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CompXM Exam Guide|Questions with Complete Solutions Rated A+
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CompXM Exam Guide|Questions withComplete Solutions Rated A+
contribution margin in the production section - Ans contribution margin is defined as: (price-
variable costs) /price or more completely, (price-unit cost-inventory carry cost)/price; in short,
it is the percentage of the price that is left over after covering variable costs; from this you
pay for the remaining fixed expenses and eventually produce a profit, but in the calculation
for the production spreadsheet, inventory carrying costs have been set to zero because they
are ambiguous at this point; the contribution margin shown here is simply (price-unit
cost)/price; tip: try to keep your contribution margin above 30%; from your contribution
margin you must cover marketing expenses, R&D costs, interest payments, HR overheads, etc.
1st shift capacity - Ans the first shift capacity that is available for production this year in
thousands of units; for example, if your capacity is 1200, you can produce 1.2 million units on
first shift this year at the rate of 100 thousand units per month and you can produce up to
twice this rated capacity by utilizing a second shift or, if necessary, asking the first shift to work
overtime
buy/sell capacity - Ans the amount of capacity you wish to buy or sell this year in thousands of
units.; decisions to buy capacity are entered as positive numbers- for example, 100 would order
100,000 units of capacity for delivery on December 31st of this year- the new capacity will not
,be available until next year; decisions to sell capacity are entered as negative numbers; capacity
is sold on January 1st of this year; tip: if you want to retire a product but still have inventory on
hand that you think you can sell, keep 1 unit of capacity and sell the rest; if you sell all of the
capacity the inventory will be liquidated at 50% of its value
automation rating - Ans the automation rating of the production line this year; automation is on
a scale of 1.0 to 10.0; at 1.0, you rely heavily on skilled workers to build your product; at 10.0,
robots do most of the production; at an automation level of only 1.0, a typical labor cost per
unit would be $12.00 (the actual cost depends upon the current labor contract, which in turn
depends upon the year in the simulation, but $12.00 is typical); as automation increases, this
would fall by about $1.20 per point until at an automation of 10.0 labor cost per unit would be
about $1.20
new automation rating - Ans the automation rating of the production line next year;
changes are ordered on January 1st of this year and arrive on December 31st; the new
automation rating will be available next year
investment ($000) - Ans the amount of the investment in new plant and equipment; negative
numbers appear when plant is sold, but this is actually cash being paid to you for the sale;
capital expenditures are limited to the amount of money you can raise by issuing stock and
bonds, plus last years excess working capital, minus any dividend you pay this year; if your total
spending on capacity and automation is more than you can raise you will notice that any of the
plant and equipment decisions you have made contributing to this problem will be struck
through in red; if you enter those decisions anyway, the simulation will scale them back for you
(probably not in the way you want them)
max invest - Ans capital expenditures are limited to the amount of money that can be raised
through stock and bond issues plus excess working capital, i.e., the sum of your max stock
issue, max bond issue, and working capital minus 90 days of sales, less any dividend that is paid
needed complement - Ans the number of workers you need this year if you are to
avoid overtime
, complement % - Ans your staffing complement percentage (the percentage of the "needed"
complement you choose to employ this year); entering 100% means that your complement will
equal the needed complement and no one will have overtime; entering 90% means your
complement will be 9/10 of your needed complement and some workers will have overtime
complement - Ans the number of workers in your workforce; this year's complement is entered on
the production spreadsheet; the phrase "at needed complement" means that every position
required to meet the production schedule is filled; "at max complement" means that every position
at every workstation is filled; usually needed complement is less than max, because your
production schedule does not max out your physical capacity; there are two shifts; as you add
workers, the 1st shift is completely filled, then the second shift; suppose that you do not have
enough worker- your complement "this year" is less than your "needed" complement; 1st shift
must then work overtime to complete the work schedule; excessive overtime drags down
productivity and increases turnover; 2nd shift/overtime workers cost you 50% more per hour than
workers on 1st shift; the simulation schedules 2nd shift/overtime workers as a last resort
1st shift complement - Ans for each product, if your schedules are less than or equal to the
1st Shift Capacity, your workers will only be used on a 1st Shift
2cnd shift complement - Ans the number of workers on second shift; workers are assigned
to second shift only after the production schedule cannot be met on first shift; second shift
workers are paid 50% more per hour than first shift workers; second shift scheduling has no
impact upon the productivity index or turnover
overtime% - Ans the percentage of first shift workers on overtime; 100% means that every
first shift worker is working a double shift; 10% means that, on average, each 1st shift worker
performs 10% overtime; overtime increases turnover and drags down productivity
turnover rate - Ans the percentage of workers that left the company last year, excluding
downsizing; about 5% is rooted in unavoidable factors like retirement, relocation, and
weeding out poor workers; remaining turnover is a function of employee dissatisfaction- your
best workers leave first; turnover is driven down by recruiting spend and training days;
turnover goes up as a result of overtime and a substandard compensation package from the
labor negotiation; note: the turnover rate ignores downsizing factors; it reflects the turnover
in the population of workers that you keep after downsizing
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