P1 Chapter 8 Quiz

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Question 1 of 15

1. Question

From the options below, select the correct purpose of stating non-negativity constraints.

Because the quantity produced of either product cannot be a negative figure
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Because we wish to maximise contribution
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Because we have a minimum production constraint
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Because we can’t produce zero quantities of either product
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Question 2 of 15

2. Question

From the options below, select the situation in which profit will be maximised for an organisation which has a limiting factor.

The organisation is producing products which earn the highest profit per unit
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The organisation is producing products which earn the highest contribution per limiting factor
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The organisation is producing products which earn the highest contribution per unit
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The organisation is producing products which use the least amount of the limiting factor
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Question 3 of 15

3. Question

From the options below, select the ONE statement that does not relate to shadow pricing.

Shadow price is only relevant if there is a scarce resource
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It is the maximum price that would be paid for a scarce resource
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It is the extra contribution for one more unit of the scarce resource
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It is the maximum premium that would be paid for a unit of a scarce resource
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Question 4 of 15

4. Question

A company has done the following analysis:

Product	L	M
	$ per unit	$ per unit
Selling price	70	90
Direct labour ($7 per hour)	(28)	(14)
Direct material ($ 5 per kg)	(10)	(45)
Machine hours ($10 per hour)	(10)	(20)
Contribution	22	11

Demand for L and M is 400 units and 700 units respectively. Material is in short supply and there is only 6,000 kg available.

What is the optimum contribution that can be earned?

$6,347

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$17,150

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$8,800

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$15,147

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Question 5 of 15

5. Question

Which of the following statements regarding linear programming is/are TRUE?

Select all that apply:

Situations where there is only one scarce resource, are best dealt with using linear programming
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Linear programming assumes that products are infinitely divisible
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Linear programming can be used in situations where there are more than two scarce resources
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One of the key assumptions of linear programming is that unit variable costs are constant
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Linear programming cannot be used if an organisation has adopted a marginal costing system
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Question 6 of 15

6. Question

From the options below, select the factor/s that would explain the area where the solution lies.

Minimum price
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The feasible region
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Surplus resources
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Slack variable
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Objective function
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Dual price
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The feasible line
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Maximum price
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Question 7 of 15

7. Question

X Co. makes two products – Z and J. Both products are made out of material Q. Each unit of product requires 3kg of material Q. The company is already committed to a contract to make 160 units of Z.

If a total of 350 units of J can be made, what is the inventory of material Q in kgs?

1,530 kgs
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2,215 kgs
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2,105 kgs
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impossible to say given the information
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770 kgs
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Question 8 of 15

8. Question

W Plc makes two types of tables, big and small. Both the tables are made of teakwood. There is a total of 320kg of teakwood available. Each big table requires 5kg of teakwood and each small table requires 2kg of teakwood. The company is already committed to making 120 small tables.

From the above details, calculate how many big tables can be made?

units

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Question 9 of 15

9. Question

Galileo PLC is a manufacturer of two different products, Product K and Product M. The firm aims to maximise contribution from both of these products. Both products require both skilled and unskilled labour to produce.

The following information pertains to both products:

	*Product K*	*Product M*
*Selling price*	$55	$75
*Direct materials*	$13	$19
*Direct unskilled labour*	$8	$9
*Direct skilled labour*	$13	$12
*Variable overheads*	$4	$6
*Fixed overheads absorbed*	$2	$4

The organisation is limited to 1,000 hours of unskilled labour per period and 800 hours of skilled labour per period. Materials are also limited with only 5,000kgs of materials being available per period.

If ‘K’ represents the number of units of Product K sold in a period and ‘M’ represents the number of units of Product M sold in a period, what will the objective function be for Galileo PLC?

Minimise 42K + 56M

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Maximise 17K + 29M

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Minimise 13K + 19M

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Maximise 15K + 25M

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Maximise 28K + 37M

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Question 10 of 15

10. Question

A manufacturing company has the following information for Period 3, 20X1:

A B C D

Contribution (per unit) £14 £17 £20 £11

Labour hours required per unit 1 1.5 2 0.5

Maximum demand (in units) 300 150 200 50

The firm produces four different products, A, B, C and D. The firm considers labour hours to be a single limiting factor as there are only 500 labour hours available in Period 3 20X1 due to an ongoing worker protest.

Which of the four different products will be the last to be produced in Period 3 20X1?

Product B
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Product C
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Product A
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Product D
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Question 11 of 15

11. Question

In a linear programming problem, the constraints are X ≤ 41 and Y ≥ 19. Describe the feasible region, assuming where appropriate that the axes also constitute boundaries.

An infinite rectangle to the left of X = 41 and above Y = 19
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A rectangle to the left of X = 41 and below Y = 19
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An infinite rectangle to the right of X = 41 and below Y = 19
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An infinite region above Y = 19 and to the right of X = 41
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Question 12 of 15

12. Question

From a linear programming perspective, what is the most accurate description of the term ‘surplus’?

The term surplus refers to a resource that is under-utilised when the optimal solution is implemented
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The term surplus refers to the utilisation of a resource over a minimum level
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The term surplus refers to the amount by which the binding constraints can increase when an optimal solution is implemented
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The term surplus refers to any extra additional scarce resources that will be purchased at the shadow price
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Question 13 of 15

13. Question

Gladiator Ltd is a manufacturer that produces three products, Product X, Y and Z. The firm considers labour hours to be a limiting factor and so it needs to allocate labour hours to each product carefully.

The following information is budgeted for 20X1:

*Per unit information:*	X	Y	Z
Sales Price	£55	£60	£70
Direct labour cost	£15	£20	£30
Direct labour hours	3	3.5	4
Direct materials	£11	£16	£14
Variable overhead	£2	£3	£6
Fixed overhead absorbed	£1	£2	£4

Of the three products, which one will the organisation produce first?

Product Z

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There is insufficient information given to answer this question

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Product X

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Product Y

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Question 14 of 15

14. Question

From the options below, select under which type of cost would unit cost be classified in linear programming.

sunk cost
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fixed cost
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total cost
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none of the answers apply
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variable cost
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Question 15 of 15

15. Question

A company has done the following analysis:

Product	R	T
	$ per unit	$ per unit
Selling price	130	160
Direct labour ($8 per hour)	(24)	(40)
Material A ($3 per kg)	(15)	(12)
Material B ($7 per litre)	(14)	(7)
Machine hours ($10 per hour)	(30)	(40)
Contribution	47	61

Demand for R and T is 750 and 1,150 respectively. Labour hours are in short supply and there are only 7,500 hrs available. However, the company must fulfil a commercial customer order first of 250 Rs and 350 Ts before it can produce what it wishes to make.

What is the optimum production plan of Rs and Ts to make?

R = 250, T = 350

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R = 750, T = 1,050

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R = 500, T = 500

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R = 300, T = 1,150

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P1 Chapter 8 Quiz

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	A	B	C	D
*Contribution (per unit)*	£14	£17	£20	£11
*Labour hours required per unit*	1	1.5	2	0.5
*Maximum demand (in units)*	300	150	200	50