61.The level of output at which most plant-level scale economies are exhausted is known as _____.
A. mass customization
B. breakeven point
C. minimum efficient scale
D. just-in-time
E. lean production
62.Uvicon Inc. and Bionor Inc. are firms that compete against each other in the global market. Uvicon Inc. has a high level of fixed costs and high minimum efficient scale, while Bionor Inc. has a low level of fixed costs and minimum efficient scale. In this scenario, which of the following is true?
A. Uvicon Inc. will be better prepared to hedge against potential adverse moves in currencies than Bionor Inc.
B. Uvicon Inc. will benefit from centralizing its production activities and Bionor Inc. from decentralizing.
C. Uvicon Inc. will have more bargaining power over contract manufacturers than Bionor Inc.
D. Uvicon Inc. will be better enabled to adapt to changes in consumer demand in regional markets than Bionor Inc.
E. Uvicon Inc. will be better prepared to accommodate demands for local responsiveness than Bionor Inc.
63.Which of the following statements is true about minimum efficient scale of output?
A. With lesser utilization of capital equipment, the chances of a firm realizing economies of scale increases.
B. A plant must avoid operating at the minimum efficient scale of output to realize all major plant-level scale economies.
C. When the minimum efficient scale of production is low relative to global demand, it will be economical to manufacture a product at a single location.
D. An advantage of a low minimum efficient scale is that it allows the firm to accommodate demands for local responsiveness.
E. A low minimum efficient scale increases the risks against potentially adverse fluctuations in exchange rates.
64.Which of the following is a consequence of a low minimum efficient scale?
A. It prevents a firm from utilizing capital equipment fully.
B. It enhances the need to centralize production in a single location or a limited number of locations.
C. It prevents a firm from accommodating demands for local responsiveness.
D. It increases the unit cost of products.
E. It allows a firm to hedge against currency risk by manufacturing the same product in several locations.
65.A firm with a wide product variety will find it:
A. difficult to achieve shorter product runs.
B. difficult to increase its product sales.
C. difficult to reduce its unit costs.
D. easy to realize economies of scale.
E. easy to reach optimum production efficiency.
66.Producing a standardized product in large volumes will:
A. result in diseconomies of scale.
B. increase production efficiency.
C. increase production costs.
D. result in shorter production runs.
E. result in a high minimum efficient scale of output.
67.Adopting flexible manufacturing technology to produce a wide variety of end products results in:
A. increased setup times for complex equipment.
B. increased utilization of individual machines.
C. reduced quality control.
D. increased unit cost of products.
E. diseconomies of scale.
68.Which of the following is an objective of lean production?
A. Reducing the quality of a product to keep unit costs low
B. Reducing setup times for complex equipment
C. Replacing customized production with mass production
D. Decreasing utilization of individual machines through scheduling
E. Increasing the level of minimum efficient scale of output
69.Mass customization reconciles the two goals of:
A. mass production and long production runs.
B. standardization and economies of scale.
C. high fixed costs and single production facility.
D. low cost and product customization.
E. local responsiveness and decentralized production.
70.Which of the following is an implication of a mass production system?
A. It results in short production runs
B. It fails to realize economies of scale
C. It reduces the number of defects and eliminates waste.
D. It helps to accommodate consumer preferences for product diversity
E. It creates massive inventories that have to be stored in large warehouses.
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