1.

When opening the Excel version of Capstone, you should

do what to Macros?
Enable
If there are two identical products, one that has 100%
accessibility and one that has 0% accessibility,
the product with 100% accessibility will outsell the other 2 to 1
providing all other attributes are identical.
3. How many products does every team start with?
Five products
4. What are three of the five Segments?
a. Traditional, Low End, Performance
5. A segment manager's task is to
b. verify the products entering and leaving a segment, the margin
potential for those products, capacity level and the distribution
system as compared to competitors.
6. What is the difference between the market segments at the
beginning of the round to the final round?
b. The fine cuts overlap in the beginning and in year 8 only the
rough cuts overlap.
7. Successful managers will:
a. Create a strategy
b. Coordinate company activities
c. Analyze the market and its competing products
After you have uploaded your decisions to the website, can you
change your official decisions as many times as you want prior
to the processing date and time of the round?
yes
9. Once you upload your official decisions during a round, how
many times can you change them before the end of the round?
e. As many times as you want
10. What trend can be explicitly observed in the industry in
which your company is operating?
c. Products become smaller and smaller.

11. On perceptual map, the percentage of customers interested

in a product positioned outside of the rough cuts of that
product is
0%
12. MTBF is measured in
b. hour increments.
13. Customers that want low prices and are willing to sacrifice
miniaturization and performance are in the
c. low End segment.
14. Customers that want small products and are willing to
sacrifice performance are in the
e. size segment.
15. In Capstone, pricing standards are set by:
a. Customers (Market Segment).
16. "Reliability" is expressed in terms of:
a. Mean Time Between Failure.
17. MTBF measures what?
c. Reliability
18. The two characteristics that the perceptual map evaluates
are
a. Performance and Size.
19. The Perceptual Map is
a. a marketing tool used to track the position of the company's
products against those of the competitors.
20. The segments all drift to the lower-right section of the
perceptual map. Why does this drift take place?
c. Customers want smaller and faster products.
c. Customers want smaller and faster products.
d. down; right
22. When tracking market segments on the performance and
size perceptual map, which segment moves or "drifts" the
slowest?

b. Traditional
23. What happens to a product priced at $1 above or below the
segment guideline when a segment's product supply outstrips
demand?
c. It loses 20% of its appeal.
24. What's the measure for product reliability?
c. Expected time a product lasts
25. At what dollar amount above the segment guidelines is all
consumer appeal lost?
b. $5
26. The prices in each segment
a. drop by $0.50 each year.
27. MTBF in the segments should be
MTBF (Performance) > MTBF (High End)., and MTBF (Low
End) < MTBF (Size).
28. Which of the following are not buying criteria?
b. Automation
29. Inside each fine cut circle,
a. segments have an ideal spot where demand is at its highest.
30. The Traditional ideal spot is
c. near the center of its circle.
31. Increasing a product's reliability will result in which of the
following changes to production costs?
b. Higher material cost
32. Age refers to:
b. Product Age.
33. What happens to a product's Perceived Age when it is
repositioned in R&D?
a. It is reduced by 50%.
34. The preferred product perceived age for each sector peaks
at:

c. zero years for high end and seven years for low end.
c. zero years for high end and seven years for low end.
a. 2
36. Pricing plays a role
in the rough cut stage of the purchase decision and in the fine cut
stage of the purchase decision.
37. What are the top buying criteria that low end customers
most value?
b. Price
38. Which of the following is not a type of market segment in
CapSim?
c. Standard
39. What is the correct answer concerning the top buying
criteria for the following segment:
d. Price for low end and Positioning for high end.
40. Low End customers emphasize buying criteria in which
order?
a. Price, Age, Positioning, Reliability
41. Each segment places
b. a different emphasis on features of the 4 buying criteria.
42. Which market segment places the most importance on
price?
c. Low End
43. What is the most important criterion to a "Low End
Segment" customer?
a. Price
44. If you are marketing to High End customers, which criteria
are most important to them in order of importance?
e. Positioning, Age, MTBF, Price
45. Which one is not an area in which Capstone separates
company activities?
d. Logistics

46. The following represent core company activities that must

be addressed each year except:
d. Labor Negotiations.
47. Which of the following is not addressed by R&D?
e. Workforce Complement
48. In the Marketing Plan, Research and Development
addresses all but the:
d. automation of assembly lines.
49. When an R&D effort started in 2001 completes on
September 15, 2002, the product revision kicks in
b. immediately upon completion.
50. The relative cost of a product's material cost increases as:
c. MTBF is raised.
51. R&D completion time can be shortened
d. when a company takes advantage of existing technology.
52. R&D completion time depends on
a. number of projects in R&D.
b. automation rating.
c. the age of the product.
53. Which Automation rating requires the longest time to
reposition a product?
e. 10
54. In Capstone
c. the terms age and perceived age are used interchangeably.
55. When a product is moved to a new location on the
Perceptual Map, the Perceived Age (or Age) is:
c. divided in half.
56. Changing MTBF will:
a. have no impact on Perceived Age.
57. R&D projects can change a product's:

a. size.
b. age.
c. reliability.
d. performance.
58. If your team decides to introduce a new product, when
should capacity and automation be purchased?
b. One round prior to product release
59. If you purchase production capacity and automation:
c. it is available in the next year.
60. Marketing is concerned with 4 things. What are they?
c. Price, Place, Promotion, and Product
61. An increase in promotional budgets have:
c. decreasing returns over time.
62. Promotion efforts are subject to
c. diminishing returns.
63. What effect do increases in the Promotion Budget have on a
product's Awareness?
d. Diminishing returns
64. Assuming no additional product promotion, what percent
of customers, reached through last year's marketing campaign
will carry over into the current year?
c. 67%
65. How is the strength of the sales channel measured?
b. Accessibility on a scale of 0 to 100%
66. If you drop your sales budget to zero, accessibility drops to
0% in how many years?
3
67. If your company has a sales budget of $3 million and drops
it to zero,
c. accessibility drops to 0% in three years.
68. All of the following are direct implications of hiring a
second shift except:

d. increased MTBF.
69. How can assembly lines double their capacity?
b. Add a second shift.
70. If you increase automation from 2.0 to 5.0, the cost is:
a. $12 per unit of capacity.
71. What is one drawback of increasing automation?
a. The product requires increased time/expense for subsequent
short-move repositioning.
72. If you reduce automation in the production component of
Marketing, you will:
b. incur a retooling cost.
73. If you want to add 500,000 units of capacity to an assembly
line with an automation rating of 5, how much will it cost?
c. 13,000,000
74. If a line has a capacity of 100,000 units, the cost of
changing the automation level 1 unit either up or down is
c. $400,000.
75. Depreciation is calculated:
e. over a straight line 15-year period.
76. Which three factors drive labor cost?
b. Wage and benefit rates
c. Automation levels
d. Second shift/Overtime costs
77. If current wages are set at $10/hour, what would be the
minimum starting pay that your company would offer?
b. $8/hour
78. In the current contract, the workers' wage rate is $20.00.
Which of the following negotiation positions would be outside
the starting and ceiling amounts?
c. $18.00 to $35.00
79. For Wages, the negotiation Starting Position cannot be less
than ____% or more than ____% of the current contract.

d. 80; 150
80. Labor Negotiation includes:
a. hourly wage.
b. benefits.
c. profit sharing.
d. annual raise.
81. To run perfectly, all HR department managers should know
that
c. all strike settlements should be halfway between the demand
and the negotiation ceiling.
82. Your workers go on strike because they have demanded
$20/hour and your wage negotiation ceiling is at $18/hour.
Assuming that there are no other labor demands, how long will
the strike last?
a. 2 weeks
83. In the Human Resources section, workers will strike one
week for:
a. every 1% your Annual Raise Negotiation Ceiling is beneath
Labor's demand.
b. every $300 your Benefits Negotiation Ceiling is beneath
Labor's demand.
c. every 1% your Profit Sharing Negotiation Ceiling is beneath
Labor's demand.
d. every $1 your Wage Negotiation Ceiling is beneath Labor's
demand.
84. The Finance Department can use which of the following
methods to acquire capital for company activities?
a. Current Debt, Stock Issues, Bond Issues, and Profits
85. Your finance department is primarily concerned with
a. acquiring the capital needed for company activities.
b. establishing a dividend policy that maximizes the return to
shareholders.
c. setting credit policies for customers and suppliers.
d. profits.
86. Capital needed for company activities cannot be acquired
through:
d. arbitrarily firing employees.

87. Which financial obligation is best satisfied with Bond

Issues?
b. Increased production capacity
88. What happens to a company when its debt-to-assets ratio
increases?
c. Its short term interest rates increase.
d. Its bond rating is reduced.
89. What is your bond rate? The prime rate is 10%; your
current bond rating slipped one category (from AAA to AA).
b. 10.5%
90. An AAA rating bond with a given prime rate at r, the bond
rating slips to B if the current debt interest rate is charged at
a. R+2.5%
91. If your interest rate is 12.1%, and when you issue new
bonds, the bond interest rate is:
c. 13.5%.
92. Given a prime rate of r and a short term interest rate of
r+2.5, is the bond rate for issuing a new bond is equal to
(r+3.9%).
yes
93. You pay no brokerage fee if you:
d. Allow bonds to mature to their due date.
94. In Capstone what would the bond number be for a bond
with an interest rate of 6.5% that matures in 2003?
c. 6.5S2003
95. You are charged a ____ brokerage fee to issue stock and
____ brokerage fee to retire stock.
b. 5%; 1.5%
96. The Credit Policy Lag has implications for:
a. Customer survey score.
c. Production

97. Budgeting money to Quality initiative will lead to these

outcomes except:
c. increase Labor Costs.
98. How can the R&D cycle time be reduced?
b. Budgeting money to quality initiatives
99. Investing in CPI can
c. reduce material costs and labor costs to a lesser degree.
100. Investing in CCE/Six Sigma can
c. reduce labor and material costs.
101. Within the Process Management Initiatives, channel
support systems
c. increase demand.
102. Benchmarking reduces
d. Administrative Cost.
103. Which of the following is an example of a TQM initiative?
c. Quality Function Deployment Effort
104. Within the process management initiatives, concurrent
engineering
d. reduces R&D cycle time.
105. The situation analysis consists of ______ parts.
5
106. The situation analysis is
a. a team exercise.
b. designed to help your group understand the current market
conditions.
c. designed to help your group understand how the industry will
evolve over the next 8 years.
d. a five part analysis.
107. Which three customer groups "ride the wave of
technology" and are considered to be in the high technology
segments?
a. Performance, High End, and Size

108. When plotting the segment locations for each round

a. the goal is to determine the ideal spot location for each
segment during the 8 years.
109. Which of the following questions is answered by the
demand analysis?
c. Are the market segments growing at the same rate?
110. Two points that should be considered in your strategy are
c. it is easy to confuse unit market size with dollar market size.
111. What is the total cost in dollars for adding 1.0 million units
of capacity to a production line with an automation level of 1.0
and floor space costs per unit of $6? Assume automation costs
per unit of $4.
b. $10 million
1 000 000 (6 +4*1) = 10 000 000
112. If you are currently producing 100,000 units and your
automation level is 10, how much will it cost you to double your
capacity?
b. $4,600,000
100 000 (6 + 4*10) = 4 600 000
113. What is the right formula for capacity investment?
d. Investment = Capacity x [$6 + ($4 x Automation)]
114. If your current capacity is 10,000 units and your
automation level is 5.0, what is the difference of the investment
between doubling your capacity and doubling your automation
level?
a. $60,000
10 000 (6+45) = 260 000, 10 000 4 (10-5)=200 000, 260 000 200 000 = 60 000
115. If you are currently producing 100,000 units at an
automation level of 5, how much would it cost to maximize
automation?
c. $2,000,000
100 000 4 (10 -5) = 2 000 000

116. As a manager you need to change the automation level of

your segment from 2 to 5. The line has a capacity of 2 million.
How much would it cost?
b. $24 million
2 000 000 (5-2) 4 = 24 000 000
117. Rapid movement of an existing product on the Perceptual
Map requires
b. low automation levels.
118. If a product's Price was $20, its Material $8, and its Labor
$7, the Margin Per Unit would be:
d. $5.
20 - (8 + 7) = 5
119. If the price/product is $10 and the material cost/product
is $2 and the labor cost/product is $3, what is the
margin/product?
e. none of the above
10 - (2 + 3) = 5
120. In the Capstone simulation, what are the components of
a product's minimum material cost?
b. Reliability component cost and positioning component cost
121. The reliability component cost of a product with a 17,000
hour MTBF rating is:
a. $5.10.
17 000 * 0.3 /1 000 = 5.1
122. The best case margin potential for a product with a top
price of $30 and a minimum cost of goods sold of $15 is:
a. $45.
b. $2.
c. $450.
d. $.50.
e. none of the above. <--------123. A point or some points you consider for your strategy are

a. strive to give your customers the top two buying criteria.

b. the perceptual map is more important as a rough cut
consideration than a fine cut distinction.
c. maximize the effectiveness of R&D, to achieve higher demand
you must have a substantially better offer, it does not matter how
good your product is if you stock out.
124. In Capstone, the spreadsheets allow team members to
a. make changes to variables.
b. observe the results of changes made to variables.
125. Each of the spreadsheets
a. work independently.
b. depend on values entered in other spreadsheets.
126. New products are created on which spreadsheet?
b. Research and Development
127. Using the R&D Spreadsheet to design your products, you
have which of the following projects to choose from?
a. Repositioning
b. Invention
c. Reliability adjustment
128. What is the minimum amount of time that it takes to
create a new product?
c. 1 year
129. What are the drivers of Material Costs?
a. Higher performance
b. Smaller size
c. Higher Mean Time Between Failure (MTBF)
130. The marketing spreadsheet is used to set which of the
following:
a. prices.
b. promotion budgets.
c. sales budgets.
131. The A/R lag is
a. a marketing spreadsheet definition.
b. the accounts receivable lag (in days).
c. the time between customers receiving products and when they
are expected to pay for them.

132. What happens to a company when it increases the A/P

lag?
a. It improves its cash position.
d. Its suppliers withhold material for production.
133. The automation level
b. causes you to require more manpower with lower ratings.
c. causes you to require less manpower with higher ratings.
134. When going to a new automation level
a. there is a 1 year lag.
135. Negotiation Ceilings which represent the maximum
management is willing to pay are always
c. 10% above the starting positions.
136. Maximum issue is
a. the upper limit in thousands of dollars that teams can issue in
stock this year.
137. Cash position is
c. the cash position at the beginning of the round and a
projection of the cash position at the end of the round.
138. What effects do Process Management Initiatives have?
a. Administrative savings
b. Higher production efficiency
c. Increase in demand
d. Reduction of R&D times
139. Your team will make decisions for
a. Marketing.
b. Finance.
c. Human Resources.
d. Production.
140. Which customer group or market segment seeks proven
products using current technology?
b. Low End customers
141. Which customer group or market segment seeks proven
products, are indifferent to technological sophistication, and
are price motivated?

b. Low End customers

142. Which customer group or market segment seeks cutting
edge technology in both size and performance?
c. High End customers
143. Which customer group or market segment seeks high
reliability, advanced technology products that emphasize high
performance?
d. Performance customers
144. Which customer group or market segment seeks advanced
technology products that focus on small size?
e. Size customers
145. Repositioning moves a product on the Perceptual Map
from its old location to a new one. When does the new location
become active?
a. The day the R&D project completes
146. If a product's Automation rating is substantially increased,
it will:
a. take longer to move the product across the Perceptual Map.
147. There is ______ lag in buying new Capacity and ______
lag in changing Automation.
d. 1 year; 1 year
148. Which of the following is not a primary concern for your
Finance Department?
c. Employee turnover
149. This strategy attempts to gain a competitive advantage by
keeping R&D costs, production costs and raw material costs to
a minimum in order to compete on the basis of price. The
product life cycle focus will enable sales for many years on each
new product introduced into the High End segment. Products
will begin their lives in the High End, mature into Traditional
and finish as Low End products before they are retired and
their assets harvested.
c. Cost Leader with Product Life Cycle Focus
150. This strategy will allow us to maintain a presence in every
market segment. Competitive advantage will be gained by

keeping R&D costs, Production costs and raw material costs to

a minimum, enabling us to compete on the basis of price. We
will price below average. We will increase automation levels to
improve our margins and to make it acceptable to run second
shift/overtime.
a. Broad Cost Leader
151. This strategy will allow us to maintain a presence in every
market segment. Competitive advantage will be gained by
distinguishing our product with an excellent design, high
awareness, and easy accessibility. We will develop an R&D
competency that keeps our designs fresh and exciting. Our
products will keep pace with the market, offering improved size
and performance. The price of the products will be above
average and capacity will expand as we generate higher
demand.
e. Broad Differentiation
152. This strategy will concentrate on the Traditional and Low
End segment. Competitive advantage will be gained by keeping
R&D costs, Production costs, and raw materials costs to a
minimum, enabling us to compete on the basis of price (low
prices). The product will be priced below average and
automation levels will be increased to improve contribution
margins and make it acceptable to run second shift/overtime.
b. Niche Cost Leader
153. This strategy will focus on the high technology segments
(High End, Performance and Size). Competitive advantage will
be gained by distinguishing our products with excellent design,
high awareness, easy accessibility, and product extenders. Our
R&D competency will keep our designs fresh and exciting. Our
products will keep pace with the market, offering improved size
and performance. The prices of our products will be above
average and we will expand capacity as we generate higher
demand.
a. Niche Differentiation
154. The resources used in the Sales Budget are
d. Outside Sales, Distributors, and Inside Sales.
155. When working with inside sales, each inside salesperson
costs
c. $50,000.

156. When working with Distributors, each distributor costs

b. $100,000.
157. When working with Outside Sales, each salesperson costs
d. $125,000.
158. In only one product segment, diminishing returns for
distributors is reached at
c. 15
159. In only one product segment, diminishing returns for
inside sales is reached at
e. 30
160. In only one product segment, diminishing returns for
outside sales is reached at
b. 12
161. The marketing budget detail sales screen allows companies
to allocate their promotion budget to different media channels.
These media channels are:
b. Print Media, Direct Mail, Trade Shows, E-Mail, and Web
Media.
162. When investing in print media, diminishing returns apply
after
a. $700,000 per product.
163. The potential reach for E-mail is rated as good for the
e. Size and Performance.
164. The potential reach for Trade Shows is rated as good for
the
b. High End.
165. The Promotion part of advanced marketing allows teams
to allocate their time based on
b. each Product.
166. The time allocation on the advanced marketing module
can be used to
b. make a greater effort by the sales staff which translates into
increased demand for that product.

167. In forecasting, it is not likely that you will take half of the
sales unless
d. the price is at the low end of the range and the positioning, age
and MTBF are superior.
168. A product's demand is driven by
b. customer survey.
169. The customer survey score is driven by
c. 4Ps.
170. Process Management Initiatives
a. improve business procedures, resulting in improved
efficiencies and cost structures.
171. TQM initiatives
b. improve product quality while reducing the time and resources
required to design, manufacture, warehouse and ship products.
172. This process management initiative reduces material cost
and, to a lesser degree, labor costs.
c. Continuous Process Improvement systems (CPI)
173. This process management initiative reduces material costs
and administrative overhead.
b. Vendor/Just-in-Time Inventory (JIT)
174. This process management initiative reduces labor costs.
d. Quality Initiative Training (QIT)
175. This process management initiative increases the
effectiveness of the Sales Budget and therefore demand.
d. Channel Support systems
176. This process management initiative reduces R&D cycle
time,
a. Concurrent Engineering (CCE)
177. These TQM initiatives reduce administrative overhead;
reduces the R&D cycle time and enhances the effectiveness of
the promotion and sales budget.
b. Quality Function Deployment and Benchmarking

178. The TQM initiative reduces material costs and labor costs.
a. Concurrent Engineering (CCE)/Six Sigma
179. If there are 4 products listed in the Capstone Courier in
the traditional segment that have a customer survey scoring of
32, 28, 22 and 14, then the top product's demand would be:
d. 33%.
180. One of the ways of calculating the top product's demand is
by
c. divide the top product segment's score by the sum of all other
scores in that segment (not counting fringe products).
181. Combining size and performance creates a product
attribute known as
c. positioning.
182. Which statement is true?
b. Increases in capacity and changes in automation take a full
year to implement. Sales of capacity are immediately effective.
183. The traditional market segment is expected
d. to make up 27.5% of the electronic sensor market in five years
from now.
184. The sales channel effectiveness for the distributors is
highest for
c. Traditional and Low.
185. When investing in direct mail, diminishing returns apply
after
c. $800,000 per product.
186. The potential reach for direct mail is rated as good for the
c. Traditional and Low End.
187. This strategy will gain competitive advantage by
distinguishing our products with an excellent design, high
awareness, easy accessibility, and product extenders. We will
develop R&D competency that keeps our designs fresh and
exciting. Our products will keep pace with the market, offering
improved size and performance. We will price above average.

We will expand capacity as we generate higher demand in our

markets: High, Traditional and Low End.
b. Differentiation Strategy with a Product Life Cycle Focus
188. Sales channel effectiveness for inside salespeople is
highest for
d. Performance
189. The performance segment places more importance on
b. reliability and positioning.
190. Which market segment places the most importance on
reliability?
b. Performance
191. What product attributes do Performance customers value
the most?
d. Reliability
192. At what rate is inventory carrying cost charged?
d. 12%
193. Customers that want proven products and current
technology of moderate size and performance are in the
a. traditional segment
194. Customers that are willing to pay for products with cutting
edge technology that are fast performing and small in size are
in the
b. high end segment
195. What two factors are considered in both the rough cut and
fine cut of the customer buying process?
a. Price and Reliability
196. When a segment's product supply exceeds demand, how
much appeal, to the customer, will a product priced $1 above or
below the segment price range lose?
d. 20%
197. What section of the perceptual map is considered ideal for
the low end segment?
d. Upper Left

198. Increasing performance and shrinking size does what to

the material cost?
b. Increases
199. The promotion budget affects:
a. awareness
200. What is the starting awareness percentage of a new
product?
d. 25%
201. When investing in web media, diminishing returns apply
after
a. $500,000 per product.
202. When investing in Trade Shows, diminishing returns
apply after
d. $300,000 per product.
203. In order to achieve 100% accessibility, a team must:
b. have at least two products in the same segment's fine cut.
204. At the start of the simulation, your production plant has
___lines with room for ____more
d. 5, 3
205. If you sell off a production line (capacity and automation),
the amount of cash that the company will receive from the sales
of capacity will be
a. 65% of the original value.
206. Inventory Carrying Cost is ___% of the average cost of
production.
e. 12
207. Traditional customers consider this buying criteria to be
the most important
d. Age
208. What is the most important criteria to a "High End
Segment" customer?
a. Positioning

209. Size Segment customer consider this buying criteria to be

the most important
a. Positioning
210. It takes ______ years to invent a product.
c. at least one year
211. A new unit of capacity costs $6 for the floor space plus $4
times
b. automation rating.
212. A functional manager is responsible for coordinate
strategy and tactics across all functional areas of the company
exemplified by
b. R&D, Marketing, Production, Finance, Human Resources &
TQM.
213. How many market segments are there?
5
214. Which of the following buying criteria does not have a
rough cut?
age
215. When investing in E-mail, diminishing returns apply after
b. $600,000 per product.
216. What is a market segment?
c. Group of customers with similar purchasing concerns
217. The company's negotiation starting position for wages
a. is never more than 150% of the current contract.
218. Labor will strike for a maximum:
b. 84 days.
219. The interest rate on a bond ______ by________ for
each______ in the bond rating category.
a. Increases; 0.5%; Decrease

220. You are charged a ______ brokerage fee to issue bonds

and ______ brokerage fee if you retire bonds prior to their
maturation date.
d. 5%; 1.5%
221. EPS (Earning Per Share) is calculated by
d. dividing net profit by the number of shares outstanding.
222. Which of the following is not a Process Management
Initiative available to your company?
b. GEMI Sustainability
223. Which of the following is not one of the five parts to the
Situation Analysis:
e. Forecasting Analysis.
224. Products that are halfway between the fine and rough cut
circle will experience a drop in customer survey score by:
50%
225. Quality Initiative Training can
d. decrease labor costs.
226. Investing in Vendor Just In Time can
d. reduce material costs and administrative costs.
227. Adding one additional unit of capacity costs
b. $6 + ($4 x Current Automation Level).
228. How much does it cost for MTBF per 1,000 hours of
reliability?
c. $0.30
229. How are the Starting Position and the Negotiation Ceiling
related?
e. The Negotiation Ceiling is always 10% above the Starting
Position.
e. The Negotiation Ceiling is always 10% above the Starting
Position.
a. Wage and benefit rates
b. Automation levels
c. Second shift
d. TQM investment

231. The sales channel effectiveness for the outside sales people
is highest for
a. High End and Size.
232. The potential reach for web media is rated as good for the
b. Size and Performance.
233. A 6 month project in R&D costs____________; while a
12 month project in R&D costs ________.
c. 500,000; 1,000,000
234. The potential reach for print media is rated as good for the
c. Traditional and Low End.
235. Stock price is a function of:
e. Book value, Earnings per Share, and Dividend.
236. Which of the following is true about the Accounts
Receivable Lag and its implications on customer survey score?
a. If you offer no credit, customer survey score falls to about 60%
of maximum.
237. If your company offers 90 days Account Payable policy,
suppliers will start to withhold material for production at
d. 26%.
238. A bond with the number 12.6S2005, indicates that:
e. the interest rate is 12.6%; due on December 31, 2005.
239. Investing in Quality Function Deployment Effort can
d. reduce R&D cycle time and enhance the effectiveness of the
promo and sales Budgets.
240. Investing in Concurrent Engineering can
a. reduce R&D cycle time and lower R&D costs
241. Investing in Channel Support Systems can
a. increase demand.
242. If the previous year you reached 100% customer
awareness in your company, this year what will you need to do
to maintain this level?

c. I would only need to create 33% new awareness to maintain

100% this year.
243. Teams can produce up to ______ products.
8
244. A production line with 1000 units of capacity has a max
production capability of:
d. 2000.
245. When purchasing increased Capacity and Automation, the
new capacity becomes available
b. in 1 year.
246. Capacity is sold by
d. entering a negative number in the Buy/Sell row on the
Production Spreadsheet.
247. Your inventory for a product will be automatically
liquidated at half average cost of production if you
a. Sell all the capacity on the corresponding production line
248. Emergency loans are made at what rate over the normal
Current Debt interest rate?
b. 7.5%
249. The Ideal Spot
c. drifts at same pace as the segment.
250. Ideal Spot is particularly important for
d. high technology segments.
251. What is the size of the plant at the start of the simulation?
b. 5 assembly lines with space to add 3 more.
252. What are the Process Management Initiatives?
d. CPI, UNEP Green, JIT, QIT, Channel Support Systems,
Concurrent Engineering
253. Each round is the equivalent of
c. one year.

254. The Consumer Report rates product attributes of price,

reliability, age, positioning, awareness and accessibility using:
a. Three levels (such as Good, Fair, or Poor)
255. If you see a red flag on one of your spreadsheets, what
does it mean?
d. There is more information.
256. Which one of these criteria is not a top product
characteristic of at least one segment?
d. Promotion
257. Customer Awareness Reports:
c. percentage of Customers who knew about the product.
258. For positioning in the fine cut, which one is not right?
c. High End preferred Position is located in the lower left of the
circle.
c. High End preferred Position is located in the lower left of the
circle.
b. T-Bills
260. Price accounts for _________customers' decisionmaking in the low end sector.
53%
261. What does not drive length of R&D project?
e. The labor strike.
262. With each year (round) customer awareness for each
product decreases by:
33%
263. Diminishing returns for a single year and a single
initiative on TQM budgets become noticeable at
c. $2.0M.
264. High end customers prefer a product age of 0, at what age
exceeds the fine cut for the product
2 years

265. For non-advanced marketing module, promotion

expenditures reach diminishing returns at
a. about $3M
266. In the High End Segment, price as a buying criteria
accounts for:
b. 9% of decision.
267. Companies with this strategy state their vision as follows:
Low priced products for the whole industry, our brands offer
solid value. Our primary stakeholders and bondholders,
customers, stockholders and management.
d. Broad Cost Leader
268. In the Traditional Segment, age as a buying criteria
accounts for:
c. 47% of decision.
269. An accessibility of 60% means that ________.
a. only 60% of customers have an easy time finding a product,
talking to a salesperson and taking delivery.
b. of the customers who cannot easily locate the product, they
will seek it out.
270. How much higher are second shift wages than the first
shift wages?
d. 50 %
271. The accounts payable lag has implications for production.
At ________ days, suppliers withhold all material.
150
272. The center spot of traditional products drifts _______
each year.
a. +0.7 performance, -0.7 size
273. Finance Decisions should be made
c. after the other departments have entered their decisions.
274. If you sell all the capacity on a production line, Capstone
interprets this as
b. a liquidation instruction and will sell your remaining inventory
for half the average cost of production.

275. Customers evaluate the sensor industry based on:

a. Positioning.
b. Reliability.
c. Age.
d. Price.
276. When the Human Resources module is activated, which
areas must be addressed?
a. Complement (number of workers)
b. Caliber (recruitment of talent of workers)
c. Training (time workers spend in training)
277. A product's __________ does not play a role in the
rough cut
age
278. In CapSim, a product's demand is driven by its
_________________.
b. Customer Survey Score
279. The ______________ details sales volume in all
segments, reporting each product's actual and potential sales.
b. Market Share Report
280. Automation levels are given on a scale of _____ to
_____.
d. 1.0; 10.0
281. Which of the following will give your company an AAA
bond rating:
b. Have absolutely no debt.
282. Products that are modified through R&D:
d. Are perceived to be half the age as before entering R&D.
283. The order of the 4 buying criteria is the same for the
following two segments:
c. Size and High End.
284. Which of the following will result in the highest interest
rate:
d. Emergency Loan.

285. In the December customer survey, a product would not

receive a perfect score of 100 if
c. it had an MTBF at the middle of the expected range.
286. Each product can be promoted by
a. Print media.
b. Direct mail.
c. Web media.
d. Trade shows.
287. Which one of the following statements regarding
preferred position in fine cut is false?
b. Low end customers want the high performance and large sized
product.
288. The turnover rate
a. is the percentage of workers who left the company last year,
excluding down-sizing.
d. includes unavoidable factors like retirement, relocation and
weeding out poor workers (about 5%).
289. Workers will not strike approximately 7 days for
d. 1 hour difference in training.
290. In promo budget of the advanced marketing module, the
term "reach" refers to
a. the potential number of customers who would see the
advertisement message.
291. Capital used for financing activities can be acquired
through_______________.
a. Current debt
b. Stock issues
c. Bond issues
d. Profits
292. The inner fine cut circles on the perceptual map have a
radius of ________ units.
b. 2.5
293. Every year the Traditional segment circle drifts ____ in
performance and _____ in size.
b. +0.7, -0.7

294. The growth rate for industry demand in the _____

segment is 18.3%.
e. Size
295. The cost to increase automation to 8.0 is equal to
c. First Shift Capacity X [$4 X (8 - Automation Level).
296. Companies can enter a Recruiting Spend budget up to an
additional ____.
a. $5,000
297. The following describe the strategy of Differentiation with
Product Lifecycle Focus, except:
c. prices are below average.
298. One way to enter sales forecasts and production schedules
is to develop a worst case/best case scenario. Where would you
enter your best case scenario and where would you enter your
worst case scenario?
a. On the Marketing spreadsheet enter your worst case forecast
in Your Sales Forecast cell, and on the Production spreadsheet
enter your best case forecast in the Production Schedule cell.
299. Which of the following statements is true about promo
and sales budget?
a. From one year to the next, a third of those who knew about a
product forgot about it.
b. If a product ended last year with an awareness of 50%, this
year it will start with an awareness of approximately 33%.
c. If you have two or more products that meet a segment's fine
cut criteria, the sales budget for each product contributes to that
segment's accessibility percentage.
d. Companies must have at least two products in the segment's
fine cut to achieve 100% accessibility.
300. Which of the following is not one of the primary concerns
in the Finance Department?
e. Deciding promo and sales budget.
301. Which of the following is not the correct yearly drift rate
for the corresponding segment?
e. In the size segment performance drifts by -0.7 and size by
+1.0.

302. The CAPSIM simulation is based on which industry?

a. sensor industry
303. Your ___________ department controls the
performance and size, therefore position of your sensor
products within the market.
c. R&D
304. Customers go through ________________stage(s) as
they make their purchase decisions.
c. fine cut and rough cut
305. Account Receivables lag impacts sales. At no credit terms,
the customer survey score falls to about ______ % of
maximum, at 30 days, the score is _____ %, at 60 days, the
score is ______%.
b. 60, 93, 99.3
306. Do decisions on a product's prices and MTBFs in its
segment's rough cut affect the product's demand?
yes
307. Which module in CAPSTONE allows investment in
workforce training?
a. HR
308. Investments in training leads to a __________ and
_________.
b. higher productivity, lower turnover
309. In what circumstance would a company have a high
market share relative to that of its competitors, though it is not
making best use of resources available to it?
b. Where competitors underperform, a company may have a
higher market share than that of its competitors though it is not
making best use of its resources.
310. A perfect product (with 100% awareness) starting with a
survey score of 100, what is the survey score if the accessibility
rate is only 60%?
d. ((1+accessibility)/2)*base score = 20

311. What is most likely to happen on introduction of a new

product, if you do not buy the production line, in the year prior
to the product's introduction?
a. You cannot manufacture your new product.
312. R&D project length can be as long as ___________.
d. 3 years
313. Your company was formed ______________
c. When a former monopoly was broken up into identical
competitor
314. How is Contribution Margin calculated?
c. Price - (Material cost + Labor cost)
315. The percentage of workers that left the company last year
is the:
d. Turnover rate.
316. At the start of the simulation, all assembly lines have an
automation level between:
b. 3.0 and 5.0.
317. Segment price ranges drop _____ per year.
d. $0.50
318. Each year the company receives bond ratings. The range
of these bond ratings from best to worse is:
e. AAA to D.
319. The December Customer Survey indicates
b. how customers perceived the products in the segment.
320. Period costs include
a. R&D.
b. promotion.
c. sales and administration expenses.
321. Lowering the automation level will result in
c. a charge.
322. If all of the capacity on a production line is sold

a. all remaining inventory is sold for half the average cost of

production.
b. a loss is written off on the income statement.
c. Capstone interprets the action as a liquidation instruction.
d. the company will receive a cash payment of 65% the original
investment on capacity.
323. As a general rule, stock issues are used to:
c. Fund long term investments in capacity and automation.
324. Which segment has the highest growth rate?
d. Performance
325. Looking at the production, if the potential bar is higher
than the actual one,
d. the company under produced and missed sales opportunities.
326. Looking at the production, if the potential bar is lower
than the actual,
c. the company picked up sales because other companies under
produced.
327. Investing more than $5,000,000 in the same TQM
initiative over a two or three year period creates
a. little or no additional improvement.
328. According to Capstone, Complement is best defined as:
a. the number of workers in your workforce this year.
329. Capstone's definition of reach in the marketing module is
defined by the potential number of customers who would see
the message. Based on this definition what segment has "fair"
reach with direct mailing?
a. High End
330. Where are the credit policies for customer and supplier
set in Capstone.xls?
a. Marketing spreadsheet
331. The primary difference between the Proformas and annual
reports is:
b. Proformas are projections of results for the upcoming year;
annual reports are results from the previous year.

332. What is the most important element that ensures the

accuracy of the Proformas reports?
b. Marketing sales forecasts
333. When should you purchase the production line to produce
a new product?
c. The year prior to its introduction
334. Which tool can you use as a quick comparison tool when
conducting a competitive analysis concerning production?
c. Customer survey
335. In the Perceptual Map each segment has a set of circles
where:
b. The inner fine cut circles represent the heart of the segment
where demand is strong.
336. Different customer demands impact the drifting speed of
the segments such that:
b. High End, Performance and Size drift at a faster rate than the
other segments.
337. Which screens are necessary to make a complete human
resource decision when the advance module has been
activated?
a. Production & human resources
338. What is working capital?
a. Current asset minus current liability
339. What happens if you increase the A/R lag days in the
marketing function?
a. Sales forecast increases
b. Collection time increases
340. Which of the following is an important about working
capital in Capsim?
a. Emergency loans are closely linked to your working capital
policy
b. Shows the liquidity situation of your firm
c. Can be calculated using numbers from the balance sheet under
the headings current assets and current liabilities
d. Shows how much equity is in use

341. Which is false about production in Capsim?

a. Teams cannot produce beyond 100% capacity.