Product Management Production Management 4 — Questions and Answers
Question 1: A product manager is evaluating whether to add a new production line. The break-even analysis shows fixed costs of $500,000 and a contribution margin of $50 per unit. What is the break-even volume?
- 5,000 units
- 10,000 units (Correct answer)
- 25,000 units
- 50,000 units
Correct answer: 10,000 units
Break-even volume = Fixed Costs ÷ Contribution Margin = $500,000 ÷ $50 = 10,000 units.
Question 2: Which scheduling approach schedules jobs by starting from the due date and working backward to determine the latest possible start date?
- Forward scheduling
- Backward scheduling (Correct answer)
- Infinite capacity scheduling
- First-Come-First-Served scheduling
Correct answer: Backward scheduling
Backward scheduling calculates start dates by working back from the due date, minimizing work-in-process time.
Question 3: Statistical Process Control (SPC) uses control charts primarily to:
- Set production quotas for workers
- Distinguish between common cause and special cause variation (Correct answer)
- Calculate the optimal batch size
- Determine supplier lead times
Correct answer: Distinguish between common cause and special cause variation
SPC control charts signal when process variation is due to an assignable (special) cause requiring investigation, vs. normal random variation.
Question 4: A company applies ABC inventory classification. 'A' items should be managed with:
- Minimal oversight and periodic counts
- Loose reorder policies and large safety stock
- Tight controls, frequent reviews, and accurate records (Correct answer)
- Automated reorder triggers only
Correct answer: Tight controls, frequent reviews, and accurate records
A items represent high-value, high-priority inventory requiring strict controls and frequent cycle counts.
Question 5: The Theory of Constraints (TOC) 'Five Focusing Steps' begin with which action?
- Subordinate everything to the constraint
- Elevate the constraint
- Identify the system's constraint (Correct answer)
- Exploit the constraint
Correct answer: Identify the system's constraint
TOC's first step is to identify the single constraint that limits the system's throughput before taking any action.
Question 6: Single Minute Exchange of Die (SMED) is a lean technique designed to:
- Reduce the number of product variants in production
- Eliminate all setup activities permanently
- Reduce machine changeover time to under ten minutes (Correct answer)
- Standardize die specifications across suppliers
Correct answer: Reduce machine changeover time to under ten minutes
SMED aims to shorten equipment changeover time to single-digit minutes, increasing flexibility and reducing batch sizes.
Question 7: Which term describes the total time from when a customer places an order to when they receive the finished product?
- Cycle time
- Takt time
- Lead time (Correct answer)
- Throughput time
Correct answer: Lead time
Lead time is the elapsed time from order placement to customer delivery, encompassing all production and logistics steps.
Product Management Production Management 4
A product manager is evaluating whether to add a new production line.
The break-even analysis shows fixed costs of $500,000 and a contribution margin of $50 per unit.
What is the break-even volume?