750,000; $500,000
turnover
Using the information from page 4 of the FastTrack report, how many new products will be
entering the markets in Round 3? (Refer to the Round 2 Foundation FastTrack Report
available both on Canvas and in Appendix 1 of "An Introduction to Business.") 4
Based on the FastTrack in the reported year, did Andrews meet their performance target for
inventory? (Refer to the Round 2 Foundation FastTrack Report available both on Canvas
and in Appendix 1 of "An Introduction to Business.") no
Based on the FastTrack in the reported year, how many months will AceX be available for
sale in Round 3 for the year 2012? (Refer to the Round 2 Foundation FastTrack Report
available both on Canvas and in Appendix 1 of "An Introduction to Business.") 0.5 months
The more off-line time for Training the higher the needed: complement
Which company ran out of cash? (Refer to the Round 2 Foundation FastTrack Report
available both on Canvas and in Appendix 1 of "An Introduction to Business.") None of
the above companies ran out of cash
How was Digby's market capitalization calculated? 2,137,845 * $23.60
Which company relied least on debt to finance their assets? (Refer to the Round 2
Foundation FastTrack Report available both on Canvas and in Appendix 1 of "An
Three basic aspects to the production process 1. Quantity of the commodity produced
2. Form of the good produced
3.Temporal and spatial distribution of the commodity produced
Operations describe the activities needed to keep the company producing through a
function or series of functions to carry out a plan.
Production involves the actual process of creating goods and services.
Resources used for production 1. Human resources (employees)
2. Raw Materials (cost of goods to create products)
3. Capacity (The annual production capabilities of the facilities, technology, machinery,etc.)
Economies of Scale occurs when the cost of each good produced decreases as the
volume
produced increases
Master production schedule determines when the products will be produced and in
what
quantities
PERT chart depicts the process and maps out the time it will require.
work-in-process inventory is managing products as inventory is in the process of

being created.
carrying costs are the costs of maintaining inventories
just-in-time (JIT) inventory is having just enough inventory on hand to satisfy

consumer demand.
materials requirement planning helps to determine when the materials to produce the
product are needed to meet production deadlines.
Supply Chain Management (SCM) plan, source, make, deliver, return
Quality circles are small groups of employees who meet regularly to attempt to identify and
solve bestproblems involved in quality improvement
Total Quality Management (TQM) is a more formalized "quality circles"
Benchmarking method of evaluating performance by comparison with another specified level

achieved by another entity
Technology Ongoing use can reduce labor expenses in time due to the efficiencies they
offer
Improving Productivity Healthy economy=improvement in productivity
company Chester is going to reposition Cake and the change has a revision date of August
12th of the coming year( August 12th is about 7/10of the year.) What will Cakes perceived
age be as soon as the revision takes place on August 13th?(FastTrack Round 2) 2.0 years
old
Sales forecasting is often challenging due to the many unpredictable variables

In the "fishing story", what influenced the value of Dave's fish in trade? supply and demand
Organizing may be described as arranging the organization resource and activities in a

way ...
A business engages in which activities? all the above ★

what does the research and development department do? ★ Creates new products
and changes specifications on existing products based on customer need
Production may be described as The processor making products, i.e.building

quality products at lowest ,,, ★
What is a 10% increase from a base of 1000? 1100
What does the deal spot of a perceptual map define? The position in the fine cut circle
where demand...★
In Foundation, awareness of a product is created specifically through the: promotion

budget
In the "fishing" story, what is an example of a competitive advantage. The owner of the net
can capture more fish in less time than either
In Foundation, which market segment is more sensitive product position and less sensitive to
price? High Tech
Which product will be most attractive to High Tech customers as of January 1 next year
( Appendix 1 of " An Introduction to Business ") Fast
What does target marketing involve? Concentrating marketing efforts on one or a few
key markets most likely to buy your product
if company Ferris wanted product Fast to be positioned on the "ideal" spot for the high tech
market?(FastTrack Report available both on Blackboard and in ) Pfmn-9; Size-10.5
The strength of the distribution investment is measured by accessibility
In the "fishing story", which best describes the concept of "profit"? Achieving wealth
through meeting needs
What is an advantage of economic specialization? It provides an opportunity to

experience greater efficiency and increased productivity.
What is the "deal" position for a High Tech product next year? (Refer to the Round2)
Pfmn- 9.5; Size- 10.5
What does the "ideal spot"of the perceptual map define? The position in the fine
cut circle where demand for the product is strongest
Not knowing exactly what will happen based on the decisions made is know Uncertainly
Which product has the best position for the High Tech market? (Refer Round2) Fast
Yo have evaluated product Acom (a made up product) against the Buying 87, and Position
92. What is the Customer Survey Score for this month? 63.9
What will change a product's position on the perceptual map? A change in the product's
size or performance.
From year to year, market segments as shown on the perceptual map are : Drifting
lower and to the right as the markets demand decrease in size and an...
Market segmentation identifies customer group on the basis of their needs regarding: all the
above
How many units could be sold in the Low Tech market next year? Assume: Low Tech has a
growth rate of 10% and high Tech has a growth rate of 20%( Refer to the Round2)
6708
To increase a number by 10% you can either multiply the base number by 0.1 and add that
number?
For example;
6098+(6098*0.1)=6707.8
and,
6098*1.1-6707.8 True
In the "fishing" story, which best describes the concept of "profit"? Achieving wealth
through meeting needs
If demand last year was 1000 and that demand increases by 20% next year, what will the
demand be next year? 1200
One attribute of competing pin a private enterprise is that competitors are motivated to offer
customers; value
From the FastTrack report, at the end of December, which of these products has the best
age for the High Tech market?(Round2) Dabble
To increase a number by 20% you can either multiply the base number by 0.2 and add that
number?
For example;
2160+(2160*0.2)=2592
and,
2160*1.2=2592 True
According to the Team Member Guide(TMG) , a total of $1500(000) invested in the

promotion budget buys an additional 35% awareness. If promoting Cake, what would Cake's
awareness be next year?(FastTrack) 72.3%
The perceptual map evaluates and compares The position of competing products in
the industry in relation to segmentation...
Which product will be most attractive to High Tech customers as of january 1 next year?
（FastTrack) Fast
The primary economic systems include: All the above
Before the industrial Revolution began in the late 18th century, more than __ percent of the
world's workforce was employed in the agricultural sector 60
_______ determines what the organization needs to do and how to get it done.
Planning
A free market system is also know as: a private enterprise or capitalist system
In Foundation, which market segment is more sensitive to position and less sensitive to
price? High Tech
Sales forecasting is often challenging due to the; many unpredictable variables

The marketing mix includes all the above
What are factors of production? All the above
How many units could be sold in the High Tech market next year? Assume: Low Tech has a
growth rate of 10% and high Tech has a growth rate of 20%. ( FastTrack) 3732
What is an example of a market? All the above
What set of questions do all economic system have to answer? All the above
Primary market research includes conducting direct research with existing and
potential customers
What is a market? Any mechanism that facilitates exchange of goods and

services between buyers and sellers
What is the "ideal" position for a Low Tech product next year? ( FastTrack) Pfmn-6.3;
Size-13.7
what is the "fifth" aspect of the marketing mix? service
How would you describe the concept of scarcity? Our wants ar greater than the
resources available to satisfy them
How would you best define demand ? The quantity of goods and services consumer are
willing to buy at different prices
From the "fishing" story,. what is an example of a technological innovation? the use of
nets, rather than a pole, for fishing
The best serve the Low Tech market, why should baldwin reposition Baker this year?
(FastTrack) They should NOT reposition the product this year.
In the "fishing" story what best describes the concept of wealth? the amount of fish
caught
The perceptual map evaluates and compare the position of competing products in the
industry in relation to segment preferences
Reliability perceptions are expressed as; mean time before failure - MTBF
Primary market research includes; conducting direct research with existing and
potential customers
From the FastTrack report, at the end of December, which of these products has the High
Tech market? (FastTrack) Daze
Secondary market research involves conducting research through online and

published information
management accounting one of the accounting system. it helps managers plan,

operate, control a company's activities.
This system provides information for managers inside the company, so it's free from outside
regulation.
financial accounting one of the accounting system. it provides a source of information

about the company's performance. this information is for external users(people or group who
are outside of the company and need our information) to apply to their decisions.
GAAP (generally accepted accounting principles) The common set of accounting

principles, standards and procedures that companies use to compile their financial
statements.
budgeting the process of quantifying manager's plans and showing the impact of there
plans on the company's operating activities. managers present this information in a ---.
cost analysis the process of defining the costs of specific products or activities
within a company.
manufacturing cost reports sometimes budgeted cost are greater than total actual
cost, or total actual cost are greater than budgeted cost. this report is useful for analyzing
why the total actual cost and the budgeted cost have difference.
revenue - all expenses formula of net income
balance sheet it summarizes its financier position on a given date. it lists the company's
assets, liabilities, and owner's equity.
asset the economic readouts that a company owns and that it expects will provide future
benefits to the company. (資産）
liabilities the company's economic obligation.
owner's equity the owner's current investment in the assets of the company includes the
owner's original contribution to the company and any earning.
(自己資本）
liabilities + owner's equity formula of assets
inventory the tangible quantity of goods and materials on hand
too much inventory the cause that you have to discount your price or keep them for a long
time
too little inventory customers forgo(quit) the purchase or buy it from one of your
competitors
fixed assets the things which the firm owns that they will use more than one year
(equipment, buildings, vehicles)
accumulated depreciation total amount of value that has been used up since the
initial purchase of the building and equipment
fixed asset - accumulated depreciation formula of total fixed assets
retained earnings the amount of owners reinvest in the company
dividend they can make a payment out of profits (配当）
owners equity / number of shares outstanding formula of book value
net income excess of revenues over expenses
company's profit
純利益
total revenue - veritable costs formula of contribution margin
promotion expense what the company spends on advertising. money for creating
awareness.
sales expenses what the company sounds on getting your sales representatives to contact
your customers.
money for getting accessibility
https://quizlet.com/55361618/ba101-accounting-flash-cards/
Operations management is the management of systems or processes that create
goods and/or provide services
What are the three basic functions in business organizations? budgeting
economic analysis of investment proposals
provision of funds
supply-chain consists of: a sequence of organizations- their facilities, functions

and activities- that are involved in producing and delivering
Suppliers' suppliers-->direct suppliers-->producer-->distributor-->final customer
what is meant by the term value-added? value-added is the difference between

the cost of inputs and value or price of outputs
--value can be psychological like branding
The operations function oversees a transformation or conversion process. Explain briefly.

The creation of goods or services involves transforming or converting inputs or
outputs
Goods-service continuum refers to the range of product-service combinations

companies bring to market (not purely service nor product)
List some ways that manufacturing and systems and service systems differ. -degree of
customer contact
-labor content of jobs
-uniformity of inputs
-quality assurance
-inventory
-wages
List some similarities of manufacturing and systems and service systems. -

forecasting and capacity planning to match supply and demand
-process management
-managing variations
-monitoring/controlling costs and productivity
-supply-chain management
-location planning, inventory, management, quality control, and scheduling
List four important reasons for learning about operations management. -operations
involves multiple job sectors
-operations provides general knowledge instead of very focused
-collaboration/working in teams
-people in every area of business need to appreciate the importance of manging and
coordinating operations decisions that affect the supply chain...
What is a process, and what is the central role of all management? one or more
actions that transform inputs into outputs
process management is the central role of all management
Give an example of each process category:
Upper management
Operational
Supporting upper-management (entire organization): organizational governance and

strategy
operational processes (core processes that make up marketing): purchasing,

production/service, marketing and sales
supporting (support core processes): accounting, HR, IT
List the basic sources of variation (4) -the variety of goods or services being offered
-structural variation in demand
-random variation
-assignable variation
Why is it important to manage variations? variation: variety of goods and

services,structural variation in demand, random variation, assignable variation
List areas that are included in the scope of operations management. -forecasting
-capacity planning
-locating facilities
-facilities and layout
-scheduling
-managing inventories
-assuring quality
-motivation and training employees
What are models, and what are some of the ways they are useful? Model: simplified
representation of something
-physical: real-life counterparts
-schematic: more abstract than their counterparts (graphs, charts, blueprints)
-mathematical: most abstract (formulas)
Why are performance metrics necessary? Measures an organization's behavior,

activities and performance
What are trade-off decisions and why are they important? -deciding on the amount
of inventory to stock, the decisionmaker must take into account the trade-off between the
increased level of customer service that the additional inventory would yield and the
increased costs required to stock that inventory
What is a systems approach, and how is a systems approach useful? system: set of
interrelated parts that must work together
systems approach: emphasizes interrrelationships among subsystems but main theme is

greater than individual parts
-->systems approach is essential whenever something is being designed, redesigned,

implemented, improved or otherwise changed.
Why is degree of customization a factor in operations management? providing highly

customized products or services tends to be more labor intensive than providing off-the-shelf
standardized products
-higher price tag
-lower volume of output
--affects marketing, sales, accounting, finance and IT
Explain the term Pareto effect a few factors account for a high percentage of the
occurrence of some events
craft production system where highly skilled workers use simple, flexible tools
to produce small quantities of customized goods
mass production system in which low-skilled workers use specialized machinery

to produce high volumes of standardized goods
interchangeable parts parts of a product made to such precision that they do not have to be
custom fitted
division of labor the breaking up of a production process into small tasks, so

that each worker performs a small portion of the overall job
technology the application of scientific knowledge to the development and improvement

of products and services and operations processes
Six sigma a process for reducing costs, improving quality, and increase
customer satisfaction
Agility ability of an organization to respond quickly to demands or opportunities
List five key issues for today's business operations -economic conditions: lingering
recession and slow recovery in sectors make managers cautious
-quality problems: product design, risk assessment, and timely response
-cyber-security
-competing in a global economy
-sustainability: using resources in ways that don't harm ecological systems that support
human existence
Sustainability using resources in ways that don't harm ecological systems that support
human existence
What are some areas of ethical responsibility in the management of operations?

financial statements, worker safety, product safety, quality, the environment, the
community, hiring and firing workers, closing facilities, workers rights'
List the five ethical principles and for each one, list an act that would violate that principle
1. Utilitarian: good by an action should outweigh any harm it may cause-- not
allowing a person who has drank too much to drive
2. Rights: actions should respect moral rights-- freedom of religion
3. Fairness: equals should be held to by the same standards-- equal pay for equal work
4. Common good-- an ordinance or noise abatement
5. Virtue: actions should be consistent with certain ideal virtues-- honesty,compassion
What is an ethical framework? sequence of steps intended to guide thinking and actions
Problems in supply chains include oscillating inventories, late deliveries, and quality issues.
List eight other important reasons for the need to manage the supply chain. -the need
to improve operations
-increasing levels of outsourching
-increasing transportation costs
-competitive pressures
-increasing globalization
-increasing the importance of e-business
-the compleity of supply chains
-the need to manage inventories
Name the ten elements of supply chain management and a typical issue for each element.
-customers: determining what products and/or services customer want
-forecasting: predicting the quantity and timing of customer demand
-design: incorporating customers, wants, manufacturability, and time to market
-capacity planning: matching supply and demand
-processing: controlling quality, scheduling work
-inventory: meeting demand requirements while managing the costs of holding inventory
-purchasing: evaluating potential suppliers, supporting the needs of operations
-suppliers: monitoring supplier quality, on-time delivery, and flexibility
-location: determining the location of facilities
-logistics: deciding how to best move info and materials
List the Key Points of the chapter 1 1. the operations function is that part of every
business that produces products and/or delivers services
2. operations consists of processes that convert inputs into outputs
3. a key goal of business organizations is to achieve an economic matching of supply and

demand
4. all processes exhibit variation that must be managed
5. although there are some basic differences between services and products that must be
taken into account from a managerial standpoint, there's also similarities
6. environmental issues will increasingly impact operations decision making
7. ethical behavior is an integral part of good management practice

8. all business organizations have, and are part of, a supply chain that must be managed.
Name five ways the operations function influences the competitiveness of an organization
1. cost
2. quick response
3. flexibility
4. quality
5. location
mission reason an organization exists
goals detail and scope of a mission
strategies plans for achieving organization goals
core competencies special attributes to give an organization competitive

advantage
tactics methods and actions to accomplish strategies
order qualifers minimum standard characteristics that's acceptable for customer purchase
potential
order winners characteristics cause it to be better than perceived
environmental scanning monitoring of events and trends that pose threat or

opportunity
3 basic business strategies low cost, responsiveness, and differentiation
Why are global strategies becoming more important in today's business environment?
globalization is increasing
outsourcing
political issues/upheaval
Why is operations strategy an important key to success? it incorporates the

organization strategy to guide operation functions
What are the four perspectives of a balanced scorecard? financial, customer,

internal process and innovation
purpose of a balanced scorecard clarifies vision and strategy to transform them

into action
What is productivity and why is productivity important? productivity: measure of
effective use of resources, expressed as ratio output to input
important because for regular organizations it determines how competitve a company is and
for non-profits increasing productivity, the lower the cost
Name some the major factors that affect productivity? standardizing
quality difference
use of internet
computer viruses
scrap rates
new workers
layoffs
What are some steps that can be taken to improve productivity? 1. develop
productivity measures for all operations
2. look at whole system, decide what's critical
3. develop methods for achieving productivity improvement
4. establish reasonable goals
5. management needs to support and encourage productivity improvements
6. measure improvements and publicize them
Key Points CH 2 1. competitive pressure means business organization assess their

competitors strengths and weakness and their own
2. Strategy formulation is critical because strategies provide direction; they play a role in
success or failure
3. functional strategies and supply chain need to be aligned with goals and strategies of
overall organization
4. 3 primary business strategies: low cost, responsiveness, and differentiation
5. producitivity is a key factor in cost of goods and services
6. high productivity is important for organization that have a low cost strategy
Depreciation expense is the dollar value that accounts for the use of equipment and
buildings - wear and tear over time
Consumer Power bills the Diaz Company for gas used during the month of December. Until
they pay their gas bill to Consumer Power, Diaz Company would consider the amount owed
to be An account payable
Anything of value owned or leased by a business (such as cash, accounts receivable and
buildings) is considered to be An asset
Examples of period costs, also referred to as fixed costs, are depreciation expenses, R
& D expenses, and administrative expenses
Owners' Equity accounts include owners' investment and retained earnings
Which area of the balance sheet captures the value of the capacity and equipment?
Assets
Anything owed to creditors is:A liability
What is an example of a current liability? a short term loan
An accounting term for sales is revenues
Operations involves: the functions needed to keep the company producing through a
function or series of functions to carry out a plan
The two major classifications of those who have claims against a firm's assets are: the
stockholders and those associated with the company's liabilities
Quality circles are small groups of employees who meet regularly to attempt to identify
and solve problems involved in quality improvement.
Depreciation expense is the: dollar value that accounts for the use of equipment and
buildings - wear and tear over time.
An accounting term for profit is: net income
(T/F) The money spent to increase capacity is an expense that reduces profit. False
What does the term "economies of scale" mean? The higher the volume produced, the
lower the per unit cost.
Accumulated depreciation represents: the total depreciation over the life of the
company's assets

Variable costs are the: costs of making products the company sells
Insufficient inventory may: not allow product to be available to customers because of a

stockout situation
The information presented in an income statement could be described by this equation:
sales (revenue) = sales (revenue) = price per unit X units sold
12 of the coming year (August 12 is 7/10 of a year). What will Cakes perceived age be on
December 31? (Refer to the Round 2 Foundation FastTrack Report available both on
Blackboard and in Appendix 1 of "An Introduction to Business.") 2.3 years old
To best serve the Low Tech market, why should Baldwin reposition Baker this year? (Refer
1 of "An Introduction to Business.") They should NOT reposition the product this year.
Anything of value owned or leased by a business (such as cash, accounts receivable and
buildings) is considered to be: an asset
If Raja owns a truck, $1000 in cash, and plumbing supplies these are all considered:
assets
Excess inventory well beyond what is need for the year ahead may: tie up cash and
cause cash flow problems
The financial document that shows revenues, expenses, and profits over a period of time is:
an income statement
The financial statement that shows the financial position of a company as if it were a
"snapshot" of information on a particular date is the:balance sheet
The collection of production partners, such as manufacturers, wholesalers, distributors,

retailers, and on-line sales sites, is referred to as: the supply chain
Who benefits from accounting information? all the above

The accounting system generates information about the: operations of a business.
Fixed assets include: all the above
Liabilities are: all the above
What are examples of current assets? Cash, accounts receivable and inventory
Which of the following statement best defines the term retained earnings? Profit reinvested
back into company
The contribution margin is calculated by this formula: total revenue - variable costs
The difference between contribution margin and gross margin is: gross margin includes
depreciation expenses
an income statement
To best serve the Low Tech market, why should Baldwin reposition Baker this year? (Refer
1 of "An Introduction to Business.") They should NOT reposition the product this year
an income statement
The information presented in an income statement could be described by this equation:

sales (revenue) = price per unit X units sold
An account payable is the same as a current liability
Debts of the business that will be repaid within one year are called: current liabilities
Anything of value that is used or leased by a firm for periods longer than one year is
considered to be a: fixed asset
costs of making products the company sells Variable costs are the:
Production involves: the actual process of creating goods and services
The statement that includes Assets, Liabilities and Owners' Equity is: the balance sheet
What does a PERT chart seek to accomplish? It depicts the production process, maps
out the anticipated time required, and attempts to identify potential problems in the process.
______________ is used by individuals external to the organization to understand its

performance. Financial accounting
The accounting system generates information about the: operations of a business
(T/F) To increase a number by 20%, you can either multiply the base number by .2 and then
add that to the base, or you can multiply the number by 1.2 and get the same answer.
For example:
2,160 + (2,160 * .2) = 2,592
and,
2,160 * 1.2 = 2,592 true
competiton invisible hand of market, other sellers

freedom of choice not forced to trade
fair competiton no cutting nets, cheating in market
competition in exchanges results in... pressure to lower prices
create new/better products
more efficient ways to do things
stakeholders(4) citizens
consumer
employee
owner
uncertainty not knowing how the market will respond
risk damage associated with bad outcomes
specialized competitive markets rely on_____(4) to deal with risk and uncertainty planning
organizing
operating
controlling
organize(planning) configure resources(ppl, materials, tools)
operate(planning) work on plan
control(planning) measure results, compare to plan. adjust , learn/improve performance
marketing know customer and determine how best to serve them(creat price, promo
budget, sale budget, sales forcast)
production build quality products at lowest possible cost( units sold and unsold,
investment decisions like expand factory)
financemoney( profit, bond, stock, loans) arrange tools and money necessary to meet the
goals of the company
administrative determine who the company is and what it wants to accomplish
main office sales, customer relations, research, daily operations
accounting market research, product, price, place promotion

track economical consequences of every decision made in company... rev, expenses,
profits, assets, money borrowed and owed to us, investments(all in financial statement)
research and development invent new products and reengineer old ones(determine size,
performance, mtbf, perceived age)
finance
assets= liabilities+owners equity
value of stuff organizations control
profit= revenue-expenses
liabilites debt claims against stuff sold
owners equity value of owners investments in company
owners claim against stuff sold
how much they get from sale
accounts receivable amount customers owe from purchase on credit
total current assets all assets that you use to operate business
fixed assets assets with long-term use/value(factory)
property plant equipment purchase price for land, building, equipment(things used to
build products)
accumulated depreciation value of plant and equipment used up while operating your
business
total fixed assets net value of prop. plant equip.(value
total assets value of all the stuff of ur business
liabilities and owners equity where the money came from to get assets, accounts for who
has claims against companys assets
current liabilities loans that have to be paid back within a year
accounts payable amount u owe to supplies for materials purchased on credit
current debt loans(part of a long term loan) to be paid back this year
total current liabilities what must be payed back within the year
long-term liabilities loan(or debt contracts) that have to be paid back some time in future
total liabilities all wealth u are renting from others

paid-in capital(common stock) value of owners direct investments
retained earnings value of owners profits(can choose to re-invest in company)
total owners equity owners claim against assets of business
total liabilities and owners equity always equal to total assets-liabilities and owners
equity used to acquire assers
tell which company is biggest who has largest total assets
company took emergency loan cash=0 on balance sheet
value of sales made but not been paid for acct recceivable
value of stuff in stock inventory
stocked out inventory=$0
(total) variable cost cost of goods sold
period costs (fixed costs/operating expense)
cost of being in business that month
do not vary with activity-factory,r&d
revenue funds from sales
contribution margin revenue-total variable cost
depreciation value that operating "uses up" factory and equipment
marketing expense money spent on ads, selling, distributing products
R&D money spent developing new products/improve existing
admin expense cost of legal expenses, accounting services, ect
total period costs cost of operating your business over a period of time
earn before interest tac rev-cariable costs(contribution margin)-period cost(net margin)
interest expense rent you pay to use other ppls money
net income rev-variable cost-period cost-interest-taxes
profit
demographic segmentation age, gender, income, family life cycle
segmentation(5 categories) geography

demographics
psychographics(personality lifestyle motives)
benefits sought
usage rate
promotion budget controls awareness(half of who were not aware find out on their own)
Accounts receivable number of days your customers have to sell their products and use re
to pay(gain more appeal longer you wait)
potential share (best guess of how many units may sell) how much you would have sold if
every customer had their first choice
(total demand X growth X potential market share-page 7) larger than actual if you stocked
out
actual market share how much u actually sold
(calculate total demand by growth of market then by % of market u control) larger than
potential if competitor stocked out
DCS Market share formula (demand X growth of market)/[your score/ (add all dcs scores)]
accessibilty horizontal graph up top, how much of the ppl who bought ur product find it
easy to get
awareness ppl who got ur info from advertising (half of those who dont found out through
another way)
percent under customer awareness
available for sale produce and unsold units
AFS warehouse least 1
AFS warehouse most AFS/6
AFS sales least AFS-1
AFS sales most AFS-(AFS/6)
set production schedule(how many u should have available for sale) (best guess/11)
X12
adding capactiy takes 1 year so forecast sales 2 years in advanced
Revenue= price X units sold
Cost of goods sold(COGS)= unit cost X units sold

contribution margin(net profit)= rev-COGS
automation machines and human labor
labor cost pr unit 11.20 at 1(goes down 1.12 per unit)
required investment for automation= price X automation X total units
addition capacity cost= (units X 6) + (4 X automation level X units)
Using information from the FastTrack Report (primarily from performance in the High
Tech segment) from Round 2, Ferris forecasts Fast sales and decides to have 1,680
units for sale in Round 3. (It is unclear what process they used to generate this
number). Remembering that it takes a year to come on-line, does Ferris have to add
capacity for Fast in Round 3? (Refer to the Round 2 Foundation FastTrack Report
available both on Canvas and in Appendix 1 of "An Introduction to Business.")
yes
Time Value of Money (TVM) - The concept that money available today is worth more than
the same amount tomorrow. Money that you have in hand today can be invested to earn a
positive rate of return, producing more money tomorrow.
- The theory and application of valuing cash flows at various points in time.
Time Line Depicts the cash flows associated with a given investment.
Principles of Time Value 1. Managers need to compare the cash flows at a single point
in time. Typically, that point is either the end or the beginning of the investment's life
2. The future value technique uses compounding to find the future value of each cash flow at
the end of the investment's life and then sums these values to find the investment's future
value.
3. The present value technique uses discounting to find the present value of each cash flow
at time zero and then sums these values to find the investment's value today.
Basic Patterns of Cash Flow 1. A single amount: A lump sum amount either held currently
or expected at some future date.
2. An annuity: A level periodic stream of cash flow.
3. Mixed stream: A stream of unequal periodic cash flows.
Future Value (FV) The amount to which a cash flow or series of cash flows will grow over
a given period of time when compounded at a given interest rate.
- Process of finding future values is often referred to as compounding cash flows.

Future Value Technique FV technique uses compounding to find the future value of
each cash flow at the end of investment's life.
Rules of Future Value Everything else equals,
1. Higher the interest rate (r - compounding rate)
2. Longer the period of time (n)
Rule: Higher the future value
Principal Amount of money borrowed which interest is paid.
Present Value (PV) The amount of money that would have to be invested today at a given
rate over a specified period to equal the future amount.
- Process of finding present values is often referred to as discounting cash flows.
Present Value Technique PV technique uses discounting to find the present value of
each cash flow at time 0 and then sum these values to find the investment's value today.
- In practice, when making investment decisions, managers usually adopt the present value
approach.
Compounding interest- Amount of interest earned on a given deposit has become part of the
principal at the end of specified period.
- Earn interest on interest
Discounting The process of finding the present value of a cash flow or a series of cash
flows; discounting is the reverse of compounding.
Discount rate The discount rate is often also referred to as the opportunity cost, the
discount rate, the required return, or the cost of capital.
Rules of Present Value Everything else equals,
1. Higher the interest rate (r - compounding rate)
2. Longer the period of time (n)
Rule #1: Lower the present value
When discount rate equals to 0
Rule #2: Present value = Future value
Types of Annuities Two basic types of annuities:
1. Ordinary annuity: cash flow occurs at the end of each period
2. Annuity due: cash flow occurs at the beginning of each period.

Future Value of Ordinary Annuity The future value of an annuity is the value of a group of
recurring payments at a specified date in the future. For an ordinary annuity, the cash flow
occurs at the end of each period. The ordinary annuity is commonly used in investment
decisions.
Future Value of Annuity Due The future value of an annuity is the value of a group of
recurring payments at a specified date in the future. For an annuity due, the cash flow occurs
at the beginning of each period and compared to ordinary annuity there is always one extra
period of compounding affect.
Present Value of Ordinary Annuity The present value of an annuity is the current value of
future payments from an annuity, given a specified rate of return or discount rate.
Present Value of Annuity Due For an annuity due, the cash flow occurs at the
beginning of each period and compared to ordinary annuity there is always one extra period
of compounding affect.
- PV of annuity due is always greater than PV of ordinary annuity for same project.
Rule of Annuities Everything else equals,
Rules #1: Ordinary annuity is always less than Annuity due. (Ordinary annuity < Annuity due)
Perpetuity Annuity with an infinite life, providing continual annual cash flow.
- Annuity that never stops providing its holder with a cash flow at the end of each year.
Mixed Stream of unequal periodic cash flows that reflect no particular pattern.
- The future value of a mixed stream of cash flows is calculated by multiplying each year's
cash flow by compounding at the appropriate interest rate.
- The present value of a mixed stream of cash flows is calculated multiplying each year's
cash flow by discounting at the appropriate discount rate.
Compounding Frequency The number of compounding periods in one year. Rule #1: The
greater the compounding frequency, higher the effective annual rate.
Nominal, or stated annual rate The contractual annual rate of interest charged by a
lender or promised by a borrower.
Effective, or true annual rate (EAR) Annual rate of interest actually paid or earned. The
effective annual rate reflects the effects of compounding frequency.
Continuous Compounding Compounding over every nanosecond - the smallest time

period imaginable.
- Continuous compounding uses "e" number, which is mathematical constant.
Determine deposits needed to accumulate a future sum - Planning to reach certain

amount of savings in the future date.
- Planning to retire with certain amount of money
- Planning to buy certain big value items in the future.
- These kinds of calculation involves a finding annual payments /CF/.
Loan Amortization The determination of the equal periodic loan payments necessary to
provide a lender with a specified interest return and to repay the loan principal over a
specified period.
Loan Amortization Schedule A schedule of the breakdown of each payment between

interest and principal as well as the remaining balance after each payment.
- Initial beginning of year principle equals to loan amount or borrowed amount of money.
- Every year loan payment equals to annual cash payment or CF.
- Interest rate equals to Principle C1 times interest rate of the loan.
- Principle Payment of that year equals to difference between loan payment and interest
payment.
- End of year principle of that year equals to difference between Principle C1 and principle
payment.
Interest or growth rates The rate of return that would be required for an investment to
grow from its beginning balance to its ending balance, assuming the profits were reinvested
at the end of each year of the investment's lifespan.
Human resources includes: employees and their skills involved in the production process
In Foundation, you are making decisions for the year 2010. You add a new product that will
come on-line in October of 2011. What decisions should you make now to prepare for that
product release? Build capacity and determine your automation level for the new
product
Capacity involves: the ability of your machinery to produce a specified quantity of

products each year
Business.") 285
Chester decided to have 1,700 units of Cake available for sale next year. What is the least
they can sell and still meet their inventory management goal next year? 1,416
Based on the FastTrack in the reported year, using the actual market share method, how
many units will Able sell just to the Low Tech market next year? Assume: 22.5% market
Report available both on Canvas and in Appendix 1 of "An Introduction to Business.")
1,509
Based on the FastTrack in the reported year, using the potential market share method, how
many units will Able sell to just the Low Tech market next year? Assume: 25.5% market
Report available both on Canvas and in Appendix 1 of "An Introduction to Business.")
1,711
Based on the FastTrack in the reported year, using the DCS share method, how many units
will Able sell to the low tech market next year? Assume: 10% growth rate for Low Tech.
Appendix 1 of "An Introduction to Business.") 1,690
You have calculated the following forecasts for Fast based primarily on information about
Fast's performance in the High Tech Market:
Which of the following would be the most realistic or "safest" number to have available for
sale if Ferris wants to meet its inventory management targets? Assume: 20% growth rate for
High Tech 1,400
Using information from the FastTrack Report from Round 2, Chester forecasts Cake's sales
and decides to have 1,750 units for sale in Round 3. If Chester's goal is to have at least 80
percent of Cake's products made in the first shift in the future, should Chester add capacity
for Cake? Assume: 10% growth rate for Low Tech and 20% growth rate for High Tech.
Appendix 1 of "An Introduction to Business.") Yes
Chester decided to have 1,700 units of Cake available for sale next year. What is the most
they can have left in inventory and still meet their inventory management goal next year?283
Report available both on Canvas and in Appendix 1 of "An Introduction to Business.") Yes
You have the capacity for 800 units in a product line that you want to discontinue. You have
an existing inventory of 600 units. If you sell 800 units (all) of the capacity for that line, what
will happen? (Refer to Foundation Exercise 8 in "An Introduction to Business.") You will
receive cash from the sale of the capacity (equipment) and the 600 products will be sold for
one-half of what they cost to produce.
You are creating a new product ABLER and want to build a very efficient factory to produce
it. Since ABLER will compete in the High Tech market, you think that an automation level of
4 would be the best. You want your factory to have a capacity of 800(000) units. How much
will you have to invest in the building (only) for ABLER's factory? $ 4,800
The capacity is for 1,000 units with an automation level of 4. The per-unit cost of adding
capacity is $6 for floor space and $4 per level of automation. If you double your current
capacity at the same automation level, what will that cost? $22,000
Exercise 8 in "An Introduction to Business.") $ 8.40
is no overtime involved.) $ 3.36
You are creating a new product ABLER and want to build a very efficient factory to produce
it. Since ABLER will compete in the High Tech market, you think that an automation level of
4 would be the best. You want your factory to have a capacity of 800(000) units. How much
will you have to invest in the machinery (the automation) for ABLER's factory? $12,800
Able is currently selling for $34. They expect to sell 1,000 units. Andrew's factory for Able
has a capacity of 1,000 units and an automation rating of 7. The material cost per unit is
$11.52. Assuming no overtime (and no inventory carrying costs), what will Able's Total
Revenue (as a total dollar amount) be if they sell 1,000 units? $34,000

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General Things

What does your company manufacture?

How was your company created?

What is FastTrack? What does it include?

It is an extensive year-end report of the sensor industry.

What is a Customer Survey Score?

It is a rating that can determine sales distribution.

(Higher scores = better sales)

What is FastTrack? What does it include?

It is an extensive year-end report of the sensor industry.

What is Situation Analysis?

What are Proformas? How will they help you?

They are projections for the upcoming year.

What are annual reports? How will they help you?

They are results from the previous year.

What is Foundation Spreadsheet?

What are the four departments?

What is Research and Development?

-Changes size and performance on the Perceptual Map.

Inter-Department Coordination: R&D + Marketing

Work together to make sure products meet customer expectations.

Inter-Department Coordination: R&D + Production

Inter-Department Coordination: Marketing and Production

Inter-Department Coordination: Marketing + Finance

Accounts Receivable Policy

Inter-Department Coordination: Finance and Production

Production tells Finance if they need additional equipment.

What is a Decision Audit? How does it help you?

It is a complete trail of all team decisions.

It helps you identify your decision making strengths and weaknesses.

What does the Industry Conditions Report do?

Summarize the Low Tech buying criteria.

-Price (41%) $15-35)

-Age (29%) 3yrs

-MTBF (21%) 14,000-20,000

-Ideal Position (9%) Center segment

Summarize the High Tech buying criteria.

-Ideal Position (33%) Leading edge

-Age (29%) 0 yrs

-Price (25%) $25-45

-Reliability (13%) 17,000-23,000

A rating of reliability measured in hours.

High tech prefers higher MTBF

Low tech prefers lower MTBF

-Your customers expect products that are smaller and faster.

Define ideal spots.

The size and performance most desired by customers in the segment.

Low Tech -0.0 +0.0 (Segment Center)

High Tech +1.4 -1.4

Low Tech High Tech

Round Pfmn. Size Pfmn. Size

1: 5.3 14.7 / 6.7 13.3 (BASICALLY JUST NEED TO KNOW THIS)

4: 6.8 13.2 / 8.8 11.2

8: 8.8 11.2 / 11.6 8.4

Price, age, MTBF always remains the same.

How many times a year is a customer survey score calculated?

12 times (one per month)

Explain the rough cut circle. What's its radius?

"I will NOT purchase a product outside this boundary."

-Radius is 4.0 units.

Explain the fine cut circle. What's its radius?

Prefers products within the circle.

-Radius is 2.5 units.

Sensors are priced at $10.

_ hours of realiability (MTBF) adds to the ____. 1,000,