The King's College Capstone Simulation Quiz #3 Capacity

Explanation
Reducing the Mean Time Between Failures (MTBF) from 21000 to 14000 does not result in any direct savings in terms of $2.80 in direct materials per unit. The given statement is false because there is no correlation or direct relationship between the MTBF and the cost savings in direct materials per unit.

Explanation
Increasing the MTBF (Mean Time Between Failures) from 17000 to 23000 means that the product will have a longer average lifespan before it fails. This increase in reliability will result in lower maintenance and repair costs per unit, hence reducing the overall cost. Therefore, the cost per unit will remain the same at $1.80.

Explanation
Increasing automation from 0 to 1 results in a saving of $1.01 per unit in direct labor. This means that by implementing automation, the cost of labor required to produce each unit is reduced by $1.01.

Explanation
By changing the automation from 1 to 3, the production capacity of the line is increased threefold. Since the original capacity was 1,000,000 units, the new capacity will be 3,000,000 units. The total cost is not provided in the question, so we cannot determine the exact cost. Therefore, the correct answer cannot be determined based on the given information.

Explanation
The given statement is false because changes in capacity and automation do not happen immediately. Implementing changes in capacity and automation requires planning, decision-making, and implementation processes. These processes can take time and involve various factors such as budgeting, resource allocation, training, and coordination. Therefore, it is not accurate to say that changes in capacity and automation happen immediately.

Explanation
Adding 800,000 units of capacity at an automation rating of 3 will cost $14,400,000.

Explanation
If you reduce automation, it means that you are decreasing the level of automation in a process or system. This reduction in automation would require more manual labor and human intervention, which in turn would lead to incurring additional costs for acquiring and implementing the necessary tools and equipment for manual work, also known as etooling costs. Therefore, the statement "If you reduce automation, you will incur etooling costs" is true.

Explanation
The statement suggests that selling capacity can be achieved instantly, while buying capacity takes a year to develop. This implies that one can start selling their products or services right away, but it takes time to build the necessary resources and capabilities for purchasing. Therefore, the answer "True" indicates that selling capacity can be established immediately, while buying capacity requires a longer timeframe.

Explanation
The given statement states that each new unit of capacity costs $5 per unit for floor space and $4 per unit of automation. However, the correct answer is False; $6 per unit of floor space. This means that the cost per unit of floor space is actually $6, not $5 as stated in the statement.

Explanation
Since the unit sales are growing at a faster rate (20% per year) compared to the market growth rate (10% per year), it means that your company is gaining a larger portion of the market. This indicates that your market share will increase in relation to your competition.