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BUS 515 Final exam 1 and 2, BUS515 Final exam 1 and 2

13. An improvement tool that utilizes cross-functional teams to plan and deliver improvements to specific processes during two- or three-day marathon sessions is called a ___________________________.a) kanban blitzb) cross-functional blitzc) short-term blitzd) JIT blitze) kaizen blitz

Ans:Section Ref: The Philosophy of JITLevel: moderate

14. JIT flexibility refers to a) ability to modify sales figuresb) correct the bull whip effectc) increase or decrease supplier deliveries on short noticed) workers being able to perform many different taskse) managers being able to shift positions easy


15. Being able to keep costs low while changing the volume of production is an example ofa) Simplicityb) Flexibilityc) Visibilityd) Continuous improvemente) Total quality management

Ans:Section Ref: The Philosophy of JITLevel: hard

16. Three basic elements work together to complete a JIT system: just-in-time manufacturing, total quality management, anda) Quality circlesb) Pull productionc) Minimizing inventoryd) Respect for people

e) Full utilization of capacity

Ans:Section Ref: Elements of JITLevel: moderate

17. JIT is often mistakenly assumed to a) refer to the final assembly schedule onlyb) dictate the product standards specificationc) refer to only just-in-time manufacturingd) be a core element of ISO 9000 requirementse) be driven by the finance department long range spending plan


18. By focusing on processes, JIT is able to achieve high-volume production of high-quality, low-cost products.a) Downstreamb) Upstreamc) Change-overd) Gatewaye) Value-added


19. The manufacturing process in JIT starts with thea) Final assembly scheduleb) Schedules for individual machinesc) Vendor deliveriesd) Prioritization of lotse) Forward scheduling

Ans:Section Ref: Elements of JITLevel: hard

20. For the current month using JITa) The same amount of each product is produced in the same order each day

b) Production matches that of last monthc) Lot sizes are varied week-to-weekd) Production differs greatly from day to daye) Production is primarily for next month’s sales


21. JIT relies on a ______ that withdraws parts for a previous work cell and moves them to the next.a) Information technology systemb) coordination systemc) six sigma systemd) quality circle systeme) transportation system


22. JIT is a system.a) Pullb) Pushc) Lead timed) Preventive maintenancee) Closed

Ans:Section Ref: Elements of JITLevel: easy

23. JIT manufacturing cannot succeed if costs are too high.a) Variableb) Fixedc) Set-upd) Depreciatione) Marginal


24. The ultimate goal of JIT is to produce products in a lot size ofa) 100 or fewerb) N=(DT(1+X))/Cc) The inverse of the carrying costd) Onee) The capacity of the factory


25. Unlike JIT traditional quality control systems usea) quality circlesb) quality plansc) control chartsd) acceptable quality levelse) quality applications


26. According to JIT, is carried to cover up a wide variety of problems, such as poor quality, demand uncertainty, and slow delivery.a) Inventoryb) Excess capacityc) A group of back-up workersd) Spare equipmente) Insurance


27. According to JIT, by eliminating inventory we can clearly identify and work on eliminating them.a) Obsolete productsb) Malfunctioning machinesc) Grievancesd) Product imperfectionse) Problems

Ans:

Section Ref: Elements of JITLevel: easy

28. Before it is possible to operate successfully with JITa) Inventory space must be eliminatedb) Inventories must be reduced rapidlyc) Problems must be uncoveredd) Problems must be solvede) Setup times must be increased


29. An important TQM concept is that quality is defined by thea) Quality control groupb) Marketing departmentc) Board of directorsd) Customere) Auditors


30. The objective of quality at the source is not only to identify a quality problem, but also toa) Determine its extentb) Uncover its root causec) Rate its seriousnessd) Place blamee) Categorize it


31. JIT considers to be a company’s most precious resource.a) Capitalb) Productive equipmentc) Informationd) People

e) Vision


32. In JIT the workforce is viewed asa) another resource to be managedb) another contractual obligationc) a long-term assetd) a short term assete) an asset that must be closely managed


33. JIT believes in developing relationships with suppliers.a) Long-termb) Adversarialc) Arms-lengthd) Temporarye) Distant


34. are groups of workers who are responsible for every aspect of their business.a) Focus teamsb) Staff departmentsc) Partnershipsd) Self-managed teamse) Negotiators


35. Traditional manufacturing operations are based on the assumption thata) Overproduction is disastrousb) Nice guys finish last

c) It is better to anticipate future requirements and plan for themd) If you manufacture it, demand will increasee) Inventory has no value

Ans:Section Ref: Just-In-Time ManufacturingLevel: hard

36. JIT uses a pull system where communication starts with either the customer or with the _________ work station in the production line.a) Firstb) Bottleneckc) Dominantd) Most expensivee) Last

Ans:Section Ref: Just-In-Time ManufacturingLevel: easy

37. With JIT there are two types of Kanban cards, production Kanban and Kanban.a) Bufferb) Transactionc) Withdrawald) Logisticse) Sales

Multiple Choice

1. Every business is managed through what three major functions?a) accounting, finance, and marketingb) engineering, finance, and operations managementc) accounting, purchasing, and human resourcesd) accounting, engineering, and marketinge) finance, marketing, and operations management

2. Which business function is responsible for managing cash flow, current assets, and capital investments?a) accountingb) financec) marketingd) operations management

e) purchasing

Ans:Section Ref: What is Operations Management?Level: easy

3. Which business function is responsible for managing cash flow, current assets, and capital investments?a) accountingb) financec) marketingd) operations managemente) purchasing


4. Which business function is responsible for sales, generating customer demand, and understanding customer wants and needs?a) financeb) human resourcesc) marketingd) operations managemente) purchasing


5. Which business function is responsible for planning, coordinating, and controlling the resources needed to produce a company’s products and services? a) engineeringb) financec) human resourcesd) marketinge) operations management


6. Which of the following is not true for business process reengineering?a) It can increase efficiency.b) It cannot be used to improve quality.c) It can reduce costs.d) It involves asking why things are done in a certain way.e) It involves redesigning processes.

Ans:Section Ref: Historical DevelopmentLevel: easy

7. At the GAP, which function plans and coordinates all the resources needed to design, produce, and deliver the merchandise to its various retail locations?a) engineeringb) human resourcesc) marketingd) operations managemente) purchasing


8. Operations Management is responsible for increasing the organization’s efficiency, which means the company will be able to __________.a) add to the engineering processb) take for granted current operationsc) increase the number of positions under the manager’s positiond) eliminate activities that do not add valuee) increasing purchasing opportunities

Ans:Section Ref: What is Operations Management?Level: moderate

9. Which one of the following would not generally be considered to be a transformation?

a) a haircutb) a train ridec) manufacturing a radiod) waiting to see the doctore) a surgery


10. At a factory, the transformation process is a (an) change of raw materials and components into products.a) locationalb) imperceptiblec) hypotheticald) irreversiblee) physical


11. Which of the following is not an input?a) servicesb) managersc) buildingsd) technologye) information


12. Operations management is responsible for orchestrating all the resources needed to produce the final product. This includes all of the following except ______________________________________.a) obtaining customer feedbackb) arranging schedulesc) managing inventoryd) controlling qualitye) designing work methods

Ans:Section Ref: What is Operations Management?Level: hard

13. Which second-tier computer company utilized a drastic change in its operations function to become an industry leader in the late 1990s?

a) Appleb) Compaqc) Delld) IBMe) Kozmo


14. A company with a low customer contact that is capital intensive is called:a) a farmb) manufacturingc) quasi-manufacturingd) servicee) Industrial era operations management

Ans:Section Ref: Differences Between Manufacturing and Service OrganizationsLevel: easy

15. Which initially successful web-based home delivery company had to shut down in 2001 due to inadequate management of its operations?a) Contact.comb) Time Saver.comc) Kozmo.comd) Kramer.come) Neptune.com


16. In order to be successful with Web-based on-line shopping, companies must do all except which of the following?a) manage distribution centers and warehousesb) operate fleets of trucksc) maintain adequate inventories of productsd) promise same-day deliverye) schedule deliveries

Ans:Section Ref: What is Operations Management?

Level: hard

17. What outsourcing functions does UPS provide for clients?a) accounting and inventoriesb) inventories and deliveriesc) accounting and deliveriesd) accounting and maintenancee) deliveries and maintenance


18. An example of an operation that does not add value is ____________________________.

a) removing iron ore from the ground and shipping it to a steel millb) filling the underground gasoline tanks at a service stationc) making a wedding caked) moving components to a warehouse for storage until the factory needs theme) moving luggage from a cab to the airport ticket counter


19. Which famous economist once suggested that, “The production problem has been solved.”?a) John Nashb) Irving Fisherc) John Kenneth Galbraithd) Adam Smithe) John Maynard Keynes

Ans:Section Ref: Historical DevelopmentLevel: hard

20. What was the primary reason why American firms lost market dominance in many industries in the 1970s and 1980s?a) OPEC oil embargoes b) the Vietnam war had drained the economy of resources

c) after Richard Nixon was President, foreign consumers began to mistrust American firmsd) they had become lax with a lack of competition in the 1950s and 1960se) foreign government subsidies for business

Ans:Section Ref: Historical DevelopmentLevel: moderate

21. In what area does General Motors earn its highest return on capital?a) selling carsb) selling logo merchandisec) financingd) selling racing enginese) post-sales parts and service


22. Which of the following is an example of a “back room” operation for an airline company?

a) serving food and drinks to passengersb) collecting tickets and checking passengers in at the gatec) loading luggage onto the airplaned) demonstrating use of the seat belt and other safety features of the airplanee) assisting passengers in getting off of the plane

Ans:Section Ref: Differences Between Manufacturing and Service OrganizationsLevel: moderate

23. What are companies that have low customer contact and are capital intensive, yet provide a service, called?

a) pseudo-manufacturing organizationsb) quasi-manufacturing organizationsc) hierarchical manufacturing organizationsd) service factoriese) servifacturing organizations


24. What percentage of total non-farm jobs in the U.S. economy come from service-producing industries?a) 20%b) 50%c) 60%d) 80%e) 95%


25. What are long-term decisions that set the direction for the entire organization called?

a) tacticalb) operationalc) directionald) distante) strategic

Ans:Section Ref: Operations Management DecisionsLevel: easy

26. Which of the following is not true with respect to strategic and tactical decisions?a) tactical decisions focus on more specific day-to-day decisionsb) tactical decisions determine the direction for strategic decisionsc) tactical decisions provide feedback to strategic decisionsd) tactical decisions are made more frequently and routinelye) tactical decisions must be aligned with strategic decisions

Ans:Section Ref: Operations Management DecisionsLevel: moderate

27. Which of the following is not primarily performed by the operation management function?a) job design and work measurementb) advertising strategyc) location analysisd) quality managemente) facility layout

Ans:Section Ref: Operations Management DecisionsLevel: moderate

28. When did operations management emerge as a formal field of study?a) during the late 1950s and early 1960sb) during the late 1970s and early 1980sc) during World War IId) during the nineteenth centurye) during the early 1900s


29. Managing the transformation of inputs into goods and services is:a) a post industrial era process.b) a direct contributor to the curved earth syndrome.c) as old as time.d) a twenty-first century developed process.e) a design of Frederick Taylor.


30. Who invented the steam engine?a) James Wattb) Adam Smithc) Eli Whitneyd) Henry Forde) Frederick Taylor

Ans:Section Ref: Historical Development

Level: hard

31. What concept involves breaking down the production of a product into a series of small, elementary tasks, each of which is performed by a different worker?a) division of laborb) interchangeable partsc) scientific managementd) the Hawthorne effecte) operations research

Ans:Section Ref: Historical DevelopmentLevel: easy

32. Who wrote The Wealth of Nations in 1776, describing division of labor?a) James Wattb) Adam Smithc) Eli Whitneyd) Henry Forde) Frederick Taylor


33. The concept of interchangeable parts was introduced by ___________________.a) Adam Smithb) Frederick Taylorc) Eli Whitneyd) Henry Forde) W. Edwards Deming


34. Who created “scientific management?”a) James Watt

b) Adam Smithc) Eli Whitneyd) Frederick W. Taylore) Henry Ford


35. What was Frederick W. Taylor’s background?a) physicsb) human resources managementc) operations researchd) psychologye) engineering


36. A key feature of scientific management is that workers are motivated only by __________________.

a) loveb) powerc) challenging workd) moneye) fame


37. A key feature of scientific management is that workers are limited only by __________________.a) machineryb) co-workersc) their job descriptiond) their toolse) their physical ability


38. The creator of scientific management believed that ______________________________________.

a) worker productivity is governed by scientific lawsb) the worker should have a lot of control over his or her jobc) efficiency is overratedd) worker pay should primarily be based on senioritye) mathematical models are the basis for management of production


39. Which of the following operations management concepts did not evolve from scientific management?

a) moving assembly linesb) interchangeable partsc) stopwatch time studiesd) piece rate incentivese) setting time standards for task performance


40. Who popularized the moving assembly line?a) James Wattb) Adam Smithc) Eli Whitneyd) Frederick W. Taylore) Henry Ford


41. Under scientific management, information from what is used to set time standards for task performance?a) stopwatch time studiesb) observance of similar tasksc) computer simulationd) negotiations with unionse) arbitration


42. What movement started with the publication of the results of the Hawthorne studies?

a) scientific managementb) human relationsc) management scienced) marketing researche) operations management


43. What is the Hawthorne effect?a) workers responding to the attention they are givenb) stopwatch time studies leading to time standardsc) the use of quantitative methods for solving management problemsd) the use of interchangeable partse) more lighting increases productivity


44. Increasing the level of responsibility of a job by adding planning and coordination tasks is ___________.

a) job enlargementb) job rotationc) job involvementd) job enrichmente) job backward integration

Ans:

Section Ref: Historical DevelopmentLevel: moderate

45. The first military use of management science was solving complex problems of logistics control, weapons system design, and deployment of missiles during _____________________.a) World War Ib) World War IIc) The Korean Ward) The Vietnam Ware) Operation Desert Storm


46. What term describes the approach of giving workers a larger portion of the total task to do?

a) job enlargementb) job rotationc) job involvementd) job enrichmente) job backward integration


47. When were the Hawthorne Studies conducted?a) 1770sb) 1830sc) 1930sd) 1960se) 1980s


48. In what company were the Hawthorne Studies conducted?a) Westinghouse

b) General Electricc) Hawthorne Incorporatedd) General Motorse) Western Electric


49. Management science is focused on:a) profit marginb) qualitative systems analysisc) management promotion metricsd) quantitative techniques for solving personnel issuese) quantitative techniques for solving operations problems


50. When was the first mathematical model for inventory management developed?a) 1770b) 1865c) 1900d) 1913e) 1930


51. Where was the just-in-time philosophy developed?a) Germanyb) United Statesc) Canadad) Japane) Italy


52. Just-in-time philosophy is applicable in:a) Service organizationsb) Manufacturing organizationsc) Assembly line operationsd) A, B, and Ce) A and C only


53. When was the just-in-time philosophy developed?a) 1980sb) 1930sc) 1800sd) 1700se) 1990s


54. What is a philosophy that aggressively seeks to improve product quality by eliminating causes of product defects and making quality an all-encompassing organizational philosophy?a) CQIb) TQMc) SPCd) JITe) BPR


55. Which of the following is considered a “quality guru?”a) Elton Mayob) W. Edwards Demingc) Alex Gambled) F.W. Harrise) Frederick W. Taylor


Level: hard

56. Supply chain management involves managing:a) the flow of internal information only.b) the flow of materials and information from suppliers and buyers to the final customer.c) the flow of raw materials to inventory only.d) managing the stock room supply only.


57. Many companies require their suppliers to meet what standards as a condition for obtaining contracts?a) RFO 6000b) PUR 8000c) ISO 9000d) MACH 5000e) SUP 2000


58. One of the two most important features of time-based competition involves ________________________.

a) advertising on the Internetb) stopwatch time studiesc) setting time standards for task performanced) instantaneous access to inventory informatione) developing new products and services faster than the competition


59. ISO 14000 standards provide guidelines for what?a) business ethicsb) environmentally responsible actionsc) supplier certificationd) quality controle) web site development


60. NAFTA and the EU are _________________________.a) certification groupsb) regional trade agreementsc) quality control methodsd) logistics providerse) U.S. government agencies


61. What type of commerce makes up the highest percentage of electronic transactions?a) B2Cb) C2Cc) B4Bd) B2Be) B4C


62. The Internet developed from a government network called ARPANET, which was created in 1969 by _____.

a) Japanese scientists b) the EPAc) the U.S. Defense Departmentd) NSFe) ISO


Level: hard

63. Today’s business must think in terms of:a) regional trade zonesb) the EPAc) the U.S. Defense Departmentd) the global market placee) the curved world


64. General Electric’s Trading Process Network primarily handles transactions between _________________.a) individual customersb) companies and individual customersc) companies and their shipping firmsd) companies and their distributorse) companies and their suppliers


65. What is a concept that takes a total system approach to creating efficient operations?a) lean systemsb) enterprise resource planningc) customer relationship managementd) management sciencee) management information systems

Ans:Section Ref: Today's OM EnvironmentLevel: easy

66. What are software solutions that allow the firm to collect customer-specific data?a) MRPb) CRMc) ERPd) JIT

e) ISO

Ans:Section Ref: Today's OM EnvironmentLevel: moderate

67. Entry-level positions for operations management graduates include all of the following except _________.a) quality specialistb) inventory analystc) plant managerd) production analyste) production supervisor


68. Operations management personnel perform a variety of functions, including all of the following except ___________________.a) analyzing production problemsb) analyzing potential mergersc) developing forecastsd) developing employee schedulese) monitoring inventory


69. Which of the following concepts is linked the least with Henry Ford?a) scientific managementb) mass productionc) mass customizationd) technologye) interchangeable parts


70. Today’s operations management is characterized by:

a) its use of the internet.b) its reliance on the intranet.c) its increased use of cross-functional decision making.d) its use of cross-functional job sharing.e) its use of interchangeable parts.

Ans:Section Ref: Today’s OM EnvironmentLevel: hard

71. Which of the following historical figures would probably have the most different management style from the others?a) Elton Mayob) Henry Fordc) Eli Whitneyd) Frederick W. Taylore) Adam Smith


72. Operations management interacts with which of the following:a) Marketingb) Information systemsc) Financed) Engineeringe) all the above

Ans:Section Ref: OM Across the OrganizationLevel: moderate

True/False

1. Operations management is the business function that plans, coordinates, and controls the resources needed to produce a company’s products and services.


2. Marketing is the central core function of every company.


3. Operations management is the central core function of every company.


4. An example of a transformation is waiting to see the doctor.


5. At a factory, the transformation process is the physical change of raw materials and components into products.


6. An example of an operation that does not add value is making a wedding cake.


7. Efficiency means being able to perform most activities.


8. An example of a “back room” operation for an airline company is loading luggage onto the airplane.


9. Companies that have low customer contact and are capital intensive, yet provide a service, are called service factories.


10. The Industrial Revolution started in the 1770s with the development of a number of inventions that relied on machine power instead of human power.


11. Division of labor involves breaking down the production of a product into a series of small, elementary tasks, each of which is performed by a different worker.


12. A key feature of scientific management is that workers are limited only by their tools.


13. The creator of scientific management believed that worker productivity was governed by scientific laws.

Ans:

Section Ref: Historical DevelopmentLevel: moderate

14. Operations management is a result of a single event, the industrial revolution.


15. Worker participation in decision making is a key feature of scientific management.

Ans:R Section Ref: Historical DevelopmentLevel: moderate

16. “Job enrichment” is an approach in which workers are given a larger portion of the total task to do.


17. The first mathematical model for inventory management was developed by Elton Mayo.


18. Operations research started with the publication of the results of the Hawthorne studies.


19. Sustainability was an early 1950’s management function and focus.


20. The Hawthorne effect is that workers are motivated by the attention they are given.


21. Increasing the level of responsibility of a job by adding planning and coordination tasks is called job enrichment.


22. Outsourcing is providing goods or services to an outside provider.


23. Management science focuses on developing quantitative techniques for solving operations problems.


24. The advent of the computer age paved the way for the development of MRP for inventory control and scheduling.


25. The objective of supply chain management is to have every member of the chain compete against each other to enhance competitive abilities.


26. The need to offer a greater variety of product choices to customers of a traditionally standardized product is the challenge of flexibility.


27. One of the most important trends in companies today is competition based on time.


28. The highest percentage of transactions on the internet occur between businesses and their customers (B2C).


29. Today many corporate CEOs have come through the ranks of operations.


30. Marketing can always meet the customer’s needs.


Essay

1. Define operations management.

Ans:

2. What must companies focus on in order to survive in today’s business environment?

Ans: Section Ref: What is Operations ManagementLevel: moderate

3. What are the three major functions through which every business is managed?

Ans: Section Ref: What is Operations ManagementLevel: easy

4. What is the “role” of operations management?

Ans: Section Ref: What is Operations ManagementLevel: easy

5. List at least seven different possible inputs to a transformation process.


6. What must companies do in order to be successful with Web-based on-line shopping?


7. In what ways do service organizations differ from manufacturing organizations?


8. List some typical operations management decisions that are made, along with their associated operations management term.

Ans: Level: hard

9. Why are operations management decisions typically more complex for large companies than for small companies?

Ans: Section Ref: Operations Management DecisionsLevel: hard

10. What operations management approaches came out of the scientific management movement?

Ans: Section Ref: Historical DevelopmentLevel: hard

11. Tactical decisions can be distinguished from strategic decisions by what set of characteristics?

Ans: Section Ref: Operations Management DecisionsLevel: hard

12. What are the two key features of scientific management?


13. What were the major impacts on operations management that resulted from the widespread use of computers in the 1970s?


14. What is the basic approach for business process reengineering and what are its major impacts?

Ans: Section Ref: Historical DevelopmentLevel: moderate

15. How have information technology tools helped with supply chain management?


16. What are environmental issues faced by business?

Ans:Level: moderate

17. Operations Management is:

Ans:

Section Ref: What is Operations Management?Level: easy

18. Why is today’s Operations Management environment described as very different from what it was just a few years ago?

Ans:

Section Ref: Today’s OM EnvironmentLevel: moderate

19. While customers and service organizations interact directly, customers and manufacturers interact

Ans: Section Ref: What is Operations Management?Level: hard

20. Manufacturers often provide services like


21. Service providers may also transform inputs into


22. Service providers’ “back room” activities, like ________________________, often have manufacturing characteristics like ________________________.

AnsSection Ref: Differences Between Manufacturing and Service OrganizationsLevel: hard

23. While service and manufacturing firms contribute more to the economy and offer more jobs at all levels, ________________________ are also important to our lives and the economy.

Ans: Section Ref: Differences Between Manufacturing and Service OrganizationsLevel: hard

24. All business functions need ______________from operations management while operations managers are highly dependent on______ from _____ _______ to perform their jobs.

Ans: Section Ref: Operations Management in PracticeLevel: moderate

25. While Operations Management focuses on privately−owned firms, governments provide many services and some goods, like:.

Ans: Section Ref: Differences Between Manufacturing and Service OrganizationsLevel: hard

26. The history of Operations Management reflects.


27. Applying the best practices to operations management is not enough to give a competitive advantage because:

Ans: Section Ref: Today’s OM EnvironmentLevel: moderate

28. Scientific Management, Management Science, Just−in−Time, Total Quality Management, Business Process Reengineering, and other developments reflect the application of ________________________ and ________________________ to the transformation of inputs into goods and services.


File: ch02, Chapter 2: Strategy and Productivity

Multiple Choice

1. What are the two key components of the operations strategy of Federal Express?a) they own their own fleet of tractor trailers, and they use a sophisticated bar code technologyb) they own their own fleet of tractor trailers, and they have a large warehouse in every statec) they own their own fleet of airplanes, and they have a large warehouse in every stated) they use a sophisticated bar code technology, and they have a large warehouse in every statee) they own their own fleet of airplanes, and they use a sophisticated bar code technology

Ans:Section Ref: The Role of Operations StrategyLevel: moderate

2. Operational efficiency is:a) driving the business strategyb) ensuring the right tasks are performed

c) decreasing the firm’s input requirementsd) increasing the firm’s outpute) performing operations tasks well


3. During the 1970s and 1980s, firms from which country provided the most serious competitive threat to U.S. companies?

a) Germanyb) Canadac) Mexicod) Japane) United Kingdom


4. The process of monitoring the external environment is called what?a) environmental examinationb) environmental inspectionc) environmental scrutinyd) environmental perusal e) environmental scanning

Ans:Section Ref: The Role of Operations StrategyLevel: easy

5. Which of the following would not be considered a core competency that a company might have?a) a highly trained workforceb) an inefficient distribution systemc) skills in attracting and raising capitald) use of information technologye) quality control techniques

Ans:Section Ref: Developing a Business StrategyLevel: easy

6. .Environmental scanning would not provide information on:a) sources of highly trained workersb) the firm’s internal inefficient distribution systemc) opportunities and threatsd) changes in information technologye) changes in global competition


7. Which of the following is not typically considered to be a core competency?a) workforceb) missionc) market understandingd) technologye) facilities

Ans:Section Ref: Developing a Business StrategyLevel: moderate

8. What term describes the process of obtaining goods or services from an outside provider?a) outprovidingb) transferizationc) outsourcingd) subsourcinge) supersourcing


9. Once a business strategy has been developed:a) service prices are establishedb) competition must be identifiedc) an operations strategy must be formulatedd) contracting with external sources must begine) insourcing will be conducted

Ans:Section Ref: Developing a Business Strategy

Level: easy

10. Which of the following is not considered one of the four broad categories of competitive priorities?

a) technologyb) costc) qualityd) flexibilitye) time

Ans:Section Ref: Developing an Operations StrategyLevel: easy

11. Which of the following competitive priorities typically requires the use of more general-purpose equipment?

a) technologyb) costc) qualityd) flexibilitye) time

Ans:Section Ref: Developing an Operations StrategyLevel: moderate

12. Highly-skilled hourly workers would be most needed by companies employing which of the following competitive priorities?a) locationb) costc) flexibilityd) development speede) time

Ans:Section Ref: Developing an Operations StrategyLevel: hard

13. How does Federal Express maintain its ability to compete on time during peak demand periods?a) it subcontracts overload to other firms

b) it purchases more planesc) overtimed) it uses a very flexible part-time workforcee) it purchases more vans


14. When making competitive priority decisions the firm:a) must select the correct supply chainb) must ensure the PWP is correctly establishedc) must focus on the one competitive priority at the exclusion of all othersd) must make trade-off decisionse) must isolate the competing internal departments


15. Empire West displays what by specializing in making a wide variety of products?a) outsourcingb) SCMc) qualityd) flexibilitye) efficiency


16. Order winners and qualifiers:a) are consistent between manufacturing and service organizationsb) only matter when responding to formal competitive bid requestsc) remain constant over timed) change over timee) only apply to quasi-manufacturing firms


17. Decisions regarding which of the following are not part of the production process infrastructure?

a) organization of workersb) facilitiesc) worker payd) quality control measurese) management policies


18. Decisions regarding which of the following are not part of the production process structure?

a) management policiesb) facilitiesc) robotsd) flow of goods and services through the facilitye) flexible manufacturing system (FMS) machines


19. What are the three primary types of technology?a) product technology, process technology, and information technologyb) product technology, process technology, and environmental technologyc) product technology, process technology, and safety technologyd) information technology, environmental technology, and safety technologye) environmental technology, information technology, and process technology


20. Teflon is an example of what?a) process technologyb) information technologyc) environmental technologyd) safety technologye) product technology

Ans:Section Ref: Developing an Operations Strategy

Level: moderate

21. Technology should be acquired because:a) the new technology is funb) the new technology keeps the employees happyc) the new technology doesn’t cost very muchd) the new technology always improves productivitye) the new technology supports the company’s chosen competitive priorities


122. Computer-aided manufacturing is an example of what?a) process technologyb) information technologyc) environmental technologyd) safety technologye) product technology

Ans:Section Ref: Strategic Role of TechnologyLevel: moderate

23. Which type of technology has had the greatest impact on business?a) process technologyb) information technologyc) environmental technologyd) safety technologye) product technology


24. When does productivity increase?a) inputs increase while outputs remain the sameb) inputs decrease while outputs remain the samec) outputs decrease while inputs remain the samed) inputs and outputs increase proportionallye) none of the above


25. Which of the following is a valid type of “productivity measure”?a) multi-output productivity measureb) partial productivity measurec) multi-part productivity measured) multi-component productivity measuree) imperfect productivity measure

Ans:Section Ref: ProductivityLevel: moderate

26. Consider a pizza parlor. Which of the following would not be a valid productivity measure?

a) pizzas produced / number of workers usedb) pizzas produced / number of ovensc) pizzas produced / cost of workers and ingredientsd) pizzas produced / cost of all inputs usede) labor hours / pizzas produced


27. If inputs increase by 30% and outputs decrease by 15%, what is the percentage change in productivity?

a) 100% decreaseb) 11.54% increasec) 34.62% decreased) 15% increasee) 15% decrease

Ans:Section Ref: ProductivityLevel: hard

28. If inputs increase by 6% and outputs increase by 24%, what is the percentage productivity increase?

a) 400.00%

b) 16.98%c) 0.25%d) 4.00%e) 18.00%


29. An airline has determined that its baggage handlers handle 12,000 bags when 3 baggage handlers are on shift. What is the baggage handler productivity?

a) 4,000 bags/shiftb) 4,000 bags/handlerc) 14,000 bags/shiftd) 12,000 bags/shifte) 2,000 bags/handler


30. If inputs increase by 10% and outputs increase by 4%, what is the percentage productivity increase?

a) 5.45%b) 250.00%c) - 5.45%d) 5.77%e) - 5.77%


31. If inputs increase by 10% and outputs increase by 5%, what is the percentage change in productivity?

a) 4.545% decreaseb) 4.545% increasec) 4.762% increased) 4.762% decreasee) 50.000% increase


32. If Joe’s Diner serves 150 meals in one day using 3 kitchen staff, what is the kitchen staff daily productivity?

a) 40 meals/staff b) 45 meals/staffc) 50 meals/staffd) 55 meals/staffe) 60 meals/staff


33. If inputs increase by 30% and outputs increase by 15%, what is the percentage change in productivity?

a) 50.00% decreaseb) 88.46% increasec) 88.46% decreased) 11.54% increasee) 11.54% decrease


34. Suppose that on Monday the cost of inputs sums to $1000, and the value of outputs sums to $4000. For which of the following values on Tuesday would productivity increase?a) inputs = $1100, outputs = $4000b) inputs = $1100, outputs = $4200c) inputs = $850, outputs = $3600d) inputs = $1000, outputs = $3900e) inputs = $2000, outputs = $8000


35. Suppose that a plant has a daily productivity of 200 parts per employee? What can we conclude?

a) the daily productivity is excellent

b) the plant can hire more workers and still earn profitsc) the plant is not earning profitsd) the plant must be highly automatede) nothing


36. Suppose that a plant has a daily productivity of 0.85 parts per employee? What can we conclude?

a) the plant must be very labor-intensiveb) the plant is not earning profitsc) the plant must be highly automatedd) the plant should lay off workerse) nothing


37. Suppose that a plant has a total productivity measure of 0.85. What can we conclude?a) the plant is not earning profitsb) nothingc) the plant should lay off workersd) the plant is highly automatede) the daily productivity is excellent


38. Suppose that last month the cost of inputs summed to $100,000, and the value of outputs summed to $800,000. For which of the following values this month would productivity increase?a) inputs = $110,000, outputs = $800,000b) inputs = $50,000, outputs = $400,000c) inputs = $200,000, outputs = $1,600,000d) inputs = $100,000, outputs = $820,000e) inputs = $300,000, outputs = $1,600,000

Ans:Section Ref: Productivity

Level: moderate

39. Suppose that in week 1 a company produced 1000 units using 60 labor hours. For which of the following values in week 2 would labor productivity decrease?a) units = 2000, hours = 120b) units = 1500, hours = 95c) units = 1000, hours = 58d) units = 500, hours = 30e) units = 2000, hours = 100


40. Suppose that on Wednesday the cost of inputs summed to $4000, and the value of outputs summed to $10,000. For which of the following values on Thursday will productivity stay the same?a) inputs = $2000, outputs = $5000b) inputs = $5000, outputs = $10,000c) inputs = $4000, outputs = $8000d) inputs = $10,000, outputs = $4000e) inputs = $12,000, outputs = $40,000


41. Vericol, Inc. manufactures drugs using workers and automated machines. The firm has decided to replace two workers with a new machine, while the output per day is not expected to change. Which of the following cannot be true?a) labor productivity will increaseb) machine productivity will decreasec) labor productivity will decreased) multifactor productivity will increasee) multifactor productivity will decrease


42. A manager has just replaced three workers with a machine that is cheaper to operate than the cost of the three replaced workers. Output is expected to remain the same. Which of the following is true?

a) labor productivity will decreaseb) machine productivity will increasec) multifactor productivity will decreased) multifactor productivity will increasee) the value of output will decrease


43. Suppose that in January a company produced 5000 units using 1000 labor hours. For which of the following values in February would labor productivity decrease?a) units = 5000, hours = 900b) units = 10,000, hours = 1500c) units = 10,000, hours = 2000d) units = 2500, hours = 500e) units = 5000, hours = 1100


44. Suppose that in year 1 a company produced $100 Million worth of outputs while inputs totaled $50 Million. For which of the following values in year 2 would productivity decrease?a) outputs = $90 Million, inputs = $50 Millionb) outputs = $400 Million, inputs = $200 Millionc) outputs = $250 Million, inputs = $100 Milliond) outputs = $50 Million, inputs = $25 Millione) outputs = $60 Million, inputs = $25 Million


45. If the telecommunication company sold $10,000,000 of internet service using $50,000 of labor, $25,000 of leased bandwidth, $45,000 service fees, and $80,000 or replacement parts, what is the telecommunication multifactor productivity?a) 35b) 40c) 45d) 50e) 55


46. Suppose that on Thursday a company produced 80 units using 160 labor hours. For which of the following values on Friday would daily labor productivity increase?a) units = 70, hours = 160b) units = 80, hours = 180c) units = 240, hours = 500d) units = 160, hours = 300e) units = 40, hours = 100


47. A firm produces 100 units using 800 labor hours. What is its labor productivity?a) 0.125 units/hourb) 8 units/hourc) 100 units/hourd) 800 units/houre) -0.125 units/hour

Ans:Section Ref: ProductivityLevel: easy

48 A firm produces 2000 products using 10 workers on an eight-hour shift. What is the labor productivity per worker?a) 200 units/hourb) 25 units/hour c) 250 units/hourd) 20 units/houre) 0.04 units/hour


49. A machine shop produces metal frames on two different machines. The average daily production on machine 1 is 300 frames, and the average daily production on machine 2 is 180 frames. What is the daily machine productivity?

a) 480 frames/machineb) 330 frames/machinec) 240 frames/machined) 160 frames/machinee) 300 frames/machine


50. A machine shop produces metal brackets on two different machines. Machine 1 can produce a bracket every 10 minutes. Machine 2 can produce a bracket every 4 minutes. What is the average productivity per machine?a) 4.3 brackets/hourb) 8.6 brackets/hourc) 10.5 brackets/hourd) 21.0 brackets/houre) 7.0 brackets/hour


51. A firm produces handbags using three workers. On Tuesday, Jane completed 60 bags in 6 hours, Ron completed 50 bags in 7 hours, and Mary completed 80 bags in 5 hours. What was the overall productivity of the firm?a) 7.92 bags/hourb) 11.05 bags/hourc) 10.00 bags/hourd) 10.56 bags/houre) 61.67 bags/hour


52. Suppose that output is worth $400, and labor and materials costs are $200 and $100, respectively. What is the materials productivity?a) 2.00b) 1.33c) 0.25d) 0.75e) 4.00


53. A firm produces 500 units per day using five workers on a five-hour shift. On average, 15% of the units produced are defective and must be scrapped. What is the labor productivity for non-defective units?a) 17 units/hourb) 3 units/hourc) 20 units/hourd) 85 units/houre) 15 units/hour


54. Suppose that weekly output is worth $1000, and labor and materials costs are $300 and $200, respectively. What is the multifactor productivity ratio?a) 1000b) 8c) 2d) 3e) 0.5


55. Each day a firm produces 50 products worth $40 each. Raw materials cost per unit are $12. The firm uses 4 workers on an eight-hour shift earning $10 per hour each. What is the multifactor productivity ratio?a) 1.82b) 0.77c) 3.16d) 0.12e) 2.17


56. A bakery bakes bread in two different ovens. Oven 1 can bake a loaf every 30 minutes. Oven 2 can bake a loaf every 15 minutes. What is the average productivity per oven?a) 6.00 loaves/hourb) 3.00 loaves/hourc) 2.67 loaves/hourd) 1.33 loaves/houre) 0.38 loaves/hour


57. Johnny employs five painters. He collected the following data from last week.Painter Hours Walls CompletedJulius 40 60Margaret 32 68Dave 50 78Suzy 36 70Fawn 44 74Which painter was least productive last week?a) Juliusb) Margaretc) Daved) Suzye) Fawn


58. A bakery uses five ovens to bake muffins. Yesterday’s data are provided below.Oven Hours Muffins BakedOven 1 5 600Oven 2 10 1500Oven 3 8 1280Oven 4 8 800Oven 5 6 780Which oven was the most productive?a) Oven 1b) Oven 2c) Oven 3d) Oven 4e) Oven 5

Ans:

Section Ref: ProductivityLevel: moderate

59. The state government utilizes five workers to stamp license plates. Last month’s data are provided below.Worker Days Worked Units StampedPete 30 1440Tommy 20 1600Laura 24 2000Julie 28 2100Susan 29 1200Which worker was the least productive?a) Peteb) Tommyc) Laurad) Juliee) Susan


60. A firm uses five plants to produce its products. Each final product has a value of $100. The following table provides last week’s output, labor hours used (at $15 per hour), and materials cost per unit. Plant Output Labor Hours Materials Cost per UnitPlant 1 2000 400 $20Plant 2 5000 900 $18Plant 3 9000 2000 $20Plant 4 1000 150 $30Plant 5 2000 440 $18Which plant was most productive last week?a) plant 1b) plant 2c) plant 3d) plant 4e) plant 5


61. A firm uses five plants to produce its products. Output value and total input cost for last week are provided below.

Plant 1 Output Value Total CostPlant 1 $20,000 $25,000Plant 2 $50,000 $60,000Plant 3 $40,000 $42,000Plant 4 $80,000 $99,000Plant 5 $25,000 $29,000Which plant was least productive last week?a) plant 1b) plant 2c) plant 3d) plant 4e) plant 5


62. Last week Jason painted 11 houses in 4 days. This week he painted 14 houses in 5 days. What was his percent productivity increase?a) 1.82%b) 1.79%c) 27.27%d) 25.00%e) 5.00%


63. Last month a plant produced 10,000 units using 2000 labor hours. This month it produced 12,000 units using 3000 labor hours. What is the percent productivity decrease?a) 200%b) 100%c) 50%d) 25%e) 20%


64. On Tuesday George produced 100 units in 8 hours. On Wednesday he produced 120 units in 10 hours. What was his percent productivity change?

a) 0.50%b) 4.17%c) 4.17%d) 4.00%e) 4.00%


65. Last month Stacy sold 10 houses while working 20 days. This month she sold the same number of houses in 22 days. What is her percent productivity change?a) 10.00%b) 9.09%c) 9.09%d) 10.00%e) 4.55%


66. Yesterday, John produced 100 units in 8 hours. Today he produced the same amount in 6 hours. What is his percent productivity change?a) 33.33%b) 0.00%c) 25.55%d) 25.00%e) 4.67%


66. A company used to produce 500 units every 2 days, but 10% of the units were defective. After installing a new process, defects have been eliminated while output has remained the same. What is the percent increase in productivity due to installing the new process? a) 10.00%b) 25.00%c) 11.11%d) 0.00%e) 5.56%


67. A company used to produce 500 units every 2 days, but 10% of the units were defective. After installing a new process, defects have been eliminated while output has remained the same. What is the percent increase in productivity due to installing the new process? a) 10.00%b) 25.00%c) 11.11%d) 0.00%e) 5.56%


68. A company used to produce 300 units every day, but 20% of the units were defective. After installing a new process, the defect rate has been reduced to 5%, while output has remained the same. What is the percent increase in productivity due to installing the new process? a) 15.79%b) 0.00%c) 15.00%d) 18.75%e) 75.00%


69. Last month a plant produced 1200 units using 150 labor hours. This month it produced 1500 units using 300 labor hours. What is the percent productivity decrease?a) 37.50%b) 60.00%c) 100.00%d) 300.00%e) 200.00%


70. Which of the following has used the Internet to conduct a fashion show in order to boost sales?a) The Gapb) Eddie Bauerc) Fruit of the Loomd) Victoria’s Secrete) Sears

Ans:Section Ref: Developing a Business StrategyLevel: hard

71. Which of the following is not described in the chapter as one of the major environmental trends that firms should monitor?a) marketplace trendsb) global climate trendsc) economic trendsd) political trendse) social trends


72. Suppose that a plant manager is only evaluated based on the partial productivity measure: output/(number of employees). If she replaces 10% of the workforce with robots (one robot per replaced worker), and output remains the same, what will be the percent change in this measure of productivity?

Ans: 11.1% increase Section Ref: ProductivityLevel: hard

73. Productivity is essentially:a) something to fill out managers’ reportsb) measure of resource effectivenessc) a scorecard of how efficiently resources are usedd) a balance scorecard metrice) the current business fad


True/False

1. An operations strategy covers a relatively short time horizon, whereas a business strategy covers a relatively long time horizon.

Ans:Section Ref: The Role of Operations StrategyLevel: easy

2. To provide speed of delivery, Federal Express invested in a sophisticated bar code technology.

Ans:Section Ref: The Role of Operations StrategyLevel: hard

3. To provide dependability of delivery, Federal Express acquired its own fleet of airplanes.


4. Operations Strategy is developed before the business strategy so the company knows what it will be producing before establishing a long range business strategy.


5. Victoria’s Secret has used the Internet to conduct a fashion show in order to boost sales.


6. Market research represents a type of environmental scanning.


7. Companies that compete based on cost generally also allow a lot of product customization.


8. Firms that focus on quality as their primary competitive priority usually implement either product design quality or process quality, but not both.


9. Federal Express subcontracts its work overload to other firms during peak demand periods.


10. As long as the firm always meets the order qualifier classification it will be always be competitive and win competitive bid opportunities


11. Companies that compete based on flexibility often cannot compete based on cost.


12. Facilities decisions are part of the production process infrastructure.


13. Decisions regarding flow of goods and services through the facility are part of the production process structure.


14. Worker pay decisions are part of the production process structure.


15. Quality control approaches are part of the production process infrastructure.


16. Studies have shown that companies that invest in new technologies tend to improve their financial position over those that do not.


17. Operations management is only concerned with information technology applications within the firm.

Ans:Section Ref: Strategic Role of Technology

Level: moderate

18. Process technology is the technology that has grown the most rapidly and has had the greatest impact on business.


19. A measure of how efficiently inputs are being converted into outputs is called utilization.


20. Productivity = input/output.


21. Output/(all inputs used) is called total productivity.

Ans:Section Ref: ProductivityLevel moderate

22. An operations strategy should not impact the firm’s supply chain design.

Ans:Section Ref: Operations Strategy Across the OrganizationLevel moderate

123. Output/(labor + capital) is an example of a partial productivity measure.

Ans:Section Ref: Productivity

Level: moderate

24. Productivity gains in the service sector have been much lower than that of manufacturing.


Essay

1. Describe the difference between operational effectiveness and strategy.

Ans:

2. Define “environmental scanning.”

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3. A mission statement answers what three overriding questions?

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4. What are some general technological trends in the marketplace?

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5. How have U.S. tobacco companies responded to public awareness of the dangers of smoking?

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6. Discuss how the operation strategy categories of structure and infrastructure determine the nature of the company’s operations function.

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7. Suggest some core competencies that companies may have.

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8. What is management guru Tom Peters’ famous quote regarding outsourcing? What is his main point?

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9. What outsourcing activities does Total Logistics Control perform for Meijer?

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10. At the national level why is it important to measure productivity?

Ans:

11. Describe how Southwest Airlines competes on cost.

Ans:

12. For what entities can productivity be measured?

Ans:

Problems

1. Suppose that a plant manager is only evaluated based on the partial productivity measure: output/(number of employees). If she replaces 10% of the workforce with robots (one robot per replaced worker), and output remains the same, what will be the percent change in this measure of productivity?

Ans:

2. If a company’s inputs for producing a certain product increase by 10% and the output increases by 25%, what is the percentage productivity increase for that product?

Ans:

3. If a company’s inputs for producing a certain product increase by 50% and the output increases by 90%, what is the percentage productivity increase for that product?

Ans:

4. The school’s cafeteria has three service lines (pizza, salads, and sandwiches). The pizza line has one server and serves 90 pizzas per hour. The salad line has two servers and they handle 140 customers in 70 minutes. The sandwich line has three servers and they supply 360 sandwiches in 90 minutes. Which service line has the highest hourly productivity?

Ans:

5. A new milling machine can process 2000 jobs in 8 hours. What is the productivity of the machine?

Ans:

6. A firm produces 6000 products using 12 workers on a nine-hour shift. What is the labor productivity per worker?

Ans:

7. A machine shop produces hangers on two different machines. Machine 1 can produce a hanger every 15 minutes. Machine 2 can produce a hanger every 10 minutes. What is the average productivity per machine?

Ans:

8. A firm produces shirts using three workers. On Wednesday, Madeline completed 110 shirts in 6 hours, Federico completed 90 shirts in 7 hours, and Susan completed 130 shirts in 9 hours. What was the overall productivity of the firm?

Ans:

9. A firm produces 1500 units per day using four workers on a five-hour shift. On average, 12% of the units produced are defective and must be scrapped. What is the labor productivity for non-defective units?

Ans:

10. Last week George mowed 6 lawns in two days. This week he mowed 8 lawns in three days. In which week was George more productive?

Ans:

11. During week one, on average, the aircraft cleaning staff was able to totally clean an airplane in 45 minutes using 3 cleaners. During week two the average time to clean an aircraft went to 40 minutes with one of the cleaning staff off sick. Week two productivity changed in which direction and by how much?

Ans:

12. A company uses two plants to produce motorcycles. Plant A produces 200 per week using 20 workers and 4 machines. Plant B produces 250 per week using 10 workers and 10 machines. Which plant is more productive?

Ans:

Short Answer

1. Firms measure productivity to learn how ________________________ they are.

Ans:

Section Ref: Developing an Operations Strategy

Difficulty: moderate

2. Rapid technological change includes the risk of ________________________ .

Ans:

Section Ref: Developing an Operations Strategy


3. The operations function must place emphasis on those priorities that directly support the __________ ________. Therefore, it needs to make _________ between different priorities.

Ans:

Section Ref: Operations Strategy and Competitiveness


4. Estimating productivity requires measurements of ________________________ and ________________________.

Ans:

Response: Productivity


5. Operations strategy is a long range plan for the design and use of resources in support of ________________________

Ans:

Section Ref: The Role of Operations Strategy

Difficulty: easy

6. Mass produced standard products were the main manufacturing concern until ________________________.

Ans:


Difficulty: easy

7. Restaurants that offer pizza to go have different ________________________ than those that do not.

Ans:


Difficulty: easy

8. __________ ________ is used to improve the process of creating goods and services.

Ans:

Section Ref: Strategic Role of Technology

Difficulty: easy

9. Environmental scanning helps organizations recognize ________________________.

Ans:

Section Ref: Developing a Business Strategy

Difficulty: easy

10. Firms use ________________________ to concentrate on their ________________________.

Ans:


Difficulty: easy

11. A business strategy is like an explorer's ________________________.

Ans:


Difficulty: easy

12. Saying that an organization is qualified to be in its marker means it has the right ______________________.

Ans:


Difficulty: easy

File: ch03, Chapter 3: Product and Process Design

Multiple Choice

1. The ease with which the product can be made is itsa) manufacturabilityb) repeatabilityc) readiness for manufacturingd) reliabilitye) accountability

Ans:Section Ref: Product DesignLevel: moderate

2. Service design differs from product design by including __________________________.

a) customer needsb) marketing personnel in the decision making processc) speedd) qualitye) the esthetic and psychological benefits of the product


3. A company’s product design supports it business strategies bya) designing products that appeal to its customersb) designing as many products as possible c) including the company’s mission somewhere in the productd) designing products that aid strategic planning activitiese) designing the company’s strategy

Ans:Section Ref: Product DesignLevel: hard

4. Which of the following is not a step in product design?a) final designb) preliminary design and testingc) idea developmentd) conceptual designe) product screening

Ans:Section Ref: The Product Design ProcessLevel: moderate

5. ___________ is a vital link between customers and product design.a) Engineeringb) Accountingc) The Internetd) Operationse) Marketing


6. All product designs begin with ____________________________.a) a blueprintb) a cost analysisc) an idead) a feasibility studye) a focus group


7. Which of the following is true regarding the relative predictability of the cycle of new product introductions?a) new car models are predictable, but new fashion and new skin care products are notb) new car models and new fashion are predictable, but new skin care products are notc) new car models, new fashion, and new skin care products are all predictabled) new car models, new fashion, and new skin care products are all unpredictablee) new fashion and new skin care products are predictable, but new car models are not

Ans:Section Ref: The Product Design ProcessLevel: hard

8. Lands’ End is a well known benchmarking target because of its _________________________.a) catalog businessb) supply chain managementc) success at resolving complaintsd) labor relationse) environmental policies


9. In 1997, who performed a large benchmarking study for IBM?a) Boston Consulting Groupb) Anderson Consultingc) i2 Technologiesd) Mercer Management Consultantse) Manugistics


10. When designing the Taurus model, what did Ford Motor Company do with regard to BMW and Toyota?a) benchmarkingb) hired some of their employeesc) reverse engineeringd) copied their quality management techniquese) bought some of their dealerships


11. Reverse engineering is:a) altering the basic design based on user input.b) reengineering a failing product.c) acquiring a competitor’s product and relabeling it for sale.d) acquire a competitor’s product and studying its design features.e) changing your mind on the previous design.


12. Studying the practices of companies considered “best in class” and comparing the performance of our company against their performance is

a) competition

b) copyingc) frustrationd) benchmarkinge) notching


13. Involving suppliers early in the design process is called:

a) reengineeringb) disaggregationc) redesignd) benchmarkinge) supplier involvement


14. Evaluating a product idea to determine its likelihood of success isa) product screeningb) estimatingc) technological forecastingd) product windowinge) product evolution


15. In product screening, issues such as “Will we need new facilities and equipment?” and “Can material for production be readily obtained?” are addressed by

a) marketingb) financec) engineeringd) operationse) accounting


16. In product screening, issues such as, “What is the market size?” and “What is the long term-product potential?” are addressed by:

a) marketingb) financec) engineeringd) operationse) accounting


17. Approximately what percentage of ideas do not make it past the screening stage?a) 30%b) 50%c) 60%d) 80%e) 90%


18. What technique is based on computing the quantity of goods a company needs to sell to just cover its costs?

a) net present valueb) break-even analysisc) internal rate of returnd) activity based costinge) variable costing

Ans:Section Ref: The Product Design ProcessLevel: easy

19. Costs that are proportional to the amount of units produced, such as materials and labor, area) fixed costsb) marginal revenuec) sunk costsd) cost driverse) variable costs


20. Which of the following is not a fixed cost?a) land rentb) materialsc) overheadd) taxese) insurance


21. In break-even analysis, what is the break-even point?a) the quantity where revenue equals total costb) the quantity where revenue equals fixed costc) the quantity where revenue equals variable costd) the quantity beyond which the firm starts to lose moneye) the quantity where variable cost equals fixed cost


22. In break-even analysis, in order to make a profit the company musta) sell above the break-even pointb) sell below the break-even pointc) sell at a lossd) sell at the break-even pointe) sell on consignment


23. For which of the following is break-even analysis not appropriate?a) deciding how much of a product must be sold to make a profitb) evaluating different processesc) deciding whether it is better to make or buy a product

d) deciding between different productse) deciding how to allocate overhead


24. Which of the following is not included in the preliminary design and testing stage?

a) the product design idea is evaluated according to the needs of the major business functionsb) design engineers translate general performance specifications into technical specificationsc) “bugs” are worked outd) revising the design based on test resultse) prototypes are built and tested


25. During the final design and testing stage:a) the product design idea is evaluated according to the needs of the major business functions.b) design engineers hand the product over to the final design engineers.c) the product specifications are drawn up.d) marketing becomes involved for the first time.e) the product achieves full production.


26. Which one of these refers to reducing the number of parts and features of the product whenever possible?a) design automationb) design specificationc) design reductiond) design standardizatione) design simplification

Ans:Section Ref: Factors Impacting Product DesignLevel: moderate

27. What refers to the use of common and interchangeable parts?a) design automationb) design specificationc) design reductiond) design standardizatione) design simplification


28. Which of the following is not a guideline for design for manufacture?a) use modular designb) design parts for different productsc) minimize partsd) rely on automated equipmente) simplify operations

Ans:Section Ref: Factors Impacting Product DesignLevel: hard

29. Maturity and decline are also referred to as:a) the early stagesb) the life cyclec) the later stagesd) design for manufacture stagese) re-engineering stages

Ans:Section The Product Design ProcessLevel: Moderate

30. Which type of operation is used to produce many different products with varying process requirements in lower volumes?a) intermittentb) repetitivec) continuousd) downstreame) gateway

Ans:Section Ref: Process SelectionLevel: moderate

31. Which of the following is not characteristic of intermittent operations?a) produce many different products with varying processing requirementsb) capital intensivec) workers need to be able to perform different tasks depending on the processing needs of the productd) general purpose equipmente) volume of goods produced directly tied to number of customer orders


32. Building a bridge over the Mississippi River for a new highway uses aa) project processb) batch processc) line processd) continuous processe) recycle process


33. The classes that you are taking at the university use a _______________ process.a) projectb) batchc) lined) continuouse) recycle


34. What type of process is designed to produce a large volume of a standardized product for mass production, such as automobiles?

a) project processesb) batch processes

c) line processesd) continuous processese) recycle processes


35. Which type of process would be least likely to produce goods for inventory rather than for a specific customer request?a) projectb) batchc) lined) continuouse) remanufacturing


36. Which of the following is a tool for evaluating an operation in terms of the sequence of steps from inputs to outputs with the goal of improving its design.a) operations analysisb) operations sequencingc) process flow analysisd) input/output analysise) sequencing analysis

Ans:Section Ref: Designing ProcessesLevel: moderate

37. If the third stage of a repetitive line process cannot complete its activities as fast as stage one or two it has become a:

a) key work location

b) bottle neck

c) place not to work

d) project process location

e) none of these

Ans:

Section Ref: Designing Processes

Level: Moderate

38. Which of the following is correct sequence for relating product design, process selection, and arrangement of equipment in the factory?

a) product design determines arrangement of equipment which determines process selectionb) product design determines process selection which determines arrangement of equipmentc) process selection determines product design which determines arrangement of equipmentd) process selection determines arrangement of equipment which determines product designe) arrangement of equipment determines process selection which determines product design

Ans:Section Ref: Linking Product Design and Process SelectionLevel: moderate

39. What type of operations focus on products in the early stage of the life cycle?a) repetitiveb) downstreamc) gatewayd) intermittente) recycle


40. With respect to competitive priorities, intermittent operations compete more on _______________ compared to repetitive operations.

a) cost and featuresb) durability and costc) availability and reliabilityd) flexibility and deliverye) durability and features

Ans:Section Ref: Linking Product Design and Process Selection

Level: moderate

41. Intermittent operations group their resources based ona) requirements of the productb) similar operations or functionsc) shape of the shop floord) abilities of the labor forcee) the number of machines


42. Compared to intermittent operations, repetitive operationsa) have higher material handling costsb) have greater efficiencyc) have slower processing ratesd) have more flexibilitye) are less specialized


43. Which product and service strategy is used to produce standard components that can be combined to customer specifications?a) assemble-to-deliverb) make-to-stockc) assemble-to-orderd) make-to-ordere) make-to-package

Ans:Section Ref: Linking Product Design and Process SelectionLevel: easy

44. Which product and service strategy has the longest delivery lead time?a) assemble-to-deliverb) make-to-stockc) assemble-to-orderd) make-to-ordere) make-to-package


45. Pre-fabricated furniture with choices of fabric colors is an example of which product and service strategy?a) assemble-to-deliverb) make-to-stockc) assemble-to-orderd) make-to-ordere) make-to-package


46. Which product and service strategy is typically seen in repetitive operations?a) assemble-to-deliverb) make-to-stockc) assemble-to-orderd) make-to-ordere) make-to-package


47. If a firm’s facility layout is not correct it will create:a) project processesb) optimum outputsc) equal number of productsd) inefficiencye) job satisfaction

Ans:Section Ref: Linking Product Design and Process SelectionLevel: Moderate

48. Information Technology does NOT assist the firm in:a) information storageb) information processing

c) information creationd) intra firm information communicatione) inter firm information communication

Ans:Section Ref: Technology DecisionsLevel: Easy

49. Vertical integration is a good strategic option for a manufacturing company whena) it needs several different parts and subassembliesb) it makes many different productsc) its facilities are obsoleted) it uses distributed processinge) it needs one input material in large volumes

Ans:Section Ref: Technology DecisionsLevel: moderate

50. Which of the following is a disadvantage of automation?a) inflexibility for product and process changesb) inconsistency of productsc) inefficiency for producing large volumesd) harder to monitor qualitye) frequent interruptions of production

Ans:Section Ref: Technology DecisionsLevel: hard

51. What is a small battery-driven truck that is not operated by a human and moves material from location to location?

a) CADb) AGVc) AS/RSd) FMSe) CAM


52. A technology which uses sensor tags to monitor perishable products is:a) FMSb) CADc) RFIDd) CAMe) RF

Ans:Section Ref: Technology DecisionsLevel: Hard

53. What is an automated material handling system that basically is an automated warehouse?

a) CADb) AGVc) AS/RSd) FMSe) CAM


54. What is CAD short for?a) conceptually appropriate designb) computer aided designc) commercial applications designd) competitive advantage designe) completely automated design


55. What is a type of automation system that provides the flexibility of intermittent operations with the efficiency of repetitive operations?a) CADb) AGVc) AS/RSd) FMSe) CAM

Ans:Section Ref: Technology Decisions

Level: moderate

56. In manufacturing, a robot typically:a) resembles a human in appearanceb) has a mechanical armc) is mobiled) has legse) is very small


57. What type of machine is controlled by a computer and can do a variety of tasks, such as drilling, boring, or turning parts of different sizes and shapes?

a) numerically controlledb) variable turningc) flexible drivend) noncalculatinge) next component


58. What term is used to describe the integration of product design, process planning, and manufacturing using an integrated computer system?a) CAD/CAMb) AGVc) AS/RSd) FMSe) CIM

Ans:Section Ref: Technology DecisionsLevel: hard

59. Since services are intangible, the design of the service needs _________________________.a) to be intangible

b) to be very specificc) to be in the mind of the customerd) to be explained to the customer prior to delivery of the servicee) to specify exactly what the customer is supposed to experience.

Ans:Section Ref: Designing ServicesLevel: hard

60. Services with low customer contact are called ___________________________.a) quasi-manufacturingb) quasi-servicesc) mixed servicesd) pure servicese) mixed manufacturing

Ans:Section Ref: Designing ServicesLevel: moderate

61. Highly labor intensive services are called ___________________________.a) quasi-manufacturingb) quasi-servicesc) mixed servicesd) pure servicese) mixed manufacturing


62. Firms that have areas that have little customer contact and others with high customer contact are classified as _________ services.a) pure servicesb) quasi-manufacturingc) quasi-servicesd) mixed servicese) manufacturing


63. What are the three elements of the service package?a) physical goods, sensual benefits, and psychological benefitsb) sales, return policy, and warrantyc) customer service, return policy, and warrantyd) kindness, information provision, and speede) physiological benefits, sensual benefits, and psychological benefits


64. What are the three different service designs that are described in the chapter?a) substitute people for technology, get the customer involved, high customer attention approachb) customer-based market research, high customer attention approach, substitute technology for peoplec) customer-based market research, high customer attention approach, get the customer involvedd) substitute people for technology, customer-based market research, high customer attention approache) substitute technology for people, get the customer involved, high customer attention approach


65. Product design decisions are:a) purely tactical decisions.b) mixed tactical and strategic decisions.c) strategic in nature.d) only made by the OM department.e) rarely made.

Ans:Section Ref: Product Design and Process Selection Within OMLevel: Moderate

True/False

1. Product design and process selection decisions are typically made separately.


2. One source of new product ideas is a product manager.

Ans:Section Ref: The Product Design Process

3. To remain competitive, companies must be innovative and bring out new products regularly.


4. Analyzing customer preferences is an ongoing process.


5. There is a pure mathematical formula to making the decision to pursue a specific idea.


6. Benchmarking should only be performed against firms in similar lines of business with our own.


7. Buying a competitor’s new product and studying its design features by disassembling it and analyzing its parts and features is reverse engineering.

Ans:Section Ref: The Product Design ProcessLevel: Answer: moderate

8. Net present value is based on computing the quantity of goods a company needs to sell to just cover its costs.

Ans:Section Ref: The Product Design ProcessLevel: Answer: moderate

9. At the preliminary design and testing stage of new product design, design engineers translate technical specifications into general performance specifications.


10. Understanding the stages of the life cycle is NOT important for product design purposes.


11. Design standardization refers to the use of common and interchangeable parts.


12. One issue that design for manufacture focuses on is material durability.

Ans:Section Ref: Factors Impacting Product DesignLevel: Answer: moderate

13. When product and process design work together, much of the work is done in sequence rather than in parallel.


14. Remanufacturing is the concept of using components of old products in the production of new ones.

Ans:Section Ref: Factors Impacting Product DesignLevel: Answer: moderate

15. Repetitive operations are used to produce many different products with varying process requirements in lower volumes.

Ans:Section Ref: Process SelectionLevel: Answer: easy

16. A common difference between intermittent and repetitive operations is degree of product standardization.

Ans:Section Ref: Process SelectionLevel: Answer: easy

17. Intermittent operations group their resources based on similar operations or functions.

Ans:Section Ref: Linking Product Design and Process SelectionLevel: Answer: moderate

18. The make-to-stock product and service strategy has the shortest delivery lead time among the possible strategies, but the customer has no involvement in product design.


19. Process velocity is computed as a ratio of throughput time to output.

Ans:Section Ref: Process Performance MetricsLevel: Moderate

20. Outsourcing instead of pursuing vertical integration is often a good strategic option for a firm using an intermittent operation.


21. The psychological benefits of the service package involve the sights, smells, and sounds of the experience.

Ans:Section Ref: Designing ServicesLevel: Answer: moderate

Essay

1. Define product design.

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2. Name some sources for ideas for new products.

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3. In the product screening stage of new product development, what are some questions that may need to be explored by the operations function? By marketing? By finance?

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4. Describe what process flow analysis is.

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5. For what types of decisions is break-even analysis appropriate?

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6. What is included in the preliminary design and testing stage of product design?

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7. What are the guidelines for design for manufacture?

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8. What are the characteristics of intermittent operations?

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9. What are the characteristics of repetitive operations?

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10. Describe three different types of service designs.

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11. Describe why marketing should be involved in the product design process.

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Problems

1. What is the break-even volume given a fixed cost of $100,000, a variable cost per unit of $30, and a selling price of $35?

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2. What is the break-even volume given a fixed cost of $15,000,000, a variable cost per unit of $2.30, and a selling price of $12.80?

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3. What is the break-even volume given insurance costs of $30,000, materials costs of $6 per unit, taxes of $10,000, labor costs of $34 per unit, and a selling price of $80?

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4. If a firm has fixed costs of $250,000, a market-based selling price of $50 per unit, and it expects to sell 20,000 units, how low must its variable costs be to break even?

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5. Blaster Radio Company is trying to decide whether or not to introduce a new model. If they introduce it, there will be additional fixed costs of $400,000 per year. The variable costs have been estimated to be $20 per radio.

a) If Blaster sells the new radio model for $30 per radio, how many must they sell to break even?b) If Blaster sells 70,000 of the new radio model at the $30 price, what will the contribution to profit be?

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6. Birdie Par owns a company that makes golf gloves. She is thinking about introducing a new glove, which would require an additional fixed cost of $20,000 per year. The variable costs for the new glove have been estimated to be $5 per glove.

a) If she sells the new glove for $15, how many must she sell to break even?b) If she sells 3,000 gloves at the $15 price, what will the contribution to profit be?

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7. Bazooka Company is thinking about introducing a new type of color printer. If they introduce it, their factory will incur additional fixed costs of $37,000,000 per year. The variable costs will be $261 per printer.

a) If Bazooka sells the new printer for $819, how many must they sell to break even?b) If Bazooka sells 70,000 of the new printer at the $819 price, what will the contribution to profit be?

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8. Sam Smear owns a manufacturing company that makes ball point pens. Currently he is trying to decide between two processes for making the pens. The first process will have a fixed cost of $200,000 per year and variable costs of $0.40 per pen. The second process will have a fixed cost of $250,000 per year and variable costs of $0.30 per pen.

a) Identify which ranges of product volume are best for each process.b) If Sam makes 200,000 pens, which process provides a lower cost?

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9. If a firm has fixed costs of $200,000, variable costs of $100 per unit, and it hopes to sell 1000 units, what selling price must it charge in order to break even?

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10. Languages, Inc. manufactures hand held computers that translate between two languages. Based on their market research, they have developed computers for French/English, German/English, and Spanish/English. The process for making the computers will have fixed costs of $2,000,000 per year and variable costs of $50 per computer. The company believes that it can sell at least 40,000 computers per year.

a) What should the price per computer be if the company wants to break even at a volume of 40,000 computers per year?b) If they sell 60,000 computers at a price of $90 per computer, what will the contribution to profit be?

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11. Frank’s manufacturing firm has determined that the industry standard process velocity time is 15 seconds. Frank’s OM engineer has determined that their process velocity time is 17 seconds with a throughput time of 136 seconds. If the throughput time cannot be changed, what, how much, and by which direction does the value added time need to change so Frank’s manufacturing can match the industry standard process velocity?

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12. Tom’s hazardous material movement company limits the number of hours an individual works to 8.5 a day. Each hazardous material handler product movement time has been stopwatch analyzed to take 240 seconds. What is the hazardous material handler utilization if they make 110 moves a day?

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Short Answer

1. Name a company that has a good match between customer expectations ________________________ and a company that does not have a good match _____________________.

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2. Name a company that hurt its business success by changing its Operations Type ________________________.

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3. What is throughput time if process velocity = 5 and Value-added time = 2? ________________________

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4. What is input if Productivity = 7 and Output = 5? ________________________

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5. How efficient was a process whose Standard output = 27 while Actual output = 24? ________________________

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6. Why is delivery time longer for make to order than assembly to order processes that deliver similar products? ________________________

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7. Name a reason for using ERP and a reason it might be difficult to implement. ________________________

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8. Name three computer applications that affect product design and process selection: ________________________

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9. What is the break-even price if fixed cost = 100, variable cost = 7, and selling price = 9? ________________________

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10. Substituting technology for people has been argued to reduce what in the service delivery?

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11. Why are services more complex to design than manufactured good? ________________________

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12. Name an operational consideration that a firm must take into consideration when designing a new product

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File: ch04, Chapter 4: Global Supply Chain Management

Multiple Choice

1. An organization’s supply chain is facilitated by:a) dedicated peopleb) an information systemc) specific vendorsd) specific customerse) government regulations

Ans:Feedback: What is a Supply ChainDifficulty: Moderate

2. Which of the following typically represent the beginning of a supply chain:a) Wholesalersb) Retailersc) Manufacturersd) External supplierse) Inspectors

Ans:Section Ref: What is a Supply ChainLevel: easy

3. Supply chain management is the vital business function which does NOT coordinate and manage:

a) linking suppliersb) transportersc) human resource interviewsd) internal departmentse) third-party companies

Ans:Section Ref: What is a Supply ChainLevel: easy

4. Typically a manufacturer will have more direct contact with which type of supplier?a) Tier one supplierb) Tier two supplierc) Tier three supplierd) Tier four suppliere) Tier five supplier

Ans:: Section Ref: Issues Affecting Supply Chain ManagementLevel: moderate

5. Consider a packaged milk products supply chain. A lumber company provides wood to a paper mill, who supplies cardboard to a container manufacturer, who supplies containers to the milk products manufacturer. The lumber company is:a) a tier one supplier.b) a tier two supplier.c) a tier three supplier.d) a tier four supplier.e) not in the supply chain.

Ans:Section Ref: Issues Affecting Supply Chain ManagementLevel: moderate

6. Which of the following is not a typical result of the bullwhip effect?a) Absenteeismb) Lost revenuesc) Ineffective transportation used) Poor customer service levelse) Misused manufacturing capacity

Ans:Section Ref: The Bullwhip Effect

Level: moderate

7. Which term refers to inaccurate or distorted demand information created in the supply chain?a) Battle axe effectb) Cobra effectc) Bullwhip effectd) Lasso effecte) Whirlpool effect

Ans:Section Ref: The Bullwhip EffectLevel: easy

8. Which of the following is not a remedy for the bullwhip effect?a) Allocate units based on past demandb) Price stabilizationc) Base forecasts on demand coming from the immediate downstream customerd) Eliminate order batchinge) Information sharing

Ans:Section Ref: The Bullwhip EffectLevel: moderate

9. Which of the following is not one of the four major causes of the bullwhip effect?a) Demand forecast updatingb) Order batchingc) Price fluctuationsd) The business cyclee) Rationing and shortage gaming


10 Which of the following is not one of the four major causes of the bullwhip effect?a) Demand forecast updatingb) Order batchingc) Price fluctuationsd) Government regulationse) Rationing and shortage gaming


11. Which of the following is not a remedy for the bullwhip effect?a) Allocate units based on past demandb) Price stabilizationc) Fill orders based on a set percentaged) Eliminate order batchinge) Information sharing


12. Price fluctuations follow all but which of the following marketing promotions?a) Advertisingb) Price discountsc) Quantity discountsd) Couponse) Rebates

Ans:Section Ref: Issues Affecting Supply Chain ManagementLevel: easy

13. When do rationing and shortage gaming occur?a) Supply exceeds demand.b) Demand exceeds supply.c) Government contracts are awarded.d) Transportation workers go on strike.e) Marginal revenue exceeds marginal cost.


14. Collection of point-of-sale (POS) information is most useful for which bullwhip effect remedy?a) Allocate units based on past demandb) Price stabilization

c) Fill orders based on a set percentaged) Eliminate order batchinge) Information sharing

Ans:Section Ref: Issues Affecting Supply Chain ManagementLevel: Hard

15. The time between order placement and the receipt of goods is called _____________________________.a) receipt timeb) lead timec) allowance timed) processing timee) waiting time


16. Service organization supply chains are:a) similar to manufacturing organizations.b) NOT similar to service organizations.c) very unique.d) not a consideration when planning a service organization.e) universally government regulated.

Ans:Section Ref: Supply Chains for Service OrganizationsLevel: Moderate

17. What is a network internal to an organization called?a) supernetb) internetc) intranetd) supranete) internalnet


18. What is an extension of an intranet to include suppliers and customers called?a) supply chain netb) supernetc) supranetd) extranete) intranet++


19. Net marketplaces are designed to: a) bring together only internal resources.b) bring together limited external resources.c) bring together significant number of purchasing firms. d) limit the number of daily transactions.e) limit cyber security risks.

Ans:Section Ref: Major Issues Affecting Supply Chain ManagementLevel: Moderate

20. Which of the following is open to the most users?a) an intranetb) an extranetc) a LANd) a WANe) the Internet


21. Online retailing, or B2C, has shifted:a) the cost of doing business.b) the power from the suppliers to the consumers.c) the way the internet works.d) internal corporate power to the IT department.e) corporate funding levels to the IT department.


22. Due to globalization, which of the following are NOT some commonly shared ocean shipping logistical characteristics?a) goods arrive in larger quantitiesb) greater break-bulk activity is requiredc) crossdocking is requiredd) typically have higher inventoriese) longer port times occur


23. A recent change in supply chain management has been the:a) need for faster computers.b) green supply chain management requirement.c) requirement for advanced educational degrees.d) increased government regulation.e) need for smaller ocean transportation methods.


24. Purchasing is typically responsible for:a) initiating purchasing requests.b) physically inventorying all received materials.c) developing the engineering specifications. d) analyzing the make-buy decision.e) monitoring supplier performance.

Ans:Section Ref: The Role of PurchasingLevel: Moderate

25. Which activity appears to be most frequently outsourced by large companies?a) Purchasingb) Marketingc) Financed) Accountinge) Manufacturing

Ans:

Section Ref: Sourcing IssuesLevel: Hard

26. What refers to owning or controlling sources of raw materials and components?a) Backward integrationb) Horizontal integrationc) Encapsulating integrationd) Forward integratione) Subsuming integration

Ans:Section Ref: Sourcing IssuesLevel: easy

27. What term refers to processes or activities that are completed in-house?a) Ownsourceb) Insourcec) Homesourced) Outsourcee) Supplysource


28. What term refers to processes or activities that are completed by suppliers?a) Vendorsourceb) Insourcec) Homesourced) Outsourcee) Supplysource


29. A higher level of vertical integration implies:a) more outsourcing.b) less outsourcing.c) more insourcing.d) less insourcing.e) b and c.

Ans:Section Ref: Sourcing IssuesLevel: moderate

30. The quantity that equates the cost of making a product to the cost of buying the product is generally called what?a) Neutrality pointb) Point of equalityc) Indifference pointd) Point of optimalitye) No such point can exist.


31. According to the financial calculations of the make-or-buy decision, if we need fewer units than the indifference point, then which option should we definitely choose?a) Makeb) Buyc) The option with the lower variable costsd) The option with the higher variable costse) It is not profitable to choose either option.


32. To perform the financial calculations of the make-or-buy decision, which costs are needed?a) Fixed and variableb) Fixed and averagec) Variable and averaged) Variable onlye) Average only


33. Which of the following is NOT a positive attribute of Multiple Suppliers?a) provides a greater flexibility of volumeb) eliminates a supplier’s dependence on the purchaserc) probability of assured supply is betterd) deliveries can be schedule more easilye) allows for testing of new suppliers without jeopardizing the flow of materials


34. In general, what comprises the bulk of the cost of goods sold?a) Overheadb) Materialsc) Electricityd) Depreciatione) Labor

Ans:Section Ref: The Role of PurchasingLevel: moderate

35. A constant concern within purchasing departments is the issue of ethics in managing _______________.a) customersb) web sitesc) inventoryd) supplierse) entry-level employees


36. What are the Institute for Supply Management’s principles of ethical supply chain management conduct?a) objectivity always, loyalty to your organization, and faith in your professionb) objectivity always, justice to those with whom you deal, and faith in your professionc) objectivity always, justice to those with whom you deal, and loyalty to your organizationd) objectivity always, know the law, and justice to those with whom you deale) loyalty to your organization, justice to those with whom you deal, and faith in your profession

Ans:Section Ref: The Role of PurchasingLevel: hard

37. According to several studies, what are the three most important criteria for selecting suppliers?a) Price, quality, fast deliveryb) Quality, fast delivery, on-time deliveryc) Price, flexibility, on-time deliveryd) Quality, flexibility, fast deliverye) Price, quality, on-time delivery


38. What is the common term for a process of developing a long-term relationship with a supplier based on mutual trust, shared vision, shared information, and shared risks?a) Marryingb) Cohabitatingc) Sharingd) Partneringe) Diversifying

Ans:Section Ref: The Role of PurchasingLevel: easy

39. Going beyond a basic partnership, an expanded partnership between a firm and its supplier implies:a) mutual respect.b) honesty.c) trust.d) open and frequent communications.e) a commitment to helping each other succeed.


40. According to the textbook, the two kinds of partnerships are basic and what?a) Expandedb) Enhancedc) Enlargedd) Elaboratede) Evolved


41. What does the textbook define as the three most critical factors in successful partnering?a) Impact, mission, visionb) Impact, intimacy, visionc) Contracting, mission, visiond) Contracting, intimacy, missione) Contracting, impact, intimacy


42. What term refers to attaining levels of productivity and competitiveness that are not possible through normal supplier relationships?a) Intimacyb) Visionc) Impactd) Powere) Collusion


43. What term refers to the working relationship between partners?a) Impactb) Visionc) Familiarityd) Intimacye) Proximity

Ans:Section Ref: The Role of Purchasing

Level: moderate

44. What term refers to the mission or objectives of a partnership?a) Impactb) Intimacyc) Dreamd) Conceptione) Vision


45. What do studies suggest are the three sources of impact?a) Reduce waste, leverage core competence, create new opportunitiesb) Provide quantity discounts, reduce waste, create new opportunitiesc) Create detailed contracts, reduce waste, create new opportunitiesd) Create detailed contracts, leverage core competence, reduce wastee) Create detailed contracts, leverage core competence, create new opportunities


46. Leveraging core competence is about sharing:a) workers.b) knowledge.c) machines.d) expenses.e) financial hedges.


47. Which of the following is not considered to be a characteristic of partnership relations?a) Have a long-term orientationb) Are strategic in naturec) Are “arms-length” in natured) Share a common visione) Share short- and long-term plans


48. What does ESI stand for?a) Easy supplier integrationb) Early stage initiationc) Every supplier’s importantd) Early supplier involvemente) Engaged supply initiative


49. Early supplier involvement refers to the involvement of critical suppliers for what?a) Strategic planningb) Assembly line designc) Speedy delivery planningd) Selection of new supplierse) New product design


50. According to a 1996 study by the Council for Logistics Management of the third-party logistics industry, which companies are particularly likely to use third-party logistics services to handle most of their logistics needs?a) Companies engaged in international businessb) Transportation companiesc) Warehousing companiesd) Hospital equipment manufacturerse) Large retailers


51. Which of the following is least likely to be a benefit of implementing barcode scanners at retail store checkout registers?a) Improved forecastingb) More efficient packaging of customer ordersc) Improved inventory controld) Faster checkout for customerse) More accurate checkout for customers

Ans:Section Ref: Supply Chain DistributionLevel: moderate

52. The discussion in the textbook implies that information sharing has shifted power in the supply chain the most to which group?a) Suppliersb) Manufacturersc) Distributorsd) Retailerse) Individual consumers

Ans:Section Ref: Supply Chain DistributionLevel: Hard

53. Which type of technology provides “point-of-sale information?”a) Automatic guided vehicles (AGV)b) Automatic storage and retrieval systems (ASRS)c) Barcode scannersd) Flexible manufacturing systems (FMS)e) Computer aided design/computer aided manufacturing (CAD/CAM)

Ans:Section Ref: Supply Chain DistributionLevel: easy

54. What does EDI stand for?a) Easy data interchangeb) Electronic door interfacec) Electronic detachable interfaced) Elementary data integratione) Electronic data interchange

Ans:Section Ref: What is a Supply Chain?

Level: easy

55. Which of the following is not considered to be a benefit of EDI?a) Increased human interactionb) Reduced paperworkc) Improved data accuracyd) Improved tracking capabilitye) Reduced clerical costs

Ans:Section Ref: What is a Supply Chain?Level: moderate

56. Some warehouses provide product mixing. This is referred to as:a) reduced value-added service for customers.b) value-added service for customers.c) mix and match capability.d) correcting earlier mistakes in shipping.e) storage warehouse functions.


57. What is the throughput of Fingerhut’s warehouse in St. Cloud, MN?a) 30,000 items per minuteb) 30,000 items per hourc) 30,000 items per dayd) 30,000 items per weeke) 30,000 items per month


58. What type of warehouse is used for long-term storage?a) Customizedb) Strategicc) Generald) Distributione) Tactical


59. What type of warehouse is used for short-term storage, consolidation, and product mixing?a) Customizedb) Strategicc) Generald) Distributione) Tactical


60. What does TL stand for?a) Transportation lead timeb) Transportation logisticsc) Trucking lined) Trucking lifee) Truckload (quantity)

Ans:Section Ref: Supply Chain Distribution

61. What is the process whereby shipments are transferred directly from inbound trailers to outbound trailers?a) crossdockingb) directdockingc) nodockingd) simuldockinge) transferdocking


62. Crossdocking ____________________________________________________.a) eliminates the receiving and shipping functions of a distribution warehouse while

still performing its storage and order picking functions

b) eliminates the receiving and storage functions of a distribution warehouse while still performing its shipping and order picking functions

c) eliminates the storage and shipping functions of a distribution warehouse while still performing its order picking and receiving functions

d) eliminates the receiving and order picking functions of a distribution warehouse while still performing its storage and shipping functions

e) eliminates the storage and order picking functions of a distribution warehouse while still performing its receiving and shipping functions

Ans:

Section Ref: Supply Chain Distribution

Level: moderate

63. Crossdocking allows the retailer to replace ______________ with information and coordination.a) trucksb) buildingsc) inventoryd) truck loaderse) conveyor belts

Ans:Section Ref: Supply Chain Distribution

Level: hard

64. _________________ crossdocking is the receiving and consolidating of inbound supplies to support just-in-time manufacturing.a) Warehouseb) Manufacturingc) Distributord) Transportatione) Retail

Ans:Section Ref: Integrated Supply Chain Management

Level: moderate

65. _________________ crossdocking is the consolidating of shipments from LTL and small package industries to gain economies of scale.a) Warehouseb) Manufacturingc) Distributord) Transportatione) Retail

Ans:Section Ref: Integrated Supply Chain Management

Level: moderate

66. What is a virtual organization?a) A company that provides core functions and outsources everything elseb) An e-commerce companyc) A web server developerd) A computer manufacturere) A company with no vertical levels of management

Ans:Section Ref: Trends in Supply Chain ManagementLevel: moderate

67. Benetton is well known for the practice of assembling all white sweaters and waiting to dye them much closer to the time of sale. This is an example of what?a) Stupidityb) Postponementc) Fractionalizationd) Partitioninge) Genericness


68. Which of the following is not an argument in favor of having a single supplier?a) Quantity discounts may be achieved.b) Partnering becomes more possible.c) Consistency of input materials is achieved.d) Probability of assured supply is better.e) Deliveries can be scheduled more easily.

Ans:Section Ref: The Role of Purchasing

Level: moderate

69. Which of the following is not an argument in favor of having multiple suppliers?a) The Just-in-time philosophy can be better utilized.b) Supplier capacity is less important.c) Volume flexibility is obtained.d) Risks may be spread.e) New suppliers may more easily be tested.


70. Insourcing incurs an annual fixed cost of $500,000 and a variable cost of $60 per unit. Outsourcing incurs an annual fixed cost of $750,000 and a variable cost of $20 per unit. What is the indifference point between the two alternatives?a) 0 unitsb) 6250 unitsc) 6250 unitsd) 40 unitse) 12,500 units

Ans: (FCBUY + (VCBUY*Q) = FC Make + (VC Make*Q) $750,000 +($20Q) = $500,000 +($60Q) = 6,250)Section Ref: SCM Across the OrganizationLevel: moderate

71. What is the electronic marketplace for the auto industry?a) Carnetb) Autoexchangec) Covisintd) Citroene) Motorint

Ans:Section Ref: What is a Supply Chain?Level: hard

72. In January 2003, how many suppliers were members of Covisint?a) 76b) 760c) 7,600

d) 76,000e) 760,000


73. Which of the following is a “buyer-side,” typically industry-specific solution?a) automated order entry systemsb) electronic data interchangec) electronic storefrontsd) net marketplacese) advertising revenue model


74. Which B2C model does MyPoints.com utilize?a) advertising revenue modelb) subscription revenue modelc) transaction fee modeld) sales revenue modele) affiliate revenue model

Ans:Section Ref: Components of a Supply ChainLevel: hard

75. Companies want a supply chain that makes it possible to: a) manage all suppliers’ development costs.b) manage and adapt to all of the business dynamics.c) manage distribution display.d) manage distribution outlet retail prices.e) manage customer demands.

Ans:Section Ref: Implementing Supply Chain ManagementLevel: moderate

76. Which of the following is NOT one of the supply chain wastes the text book identifies?

a) over productionb) delay between activitiesc) procurement/purchasing delayd) unnecessary transport or conveyance of producte) unnecessary movement by people

Ans:Section Ref: Implementing Supply Chain ManagementLevel: moderate

77. Supply chain velocity refers to a) how fast the transportation vendor isb) how fast the company pays the supply chain vendorsc) how fast the purchasing department responds to a requestd) the speed at which a product moves through a pipeline from the manufacturer to the customere) the speed at which the warehouse is able to crossdock a shipment

Ans:Section Ref: Trends in Supply Chain ManagementLevel: easy

True/False

1. Supply chain management provides the company with a sustainable, competitive advantage.

Ans:Section Ref: What is a Supply ChainLevel: moderate

2. Manufacturers typically represent the beginning of a supply chain.

Ans:Section Ref: Components of a Supply ChainLevel: easy

3. A tier one supplier is always more important than a tier two supplier.

Ans:

Section Ref: The Bullwhip EffectLevel: moderate

4. The tier one, tier two, and tier three supplier designations are based upon whom the suppliers are providing materials or services to.


5. Like “ABC inventory analysis,” the tier one, tier two, and tier three supplier designations are based upon the annual level of purchases made with the suppliers.


6. Location managers are typically responsible for managing the movement of products between locations.

Ans:Section Ref: The Bullwhip EffectLevel: easy

7. If supply chain A has more levels than supply chain B, then the bullwhip effect will likely impact supply chain B more than supply chain A.

Answer: FalseSection Ref: Issues Affecting Supply Chain ManagementLevel: moderate

8. A possible remedy for the bullwhip effect is to base forecasts on demand coming from the immediate downstream customer.


9. Order batching replaces lumpy demand with constant product demand.


10. Rationing and shortage gaming occur when supply exceeds demand.


11. The time between order placement and the receipt of goods is called lead time.


12. Internet-based B2B commerce results in higher costs to the global suppliers

Ans:Section Ref: Major Issues Affecting Supply Chain ManagementLevel: easy

13. The Internet has created greater competition between suppliers.


14. A firm can hedge exchange rate risk by establishing links with suppliers in a variety of countries.


15. Service organizations can also benefit from supply chain management.

Ans:Section Ref: Supply Chain for Service OrganizationsLevel: easy

16. Global competition forces organizations to decrease their amount of product proliferation.


17. Supply chain globalization is not impacted by security requirements.

Ans:Section Ref: Major Issue Affecting Supply Chain ManagementLevel: Easy

18. Recent research suggests that most large companies have not increased their level of outsourcing.

Ans:Section Ref: Sourcing IssuesLevel: Hard

19. The amount of outsourcing in industry is increasing.


20. The greater the level of vertical integration, the higher is the level of outsourcing.


21. One of the Institute for Supply Management’s principles of ethical supply chain management conduct is “loyalty to your organization.”

Ans:Section Ref: The Role of PurchasingLevel: hard

22. Shipments should spend less than 24 hours in a crossdock.

Ans:Section Ref: Integrated Supply Chain ManagementLevel: moderate

23. Crossdocking eliminates the receiving and shipping functions of a distribution warehouse while still performing its storage and order picking functions.

Ans:Section Ref: Integrated Supply Chain ManagementLevel: moderate

24. A company can use traditional financial measures such as return on investment to measure supply chain performance.

Ans:Section Ref: Supply Chain Performance MetricsLevel: Moderate

25. Warehouses are sometimes used as part of their postponement in their product design process.

Ans:Section Ref: Supply Chain DistributionLevel: Moderate

Essay

1. What are the three “components” of a supply chain?

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2. Explain how a supply chain supports the organization to be sustainable and provide a competitive advantage.

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3. Logistics includes what two major management functions?

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4. What are the four causes of the bullwhip effect?

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5. Describe how consumers can use the Internet to shop in new ways.

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6. List some benefits derived from E-commerce.

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7. Compare the access differences among the Internet, an intranet, and an extranet.

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8. List five major factors that become important for the management of global supply chains.

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9. What are some examples of infrastructure issues that firms managing global supply chains may encounter?

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10. Provide some examples of “greening” requirements that an organization may impose on their supply chain members.

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11. What is the big difference between crossdocking and traditional distribution warehousing?

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12. What are the two major advantages or crossdocking?

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Problems

1. Derive the formula for the indifference point Q* in the make-or-buy decision.

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2. Will’s omelet factory produces 2,500 omelets a day. They’ve determined that their daily fixed costs are $4,000 with a variable cost of fifteen cents per omelet. (a) What is the total cost to make a day’s omelettes, and (b) what should Will charge for each omelet to make a 10% profit, rounded to the next whole dollar?

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3. Insourcing incurs a fixed cost of $1000 and a $5 variable cost. Outsourcing incurs a fixed cost of $2000 and a $2 variable cost. What is the indifference point?

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4. Logo, Inc., can transport its own goods for a $140,000 annual cost and $25 per unit. A logistics supplier offers a contract for a $100,000 annual cost at $30 per unit. What is the indifference point?

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5. Simuelson Industries can produce its own motors for a $60,000 fixed monthly cost and a $50 variable cost per unit. Alternatively, Simuelson Industries can purchase the motors from an outside supplier for $50,000 per month and $58 per unit. a) What is the indifference point?b) What option should be chosen if monthly demand is 1200 units?

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6. Yannis Corporation is trying to decide whether to produce its own subassemblies or outsource them. In-house production costs would include an annual fixed cost of $250,000, materials costs per unit of $7, and labor costs per unit of $5. Teshtown, Inc. has agreed to provide the subassemblies for an annual cost of $400,000 and a unit cost of $8 per subassembly. Over what ranges of demand is each option best?

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7. Insourcing incurs a periodic fixed cost of $10,000 and a $0.50 variable cost. Outsourcing incurs a periodic cost of $6000 and a $0.90 variable cost. Over what ranges of demand is each option best?

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8. Boys `R Us sells suits to young men. Management is considering vertical integration. It is determined that the company can produce its own suits for a fixed annual cost of $2,000,000 and a production cost of $100 per suit. The current supplier charges a $2,500,000 fixed annual cost and $120 per suit. Over what ranges of demand is each option best?

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9. Annual fixed costs are $900,000 and $800,000 for outsourcing and insourcing, respectively, and variable costs are $28 and $32 for outsourcing and insourcing,

respectively. If current annual demand is 22,000 units, by how much must demand increase in order for outsourcing to become cheaper?

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10. Global Metalworks can produce its own hinges for a weekly cost of $96,400 and a cost per hinge of $0.10. Currently an outside supplier is used for a weekly cost of $82,500 and a cost per hinge of $0.24. Current weekly demand is 98,000 units. How much larger must weekly demand grow in order to make insourcing economical?

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11. Sportsworld, Inc. currently incurs $100,000 in annual purchasing costs, and each purchase order costs the firm approximately $3. Third-Party Logistics, Inc. is willing to perform purchasing services for Sportsworld at a $50,000 annual fixed retainer plus $7 per purchase order. Sportsworld currently places 10,000 orders per year.a) What is the current total cost of purchasing for Sportsworld?b) What would the cost of purchasing be if Third-Party Logistics were used?c) What is the indifference point for the two alternatives?

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12. Big Oil Refinery is losing money every month. They cannot shut down the refinery. What quantity of product should they make in an effort to break even? Their primary product sale price is $1.50 per gallon. The production fixed cost is $36,000/day. The variable cost per gallon is $1.20.

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Short Answer

1. A firm whose variable cost of providing a function is $10 while a potential supplier will outsource the function if ________________________

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2. Name three kinds of B2B e-commerce: ________________________ , ________________________ , ________________________

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3. Name three benefits of B2B e-commerce: ________________________ , ________________________ , ________________________

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4. Growth in shipments from _______________________ to the U.S. have grown particularly quickly in recent years.

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5. Taxation is a particularly challenging e-commerce problem because of ________________________

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6. Global competition forces firms to offer ________________________ products.

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7. Several studies report that the top three criteria for selecting suppliers are ____, ____, and ____.

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8. _____, _____, _____are critical factors in successful partnering.

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9. Name three functions of a purchasing department: ________________________ , ________________________ , ________________________

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10. Name three things purchasing agents should avoid as they balance loyalty their own organization and those with whom they deal: ________________________ , ________________________ , ________________________

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11. Partnerships between supplier and purchaser are easier to develop when there is (are) ________________________ supplier(s).

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12. Successful supply chain partnerships have impact when they reduce: ________________________ and ________________________ while ________________________ and ________________________ .

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File: ch05, Chapter 5: Managing Quality

Multiple Choice

1. One common definition of quality is , which focuses on measuring how well the product or service meets targets and tolerances determined by its designers.a) Fitness for useb) Value for price paidc) Technical perceptiond) Judgmental evaluatione) Conformance to specifications

Ans:Section Ref: Defining QualityLevel: moderate

2. The definition of quality that involves the product functioning as expected without failure isa) Performanceb) Conformancec) Reliabilityd) Standardizatione) Endurance

Ans:Section Ref: Defining QualityLevel: hard

3. Which of the following specifically relates to Service Organization dimensions of quality?a) conformance to specificationsb) atmosphere c) durabilityd) featurese) serviceability

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Section Ref: Defining QualityLevel: moderate

4. In six-sigma the level of defects is reduced to approximatelya) 0b) 1.4 parts per millionc) 2.4 parts per milliond) 3.4 parts per millione) 4.4 parts per million


5. The expected operational life of a product is called its __________________________.a) conformanceb) reliabilityc) performanced) durabilitye) serviceability


6. Quality has gained such prominence because organizationsa) are following the latest management fadb) have found a low cost process to keep some employees busyc) have identified an employee perk, membership in quality circlesd) understand it is minimal cost and something to doe) have gained an understanding of the high cost of poor quality

Ans:Section Ref: Cost of QualityLevel: easy

7. During World War II, qualitya) Meant inspecting products to ensure that they met specificationsb) Encompassed the entire organizationc) Was defined as it had been for more than 100 yearsd) Became customer driven

e) Became more statistical in nature

Ans:Section Ref: The Evolution of Total Quality Management (TQM)Level: hard

8. TQM is , designed to build quality into the product and process design.a) Reactiveb) Proactivec) Strategicd) Competitivee) Standardized

Ans:Section Ref: The Evolution of Total Quality Management (TQM)Level: moderate

9. Not only does TQM encompass the entire organization but it a) stresses quality is supplier drivenb) stresses quality is vendor drivenc) stresses quality is customer drivend) stresses the need for ISO 9000 compliancee) stressed the need to be ‘green’

Ans:Section Ref: The Philosophy of TQMLevel: moderate

10. Which of the following is not characteristic of TQM?a) Inspecting products after they have been madeb) Identifying and correcting the root causes of quality problemsc) Encompasses the entire organizationd) Attempts to embed quality in every aspect of the organizatione) Concerned with technical aspects of quality


11. The Japanese term for continuous improvement isa) Poka-yokeb) Kaizen

c) Kanband) Mudae) Automation


12. Giving workers responsibility for seeking out quality problems and correcting them isa) Continuous improvementb) Passing the buckc) Brainstormingd) Employee empowermente) Employee involvement

Ans:Section Ref: The Philosophy of TQMLevel: easy

13. Employees of the organization who receive goods or services from others in the company area) Internal customersb) Ultimate customersc) Downstream customersd) Operatorse) External customers


14. Proper training of employees in the understanding of quality tools includes all of the following excepta) How to correct problemsb) How to assess qualityc) How to develop new quality toolsd) How to use quality control toolse) How to interpret findings


15. TQM team meetings take placea) After workb) During lunch breaksc) When the boss calls themd) When all the other work is finishede) During time in the workday set aside for them


16. A quality circle isa) An approach for the use of control chartsb) An award for quality improvementsc) An inspection stamp found on meatd) A team of volunteer production employees and their supervisors who meet regularly to solve quality problemse) A symbol used on flow charts


17. Studying business practices of companies considered “best in class” is calleda) Pairwise comparisonb) Benchmarkingc) Competitiond) Dreamscapinge) Discouraging


18. When using SPC if you plot the variable of interest against a timeline you are usinga) scatter diagramsb) control chartsc) fishbone diagramsd) pareto chartse) flow charts


19. Which of the following is not an important cost of poor quality?a) Product recallsb) Litigation resulting from product liability issuesc) Loss of businessd) Overheade) Dissatisfied customers

Ans:Section Ref: Cost of QualityLevel: moderate

20. Quality planning, employee training in quality measurement, and cost of maintaining records of information and data related to quality are costs.a) Internal failureb) External failurec) Appraisald) Preventione) Replacement


21. Costs of quality inspections, testing, test equipment, and labs are examples of costs.a) Internal failureb) External failurec) Appraisald) Preventione) Replacement


22. Machine downtime due to failures in the process, scrap, and rework are examples of costs.a) Internal failure

b) External failurec) Appraisald) Preventione) Replacement


23. External failure costs includea) Scrapb) Litigation costs resulting from product liability issuesc) Reworkd) Quality inspectionse) Employee training


24. Warranty claims, customer complaints, and costs of litigation are examples of costs.a) Internal failureb) External failurec) Appraisald) Preventione) Replacement


25. The plan-do-study-act cycle is often called thea) TQM activity approachb) Deming wheelc) Continuous improvement cycled) Quality circlee) Action wheel


26. In the plan-do-study-act cycle, what is studied?a) The plans made in the plan stepb) The previous action planc) The data collected in the do stepd) The evaluation of the current processe) Procedure documentation

Ans:Section Ref: The Philosophy of TQMLevel: hard

27. A useful tool for translating customers’ everyday language into specific technical requirements isa) Quality function deploymentb) Quality circlesc) Quality of designd) Scatter diagramse) Cause-and-effect diagrams


28. Quality function deployment begins bya) Translating scores into specific product characteristicsb) Evaluating how the product compares with its major competitorsc) Setting specific goals to address the specified problemsd) Identifying important customer requirementse) Numerically scoring customer requirements based on their importance


29. In using quality function deployment, is one way to find out precisely what features customers want in the product.a) Interviewing the company sales forceb) Analyzing the changes in features historicallyc) Asking top managementd) Talking to process engineerse) Conducting focus groups

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Section Ref: The Philosophy of TQMLevel: hard

30. The important thing in quality function deployment competitive evaluation isa) To evaluate the financial strength of competitorsb) To identify customer requirements that should be pursued and how we fare relative to our competitorsc) Speed of introductiond) The number of competitorse) Knowing our product well


31. The strength of the relationship between customer requirements and product characteristics is shown in the matrix.a) Trade-offb) Productc) Relationshipd) Strengthe) Inverse


32. The last step in constructing the house of quality includesa) Determining how to advertiseb) Setting targets for our own productc) Determining how to attack our competitors’ productsd) Designing the producte) Comparing results with past sales


33. One common name for TQM based team work is:a) quality departmentb) quality support groupc) quality circle

d) quality teame) team one


34. What quality control tool resembles a "fishbone?"a) Checklistsb) Scatter diagramsc) Pareto analysisd) Cause-and-effect diagramse) Flowcharts


35. Cause-and-effect diagrams are often calleda) Checklistsb) Scatter diagramsc) Pareto analysisd) Fishbone diagramse) Histograms


36. For a cause-and-effect diagram, causes could be related to all of the following excepta) Analysisb) Materialsc) Measurementsd) Machinese) Workers


37. What is a schematic diagram of the sequence of steps involved in an operation or process?a) Checklistb) Control chartc) Scatter diagramd) Flow charte) Process chart


38. What tool is useful in helping everyone develop a clear picture of how an operation or process works?a) Control chartb) Pareto analysisc) Checklistd) Flowcharte) Scatter diagram


39. A checklist is a list of common defects and of these defects.a) Number of occurrencesb) Relative importancec) Attributesd) Costse) Visibility


40 Checklists can also be used to focus on?a) replacement costsb) design documentationc) time dimensiond) upper control limitse) histogram

Ans:Section Ref: The Philosophy of TQM

Level: moderate

41. For control charts, which of the following situations means that the process is not in control?a) A measured observation is above the LCLb) A measured observation is below the UCLc) A measured observation is above the center lined) A measured observation is below the center linee) A measured observation is above the UCL


42. Scatter diagrams are particularly useful in detecting the amount of , or the degree of linear relationship, between two variables.a) Correlationb) Heteroscedasticityc) Agreementd) Disagreemente) Causality


43. analysis is a technique used to identify quality problems based on their degree of importance.a) Demingb) Paretoc) Davisd) Crosbye) Juran


44. A chart showing the number of defects that result from different causes would be used in:a) Pareto analysisb) Flowcharts

c) Cause-and-effect diagramsd) Benchmarkinge) Control charts


45. A shows the frequency distribution of observed values of a variable.a) Scatter diagramb) Control chartc) Histogramd) Flow charte) Process chart


46. If the derived scatter diagram shows a non-linear but scattered relationship it indicates thata) there is a direct correlation between the two variables.b) the two variables’ data was gathered at different timesc) a third variable needs to be added to the evaluationd) there is no direct correlation between the two variablese) you are using the wrong SPC chart


47. Quality at the source is the belief that it is far better to _______ quality problems and _____ them than to discard defective items after production.a) uncover the person generating, fireb) uncover the source of, correctc) discover new methods of , implementd) discover new processes of, implemente) allow returns of, fix


48. The Baldrige Award is intended toa) Demonstrate that American companies are better than their foreign competitorsb) Certify suppliersc) Reward and stimulate quality initiativesd) Focus national attention on manufacturinge) Add structure to TQM

Ans:Section Ref: Quality Awards and StandardsLevel: moderate

49. To compete for the Baldrige Award, companies musta) Be nominated by their senatorb) Submit a lengthy applicationc) Use e-mail regularlyd) Use statistical process controle) Be a Fortune-500 company


50. The Malcolm Baldrige Award criteria include categories for all of the following excepta) Leadershipb) Process managementc) Product designd) Customer and market focuse) Business results


51. The Malcolm Baldrige Award criteria category that includes commitment by top management isa) Leadershipb) Strategic planningc) Process managementd) Business resultse) Information and analysis

Ans:

Section Ref: Quality Awards and StandardsLevel: hard

52. Which of the Malcolm Baldrige Award criteria is allocated the most points?a) leadershipb) information and analysisc) human resource focusd) process managemente) business results

Ans:Section Ref: Quality Awards and StandardsLevel: hard

53. Where is the Deming prize awarded?a) U.S.b) Japanc) Englandd) Germanye) Canada


54. The Union of Japanese Scientists and Engineers named its quality award after ___________________.

a) Genichi Taguchib) Kaoru Ishikawac) Joe Jurand) Phillip Crosbye) W. Edwards Deming


55. What was the first US company to receive the Deming Prize?

a) IBMb) Microsoft

c) Wal-Martd) AT&Te) Florida Power & Light


56. The Malcolm Baldrige Award criteria category that includes the use of tools such as market surveys and focus groups isa) Leadershipb) Strategic planningc) Customer and market focusd) Business resultse) Information and analysis


57. The Malcolm Baldrige Award criteria category that includes continuous improvement programs, employee training, and functioning of teams isa) Leadershipb) Strategic planningc) Information and analysisd) Human resource development and managemente) Business results


58. The Malcolm Baldrige Award criteria category of business results does not includea) Percentage of defective itemsb) Progressive improvement over timec) Financial measuresd) Marketing measurese) One-time only improvements

Ans:Section Ref: Quality Awards and StandardsLevel: easy

59. If suppliers meet preset quality standards, materialsa) will need minimal arrival inspectionsb) will still require full arrival inspectionsc) will be package in special approved containersd) do not have to be inspection upon arrivale) will be paid for at a premium cost


60. The purpose of the International Organization for Standardization is toa) Certify all suppliers worldwideb) Establish international quality standardsc) Spread European standards worldwided) Certify productse) Streamline documentation


61. ISO 9000 isa) An award for quality given annually by the U.S. Governmentb) An approach to quality management that was developed in Japan by Demingc) A set of international quality standards and a certification process for companiesd) An approach for managing self-directed teamse) An approach for product design

Ans:Section Ref: Quality Awards and StandardsLevel: easy

62. Which of the following is not necessary for receiving ISO 9000 certification?a) Products meet customer requirementsb) Documentation of methods used to monitor qualityc) Documentation of methods and frequency of worker trainingd) Documentation of statistical process control tools usede) An audit by an ISO 9000 examiner

Ans:Section Ref: Quality Awards and Standards

Level: hard

63. Increases in international trade during the 1980s created a need for the development of ____________ standards of quality.a) universalb) country-specificc) lowerd) metrice) bilingual


64. What are the most widely used ISO standards?a) ISO 9000, ISO 9001, and ISO 9004b) ISO 9000, ISO 9001, and ISO 9002c) ISO 9000, ISO 9010, and ISO 9100d) ISO 9001, ISO 9002, and ISO 9003e) ISO 9000, ISO 9002, and ISO 9004


65. Who is the “grandfather of quality control?”a) Walter Shewhartb) W. Edwards Demingc) Joseph Jurand) Phillip Crosbye) Genichi Taguchi


66. Who developed quality control charts?a) Walter Shewhartb) W. Edwards Demingc) Joseph Jurand) Phillip Crosbye) Genichi Taguchi


67. ISO 14000 is for evaluatinga) Automotive suppliersb) Minority suppliersc) Raw materialsd) A company’s environmental responsibilitye) Service suppliers


68. is often referred to as the father of quality control.a) W. Edwards Demingb) Joseph Juranc) Philip Crosbyd) Martin Mariettae) Count Pareto

Ans:Section Ref: The Evolution of Total Quality ManagementLevel: easy

69. Deming pointed out that 85% of quality problems are caused bya) Worker errorb) Numerical quotasc) Processes and systemsd) Carelessnesse) Suppliers

Ans:Section Ref: The Evolution of Total Quality ManagementLevel: hard

70. Deming believed that is the key to improving quality.a) Employee trainingb) Process designc) Properly functioning equipment

d) Having good supplierse) Improving the system


71. Who is famous for his “14 Points?”a) Walter Shewhartb) W. Edwards Demingc) Joseph Jurand) Armand Feigenbaume) Genichi Taguchi

Ans:Section Ref: The Evolution of Total Quality ManagementLevel: moderate

72. For Juran’s quality trilogy, which part stresses that processes should be set up to ensure that the quality standards can be met?a) Quality planningb) Quality controlc) Quality improvementd) Quality certificatione) Quality awards


73. Juran stressed that quality improvement should be continuous as well asa) Uniqueb) Novelc) Retroactived) Breakthroughe) Ongoing


74. Which of the following is not attributed to Philip Crosby?

a) The concept of the quality trilogyb) The phrase “Do it right the first time.”c) Stressed the idea of prevention of defectsd) The notion of zero defectse) The phrase “Quality is free.”


75. Who is best known for the development of cause-and-effect diagrams?a) Walter Shewhartb) W. Edwards Demingc) Joseph Jurand) Kaoru Ishikawae) Genichi Taguchi


76. Who developed a formula for determining the cost of poor quality?a) Walter Shewhartb) W. Edwards Demingc) Joseph Jurand) Kaoru Ishikawae) Genichi Taguchi


77. The most important factor in the success or failure of TQM efforts isa) Getting started quicklyb) The use of statistical process controlc) The genuineness of the organization’s commitmentd) The use of cause-and-effect diagramse) Employee training


78. Which of the following is a valid formula to compute the reliability of two components in parallel?a) (Reliability of 1st component) – (Reliability of 2nd Component)(1 – Reliability of 1st Component)b) 1 – (1 – Reliability of 1st Component)(1 – Reliability of 2nd Component)c) (1 – Reliability of 1st Component)(1 – Reliability of 2nd Component)d) (Reliability of 1st component) + (Reliability of 1st Component)(1 – Reliability of 2nd Component)e) (Reliability of 1st component)(Reliability of 2nd Component) + (Reliability of 1st

Component)(1 –Reliability of 1st Component)


79. Suppose that you have a system with one component and two backups. What is the formula for the reliability of the system?a) P(1st works) + [P(1st fails)][P(2nd works)] + [P(1st fails)][P(3rd works)]b) [P(1st works)][P(2nd works)][P(3rd works)]c) [P(1st works)] + [P(2nd works)] + [P(3rd works)]d) P(1st works) + [1 – P(1st fails)][P(2nd works)] + [1 – P(1st fails)][P(3rd works)]e) 1 – [P(1st fails)][P(2nd fails)][P(3rd fails)]


80. One TQM mistake companies make is believing that the responsibility for quality and elimination of waste liesa) with the supplierb) with the return and repair shopc) with the supply chaind) with all employees but top managemente) with top management alone.

Ans:Section Ref: Why TQM Efforts FailLevel: moderate

81. SPC isa) a direct substitute for continuous improvementb) a replacement of the teamwork conceptc) a substitute for middle management

d) a fully subjective processe) is not a substitute for continuous improvement

Ans:Section Ref: Why TQM Efforts FailLevel: moderate

82. The decision to implement TQM will impact all of the following EXCEPTa) product designb) processesc) job designd) supply chain managemente) company product

Ans:Section Ref: Total Quality Management (TQM) Within OM: how it all fits togetherLevel: easy

83. TQM affects which of the followinga) marketingb) financec) accountingd) engineeringe) all of the above

Ans:Section Ref: Total Quality Management (TQM) Across the OrganizationLevel: easy

True/False

1. One common definition of quality is conformance to specifications, which focuses on measuring how well the product or service meets targets and tolerances determined by its designers.


2. The expected operational life of a product is called its reliability.


3. External failure costs tend to be particularly high for service organizations.


4. TQM is reactive, designed to build quality into the product and process design.


5. Quality at the source involves inspecting goods after they are produced.


6. It is not possible to develop a U shaped scatter diagram relationship.


7. A quality circle is a team of volunteer production employees and their supervisors who meet regularly to solve quality problems.


8. Quality planning, employee training in quality measurement, and cost of maintaining records of information and data related to quality, are appraisal costs.


9. Machine downtime due to failures in the process, scrap, and rework are examples of internal failure costs.


10. The later that defects are found, the less costly they are to correct.


11. A useful tool for translating customers’ everyday language into specific technical requirements is quality function deployment.


12. In using quality function deployment, conducting focus groups is one way to find out precisely what features customers want in the product.


13. In TQM the role of the employee is very similar to earlier requirements.


14. A control chart is a schematic diagram of the sequence of steps involved in an operation or process.


15. Cause-and-effect diagrams are problem solving tools commonly used by quality control teams.


16. A checklist is a list of common defects and the relative importance of these defects.


17. Pareto analysis is a technique used to identify quality problems based on their degree of importance.


18. The Deming Prize is an American award given to companies to recognize their efforts in quality improvement.


19. ISO 9001 is the standard used for the certification of a firm’s quality management system.

Ans:Section Ref: Quality Awards and Standards

Level: hard

20. ISO certification has become a requirement for conducting business in many industries.


21. W. Edwards Deming is often referred to as the father of quality control.

Ans:Section Ref: The Evolution of Total Quality Management (TQM)Level: easy

22. The concept of the quality trilogy is attributed to Philip Crosby.


23. A cause-and-effect diagram is also referred to as a Taguchi diagram.

Ans::Section Ref: The Evolution of Total Quality Management (TQM)Level: moderate

24. Genichi Taguchi estimates that as much as 80 percent of all defective items are caused by poor product design.

Ans:Section Ref: The Evolution of Total Quality Management (TQM)Level: hard

25. The most important factor in the success or failure of TQM efforts is the genuineness of the organization’s commitment.

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Section Ref: The Evolution of Total Quality Management (TQM)Level: moderate

Essay

1. Name six common definitions of quality in manufacturing.

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2. What are four dimensions of manufacturing quality?

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3. What are four dimensions of service quality?Ans:

4. What are the four types of quality costs?

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5. What are the steps involved in quality function deployment?

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6. What are the seven TQM tools for solving quality problems?

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7. Explain why external failure costs tend to be very expensive for service organizations.

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8. In using a cause-and-effect diagram, what are the primary possible causes of quality problems?

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9. What are the seven categories for Malcolm Baldrige Award criteria?

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10. What must a company do to become ISO 9000 certified?

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11. Who are the seven primary quality gurus?

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12. Describe the foundation of Deming’s “14 Points.”

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13. What are the common causes of TQM failure?

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Problems

1. Suppose that a product has three parts, each of which must work in order for the product to function. The reliabilities of the parts are .898, .933, and .946, respectively. What is the reliability of the product?

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2. Suppose that a product has two parts, both of which must be working in order for the product to function. The reliability of the first part is .85, and the reliability of the second part is .82. In addition, the second part comes with a backup that is 50% reliable. What is the overall reliability of the product?

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3. As a design engineer you need to obtain 99.9% reliability. The first part has a reliability factor of 99.99%. What level of reliability does the series part require to achieve 99.9% overall reliability?

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4. The design engineer in question #3 needs to improve the overall system reliability by adding another part in parallel to the unit calculated in question #3. The objective is to achieve an overall system reliability of 99.95%. What reliability must the parallel part have to meet this objective?

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Short Answer

1. TQM requires that external and internal customers receive ________________________

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2. TQM stresses the balanced use of non-quantitative (qualitative) and ________________________ tools in quality improvement.

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3. Redundant components are often used when product failure ________________________

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4. Quality Function Deployment (QFD) begins by ________________________

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5. Histograms report the ________________________ of a variable's observed values.

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6. Checklists are used to make sure all steps in a process are carried out and to ________________________

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7. Quality circles are a common application of the ________________________

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8. Products have little value if they do not ________________________

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9. Reliability is described as a _____, ______, or a _____

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10. Philip Crosby believed that ________________________ because the cost of doing it right the first time is less than the cost of correcting mistakes later

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11. The old concept of quality involved ________________________

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12. The most important factor in the success or failure of TQM efforts is the _____ of the organization’s _____.

Ans.

File: ch06, Chapter 6: Quality Control and Six Sigma

Multiple Choice

1. Which of the following is NOT associated with descriptive statistics?a) meanb) standard deviationc) ranged) proportione) measure of the distribution of data

Ans:Feedback: What is Statistical Process ControlDifficulty: moderate

2. What technique determines whether a batch of goods should be accepted or rejected?

a) Statistical process controlb) Acceptance samplingc) Fishbone diagrammingd) Scatter plottinge) Experimental design

Ans:Section Ref: What Is Statistical Quality Control?Level: easy

3. What technique answers the question of whether the process is functioning properly or not?

a) Fishbone diagrammingb) Acceptance samplingc) Statistical process controld) Scatter plotting

e) Experimental design

Ans:Section Ref: What Is Statistical Quality Control?Level: easy

4. Statistical process control tools are used most frequently becausea) they are mathematically basedb) they are helpful in measuring and evaluating the quality of productsc) they are helpful in measuring and evaluating the customers’ needsd) they are qualitative evaluation techniquese) they provide a definitive ROI calculation

Ans:Section Ref: What is Statistical Quality ControlLevel: Moderate

5. Common causes of variation are also known as __________________________.a) frequentb) usualc) inexpensived) ordinarye) random

Ans:Section Ref: Sources of Variation: Common and Assignable CausesLevel: moderate

6. The range is an example of what?a) Traditional statistical toolsb) Fishbone diagrammingc) Acceptance samplingd) Experimental designe) Statistical process control

Ans:Section Ref: Descriptive StatisticsLevel: easy

7. Variation in the production process leads to:a) quality defectsb) process improvement opportunities

c) quality improvementsd) product consistencye) service improvements

Ans:Feedback: What is Statistical Quality Control?Difficulty: moderate

8. The standard deviation is an example of what?a) Traditional statistical toolsb) Fishbone diagrammingc) Acceptance samplingd) Experimental designe) Statistical process control


9. A process chart is aa) graph that shows how the population was evaluatedb) graph of the population failuresc) graph that shows whether a sample of data falls within assignable causesd) graph that show whether a sample falls within the common or normal rangee) table showing final inspection results

Ans:Section Ref: Control Charts for VariablesLevel: moderate

10. An x-bar chart is an example of what?a) Traditional statistical toolsb) Fishbone diagrammingc) Acceptance samplingd) Experimental designe) Statistical process control

Ans:Section Ref: Control Charts for VariablesLevel: easy

11. For the standard normal distribution, how much confidence is provided within 2 standard deviations above and below the mean?a) 97.22%b) 95.44%c) 99.74%d) 99.87%e) 90.00%

Ans:Section Ref: Control Charts for VariablesLevel: hard

12. The A2 factor includes how many standard deviations of ranges?a) 1b) 2c) 3d) 4e) 6


13. A p-chart is an example of what?a) Traditional statistical toolsb) Fishbone diagrammingc) Acceptance samplingd) Experimental designe) Statistical process control

Ans:Section Ref: Control Charts for AttributesLevel: easy

14. P-charts are used to measure:a) continuous variationb) intermittent random variationc) proportion of items in a sample that are defectived) the count of defective partse) proportion of items in a sample that are good


15. A c-chart is an example of what?a) Traditional statistical toolsb) Fishbone diagrammingc) Acceptance samplingd) Experimental designe) Statistical process control


16. An OC curve is an example of what?a) Traditional statistical toolsb) Fishbone diagrammingc) Acceptance samplingd) Experimental designe) Statistical process control

Ans:Section Ref: Acceptance SamplingLevel: easy

17. Causes of variation that can be identified and eliminated are called what?a) Randomb) Assignablec) Identifiabled) Stochastice) Common

Ans:Section Ref: Sources of Variation: Common and Assignable CausesLevel: easy

18. All processes will have what type of variation?a) Randomb) Assignablec) Identifiabled) Stochastice) Common

Ans:

Section Ref: Sources of Variation: Common and Assignable CausesLevel: easy

19. What measures the central tendency of a set of data?a) Coefficient of variationb) Variancec) Standard deviationd) Meane) Range

Ans:Section Ref: Sources of Variation: Common and Assignable CausesLevel: easy

20. What measures the difference between the largest and smallest observations in a set of data?

a) Rangeb) Coefficient of variationc) Coefficient of kurtosisd) Coefficient of skewnesse) Standard deviation

Ans:Section Ref: Descriptive Statistics Level: easy

21. What measures symmetry of a distribution?a) Rangeb) Skewnessc) Standard deviationd) Meane) Variance

Ans:Section Ref: Descriptive Statistics Level: moderate

22. Which of the following would imply that data observations are closely clustered around the mean?

a) Small range and small standard deviationb) Small range and large standard deviationc) Large range and small standard deviation

d) Large range and large standard deviatione) Neither range nor standard deviation has anything to do with “clustering.”

Ans:Section Ref: Descriptive Statistics Level: easy

23. What is a distribution called when the same number of observations are below the mean as are above the mean?b) Proportionalb) Equalizedc) Wholly Uniformd) Balancede) Symmetric

Ans:Section Ref: Statistical Process Control MethodsLevel: moderate

24. What are the four most common control charts?a) x-bar, R, p, cb) x-bar, R, p, OCc) x-bar, R, c, OCd) x-bar, p, c, OCe) R, p, c, OC

Ans:Section Ref: Control Charts For VariablesLevel: easy

25. On a control chart, what separates common from assignable causes of variation?a) x-bar linesb) Control limitsc) Specification limitsd) Production limitse) Mean divided by standard deviation


26. The center line of a control chart represents what?a) Rangeb) Standard deviationc) Meand) Mean divided by standard deviatione) Skewness

Ans:Section Ref: Statistical Process Control MethodsLevel: easy

27. What is the first step that should be taken if an observation falls below the lower control limit on a control chart?a) Recalibrate the machineb) Perform a new process capability studyc) Try a larger standard deviation valued) Search for assignable causese) Nothing—a low value is a “good” thing


28. Upper and lower control limits are usually set at how many standard deviations from the mean?a) 0.5b) 1.0c) 2.0d) 3.0e) 6.0


29. Assuming that data exhibit a normal distribution, control limits set at 3 standard deviations from the mean capture how much common variation?a) 50.00%b) 80.00%c) 95.44%d) 99.74%e) 99.99%

Ans:

Section Ref: Statistical Process Control MethodsLevel: moderate

30. What is the probability of a Type I error for a control chart with limits set at 3 standard deviations from the mean?a) 0.00%b) 0.26%c) 4.56%d) 20.00%e) 50.00%


31. What is the term for the probability that a value falling outside the control limits is still due to normal variation?a) Type I errorb) Type II errorc) Normalization anomalyd) Beta riske) Standard deviation irregularity


32. The different characteristics that can be measured by control charts can be divided into what two groups?a) Parameters and attributesb) Variables and attributesc) Variables and constraintsd) Variables and parameterse) Attributes and constraints


33. What is a control chart that monitors changes in the mean value of a process?a) x-bar chart

b) R-chartc) p-chartd) c-charte) OC chart


34. What is a control chart that monitors changes in the dispersion or variability of a process?a) x-bar chartb) R-chartc) p-chartd) c-charte) OC chart


35. What is a control chart that monitors the proportion of defects in a sample?a) x-bar chartb) R-chartc) p-chartd) c-charte) OC chart


36. For which of the following would a control chart for attributes not be appropriate?a) Number of nonfunctioning light bulbsb) Proportion of broken eggs in a cartonc) Number of rotten applesd) Number of complaints issuede) Length of metal rods

Ans:Section Ref: Control Charts for AttributesLevel: moderate

37. What are the two types of control charts for attributes?a) p and cb) x-bar and pc) x-bar and Rd) R and ce) p and R


38. What are the two types of control charts for variables?a) p and cb) x-bar and pc) x-bar and Rd) R and ce) p and R


39. Consider a p-chart measuring the percentage of defective light bulbs. If the LCL is .04 and a sample has 1% defects, what is the implication?a) The process is in a state of control.b) The process is out of control even though the variation is “good.”c) The value of sigma must be increased.d) The process has too many errors.e) A calculation error must have occurred.


40. For a p-chart or c-chart, what is the implication of a negative value for the LCL?a) A calculation error must have occurred.b) The value of sigma must be reduced.c) The process has too many errors.d) The process is in a state of control.e) The LCL can effectively be rounded up to 0.


41. What are preset ranges of acceptable quality characteristics?b) Control limits.b) Product specifications.c) Six-sigma limits.d) AQC limits.e) R-chart limits.

Ans:Section Ref: Process CapabilityLevel: easy

42. Product tolerances are often calleda) SPCb) Product drawingsc) Product descriptionsd) Process capabilitye) Product specifications


43. What process width is typically used when computing the process capability index Cp?a) 1b) 2c) 3d) 4e) 6


44. Setting up control charts to monitor whether a process is in control a) guarantees process capabilityb) guarantees process specificationsc) does not guarantee process capability

d) does not guarantee product specificatione) guarantees meeting client needs


45. What is the formula for the process capability index Cp?a) process width / specification widthb) specification width process widthc) specification width / Type I errord) specification width / process widthe) specification width / 99.74%

Ans: (CP = (USL – LSL)/6σ)Section Ref: Process CapabilityLevel: easy

46. What process capability index (Cp) value implies that the process “exceeds minimal capability?”a) 0b) < 1c) = 1d) > 1e) 6

Ans:Section Ref: Process CapabilityLevel: moderate

47. A process capability index (Cp) value of 1 means that what percent of products produced will fall within the specification limits?a) 0.26%b) 90.00%c) 95.44%d) 99.74%e) 100.00%


48. According to the textbook, the way to reduce the ppm defective is toa) change product specificationsb) increase process capability c) increase the number of inspection points.d) employ more inspectors e) increase process throughput


49. What is the relationship between Cpand Cpk?a) Cp 2 Cpk

b) CpCpk

c) CpCpk

d) Cp 2Cpk

e) Cp Cpk 3

Ans:Section Ref: Process CapabilityLevel: hard

50. Which company is known for coining the term “six-sigma?”a) Ford Motor Companyb) Proctor and Gamblec) IBMd) Motorola Corporatione) Hewlett-Packard

Ans:Section Ref: Six Sigma QualityLevel: moderate

51. Six-sigma quality implies how many average defects per million?a) 3.4b) 6c) 2600d) 3e) 6


52. What are the two aspects to implementing the six-sigma concept?a) numerically controlled machines and inventory managementb) numerically controlled machines and people involvementc) numerically controlled machines and technical toolsd) technical tools and people involvemente) inventory management and technical tools

Ans:Section Ref: Six Sigma QualityLevel: hard

53. In six-sigma programs, individuals who have extensive training in the use of technical tools and are responsible for carrying out the implementation of six sigma are ____________________.a) black beltsb) green beltsc) blue beltsd) red beltse) white belts


54. In six-sigma programs, individuals are given ____________________ titles that reflect their skills in the six-sigma process.a) Olympic medal b) academicc) martial artsd) medieval joustinge) boxing


55. The Six Sigma approach is organized around a_____ plan known as ______.a) four step, PDACb) four step, DMACc) five step PDACRd) five step DMAICe) five step, DMCRA


56. The person that comes from the top ranks of the organization and is responsible for providing direction and overseeing all aspects of a six-sigma implementation process is called a ________________________.a) generalb) admiralc) directord) producere) champion


57. When should 100% inspection be used?a) Whenever attributes are being measuredb) When the expected cost of a defective item exceeds the cost of inspecting a unitc) With destructive testingd) When the cost of inspecting a unit exceeds the expected cost of a defective iteme) 100% inspection should never be used

Ans:Section Ref: Acceptance SamplingLevel: moderate

58. What is a graph that shows the probability or chance of accepting a lot given various proportions of defects in the lot?a) S curveb) Z-chartc) OC curved) p-charte) R-chart


59. Single sampling plan is when a) a non-random sample is drawn from every lot.b) a random sample is drawn from every lot.c) a second lot is sampled due to the first sample inconclusive results.d) only one time is tested.e) a sample plan used once and discarded.


60. According to the text, generally consumers are willing to accept what percent of defects?a) 1-2%b) 2-3%c) 3-4%d) 4-5%e) 5-6%


61. Which of the following is the least important point to perform inspection?a) Incoming materialsb) Prior to costly processingc) Just after costly processingd) Prior to bottleneck (limited machine capacity) processinge) After the product is finished

Ans:Section Ref: Implications for ManagersLevel: hard

62. What is the only service company to have won the Malcolm Baldrige National Quality Award twice?a) Marriottb) Nordstrom Department Storesc) Wal-Martd) Ritz-Carltone) Northwest Airlines

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Section Ref: Statistical Quality Control In ServicesLevel: moderate

63. Suppose that you want to measure the percentage of candles that are cut longer than 9 inches. Which control chart would be appropriate?a) x-bar chartb) R-chartc) p-chartd) c-charte) OC chart

Ans:Section Ref: Control Charts for AttributesLevel: hard

64. What is the upper control limit for a c-chart if the total defects found over 20 samples equals 150?a) 7.5b) 2.739c) 15.72d) 20e) 30

Ans: (UCL = Ċ + Z√Ċ = 150/20 + 3 * √(150/20) = 15.72)Section Ref: Control Charts for AttributesLevel: moderate

65. Suppose that Matt wants to use a process control chart to monitor the number of different types of mistakes that he makes when giving motivational speeches to student groups. Which control chart would be most appropriate?a) x-bar chartb) R-chartc) p-chartd) c-charte) OC chart


66. Suppose that you have calculated the control limits for a p-chart to be the following:

LCL = 0.02 and UCL = 0.08.Today you took 10 samples of 20 units each. The first nine samples each had one defect. The last sample had zero defects. What can you conclude?a) the process is out of controlb) the process is in a state of controlc) the last sample should be ignored because it was “too good”d) you calculated the limits incorrectly because the LCL must be either negative or 0e) the sample size must be increased

Ans:Section Ref: Control Charts for AttributesLevel: hard

67. Suppose that you want to monitor the variability in ounces of a process that fills beer cans. Which control chart would be appropriate?a) x-bar chartb) R-chartc) p-chartd) c-charte) OC chart


68. What is the lower control limit for a c-chart if the average number of defects found over 320 samples is equal to 16?a) 6.584b) 4c) 20d) 0e) 12

Ans: (LCL = Ċ - Z√Ċ = 16 + 3 * √(16) = 4)Section Ref: Control Charts for AttributesLevel: moderate

69. Each day for two workweeks (10 days total), George weighs 4 bags from that day’s production. If the average of the means is 14 oz. and the average range is 0.4 oz., what is the lower control limit for an x-bar chart for this process?a) 13.7084 oz.b) 13.8768 oz.

c) 14.2916 oz.d) 12.8000 oz.e) 13.5908 oz.

Ans: (LCL = x-bar – A2*R-bar = 14 - .73*.4 = 13.708)Section Ref: Control Charts for VariablesLevel: moderate

70. If the upper control limit for a c-chart is 28 and the lower control limit is 4, what is the average number of defects per sample?a) 16b) 12c) 5.29d) 7.29e) 4

Ans: (Ċ= (UCL-LCL)/2 + LCL = (28-4)/2 + 4 = 16)Section Ref: Control Charts for AttributesLevel: moderate

71. Suppose that you want to monitor the average ounces of a process that fills beer cans. Which control chart would be appropriate?a) x-bar chartb) R-chartc) p-chartd) c-charte) OC chart


72. What is the upper control limit for a c-chart if the total defects found over 200 samples equals 32?a) 1.36b) 13.75c) 0.56d) 25.00e) 48.97

Ans: (UCL = Ċ + Z√Ċ = 32/200 + 3 * √(32/200) = 1.36)Section Ref: Control Charts for AttributesLevel: moderate

73. Ritz-Carlton employees are empowered to spend up to how much money on the spot to correct any customer complaint?a) $25b) $50c) $100d) $1000e) $2000

Ans:Section Ref: Statistical Quality Control In ServicesLevel: hard

74. What program at Intel enforces the policy to make chips in the same way at all facilities?a) “make-same”b) “copy-exactly”c) “duplicate-same”d) “duplicate-exactly”e) “one-size-fits-all”

Ans:Section Ref: What is Statistical Quality ControlLevel: hard

True/False

1 Descriptive statistics are used to describe quality characteristics and relationships.

Ans:Section Ref: What is Statistical Quality ControlLevel: moderate

2. Statistical quality control is a subset of statistical process control.


3. Acceptance sampling occurs after the product has been produced.


4. An important task in quality control is to find out the range of natural random variation in a process.

Ans:Section Ref. Sources of Variation: Common and Assignable CausesLevel: moderate

5. The standard deviation measures the difference between the largest and smallest observations in a set of data.


6. The range of a data set is always non-negative.

Ans:Section Ref: Descriptive StatisticsLevel: moderate

7. A small range and large standard deviation imply that data observations are closely clustered around the mean.


8. A skewed distribution implies that assignable causes of variation may be present.

Ans:Section Ref: Descriptive StatisticsLevel: moderate

9. A process that is in control has no variation.


10. A process can be considered in a state of control even if one observation is 1.75 standard deviations above the mean.


11. Upper and lower control limits are usually set at 6 standard deviations from the mean.


12. Increasing the number of standard deviations on which control chart limits are based will decrease the Type I error.


13. A variable is a product characteristic that has a discrete value and can be counted.


14. A control chart y-axis represents the quality characteristic that is being monitored.

Ans:

Section Ref: Statistical Process Control MethodsLevel: moderate

15. The weight of a bag of sugar is an example of a variable.


16. The A2 factor includes two standard deviations of ranges.


17. Given a sample size of 2, the lower limit for the R-chart is 0.

Ans:Section Ref: Control Charts for VariablesLevel: hard

18. A p-chart monitors the number of defects per unit.


19. Suppose that you have created control charts to measure the length of candles. The process is in a state of control if either the x-bar chart is in control or the R-chart is in control.


20. A p-chart is used when we can compute only the number of defects but not the total sample size.


21. Product specifications are preset, whereas control limits are computed after observing data.Ans:Section Ref: Control Charts for AttributesLevel: moderate

22. Another way to construct the control limits for variables is to use the standard deviation as an estimate of variability of the process.

Ans:Section Ref. Control Charts for Variables.Level: Hard

23. In six-sigma programs, individuals are given academic titles that reflect their skills in the six-sigma process.


24. The person that comes from the top ranks of the organization and is responsible for providing direction and overseeing all aspects of a six-sigma implementation process is called a general.


Essay

1. What are the three broad categories of statistical quality control?

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2. Define acceptance sampling.

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3. Define statistical process control.

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4. Define control limits.

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5. Define attribute (as a product characteristic).

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6. What is an R-chart?

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7. What is a p-chart?

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8. What is a c-chart?

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9. Describe the two aspects to implementing the six-sigma concept.

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10. Describe the difference between black belts and green belts in a six-sigma implementation.

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11. Describe why service organizations have tended to lag manufacturing organization in the application of SQC.

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12. Describe how finance is associated with SQC.

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Problems

1. Mrs. Crabapple has a class with three students, and she has had four quizzes so far this semester. She has created control charts to determine if the variation in students’ scores from quiz to quiz is exhibiting only natural variation. Each of the quiz scores is shown below. The upper and lower control limits for the chart are 109.6 and 34.9, respectively. The upper and lower control limits for the R chart are 93.95 and 0, respectively.

Quiz Bart Lisa Nelson 1 75 100 50 2 62 82 72 3 90 90 90 4 60 86 10

Is the process in a state of control?

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2. Twenty samples of n = 200 were taken by an operator at a workstation in a production process. The number of defective items in each sample was recorded as follows.

Number NumberSample of Defects Sampleof Defects 1 12 11 16

2 18 12 15 3 10 13 13 4 15 14 16 5 16 15 18 6 19 16 17 7 17 17 18 8 12 18 20 9 11 19 21 10 14 20 22

Management wants to develop a p-chart using 3-sigma limits. What are the control limits?

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3. Cans of soup are supposed to weigh exactly 16 oz. Inspectors want to develop process control charts. They take eight samples of five boxes and weigh them. They obtain the following data:

Sample Mean Range1 15.2 1.82 14.6 0.73 16.5 0.54 18.1 0.45 13.2 0.26 16.0 0.47 15.9 0.58 14.8 0.9

(a) What is the upper control limit for the x-bar chart?(b) What is the lower control limit for the x-bar chart?(c) What is the upper control limit for the R chart?(d) What is the lower control limit for the R chart?(e) Is the process in a state of control?

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4. Inspectors want to develop process control charts to measure the weight of crates of wood. Data (in pounds) from three samples are:

Sample Crate 1 Crate 2 Crate 3 Crate 41 18 38 22 262 26 30 28 203 26 26 26 26

(a) What is the upper control limit for the R chart?

(b) What is the lower control limit for the R chart?(c) What is the upper control limit for the x-bar chart?(d) What is the lower control limit for the x-bar chart?(e) Is the process in a state of control? If not, why not?

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5. Eight samples of n = 50 were taken by an operator at a workstation in a production process. The number of defective items in each sample was recorded as follows.

Number of

Sample Defects1 102 03 124 85 106 167 148 10

(a) Management wants to develop a p-chart. What are the control limits?(b) Is the process in a state of control?

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6. Suppose a process has been monitored daily for the last ten days and the number of machine failures each day was noted. The results follow:

Day Number: 1 2 3 4 5 6 7 8 9 10Number of Failures: 8 9 6 10 12 4 9 11 9 12

Compute control limits for a c-chart that monitors the average number of machine failures per day. Is the process in a state of control?

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7. If the average range is 4.0 inches and the sample size is 18, compute the upper and lower limits for an R chart.

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8. Cholesterol Palace is a fast-food restaurant. Management was concerned with errors in filling orders at its drive-up window. It hired several undercover quality inspectors to randomly place 100 orders while the process seemed to be in control. The completed orders were then checked for accuracy. The following table shows the results of the survey:

Defect Frequency Incomplete, shorted order 12Unordered items dispensed 2Wrong product dispensed 14Wrong toppings 14Wrong size drink 2Drink lid not sealed 17No drinking straw with soft drink order 0No napkins 18Far too many condiment packets 65No salt with sandwich or fries order 10Wrong change 3Other 12

(a) Use these data to estimate the average number of defects per order and determine the three-sigma control limits for a c-chart. (b) A quality inspector just used the drive-up window and now checks her order. Her cheeseburger has mustard on it although she ordered it without ketchup or mustard. Three handfuls of ketchup and mustard packets are in the sack, but no napkins. And hot coffee has spilled because the lid wasn’t properly sealed. Is the drive-up process in control?

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9. Johnson Enterprises sells no-spill syrup in bottles. Management is evaluating four different machines with standard deviations of .006, .01, .022, and .04 ounces for Machines A, B, C, and D, respectively. The specification limits 11.95 and 12.05 ounces. Which machines should receive more detailed evaluation, i.e. which are statistically “capable?”

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10. Julia has been assigned to develop a new product design specifications. Manufacturing has stated that the system must have a capability index of 1.2 when the product standard deviation is 1.3. What is the specification range limits?

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11. Compute the Cpkmeasure of process capability for the following machine and interpret the findings. What value would you have obtained with the Cpmeasure?

Upper spec limit = 100 feetLower spec limit = 99.5 feetProcess = 99.8 feetProcess = .08 feet

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12. Joel’s fresh flower processing plant processes 2000 flowers in a lot. For quality control they use a sample size of 10 flowers. Joel has established a probability of accepting a given lot as 99.74% with a proportion of defective items, in a lot, of .05. What is the AOQ?

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Short Answer

1. What is the formula for the sample standard deviation? ________________________

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2. What is the formula for the sample standard deviation of a variable measured as a fraction or probability? ________________________

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3. What is the formula for an x-bar chart's control limits? ________________________

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4. What is the formula for an x-bar chart's center line? ________________________

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5. What is the formula for an R chart's center line? ________________________

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6. What is the formula for the basic capability index? ________________________

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7. Six sigma programs strive to set control limits at ________________________

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8. Consumers willingly accept defects if ________________________

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9. The probability of shipping a lot or batch of products whose proportion of defective items is greater than LTPD is called consumer's risk because ________________________

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10. The probability of rejecting a lot or batch of products whose proportion of defective items is not greater than AQL is called producer's risk because ________________________

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11. The computed AOQ provides a sense of the _____ _____ ____ of the product

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12. Two areas of operations management that are particularly affected by the decision to increase the level of quality and reduce the number of product defects are ____ and ___ ___

Answer:

File: ch07, Chapter 7: Lean Systems

Multiple Choice

1. JIT is applies toa) only the manufacturing organizationb) only the service organizationc) both the manufacturing and service organizationsd) only the production portion of manufacturing and service organizationse) all of the organization except the marketing division

Ans:Section Ref: IntroductionLevel: moderate

2. JIT considers waste anything thata) Fits in a waste basketb) Reduces production capacityc) Has been discardedd) Cannot be recyclede) Does not add value


3. JIT can be traced back to the early 1900’s but no one can argue that the philosophy gained worldwide prominencea) at the close of WWIIb) in the 1950sc) in the 1960sd) in the 1970se) in the 1980s


4. The philosophy of JITa) Originated in Japanb) Was operational at Henry Ford's complex in 1920'sc) Is a production planning systemd) Has received little attention in the USe) Focuses on direct control of worker activities by management

Ans:Section Ref: The Philosophy of JITLevel: easy

5. The broad view of JIT is now often termed__________________________.a) vendor-managed inventoryb) business process reengineering

c) lean productiond) cycle time managemente) e-distribution


6. In the broad view of the organization everyone should havea) the same job duration b) the same retirement planc) the same job descriptiond) the same view of serving the customere) a narrow view of the organization that includes only their assigned tasks


7. The central belief of the JIT philosophy isa) Quality must be emphasizedb) Use of Kanbanc) Elimination of wasted) Minimize inventorye) Save money


8. Which of the following is characteristic of the JIT philosophy?a) Inventories are an assetb) Lot sizes are optimized by formulac) Tolerate some scrapd) Elimination of wastee) Rigidity


9. Beliefs that help define the JIT philosophy include all of the following except

a) Simplicityb) Visibilityc) Flexibilityd) Push productione) Continuous improvement


10. An employee who will not help a customer because “it is not my job” violates the JIT belief ofa) Simplicityb) A broad view of operationsc) Continuous improvementd) Visibilitye) Pull production


11. JIT was based on the need fora) survivalb) waste eliminationc) better working conditionsd) consistent application of policiese) consistent supplier performance


12. Kaizen is a Japanese term referring to __________________________.a) just-in-time productionb) continuous improvementc) employee involvementd) concurrent engineeringe) simplicity


13. An improvement tool that utilizes cross-functional teams to plan and deliver improvements to specific processes during two- or three-day marathon sessions is called a ___________________________.a) kanban blitzb) cross-functional blitzc) short-term blitzd) JIT blitze) kaizen blitz


14. JIT flexibility refers to a) ability to modify sales figuresb) correct the bull whip effectc) increase or decrease supplier deliveries on short noticed) workers being able to perform many different taskse) managers being able to shift positions easy


15. Being able to keep costs low while changing the volume of production is an example ofa) Simplicityb) Flexibilityc) Visibilityd) Continuous improvemente) Total quality management


16. Three basic elements work together to complete a JIT system: just-in-time manufacturing, total quality management, anda) Quality circlesb) Pull productionc) Minimizing inventoryd) Respect for people

e) Full utilization of capacity


17. JIT is often mistakenly assumed to a) refer to the final assembly schedule onlyb) dictate the product standards specificationc) refer to only just-in-time manufacturingd) be a core element of ISO 9000 requirementse) be driven by the finance department long range spending plan


18. By focusing on processes, JIT is able to achieve high-volume production of high-quality, low-cost products.a) Downstreamb) Upstreamc) Change-overd) Gatewaye) Value-added


19. The manufacturing process in JIT starts with thea) Final assembly scheduleb) Schedules for individual machinesc) Vendor deliveriesd) Prioritization of lotse) Forward scheduling


20. For the current month using JITa) The same amount of each product is produced in the same order each day

b) Production matches that of last monthc) Lot sizes are varied week-to-weekd) Production differs greatly from day to daye) Production is primarily for next month’s sales


21. JIT relies on a ______ that withdraws parts for a previous work cell and moves them to the next.a) Information technology systemb) coordination systemc) six sigma systemd) quality circle systeme) transportation system


22. JIT is a system.a) Pullb) Pushc) Lead timed) Preventive maintenancee) Closed

Ans:Section Ref: Elements of JITLevel: easy

23. JIT manufacturing cannot succeed if costs are too high.a) Variableb) Fixedc) Set-upd) Depreciatione) Marginal


24. The ultimate goal of JIT is to produce products in a lot size ofa) 100 or fewerb) N=(DT(1+X))/Cc) The inverse of the carrying costd) Onee) The capacity of the factory


25. Unlike JIT traditional quality control systems usea) quality circlesb) quality plansc) control chartsd) acceptable quality levelse) quality applications


26. According to JIT, is carried to cover up a wide variety of problems, such as poor quality, demand uncertainty, and slow delivery.a) Inventoryb) Excess capacityc) A group of back-up workersd) Spare equipmente) Insurance


27. According to JIT, by eliminating inventory we can clearly identify and work on eliminating them.a) Obsolete productsb) Malfunctioning machinesc) Grievancesd) Product imperfectionse) Problems

Ans:

Section Ref: Elements of JITLevel: easy

28. Before it is possible to operate successfully with JITa) Inventory space must be eliminatedb) Inventories must be reduced rapidlyc) Problems must be uncoveredd) Problems must be solvede) Setup times must be increased


29. An important TQM concept is that quality is defined by thea) Quality control groupb) Marketing departmentc) Board of directorsd) Customere) Auditors


30. The objective of quality at the source is not only to identify a quality problem, but also toa) Determine its extentb) Uncover its root causec) Rate its seriousnessd) Place blamee) Categorize it


31. JIT considers to be a company’s most precious resource.a) Capitalb) Productive equipmentc) Informationd) People

e) Vision


32. In JIT the workforce is viewed asa) another resource to be managedb) another contractual obligationc) a long-term assetd) a short term assete) an asset that must be closely managed


33. JIT believes in developing relationships with suppliers.a) Long-termb) Adversarialc) Arms-lengthd) Temporarye) Distant


34. are groups of workers who are responsible for every aspect of their business.a) Focus teamsb) Staff departmentsc) Partnershipsd) Self-managed teamse) Negotiators


35. Traditional manufacturing operations are based on the assumption thata) Overproduction is disastrousb) Nice guys finish last

c) It is better to anticipate future requirements and plan for themd) If you manufacture it, demand will increasee) Inventory has no value


36. JIT uses a pull system where communication starts with either the customer or with the _________ work station in the production line.a) Firstb) Bottleneckc) Dominantd) Most expensivee) Last


37. With JIT there are two types of Kanban cards, production Kanban and Kanban.a) Bufferb) Transactionc) Withdrawald) Logisticse) Sales


38. In JIT a Kanban card is used to signala) The need for more partsb) A supplier needs assistancec) A worker is overloadedd) A machine is ready for preventive maintenancee) Management is inspecting operations

Ans:Section Ref: Just-In-Time ManufacturingLevel: moderate

39. Without kanbans, the withdrawal and production of materialsa) can continue in a reduced mannerb) will not be well coordinatedc) cannot take placed) would continue based on historical needse) would continue based on forecasted needs


40. The number of kanbans or containers needed at a workstation is dependent on all except which of the following?a) the demand rateb) the number of workersc) the size of the containerd) the lead timee) the safety stock level


41. The system of Kanbans used to coordinate delivery of goods by suppliers can include all of the following excepta) Filled containers delivered by the supplierb) Purchase approvals by the production managerc) Mail boxes for each supplierd) Empty containers with a Kanbane) Bar-coded Kanbans


42. If it is desired to reduce the amount of inventory in the system, the number of Kanban cards should a) Be decreasedb) Be increasedc) Remain the samed) Be calculated by formulae) Remain the same, but container size should be increased

Ans:

Section Ref: Just-In-Time ManufacturingLevel: moderate

43. Consider a workstation that can process 4 units per minute. It takes 2 hours to receive an order from the previous station. The container size is 10 units. The factory sets safety stock at 20 percent of demand during lead time. How many kanbans are needed for the workstation?a) 57.6b) 48c) 0.96d) 9.6e) 28.8

Ans: (N=(DT+S)/C =(4 * 60 * 2 + .2 * (4 * 60 * 2))/10 = 57.6)Section Ref: Just-In-Time ManufacturingLevel: moderate

44. Consider a workstation that can process 4000 units per hour. It takes 15 minutes to receive an order from the previous station. The container size is 20 units. The factory sets safety stock at 20 percent of demand during lead time. How many kanbans are needed for the workstation?a) 16b) 3600c) 50d) 10e) 60

Ans: (N=(DT+S)/C =(4000 * 15/60 + .2 * (4000 * 15/60))/20 = 60)Section Ref: Just-In-Time ManufacturingLevel: moderate

45. Small lot productiona) Increases inventoryb) Decreases flexibilityc) Reduces setupd) Increases excess processinge) Shortens lead time


46. What is adjustment of a machine after making one product type so that production can begin for another product type?a) Level assembly scheduleb) Group technologyc) Setupd) Cycle timee) Automation


47. External setupsa) Are the same as single setupb) Can be done while the machine is runningc) Are undesirable for small lot productiond) Are often contracted oute) Are more common than internal setups in traditional manufacturing systems


48. Uniform plant loading involvesa) Large lots produced over several daysb) Making the same mix of products every day in small quantitiesc) Large amounts of inventoryd) Making large changes in production to respond to changes in demande) Spreading production uniformly over several plants


49. One aspect of flexible resources isa) Use of multifunction workersb) Relying on special equipmentc) Use of overtimed) Leasing, rather than buying, equipmente) Variable work schedules


50. Advantages of cell manufacturing using a U-shaped cell include all of the following excepta) Production efficiency with flexibility to produce a variety of partsb) Easy reach and flexibility for workersc) Higher worker satisfactiond) No special material handlinge) Longer setup times


51. Quality in just-in-time is centered on building quality into thea) Product b) Maintenance of equipmentc) Processd) Distribution systeme) Workforce

Ans:Section Ref: Total Quality ManagementLevel: hard

52. Quality problems in manufacturing can come from many sources, including all of the following excepta) Customer needs are not incorporated into the product designb) Low quality materials from suppliersc) Product specifications being ignoredd) Equipment problems from design of the production processe) Operator error


53. What is the term that means giving workers authority to stop the production line when quality problems are encountered?a) Automationb) Kaizenc) Mudad) Poka-yokee) Jidoka

Ans:Section Ref: Total Quality ManagementLevel: moderate

54. Poka-yoke meansa) Using color codingb) Foolproofingc) Using process control chartsd) Preventive maintenancee) Undercapacity scheduling

Ans:Section Ref: Total Quality Management

Level: moderate

55. Regular inspections and maintenance designed to keep a machine operational is ___________ maintenance.a) Preventiveb) Breakdownc) Unscheduledd) Emergencye) Unnecessary


56. According to JIT, workers should performa) system specification developmentb) as directed by the supervisorc) routine preventive maintenance activitiesd) poka-yoke designse) quality program development


57. Which of the following is not characteristic of preventive maintenance in JIT systems?a) Keeping machines operationalb) Regular inspections of machinesc) Workers helping to maintain their own equipmentd) Operating machines properlye) Perceiving breakdowns as an opportunity for continuous quality improvement


58. Something you would not expect to see in a just-in-time work environment isa) Orderb) Clutterc) Ample spaced) Tools in their place

e) Cleanliness


59. Just-in-time organizations rely on employees toa) Do what their boss tells them to dob) Dress differently every dayc) Work togetherd) File grievancese) Be adversarial toward management


60. Just-in-time relies on worker skills, meaning the ability of workers to perform many different tasks on many different machines.a) Naturalb) Verbalc) Intuitived) Manuale) Cross functional

Ans:Section Ref: Respect for PeopleLevel: moderate

61. JIT production workers are expected toa) Cover up quality problemsb) Ignore datac) Take responsibility in getting to the root cause of quality problemsd) Blame problems on someone elsee) Have a poor attitude about quality


62. JIT production workersa) Keep data to themselves

b) Participate in team problem-solving activitiesc) Do not understand datad) Never use datae) Rely on others to do data analysis


63. The role of production employees in JIT includes all of the following excepta) Be actively engaged in improving the production processb) Monitor qualityc) Record datad) Follow clearly defined and limiting work rulese) Act on the information they have


64. Which of the following is not a characteristic of bottom-round management?a) Consensus management by committees or teamsb) Participation in quality circlesc) Decision making starts with discussion at the bottom leveld) Lack of consensuse) Employees volunteering to help solve quality problems

Ans:Section Ref: Respect for PeopleLevel: easy

65. Which of the following is not a role of JIT managementa) creating a JIT cultureb) cost and information sharingc) serving as coaches and facilitatorsd) developing an incentive systeme) ensuring multifunctional training occurs


66. In Japan lifetime employmenta) Is a recent trendb) Has had little impactc) Is an ideal that is never achievedd) Is true for everyonee) Comprises a relatively small percentage of the total work force today

Ans:Section Ref: Respect for PeopleLevel: hard

67. In a JIT environment, workers need toa) Protect themselves from their boss’s whimsb) Be prepared to be reprimandedc) Keep their ideas to themselvesd) Always work in pairse) Feel secure in their jobs


68. With JIT a company’s relationship with its suppliers includesa) Competitive biddingb) Being in partnership with themc) Buying parts from the cheapest supplierd) Short-term relationshipse) Having as many suppliers as possible


69. With regard to suppliers, JIT typically requiresa) Delivery of large lots at regular intervalsb) Buyer inspection of incoming goods and materialsc) Multiple sources from which to purchased) Information sharinge) Buying parts from the cheapest supplier


70. The benefits of long-term relationships with a small number of suppliers include all of the following excepta) Always getting the lowest priceb) Focus on improving process controlsc) Greater accountabilityd) Develop stable delivery schedulese) Eliminate paperwork


71. Which of the following is not a good approach for suppliers who are providing JIT services to manufacturers?a) Use the “push system” for deliveriesb) Locate near their customersc) Have small warehouses near the manufacturing plantd) Use standardized containerse) Join together with other suppliers to help each other make small deliveries


72. The challenge for service operations is that they have to synchronize their __________ with demand.a) accountingb) financec) marketingd) productione) information systems

Ans:Section Ref: JIT In ServicesLevel: easy

73. In making specific changes to JIT manufacturing, which of the following steps should come first? a) reduce lot sizes and lead timesb) switch to pull productionc) reorganize workplaced) reduce setup times

e) implement layout changes

Ans:Section Ref: Implementing JITLevel: hard

74. Which of the following is not considered to be a key element of JIT supplier relationships?a) suppliers viewed as internal factoryb) use of single-source suppliersc) long-term supplier relationships developedd) suppliers locate near customere) cost and information sharing

Ans:Section Ref: Benefits of JITLevel: hard

True/False

1. JIT considers waste anything that does not add value.


2. The broad view of JIT is now often termed lean production or lean systems.


3. Often the best quality problem resolution solution involves a complex answer as the organization is a complex organization.


4. Continuous improvement is called kaizen by the Japanese.


5. An improvement tool that utilizes cross-functional teams to plan and deliver improvements to specific processes during two- or three-day marathon sessions is called a kanban blitz.


6. With a kaizen system there is no excess production because the only products and quantities produced are those specified by the kaizen.


7. JIT facilities are lacking in floor space.


8. Being able to keep costs low while changing the volume of production is an example of flexibility.


9. By focusing on value-added processes, JIT is able to achieve high-volume production of high-quality, low-cost products.

Ans:Section Ref: Elements of JIT

Level: moderate

10. The manufacturing process in JIT starts with the final assembly schedule.


11. JIT manufacturing cannot succeed if set-up costs are too high.


12. According to JIT, by eliminating inventory we can clearly identify obsolete products and work on eliminating them.


13. JIT considers people to be a company’s most precious resource.


14. There are two types of Kanban cards, production Kanban and withdrawal Kanban.


15. If it is desired to reduce the amount of inventory in the system, the number of Kanban cards should be increased.

Ans:Section Ref: Just-In-Time Manufacturing

Level: moderate

16. External setups can be done while the machine is running.


17. Just-in-time organizations rely on employees to work together.

Ans:Response: See page 238Level: moderate

18. Just-In-Time relies on cross-functional worker skills.


19. Bottom-round management includes consensus management by committees or teams.


20. With regard to suppliers, JIT typically requires information sharing.


21. Successfully implementing JIT requires that it be done as quickly as possible.

Ans:Section Ref: Implementing JITLevel: easy

22. JIT concepts that are applicable to service organizations include use of multifunction workers.

Ans:Section Ref: Implementing JITLevel: moderate

23 The challenge for service organizations is synchronizing their production with demand.


24. Services organizations cannot use the JIT philosophy to reduce cycle time.


25. A key outcome of JIT is that organizational barriers are eliminated.

Ans:Section Ref. JIT and Lean Systems Across the Organization.Level: moderate

Essay

1. The central belief of the JIT philosophy is elimination of waste) What are the other beliefs that help define this philosophy?

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2. Under the JIT belief of visibility, describe JIT facilities.

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3. Describe the “kaizen blitz.”

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4. What is the formula to compute the number of kanbans needed to control the production of a particular product (including the variable definitions)?

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5. What are the advantages of cell manufacturing using a U-shaped cell?

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6. What are the responsibilities of production employees in JIT?

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7. What are the key elements a JIT company’s relationship with its suppliers?

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8. What are the benefits of JIT?

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9. What does a company need to successfully implement JIT?

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10. Discuss why implementation of a JIT will not start and end in definite time periods.

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11. What JIT concepts are applicable to service organizations?

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12. Describe how JIT affects the Accounting department.

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Problems

1. Frank James works for a production facility that makes car radios. His job is to insert the integrated circuits and make sure that they work correctly. He is expected to handle 20 radios per hour. The factory uses a Kanban production system with containers that hold four radios. It takes 60 minutes for Frank to receive the radios from the previous work station. How many Kanbans are needed?

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2. Matt Dillon works for a production facility that makes ball point pens. His job is to place the spring on the central ink insert. He is expected to process 200 inserts per hour. The factory uses a Kanban production system with containers that hold 50 inserts. It takes 30 minutes for Frank to receive the inserts from the previous work station. How many Kanbans are needed?

Ans:

3. Frank James works for a production facility that makes car radios. His job is to insert the integrated circuits and make sure that they work correctly. He is expected to handle 20 radios per hour. The factory uses a Kanban production system with containers that hold four radios. It takes 60 minutes for Frank to receive the radios from the previous work station. The factory sets safety stock at 50 percent of demand during lead time. How many Kanbans are needed?

Ans:

4. Matt Dillon works for a production facility that makes ball point pens. His job is to place the spring on the central ink insert. He is expected to process 200 inserts per hour. The factory uses a Kanban production system with containers that hold 50 inserts. It takes 30 minutes for Frank to receive the inserts from the previous work station. The factory sets safety stock at 40 percent of demand during lead time. How many Kanbans are needed?

Ans:

5. Consider a workstation that can process 4 units per minute. It takes 10 minutes to receive an order from the previous station. The container size is 10 units. The factory sets safety stock at 20 percent of demand during lead time. How many kanbans are needed for the workstation?

Ans:

6. Consider a workstation that can process 2 units per minute. It takes 6 minutes to receive an order from the previous station. The container size is 12 units. The factory sets safety stock at 20 percent of demand during lead time. How many kanbans are needed for the workstation?

Ans:

7. Consider a workstation that can process 4 units per minute. It takes 2 hours to receive an order from the previous station. The container size is 10 units. The factory sets safety stock at 20 percent of demand during lead time. How many kanbans are needed for the workstation?

Ans:

8. Consider a workstation that can process 1060 units per hour. It takes 15 minutes to receive an order from the previous station. The container size is 20 units. The factory sets safety stock at 20 percent of demand during lead time. How many kanbans are needed for the workstation?

Ans:

9. Consider a workstation that can process 400 units per hour. It takes 3 hours to receive an order from the previous station. The container size is 50 units. The factory

sets safety stock at 10 percent of demand during lead time. How many kanbans are needed for the workstation?

Ans:

10. Consider a workstation that can process 1200 units per hour. It takes 1.5 hours to receive an order from the previous station. The container size is 40 units. The factory sets safety stock at 20 percent of demand during lead time. How many kanbans are needed for the workstation?

Ans:

11. Frank’s umbrella corporation is designing a kanban system. They know that they are expected to produce 100 umbrellas per hour. They’ve also determined that a key external resource takes 30 minutes to deliver the required material once an order has been transmitted. To start with they want to maintain a safety stock of 25 critical parts. Originally they want to start with 3 kanbans. What container size should Frank’s umbrella company start with?

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12. Raissa’s teapot firm is moving to a JIT system. One question they are trying to answer is what level of safety stock they should maintain. They produce 240 teapots every four hours. The teapot ceramic handle vendor will deliver a container containing 30 parts one hour after they receive a request to ship. Raissa’s kanban system uses four containers. What should they maintain as a safety stock?

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Short Answer

1. What are the three major elements of JIT? ________________________, ________________________, and ________________________ .

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2. What are three reasons that respect for people is important in JIT. ________________________, ________________________, and ________________________ .

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3. A work cell produces 100 units per hour. It takes 15 minutes to get packaging from the previous workstation. Each container holds a dozen (12) units. Safety stock is 10% of demand during lead time. How many kanbans and containers should be devoted to this product? ________________________

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4. Traditional production plans schedule ________________________ while JIT with Level Scheduling uses ________________________ .

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5. Materials and work in process move farther and more often under ________________________

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6. Name three ways that quality at the source includes more than manufacturing. ________________________ ________________________ ________________________

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7. Scheduling two, 12-hour shifts and a 4-hour housekeeping and repair shift each workday is an example of ________________________

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8. Production employees in JIT setting record and visually display performance data like: ________________________

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9. JIT supply chains often involve firms that ________________________

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10. JIT changes happen in sequence because ________________________

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11. Every organization is just one element of an ______ _____ ____

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12. The principles of JIT need to be adopted by all members of a supply chain in order to have a ______ ____

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File: ch08, Chapter 8: Forecasting and Demand Printing

Multiple Choice

1. Forecasting is not a function which contributes to:a) deciding which business market to pursueb) deciding which product to producec) deciding how bonuses should be allocatedd) deciding how much inventory to carrye) deciding how many people to hire

Ans:Section Ref: IntroductionLevel: easy

2. When evaluating forecasting models it is accurate to say:a) they all rely on the same data setsb) they will provide the same resultsc) they are usually accurated) they differ in their degree of complexitye) they do not differ in their degree of complexity

Ans:Section Ref: Principles of ForecastingLevel: moderate

3. Which of the following is not a feature common to all forecasting models?a) This period’s forecast error is needed to compute next period’s forecast.b) Forecasts are rarely perfect.c) Forecasts are more accurate for groups of items rather than for individual items.d) Forecasts are more accurate for shorter rather than for longer time horizons.e) All of the above features are common to all forecasting models.

Ans:Section Ref: Principles of ForecastingLevel: moderate

4. The first step in forecasting is:a) determine what data is availableb) decide what to forecastc) evaluate and analyze appropriate datad) select and test the forecast modele) establish the forecast accuracy requirements

Ans:Section Ref: Steps in the Forecasting ProcessLevel: moderate

5. Which of the following companies helps businesses use weather data to make their business plans?a) i2 technologiesb) Manugisticsc) Planalyticsd) Algorithmicse) SAP

Ans:Section Ref: Types of Forecasting MethodsLevel: hard

6. Qualitative forecasting methods

a) are made objectively by the forecaster

b) are made subjectively by the forecaster

c) are made using existing data sources

d) are based on mathematical models

e) are only used in parallel with quantitative models

Ans:

Section Ref: Types of Forecasting Methods

Level: moderate

7. Under which forecasting method does a group of managers meet to generate a forecast?

a) Market researchb) Executive opinionc) Delphi methodd) Naïve methode) Gamma method

Ans:Section Ref: Types of Forecasting MethodsLevel: easy

8. Which forecasting method seeks to develop a consensus among a group of experts?a) Market researchb) Executive opinionc) Delphi methodd) Naïve methode) Gamma method


9. One quantitative forecasting models limitation isa) it is objectiveb) they are consistentc) they are based on mathematical formulasd) they are limited on the quality of available datae) they can work around bad data

Ans:Section Ref: Types of Forecasting Methods

Level: moderate

10. Which forecasting method is particular good for predicting technological changes and scientific advances?a) Market researchb) Executive opinionc) Delphi methodd) Naïve methode) Gamma method

Ans:Section Ref: Types of Forecasting MethodsLevel: moderate

11. Which forecasting method is particularly good for determining customer preferences?a) Market researchb) Executive opinionc) Delphi methodd) Naïve methode) Gamma method


12. Which forecasting method suffers from the possibility of having one person’s opinion dominate the forecast?a) Market researchb) Executive opinionc) Delphi methodd) Naïve methode) Gamma method


13. Which of the following forecasting methods is most likely to be implemented to change an existing quantitative forecast to account for a new competitor in the marketplace?a) Market research

b) Executive opinionc) Delphi methodd) Naïve methode) Gamma method


14. Which of the following forecasting methods is specifically designed to go through several rounds of modification before generating a final forecast?

a) Exponential smoothingb) Executive opinionc) Delphi methodd) Naïve methode) Gamma method


15. What are the two categories of quantitative models?a) Delphi and non-causalb) Causal and non-causalc) Delphi and time seriesd) Causal and time seriese) Causal and Delphi


16. A causal research model is based on the assumption thata) the independent variable is related to the dependent variableb) there is a relationship between the time series and the dependent variablec) the variable being forecast is related to other variables in the environmentd) there is a relationship between the time series and the independent variablee) the information is contained in a time series of data


17. Which of the following is a causal forecasting method?a) Naïveb) Moving averagec) Weighted moving averaged) Trend adjusted exponential smoothinge) Linear regression


18. Which of the following is the least useful sales forecasting model to use when sales are increasing?a) Trend adjusted exponential smoothingb) Simple meanc) Exponential smoothingd) Weighted moving averagee) Naïve


19. Over the long term, which of the following forecasting models will likely require carrying the least amount of data?a) Naïveb) Simple meanc) Exponential smoothingd) Weighted moving averagee) Moving average


20. In looking at seasonal indexes one weakness to watch for isa) use of the wrong alphab) incorrect selection of weights c) a clear lack of linear relationshipd) seasonality is not presente) significant increase in computational requirements

Ans:

Section Ref: Types of Forecasting MethodsLevel: easy

21. Which of the following is not considered to be one of the four basic patterns of time series data?a) Horizontalb) Trendc) Verticald) Seasonalitye) Cycle

Ans:Response: See pages 259-260Level: easy

22. Which is typically the most difficult data pattern to predict?a) Horizontalb) Trendc) Leveld) Seasonalitye) Cycle

Ans:Section Ref: Time Series ModelsLevel: moderate

23. Which forecasting method assumes that next period’s forecast is equal to this period’s actual value?a) Simple meanb) Ignorantc) Basicd) Naïvee) Nescient

Ans:Section Ref: Time Series ModelsLevel: easy

24. The OM supervisor informs you, the researcher, that the data has a large standard deviation. What data pattern would you expect to observe once you generated a time series trend?a) horizontal

b) seasonal c) positive/negative trendd) cyclee) insufficient information to derive a valid response


25. Suppose that you are using the naïve forecasting method with trend to forecast sales. If sales have been declining by 20% per week, and this week’s sales amounted to $200, what would your forecast be for next week?a) $200b) $ 40c) $240d. $180e) $160


26. Suppose that you are using the simple mean to make a forecast. This period’s forecast was equal to 100 units, and it was based on 6 periods of demand. This period’s actual demand was 86 units. What is your forecast for next period?a) 98b) 100c) 93d) 86e) Not enough information is given to answer the question.

Ans:Section Ref: Time Series ModelsLevel: hard

27. Suppose that you are using the four-period simple moving average method to forecast sales, and sales have been decreasing by 10% every period. How will your forecasts perform?a) Forecasts will be lower than actual.b) Forecasts will be higher than actual.c) Forecasts will equal actual.d) Forecasts will be increasing.e) Forecasts will be decreasing by 2.5% every period.


28. Suppose that you are using the four-period weighted moving average forecasting method to forecast sales and you know that sales will be increasing every period for the foreseeable future. What of the following would be the best set of weights to use (listed in order from the most recent period to four periods ago, respectively)?a) 0.25, 0.25, 0.25, 0.25b) 0.40, 0.30, 0.20, 0.10c) 1.00, 0.00, 0.00, 0.00d) 0.10, 0.20, 0.30, 0.40e) 0.00, 0.00, 0.00, 1.00


29. The following sales figures show actual sales over the identified time period. What can be determined by comparing a simple mean forecast and a six month moving average forecast

December 4,000January 5,000

February 4,000March 4,500April 5,500May 5,000

a) moving average develops a smoother forecastb) 4.7, 5c) 4.7, 4d) 4,4e) 4, 4.7


30. What are the most frequently used forecasting techniques?

a) Linear regressionb) Simple meanc) Exponential smoothing

d) Weighted moving averagee) Econometric models


31. In exponential smoothing, what values can the smoothing constant, , have?a) [1, 1]b) [1, ]c) [0, ]d) [0, 1]e) [, ]

Ans:Section Ref: Time Series ModelsLevel: easy

32. In exponential smoothing, which of the following values for would generate the most stable forecast?

a) 0.10b) 0.25c) 0.50d) 0.75e) 1.00


33. Suppose that you are interested in trend-adjusted exponential smoothing. Which of the following values of the trend smoothing constant, , would most likely be seen in practice?a) 0.10b) 0.50c) 0.75d) 0.90e) 1.00


34. In linear regression, what are we trying to forecast?a) Beta parameterb) Dependent variablec) Independent variabled) Y-intercept of the linee) Slope of the line

Ans:Section Ref: Causal ModelsLevel: moderate

35. What does the linear regression line do?a) Minimizes sum of errorsb) Minimizes product of squared errorsc) Minimizes sum of squared errorsd) Minimizes product of errorse) Minimizes sum of absolute value of errors

Ans:Section Ref: CausalCausal ModelsLevel: moderate

36. What value of the correlation coefficient implies that there is a perfect positive linear relationship between the two variables of a linear regression model?a) 1b) 0c) 0.5d) 1e)

Ans:Section Ref: CausalCausal ModelsLevel: easy

37. In linear regression, an r2 of .984 implies what?a) 98.4% of the variability of the independent variable is explained by the dependent variableb) 98.4% of the variability of the dependent variable is explained by the independent variablec) 1.6% of the variability of the independent variable is explained by the dependent variable

d) 1.6% of the variability of the dependent variable is explained by the independent variablee) 99.2% of the variability of the dependent variable is explained by the independent variable


38. What value of the correlation coefficient implies that there is no relationship between the two variables of a linear regression model?

a) 1b) 0c) 0.5d) 1e)


39. What is the statistic that measures the direction and strength of the linear relationship between two variables?a) r2

b) Coefficient of variationc) Varianced) Coefficient of kurtosise) Correlation coefficient


40. Which of the following is true with respect to the correlation coefficient r?a) r2rb) r2 | r |c) r2rd) r2 | r |e) r2 can never equal r


41. Which of the following values of the correlation coefficient implies that the value of the dependent variable decreases as the value of the independent variable increases?a) 0.2b) 0c) 0.2d) 1e) 0.5


42. The following correlation coefficient values come from five different linear regression models. Which model “fits” the data the best?a) 0.99b) 0.5c) 0d) 0.8e) 1


43. For what is a tracking signal used?a) To identify trends in actual datab) To identify seasonality in actual datac) To identify the effect of business cycles on actual datad) To compute the value of the smoothing constant, , for exponential smoothinge) To identify forecast bias

Ans:Section Ref: Selecting The Right Forecasting ModelLevel: moderate

44. Suppose that Sally’s company uses exponential smoothing to make forecasts. Further suppose that last period’s demand forecast was for 20,000 units, and last period’s actual demand was 21,000 units. Sally’s company uses a smoothing constant (α) equal to 40%. What should be the forecast for this period?

a) 20,000b) 21,000c) 20,600d) 20,400e) 19,600


45. Suppose that Jane’s company uses exponential smoothing to make forecasts. Further suppose that last period’s demand forecast was for 500 units, and last period’s actual demand was 480 units. In addition, yesterday Jane found out that this period’s actual demand will be for 550 units. Jane’s company uses an α value of .20. Today Jane’s boss asked her to prepare a forecast for this period. What should that forecast be?

a) 504b) 496c) 510d) 484e) 550


46. A firm has the following order history over the last 6 months.

January 120February 95March 100April 75May 100June 50

What would be a 3-month weighted moving average forecast for July, using weights of 40% for the most recent month, 30% for the month preceding the most recent month, and 30% for the month preceding that one?

a) 75b) 72.5c) 50d) 90e) 106.5Answer: bSection Ref: Time Series Models

Level: moderate

47. What is the mean absolute deviation of the following forecasts?

Month Actual Sales ForecastJan. 614 600Feb. 480 480Mar. 500 550Apr. 500 600

a) 3174b) 164c) 41d) 136e) -34

Ans:Section Ref: Measuring Forecast AccuracyLevel: moderate

48. What is the mean absolute deviation and mean squared error of the following forecast

Day Sales

Sale Forecast

24 3731 4127 4629 4725 50

a) 13, 157b) 14, 321c) 16, 312d) 17, 313e) 18, 321

Ans:Section Ref: Measuring Forecast AccuracyLevel: moderate

49. When is exponential smoothing equivalent to the “naïve” approach to forecasting?a) When the smoothing constant is chosen randomlyb) α = 0

c) α = 1d) α = .5e) When next month’s forecast equals this month’s forecast


50. Consider the demand data listed below. What is the 4-month moving average forecast for June?

Month Actual DemandJan. 10,000Feb. 12,000Mar. 24,000Apr. 8,000May 14,000a) 14,000b) Not enough information is given to answer the question.c) 14,500d) 13,500e) 15,333


51. Suppose that you want to set up a 3-month weighted moving average forecasting system. You want the weights to be percentages (that add to 100%). Furthermore, you want weights for the most recent two months to be equal but you want each of those weights to be twice as large as the weight for the oldest month. What should the weight be for the oldest month?a) 33%b) 25%c) 80%d) 50%e) 20%


52. Given the following data, use exponential smoothing (α = .2) to develop a demand forecast for period 3. Assume the forecast for the initial period is 5. What is the forecast?

Period Demand 1 7 2 9

a) 9.00b) 3.72c) 9.48d) 5.00e) 6.12


53. Which of the following forecasting methods would be best (most accurate) if demand were rapidly decreasing?a) 3-month moving averageb) 6-month moving averagec) 12-month moving averaged) Simple meane) Exponential smoothing with = 0.001


54. Suppose that you are using the exponential smoothing forecasting method, and this period’s forecast (Ft) was 100% accurate (i.e., no error). If α = .5, which of the following is definitely true?a) Next period’s forecast will also be 100% accurate.b) Next period’s forecast equals this period’s actual.c) This period’s forecast must be thrown out, and next period’s forecast equals

Ft-1 + α (At-1− Ft-1).d) Next period’s forecast equals 50% of this period’s forecast.e) Next period’s forecast equals 50% more than this period’s forecast.


55. A firm has had the following order history over the last 4 months:

November 140December 80January 100February 150

What is the weighted moving average forecast for March, assuming a weight of 60% for the most recent month, 30% for the month preceding the most recent month, and 10% for the month preceding that one?a) 117.5b) 228.1c) 118.0d) 128.0e) 132.4


56. What is the mean absolute deviation of the following forecasts?

Month Actual SalesForecast

January 68 60February 48 50March 50 60April 30 30

a) 1b) 5c) 20d) 1e) 42

Ans:Section Ref: Selecting the Right Forecasting ModelLevel: moderate

57. What is the mean squared error of the following forecasts?

Month Actual Sales Forecast Jan. 614 600 Feb. 480 480 Mar. 500 450 Apr. 500 600

a) 3174b) 164

c) 41d) 136e) 12,696


58. What is the mean squared error of the following forecasts?

Month Actual Sales Forecast Jan. 68 60 Feb. 48 50 Mar. 50 60 Apr. 30 30

a) 168b) 5c) 20d) 1e) 42


59. Suppose that you are using exponential smoothing with = 0.5, and your initial forecast 5 months ago was for 100 units. If the actual demand last month was 0 units, which of the following is definitely true?a) The forecast for this month should be 0.b) The model blew up. You can’t use exponential smoothing anymore.c) The forecast for last month was 0.d) The forecast for this month should be 50.e) We need more information to determine this month’s forecast.


60. Suppose that you are using the four-period simple moving average method to forecast sales, and sales have been increasing by 20% every period. How will your forecasts perform?a) Forecasts will be lower than actual.b) Forecasts will be higher than actual.c) Forecasts will equal actual.

d) Forecasts will be decreasing.e) Forecasts will be increasing by 5.0% every period.


61. Suppose that you are using the four-period simple moving average method to forecast sales, and sales have been increasing by 40% every period. How will your forecasts perform?a) Forecasts will be increasing by 40.0% every period.b) Forecasts will be higher than actual.c) Forecasts will equal actual.d) Forecasts will be decreasing.e) Forecasts will be increasing by 10.0% every period.


62. Suppose that you are using the naïve forecasting method with trend to forecast sales. If sales have been increasing by 40% per month, and this month’s sales amounted to $1200, what would your forecast be for next month?a) $1200b) $ 480c) $1680d. $ 720e) $1600


63. Suppose that you are using the naïve forecasting method with trend to forecast sales. Sales have been increasing by 10% per week. Two weeks ago, sales amounted to $100. What should your forecast be for this week?a) $100b) $ 10c) $110d. $121e) $120

Ans:

Section Ref: Time Series ModelsLevel: moderate

64. Suppose that you are using the simple mean to make a forecast. This period’s forecast was equal to 200 units, and it was based on 5 periods of demand. This period’s actual demand was 300 units. What is your forecast for next period?a) 217b) 250c) 260d) 300e) 200


65. Suppose that you are using the simple mean to make a forecast. This period’s forecast was equal to 1000 units, and it was based on 99 periods of demand. This period’s actual demand was 0 units. What is your forecast for next period?a) 1000b) 990c) 0d) 1010e) 999


66. A firm has the following order history over the last 6 months.

January 120February 95March 100April 75May 100June 50

67. What would be the 4-month simple moving average forecast for July?a) 97.5b) 325c) 90

d) 81.25e) 50


68. Given the following data, use exponential smoothing (α = .1) to develop a demand forecast for period 3. Assume the forecast for the initial period is 500. What is the forecast?

Period Demand1 6002 200

a) 569b) 470c) 541d) 551e) 479


69. Which of the following is the simplest forecasting method?a) Naïveb) Moving averagec) Weighted moving averaged) Trend adjusted exponential smoothinge) Linear regression


70. Which of the following would NOT be a consideration for selecting a forecasting software package?a) How easy is the package to learnb) Is it possible to implement new methodsc) Do you require repetitive forecastingd) Does the supplier support a local conferencee) Is there any local support

Ans:

Section Ref: Forecasting SoftwareLevel: moderate

71. Combined forecasting involves a rule thata) you must work with different vendorsb) you need different forecastersc) you must always use a quantitative and qualitative methodd) the results are not comparable to a single forecaste) the forecasting methods should be different

Ans:Section Ref: Combining ForecastsLevel: easy

72. Which of the following is not typically done jointly by CPFR trading partners?a) set forecastsb) plan productionc) replenish inventoriesd) raise capitale) evaluate their success in the marketplace

Ans:Section Ref: Collaborative Planning, Forecasting, and Replenishment (CPFR)Level: hard

73. ___________________________ is a collaborative process between two trading partners that establishes formal guidelines for joint forecasting and planning.a) Collaborative Planning Forecasting and Replenishment (CPFR)b) Supply Chain Planning Forecasting and Replenishment (SCPFR)c) Supply Chain Optimization (SCO)d) Collaborative Creation of Guidelines (CCG)e) Joint Planning and Forecasting (JPP)

Ans:Section Ref: Collaborative Planning, Forecasting, and Replenishment (CPFR)Level: moderate

74. “Inside information” is most likely garnered through which of the following forecasting methods?a) exponential smoothingb) seasonal indexesc) naïve

d) Delphie) multiple regression


75. Which of the following is not one of the nine steps utilized in the most complete form of CPFR?a) identify exceptions for order forecastsb) create a sales forecastc) create order forecastd) create separate business planse) generate order

Ans:Section Ref: Collaborative Planning, Forecasting, and Replenishment (CPFR)Level: hard

True/False

1. Forecasts are more accurate for individual items than for groups or families of items.

Ans:Section Ref: Principles of ForecastingLevel: moderate2. Forecasting demand and forecasting sales are the same thing.

Ans:Section Ref: Steps in the Forecasting ProcessLevel: moderate

3. A qualitative forecast is made subjectively by the forecaster.


4. Planalytics is a company that helps businesses use weather data to make their business plans.


5. Executive opinion is a forecasting method designed to preserve anonymity among the forecasters.


6. With the Delphi method, a group of managers meets and collectively generates a forecast.


7. The Delphi method of forecasting is preferred to the executive opinionmethod if an important consideration is eliminating any one person’s dominant opinion.


8. Time series models are generally more difficult to use than causal models.


9. A cycle is any data pattern that regularly repeats itself and is constant in length.

Ans:Section Ref: Time Series Models

Level: moderate

10. A cycle is typically the most difficult data pattern to predict.


11. The naïve forecasting method assumes that next period’s actual value will be equal to this period’s forecast.


12. The naïve forecasting method assumes that next period’s actual value will be equal to this period’s actual value.


13. The simple moving average forecasting method uses fewer periods of data than the simple mean forecasting method does.


14. Suppose that you are using the three-period simple moving average method to forecast sales, and sales have been increasing by 10% every period. Then your forecasts will be increasing by 10% every period.


15. Suppose that you are using the three-period simple moving average method to forecast sales, and sales have been increasing by 10% every period. Then your forecasts will be lower than the actual sales.


16. Moving average forecasts with a larger number of observations are more responsive than those with a smaller number of observations.


17. Moving average forecasts with a smaller number of observations are more subject to random changes in the data than those with a larger number of observations.


18. The MSE is always greater than or equal to the MAD.

Ans:Section Ref: Selecting the Right Forecasting ModelLevel: hard

19. Exponential smoothing forecasting methods requires a small amount of historical data.

Ans:Section Ref: Selecting the Right Forecasting ModelLevel: hard

20. Studies have shown that combining forecasts can lead to forecast accuracy that is better than that of the individual forecasts.

Ans:Section Ref: Collaborative Planning, Forecasting, and Replenishment (CPFR)

Level: moderate

21. Focus forecasting needs to test the rule set once for the highest level of accuracy.

Ans:Section Ref: Focus ForecastingLevel: moderate

22. CPFR is an iterative process.

Ans:Section Ref: Collaborative Planning, Forecasting, and Replenishment (CPFR)Level: moderate

23. Forecasting only impacts the business functions.

Ans:Section Ref: Forecasting Within OM: How It All Fits Together

24. Economics relies on forecasting to predict the duration of economic turning points.

Ans:Section Ref: Forecasting Across the OrganizationLevel: easy

Essay

1. Why are forecasts more accurate for groups or families of items rather than for individual items?

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2. What are the five basic steps in the forecasting process?

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3. What is the objective of the Delphi method?

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4. What are the two categories of quantitative models?

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5. Describe a data pattern with seasonality.

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6. Describe the naïve forecasting method.

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7. Explain the impact on forecasting that the number of observations used in a simple moving average has.

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8. What is a correlation coefficient?

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9. Discuss why the degree of accuracy is important in selecting the right forecasting model.

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10 Describe the idea behind focus forecasting.

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11. What is one of the simplest ways to combine forecasts?

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12. What are the 9 steps utilized in the most complete form of CPFR?

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Problems

1. Hoops, Inc. produces videos on the art of shooting in basketball. The firm has experienced the following demand for the first 6 months of the year.

Month DemandJan. 4,000Feb. 6,000Mar. 10,000Apr. 2,000May 20,000June 30,000

What is the forecast for July using a 5-month simple moving average forecast?

Ans:

2. Hoops, Inc., produces videos on the art of shooting in basketball. The firm has experienced the following demand for the first 6 months of the year.

Month DemandJan. 4,000Feb. 6,000Mar. 10,000Apr. 2,000May 20,000June 30,000

What is the forecast for July using a 4-month weighted moving average forecast, where (1) the weight for the most recent month is three times more than the weight for the period that’s four months in the past, (2) the weight for

two periods ago is the same as the weight for the most recent period, (3) the weight for three periods ago is the same as the weight for the demand four periods ago, and (4) the weights sum to 100%?

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3. Hoops, Inc., produces videos on the art of shooting in basketball. The firm has experienced the following demand for the most recent four months.

Month DemandMar. 10,000Apr. 2,000May 20,000June 30,000

Prepare an exponential smoothing forecast for July, using an value of .40. Initiate the process by assuming that the forecast for March is 8,000 units.

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4. The Freewheel motorcycle dealer in the Chicago area wants to be able to forecast accurately the demand for the Freewheel Super Z12 motorcycle. From sales records, the dealer has accumulated the following data for the second half of 2000.

Month Sales July 10August 15September 23October 44November 54December 36

a. Compute a 3-month moving average forecast of demand for January 2001.b) Compute a 5-month moving average forecast of demand for January 2001.

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5. John’s Office Supply Company has the following order history over the last 7 months.

April 65May 180June 30

July 90August 120September 190October 70

Compute an exponential smoothing forecast for November, with a smoothing constant of α = .25. To start the procedure, assume that the forecast for April was 100. Round each forecast to two decimal places.

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6. John’s Office Supply Company has the following order history over the last 8 months.

April 50May 75June 160July 120August 80September 120October 180November 90

Compute a 3-month weighted moving average forecast for December, with a weight of 65% for the most recent month, 25% for the month preceding the most recent month, and 10% for the month preceding that one.

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7. Steve’s Steak House uses exponential smoothing with trend (alpha = .10 and beta = .40) to forecast its weekly demand for chopped steak in the metro area. Average sales have been 1000 steaks per week, and the recent trend has been an increase of 20 steaks per week. Actual demand last week was for 1040 steaks. What should the forecast be for this week?

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8. Joe’s Equipment Distributors sells “Low and Loud” brand lawnmowers. Total demand in 2002 is expected to be 2000 units. Given the historical sales figures listed below, derive a forecast for each quarter in 2002.

1999 20002001

Fall 50 80 120

Winter 150 450 510Spring 500 600 700Summer 400 490 610

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9. Central Heating needs to forecast the number of boilers they will sell in April. Using the following data and an alpha of .3 how many boilers should they have on hand?

Boilers sold

forecast

Nov 12 13Dec 13.5 12Jan 14 14Feb 16 15Mar 17 18

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10. Cover Me, Inc. sells umbrellas in three cities. Management assumes that annual rainfall is the primary determinant of umbrella sales, and it wants to generate a linear regression equation to estimate potential sales in other cities. Given the data below, what is the regression equation?

Rainfall Sales X Y

City A 36 in. 2300City B 30 in. 2000City C 12 in. 800

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11. Hoops, Inc. has the following actual demand and forecasted demand data.

Month Actual Demand Forecast Jan. 1000 800 Feb. 200 880 Mar. 2000 600 Apr. 3000 1100

Calculate the mean squared error of those forecasts.

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12. Annie’s Smart Dog annual fair concession stand operates for five days. Last year they sold the following number of supreme smart dogs. Calculate (a) MAD, (MSE) and using a tracking signal of+/- 8 determine if the forecast should be reviewed.

Day Sales

Sale Forecast

24 2731 3127 3629 3725 35

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Short Answer

1. An observation's residual error is the ________________________ distance between itself and the linear regression line.

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2. Unlike MAD and MSE, the tracking signal's numerator allows positive and negative forecast errors to ________________________

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3. Developing a single forecast from several methods is called ________________________

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4. Companies that use collaborative planning, forecasting, and replenishment repeat its steps ________________________ and ________________________ annually.

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5. The basic principles of forecasting are: ________________________ , ________________________ , and ________________________ .

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6. What is the exponential smoothing formula? ________________________

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7. The most frequently used forecasting model is the _______

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8. The first round of an exponential smoothing process is often begun by setting the second period forecast equal to ________________________

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9. The difference between MSE and 2 is that ________________________

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10. The number of future periods forecast is called the ________________________

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11. Nearly all other business decisions depend on ________________________

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12. When developing the linear trend line you must calculate ____ before _____.

Ans.

13. Multiple regression is an _____ of linear regression.

Ans:

File: ch09, Chapter 9: Capacity Planning and Location Decision

Multiple Choice

1. Capacity planning can occur at all but which level:a) organizationb) division

c) assembly lined) machine levele) board of directors level

Ans:Section Ref: Capacity PlanningLevel: moderate

2. One reason capacity and location decisions are usually made simultaneously is what?a) in order to get them in the operating budget on a consistent basisb) it makes it easier to understand capacityc) often there is not enough time available to separate themd) they require the same types of informatione) the size of a new facility may affect its location


3. The maximum output that can be achieved by a facility is ___________________________.a) lead time b) storage spacec) capacityd) productivitye) cycle counting

Ans:Section Ref: Capacity PlanningLevel: easy

4. Capacity decisions at the strategic level include ______________________________.a) investment in new facilities and equipmentb) size of workforcec) inventory buffersd) day-to-day use of machinese) composition of the workforce


5. If capacity is excessive, a company may have to ____________________________________.a) decide how to use a partially empty facilityb) outsourcec) back-orderd) use group technologye) raise prices


6. Capacity planning is complicated by the fact that _________________________________.a) capital markets are complexb) existing facilities may become obsoletec) capacity is difficult to defined) capacity is usually purchased in chunks, rather than smooth incrementse) depreciation must be calculated


7. Investments in building or purchasing long-term production facilities are inherently risky due to __________.a) uncertainty in forecasting future demandsb) unexpected changes in interest ratesc) durability of materialsd) corporate mergerse) rapid technology changes

Ans:Section Ref: Capacity PlanningLevel: hard

8. Capacity planning is difficult becausea) Board of directors set the requirementsb) the mathematical requirements are difficultc) the planning stages always require global considerationsd) there is no one way to measure it

e) it is easy to confuse the service organization and manufacturing organization measurements


9. An example of an input measure of capacity is _____________________.a) labor hoursb) number of patients per monthc) number of pizzas per dayd) revenues per daye) number of cars per shift


10. Which of the following is NOT a measure of output capacity?a) cars per shiftb) labor hours consumedc) revenues per dayd) TVs sold per daye) patients served per month


11. Which of the following is not a factor in capacity planning?a) approach used to measure capacityb) economies of scalec) prepare to deal with capacity in "chunks"d) proximity to supplierse) identify the best operating level


12. Input measures of capacity work better when a company produces _____________________________.

a) discrete itemsb) a single productc) liquidsd) many different productse) off-the-shelf items


13. When discussing the capacity of a facility, we need what two types of information?a) the amount of available capacity and the productivity of workersb) the speed of the machines and the availability of laborc) the amount of available capacity and the effectiveness of capacity used) the investment in equipment and the availability of labore) the investment in equipment and the number of workers


14. Effective capacity isa) the maximum input rate that can be sustained under normal conditionsb) the maximum output rate that can be sustained under normal conditionsc) the maximum input rate that can be sustained under ideal conditionsd) the maximum output rate that can be sustained under ideal conditionse) the maximum percent measure of how well available capacity is being used


15. Which of the following does not contribute to the sustainability of design capacity?a) scheduled machine maintenanceb) overtimec) overstaffingd) using equipment to the maximume) subcontracting


16. The maximum output rate that can be achieved by a facility under ideal conditions is _________________.a) utilizationb) design capacityc) effective capacityd) ultimate capacitye) temporary capacity


17. The maximum output rate that can be sustained under normal conditions is _______________________.a) utilizationb) design capacityc) effective capacityd) ultimate capacitye) temporary capacity


18. The ratio of actual output rate to capacity is ____________________________.a) effectivenessb) cycle timec) throughputd) utilizatione) productivity


19. capacity can serve to intimidate and preempt competitors from entering the market.a) Designb) Flexiblec) Extrad) Effective

e) Focused


20. The best operating level is the volume of output that results in the _________________________.a) lowest average unit costb) most revenuec) maximum use of machineryd) best qualitye) optimum product mix


21. Operating a facility close to its best operating level is clearly important becausea) it reduces fixed costb) it reduces overtime requirementsc) of impact on costsd) of impact on employees bonusese) it increases production


22. The cost per unit is $36.74 at the best operating level. When the output is higher, the unit cost will be what?a) lowerb) the samec) higherd) could be higher or lowere) could be higher, lower or the same


23. Economies of scale occur when a company is operating _________________________________________.a) at its best operating level and increases its outputb) at its best operating level and decreases its outputc) below its best operating level and decreases its outputd) above its best operating level and increases its outpute) below its best operating level and increases its output


24. The concept of diseconomies of scale _____________________________________________________.a) states that the average cost of a unit produced is reduced when the amount of output increasesb) is not realisticc) is not valid for regulated industriesd) states that beyond a certain point the cost of each additional unit made increasese) is an approach for measuring unusable output


25. Management has decided to add capacity incrementally in smaller chunks as needed, rather than purchasing one large facility. This decision ___________________________________.a) is very riskyb) will result in low initial costsc) will ultimately result in lower costs per unit if demand increases rapidlyd) positions the company to be well prepared for high demand in the futuree) can lead to a large amount of excess capacity


26. Last month TMJG Co. started producing a new product called thingamajigs from its new plant. Sales were quite good for the first couple of weeks. Unfortunately, a technological innovation was then announced by a competitor. This innovation will almost completely eliminate the demand for thingamajigs. As a result, TMJG has decided to shut down and dismantle the plant next week. The average cost per unit will be highest if the plant was _______________________________________.

a) a small facilityb) in the right locationc) a large facilityd) just-in-timee) a medium facility


27. A focused factory is one that __________________________________________________.a) produces many products with optionsb) is small and highly specializedc) has a large number of management specialistsd) is vertically integratede) is located at the center of demand


28. Compared to large facilities, focused factories _________________________________________.a) bring economies of scaleb) have much bureaucracyc) are ancient historyd) lead to higher average inventoriese) are more flexible


29. facilities may not be the best approach in today’s business environment that has short product and technological life cycles and in which flexibility is more important than ever before.a) Largeb) Smallc) Leasedd) Self-operatinge) Agile

Ans:

Section Ref: Capacity PlanningLevel: easy

30. Large facilities can benefit from the concept of by creating a plant within a plant (PWP).a) just-in-timeb) focused factoriesc) economies of scaled) supply chaine) hierarchical management


31. One benefit PWP provides over independent plants isa) increased production outputb) increased design capacity capabilitiesc) reduction of unnecessary layers of bureaucracyd) reduction in transportation costse) improved supplier relationships


32. In the 1980s retail sales were dominated by large department stores. However, in the 1990s gains in sales were made by specialty stores because ______________________________________________________.a) the large department stores started moving out of shopping malls, and their new

locations were not nearly as effectiveb) customers got tired of trying to find sales clerks who would help them in the large department storesc) the specialty stores always had donuts and coffee for their customersd) consumer preferences change very rapidly, and the specialty stores can focus on a

specific set of customers and respond to their unique needse) parking is more readily available at the specialty stores


33. According to the text, one of the fastest-growing trends today isa) Leveraging technologyb) PWPc) focused plantsd) developing a large network of subcontractorse) developing a large focused distribution chain


34. can perform a number of tasks to help a company focus on its core capabilities.a) A plant within a plantb) Agile manufacturingc) Total quality managementd) Just-in-timee) Subcontractor networks


35. The first step in making a capacity planning decision is _____________________________________.a) evaluate capacity alternativesb) implementationc) identify capacity requirementsd) develop capacity alternativese) weight capacity objectives

Ans:Section Ref: Making Capacity Planning DecisionsLevel: moderate

36. Long-term capacity requirements are identified on the basis of ________________________________.a) the current trend of the economyb) the expected lifetime of the facilityc) demographic factorsd) forecasts of future demande) future political events

Ans:Section Ref: Making Capacity Planning Decisions

Level: moderate

37. Capacity cushions can be helpful if _____________________________________________.a) demand is greater than expectedb) sales need to be buffered from productionc) total quality management failsd) productivity is too highe) there is excess capacity

Ans:Section Ref: Making Capacity Planning DecisionsLevel: hard

38. Evaluate capacity alternatives can include use of _________________________________________.a) the Delphi methodb) estimated market sharesc) demographic factorsd) econometric forecastinge) decision trees

Ans:Section Ref: Decision TreesLevel: hard

39. Which of the following information items is not contained in decision trees?a) points in time when decisions are madeb) probability of choosing decision alternativesc) chance event probabilitiesd) decision alternativese) outcomes, such as estimated profits


40. Decision trees are useful when the alternatives are _____ and involve _____a) local, senior managementb) in parallel, certaintyc) in sequence, uncertaintyd) in sequence, certainty

e) in parallel, certainty


41. Solving a decision tree that involves maximizing profit includes _______________________________.a) using probabilities to calculate expected values for decision pointsb) calculating from left to rightc) selecting the decision alternative with the highest expected valued) calculating expected values for all chance events before considering decision nodese) inverting decision nodes


42. Expected values area) forecasted sales pricesb) forecasted revenuesc) average value of chance eventsd) weighted value of the chance eventse) exponential value of the chance events


43. Which of the following has the least to do with location analysis?a) sources of transportationb) reduction in trade barriersc) information technology reducing need for proximityd) retail stores locating near each othere) automation of factories

Ans:Section Ref: Location AnalysisLevel: moderate

44. Service organizations such as restaurants, movie theaters, and banks focus on locating near ____________.

a) suppliers b) roadsc) intersectionsd) their customerse) potential workers

Ans:Section Ref: Location AnalysisLevel: easy

45. Location decisions are particularly important because _______________________________________.a) typically they are made rather frequentlyb) they entail a high cost, short-term commitmentc) there are so many potential locationsd) they have a major impact on product designe) they can have a large impact on operating costs and revenues


46. Which of the following is least likely to be a consideration in facility location?a) the design of the production processb) mistakes in choosing a location can be difficult to correctc) often there are a number of acceptable locationsd) expanding capacity at a current location may be an optione) location decisions can have a major impact on operating costs and revenues


47. A facility location factor that is important for both service and manufacturing organizations is locating close to _________________________________.a) labor supplyb) sources of transportationc) suppliersd) warehousese) natural resources

Ans:Section Ref: Location AnalysisLevel: hard

48. Locating close to customers is least important for __________________________.a) bakeriesb) movie theatersc) flower shopsd) diamond minese) gas stations


49. It takes many pounds of milk to make one pound of cheese. Therefore, there are many cheese factories in dairy states because _________________________________.a) of reputationb) “cheeseheads” eat a lot of cheesec) of transportation costsd) making cheese is a batch processe) customers prefer domestic cheese

Ans:Section Ref: Location AnalysisLevel: hard

50. Local wage rates, presence of local unions, and attitudes of local workers would be major factors for location decision for businesses that ______________________________________.a) are labor intensiveb) have perishable productsc) have high transportation costsd) have need for specific raw materialse) provide in-home services


51. In facility location zoning restrictions, soil conditions, and access roads for trucks are ________________.

a) community considerationsb) site considerationsc) quality of life issuesd) hardly ever importante) cultural considerations


52. Which of the following is not a quality-of-life factor?a) climateb) a desirable lifestylec) good schoolsd) a low crime ratee) room for customer parking


53. With respect to globalization, which of the following would not be considered an important location consideration?a) vertical integrationb) trade barriersc) cultured) language barrierse) foreign markets


54. Disadvantages of globalization include __________________________________________________.a) use of cheap labor in certain countriesb) increased stigma due to locating factories overseasc) reduction of trade barriersd) increased sales in foreign marketse) political risks for countries with unstable governments


55. Issues that need to be considered in location globally include all of the following except ______________.a) different culturesb) FEC accounting requirementsc) language barriersd) different lawse) different business practices


56. The least likely reason for a U.S. firm to choose to locate a factory in a foreign country is _____________.a) climateb) natural resourcesc) marketsd) cheaper supplierse) lower labor costs


57. The first step managers need to take when making facility location decisions is _____________________.a) begin negotiations with governments for several potential locationsb) identify specific location possibilitiesc) gather information on location alternativesd) evaluate specific sitese) identify the location factors that are dominant for the business

Ans:Section Ref: Making Location DecisionsLevel: moderate

58. When evaluating location alternatives the firm should look ata) only qualitative factorsb) only quantitative factorsc) both qualitative and quantitative factorsd) weighted average values

e) decision support models only


59. An excellent procedure that can be used with location factors that are qualitative is __________________.a) the transportation methodb) break-even analysisc) the factor rating methodd) the center of gravity approache) the load-distance method


60. The first step in the factor rating method for evaluating location alternatives is what?a) select a scale by which to evaluate each alternative relative to each factorb) evaluate each alternative relative to each factorc) select the alternative with the highest scored) identify dominant factorse) assign weights to factors reflecting the importance of each factor relative to the other factors


61. A location analysis has been narrowed down to two locations, A and B. The main factors in the decision will be supply of raw materials, which has a weight of 50, and labor cost, which has a weight of 50. The ratings for raw materials and labor are: for A, 3 and 4, respectively; for B, 5 and 3, respectively. Using the factor rating method, the manager should _________________________________________.a) be indifferent between these locationsb) choose location Ac) choose location Bd) reject both locationse) determine the capacity before deciding

Ans:Section Ref: Making Location Decisions

Level: moderate

62. The load-distance model frequently utilizes distance, which is the shortest distance between two points using only north-south and east-west movements.a) curvilinearb) Euclideanc) rectilineard) directe) vertical

Ans:Section Ref: Making Location DecisionsLevel: hard

63. Which of the following is not a step in the load-distance model?a) solve algebraically for the best locationb) identify loadsc) select the site with the lowest load-distance scored) identify distancese) calculate the load-distance score for each location


64. In choosing a location, the provides an easy way to calculate X and Y coordinates for a good starting point.a) transportation methodb) break-even approachc) factor rating methodd) center of gravity approache) load-distance method


65. The center of gravity approacha) identifies the precise location for the new distribution siteb) identifies where the trucking firm should be locatedc) may identify a location that may not be feasible to locate atd) relies on GPS coordinates for all calculations

e) relies on which transportation method is selected

Ans:Section Ref: Making Location DecisionsLevel: easy

66. Which of the following is not a valid assumption of the break-even model?a) only one product is involvedb) everything which is produced will be soldc) the revenue per unit will be the same regardless of volumed) the fixed cost per unit will be the same regardless of volumee) the variable cost per unit will be the same regardless of volume

Ans:Section Ref: Making Location DecisionsLevel: hard

67. For fixed costs of $10,000, revenue per unit of $20, and variable cost per unit of $10, the break-even quantity is ______________________.a) 10b) 500c) 1,000d) 2,000e) 10,000


68. At the break-even point, _______________________________________.a) output equals capacityb) total cost equals total revenuec) total cost equals profitd) variable cost equals fixed coste) variable cost equals total revenue


69. For a break-even graph, the total cost for each possible location is plotted against __________________.

a) fixed costsb) variable costsc) profit margind) quantitye) price


70. To plot the break-even line one end of the line is the y-intercept point. The other line pointa) requires the center of gravity calculationb) is established by the finance departmentc) is arbitrary but usually the expected volumed) is not arbitrarye) is derived from the location analysis


71. The method which relies on a specific algorithm to evaluate the cost impact of adding potential location sites to the network of existing facilities is __________________________________________.a) cost-volume analysisb) the transportation methodc) factor rating analysisd) linear regression analysise) the load-distance model


72. Capacity planning and location analysis are decisions that must be made by _______________ working together.a) accounting, marketing and operationsb) marketing and financec) finance, marketing and operationsd) accounting, marketing and financee) marketing and operations

Ans:

Section Ref: Capacity Planning and Facility Location Across the OrganizationLevel: hard

73. Which of the following is not an example of factory focus?a) Ann Taylorb) Searsc) Limited Tood) The Gape) The Limited


74. Which of the following is not part of decision trees?a) decision pointsb) decision alternativesc) decision eventsd) chance eventse) outcomes


True/False

1. Capacity decisions at the strategic level include the size of workforce.


2. The first level of capacity planning is at the strategic level.


3. Capacity planning is complicated by the fact that capacity is usually purchased in chunks, rather than smooth increments.


4. An example of an output measure of capacity is labor hours.


5. Input measures of capacity work better when a company produces a single product.


6. Scheduled machine maintenance is one of the determinants of effective capacity.


7. The maximum output rate that can be achieved by a facility under ideal conditions is design capacity.


8. Under ideal conditions the firm can achieve 125% of design capacity on a daily basis.


9. The ratio of actual output rate to capacity is utilization.


10. Extra capacity can serve to intimidate and preempt competitors from entering the market.


11. The best operating level is the volume of output that results in the lowest average unit cost.


12. A focused factory is one that produces many products with options.


13. Focused factories are a factor which contributes to the success of JIT.


14. A plant within a plant can perform a number of tasks to help a company focus on its core capabilities.


15. Capacity cushions can be helpful if sales need to be buffered from production.


16. Long-term capacity requirements are identified on the basis of forecasts of future labor market supplies.


17. Solving a decision tree that involves maximizing profit includes selecting the decision alternative with the highest expected value.


18. The cost of space in Silicon Valley is higher now than it was in the late 1990s.


19. In facility location zoning restrictions, soil conditions, and access roads for trucks are quality of life issues.


20. Disadvantages of globalization include political risks for countries with unstable governments.

Ans:

Section Ref: Location AnalysisLevel: moderate

21. An excellent procedure that can be used with location factors that are qualitative is the factor rating method.


22. The load-distance model frequently utilizes rectilinear distance, which is the shortest distance between two points using only north-south and east-west movements.


23. The center of gravity approach requires precise XY grid coordinates to develop a valid location.


24. In choosing a location, the transportation method provides an easy way to calculate X and Y coordinates for a good starting point.


25. At the break-even point total cost equals total revenue.

Ans:Section Ref: Making Location Decisions Level: easy

Essay

1. Describe some factors that contribute to the capacity of an emergency room, as measured by the number of patients served per day.

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2. What conditions make effective capacity differ from design capacity?

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3. Why would a company consider purchasing or building a small facility, when in the long run they think that they could use a large one?

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4. Two sizes are being considered for a new facility, medium and large. Discuss best operating level in this context.

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5. Why are focused factories often the best approach in today’s business environment?

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6. How should forecasts of long-range demand be developed for identifying capacity requirements?

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7. There they go again. There is another Burger King being built right next to a McDonald’s at an Interstate Highway exit. Why does this approach make sense?

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8. Why does it make sense that there are many cheese factories that are staying in Wisconsin, while many clothing manufacturers have been shutting down domestic plants and locating outside of the US?

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9. Give an example of a type of facility for which quality-of-life issues would be of primary importance.

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10. What are the disadvantages of globalization?

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11. Discuss why marketing is important in making capacity decisions.

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12. Describe the relation of capacity requirement and the supply chain.

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Short Answer

1. While long term capacity decisions are strategic and capital intense, short term capacity decisions involve ________________________

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2. Capacity planning problems are notorious in ER and other organizations who experience ____ ______ in ____.

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3. Agile organizations often use focused factories to increase efficiency by ________________________

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4. Subcontractor networks reduce reliance on acceptance sampling by ________________________

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5. Forecasting product demand involves forecasting ________________________ demand and the firm's ________________________

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6. Name three of the main factors that affect location decisions. ________________________, ________________________, and ________________________.

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7. Schools, colleges, and universities consider the size of the classrooms carefully because ________________________

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8. What is the formula for effective utilization? ________________________

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9. A firm must choose between remaining where it is, with current capacity, and building a new facility with 50% more capacity. The probability of high demand is estimated to be 75%. The current facility would provide $100,000 profit if there is high demand or $50,000 profit if there is low demand. The replacement facility would provide $160,000,000 profit if there is high demand but would only break even if there is low demand. What is the expected value of each option?________________________

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10. What is the load-distance score formula? ________________________

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11. An area that has further encouraged globalization is the growth of __________.

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12. A firm that wishes to use break-even analysis to evaluate potential locations must know ________________________ for each site.

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13. Factor rating can be used to evaluate multiple _____ based on a number of ____ ____.

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Problems

1. A clinic has been set up to give flu shots to the elderly in a large city. The design capacity is 50 seniors per hour, and the effective capacity is 44 seniors per hour. Yesterday the clinic was open for ten hours and gave flu shots to 330 seniors.(a) What is the design utilization?(b) What is the effective utilization?

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2. Magnatree is a large company that has been working on a new product. This product has tremendous potential, but Magnatree must move quickly. They have decided that they will introduce the product in two months and have already started developing their advertising campaign.

They are sure that the product will be a success, with a possibility that it will be a huge success. They recently found out that another company, Shadycorp, has some unique expertise that could significantly improve the new product. They contacted them and Shadycorp offered to sell their expertise to Magnatree for $5 million. Magnatree needs to make an immediate decision on Shadycorp’s offer or it will be too

late to investigate the use of the expertise in design of the new product. Without the expertise Magnatree has a 20% chance of making the new product a huge success. With Shadycorp’s expertise there will be a 40% chance of the new product being a huge success.

If the new product is a huge success, the net present value of its future profits is expected to be $50 million. If it is merely a success, the net present value of its future profits is expected to be $20 million.(a) Construct a decision tree and solve it.(b) Should Magnatree accept Shadycorp’s offer?(c) What is the expected net present value of its future profits from the new product?

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3. Aacorp has experienced an increase in demand for its product and has decided that it will expand its factory, since capacity is currently too low to meet demand. It is not sure whether demand will continue to increase in the future or not. It is considering two options. A small expansion will be sufficient to meet its current demand and also its future demand if demand levels off. Its second option is a large expansion, which will be more than sufficient for current demand and will also handle future demand even if continues to increase. They have estimated that the probability that demand will continue to increase is 40%.

A small expansion will cost $2 million while a large expansion will cost $4 million. If they make a small expansion and demand continues to increase, they will have to make a second expansion in 18 months and the net present value of that second expansion is $3 million.

The net present value of the future revenue resulting from the expansion will be $5 million under two conditions: 1) demand levels off, or 2) demand continues to increase, but Aacorp chooses a small expansion and does not make a second expansion in 18 months. The net present value of the future revenue will be $9 million if demand continues to increase and Aacorp either chooses a large expansion or makes a second expansion in 18 months after choosing a small expansion.(a) Construct a decision tree and solve it.(b) Should Aacorp make a small expansion or a large expansion?(c) What is the resulting expected net present value of its future profits?

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4. Medco plans to open a new medical center and is looking for a suitable location. They have narrowed their choice down to three locations, on Oak, Elm, and Ash Streets. They have defined four factors and have assigned weights to these factors as follows: proximity to hospitals (40), customer parking (30), appearance (20), and ease of expansion (10). They then rated the three locations for the four factors, using a scale of one to five. Their ratings are as follows:

Location Factor Oak Elm Ash

Proximity to hospitals 2 5 3Customer parking 5 1 3Appearance 4 2 5Ease of expansion 3 4 1

(a) Calculate the scores for each location.(b) According to the model which location should they choose?

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5. Supershirtco plans to open a new factory and is looking for a suitable location. They have narrowed their choice down to three locations, Lima, Peru; Rome, Italy; and Nome, Alaska. They have defined four factors and have assigned weights to these factors as follows: wage rates (60), construction costs (20), logistics (10), and climate (10). They then rated the three locations for the four factors, using a scale of one to five. Their ratings are as follows:

Location Factor Lima Rome Nome

Wage rates 5 3 1Construction costs 4 2 5Logistics 3 2 5Climate 3 5 1

(a) Calculate the scores for each location.(b) According to the model which location should they choose?

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6. Aalogistics Co. has just signed a contract to deliver products to three locations, and they are trying to decide where to put their new warehouse. The three delivery locations are Chicago, Kansas City, and Memphis. The two potential sites for the warehouse are Peoria and St. Louis. The x, y coordinates for the delivery locations and warehouses are as follows:

Location x coordinate y coordinate Chicago 92 42Kansas City 85 39Memphis 90 35Peoria 90 41St. Louis 90 39

The total quantity to be delivered to each destination is: 400 to Chicago, 150 to Kansas City, and 100 to Memphis.(a) Calculate the total load-distance value from each potential warehouse location.(b) Where should the new warehouse be located?

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7. Wefixit Co. has just signed a contract to handle copy machine repairs for a large printing company in Chicago. The contract covers copy machines at four locations, in the Loop (downtown), on the North side, on the West side, and on the South side. Wefixit has identified two potential sites for housing their equipment, spare parts, and employees. One site is Northwest of the Loop, and the other on is south of the Loop. The x, y coordinates for the printing company locations and potential sites for Wefixit are as follows:

Type Location x coordinate y coordinate Printing Co. Loop 24 18Printing Co. North side 19 27Printing Co. West side 11 19Printing Co. South side 27 11Wefixit Northwest of Loop 18 23Wefixit South of Loop 24 16

The estimate number of trips per year to each Printing Co. location is: 400 to Loop, 200 to North side, 200 to West side and 100 to South side.(a) Calculate the total load-distance value from each potential Wefixit location.(b) Where should Wefixit be located?

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8. Aalogistics Co. has just signed a contract to deliver products to three locations, and they are trying to decide where to put their new warehouse. The three delivery locations are Chicago, Kansas City, and Memphis. The x, y coordinates for the delivery locations are as follows:

Location x coordinate y coordinate Chicago 92 42Kansas City 85 39Memphis 90 35

The total quantity to be delivered to each destination is: 400 to Chicago, 150 to Kansas City, and 100 to Memphis. Calculate the location of the new warehouse using the Center of Gravity approach.

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9. Phil’s consulting services has grown rapidly. Phil is now traveling extensively around the country. Phil has the liberty to live anywhere he wants but wants to decide, geographically, the ideal location to relocate to. Phil’s primary clients and associated number of trips are:Client A = 15 trips, coordinates (20,80)Client B = 40 trips, coordinates (30,60)Client C = 35 trips, coordinates (40,70)Client D = 25 trips, coordinates (50,90)

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10. Amalagamatada HOH, Inc., makes water treatment machines for homes. These machines are referred to as AmaHOH, and Amalagamatada HOH, Inc. is trying to decide whether or not to built a new plant in Southern California. The plant will have annual fixed costs of $2,000,000 and variable costs of $800 for each AmaHOH produced. The sales price is $1,000 for each AmaHOH.(a) Determine the break-even quantity.(b) Marketing is certain that they will be able to sell much more than the break-even quantity in part a. and have proposed building an even larger plant. This plant will have annual fixed costs of $5,000,000 and variable costs of $700 for each AmaHOH produced. The sales price will still be $1,000 for each AmaHOH. Determine the quantity above which the larger plant should be built, rather than the plant in part a.

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11. Acme Corp. makes vending machines for small companies. They have recently started selling their vending machines in Southern California, with a great deal of success, at a price of $5,000 per machine. The company is convinced that they will need to either build a new plant near San Diego or expand their existing plant in New Orleans. If they build a new plant near San Diego, the annual fixed costs will be $6,000,000 and the variable costs will be $3,000 for each vending machine delivered to Southern California. If they expand the New Orleans plant, their annual fixed costs for the expansion will be $2,000,000 and the variable costs will be $4,000 for each vending machine delivered to Southern California.(a) Determine the break-even quantity for building the new plant near San Diego.(b) Determine the break-even quantity for expanding the plant in New Orleans.(c) At what output will the two locations have the same total cost?(d) Assume that the demand forecast is less than the output in part c. Which option should the company choose?

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12. Raissa’s early learning center must decide how many students they need to enroll to make a profit. There is a trade off in quality of care and the number of students enrolled. They must make a profit but not have so many children that the care suffers. They must establish the point where the number of enrolled students establishes the first profit point. They’ve determined that their fixed costs are $4,500 per month. It costs them an additional $150 per month for each enrolled child. They only enroll students on a monthly basis at a price of $450. How many students must they enroll to start making a profit?

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File: ch10, Chapter 10: Layout Planning

Multiple Choice

1. Which of the following is not a resource that might not be included in deciding a facility layout?a) deskb) work centerc) telephone switchd) work centere) person

Ans:Section Ref: What is Layout Planning?Level: moderate

2. Which of the following may not be a result of a poor layout?a) wasted timeb) wasted energyc) confusiond) poor communicationd) increased flow of information

Ans:Section Ref: What is Layout Planning?Level: easy

3. Intermittent operations are seen in organizations that produce:a) a small variety of different productsb) high volumes of a few standard products

c) a large variety of different productsd) a large volume of many standardized productse) assembly line manufacturing

Ans:Section Ref: What is Layout Planning?Level: easy

4. Which of the following is not one of the four basic layout types?a) invertedb) hybridc) processd) fixed positione) product

Ans:Section Ref: Types of LayoutsLevel: easy

5. The challenge in process layouts is to arrange resources to maximize _____ and minimize ____a) movement, effectivenessb) effectiveness, efficiencyc) efficiency, waste of movementd) efficiency, effectivenesse) efficiency, labor cost

Ans:Section Ref: Types of LayoutsLevel: moderate

6. A company with a pure continuous processing system is most likely to use which layout type?a) invertedb) hybridc) processd) fixed positione) product


7. Process layouts have a) less automationb) more automationc) fewer employeesd) more cycle timee) less cycle time


8. A job shop is most likely to use which layout type?a) invertedb) hybridc) processd) fixed positione) product


9. A hospital is an example of which layout type? a) invertedb) hybridc) processd) fixed positione) product


10. A grocery store is most like which of the following layout types? a) invertedb) circularc) processd) fixed positione) product


11. A university is an example of which layout type? a) invertedb) hybridc) processd) fixed positione) product


12. Which of the following is least like a process layout?a) job shopb) automobile plantc) hospitald) universitye) grocery store


13. Which of the following is more like a product layout as compared to a process layout?a) Resources used are general purpose.b) Facilities are less capital intensive.c) Processing rates are slower.d) Space requirements for inventory storage are lower.e) Scheduling resources is more challenging.


14. Which of the following is more like a product layout as compared to a process layout?a) Resources used are specialized.b) Facilities are less capital intensive.c) Processing rates are slower.d) Space requirements for inventory storage are higher.e) Scheduling resources is more challenging.


15. Which of the following is more like a product layout as compared to a process layout?a) Resources used are general purpose.b) Facilities are more capital intensive.c) Processing rates are slower.d) Space requirements for inventory storage are higher.e) Scheduling resources is more challenging.


16. Which of the following is more like a product layout as compared to a process layout?a) Resources used are general purpose.b) Facilities are less capital intensive.c) Processing rates are faster.d) Space requirements for inventory storage are higher.e) Scheduling resources is more challenging.


17. Which of the following is more like a product layout as compared to a process layout?a) Resources used are general purpose.b) Facilities are less capital intensive.c) Processing rates are slower.d) Space requirements for inventory storage are higher.e) Scheduling resources is less challenging.


18. Which of the following is more like a product layout as compared to a process layout?a) Resources used are general purpose.b) Facilities are less capital intensive.c) Material handling costs are lower.d) Space requirements for inventory storage are higher.e) Scheduling resources is less challenging.


19. Which of the following is more like a product layout as compared to a process layout?a) Resources used are general purpose.b) Facilities are less capital intensive.c) Less skilled workers can be used.d) Space requirements for inventory storage are higher.e) Scheduling resources is less challenging.


20. Which of the following is more like a product layout as compared to a process layout?a) Resources used are general purpose.b) Facilities are less capital intensive.c) Products cannot be easily added or deleted from the existing product line.d) Space requirements for inventory storage are higher.e) Scheduling resources is less challenging.


21. A company with a pure intermittent processing system is most likely to use which layout type?a) invertedb) hybridc) processd) fixed positione) product


22. A single-line cafeteria is an example of which layout type? a) invertedb) disjointedc) processd) fixed positione) product


23. A car wash is an example of which layout type? a) invertedb) hybridc) processd) fixed positione) product


24. A high-volume paper mill is an example of which layout type? a) invertedb) circularc) processd) fixed positione) product


25. Which of the following is least like a product layout?a) high-volume paper millb) automobile plantc) hospitald) single-line cafeteria

e) car wash


26. In a product layout facility the manager must decidea) employees’ salaryb) exactly what tasks will not be performed by every workstationc) exactly what tasks will be performed by every workstationd) exactly what vacation schedule must be followede) general sequence the work must be performed in


27. Which company is widely considered to be the leader of just-in-time production?a) Fordb) Timexc) Gatewayd) Toyotae) Sony

Ans:Section Ref: Designing Process LayoutsLevel: moderate

28. A hybrid layout combinesa) fixed and productb) fixed and processc) inverted and productd) services and manufacturinge) process and product


29. A wheat farm is an example of which layout type? a) invertedb) hybrid

c) processd) fixed positione) product


30. Shipbuilding is an example of which layout type? a) invertedb) hybridc) processd) fixed positione) product


31. Building construction is an example of which layout type? a) invertedb) hybridc) processd) fixed positione) product


32. Bridge construction is an example of which layout type? a) invertedb) hybridc) processd) fixed positione) product


33. Which of the following is least like a fixed-position layout?

a) farmb) shipbuildingc) bridge constructiond) building constructione) car wash


34. The first step in designing a layout isa) identifying the facilityb) gathering informationc) selecting the correct layout software packaged) developing a REL charte) developing a from-to matrix


35. What are the two primary tools used to identify closeness measures during the layout design process?a) REL chart and from-to matrixb) MRP chart and from-to matrixc) x-bar chart and from-to matrixd) MRP chart and x-bar charte) x-bar chart and REL chart

Ans:Section Ref: Designing Process LayoutsLevel: easy

36. According to the text, the available space of a facility is best seen by using aa) photographb) detailed floor planc) architecture software packaged) block plane) overview plan


37. Which layout design tool is primarily based on managers’ opinions?a) x-bar chartb) REL chartc) MRP chartd) from-to matrixe) Gantt chart


38. What is typically used to quantitatively compare the effectiveness of layouts?a) trial and errorb) process control chartsc) load-distance modeld) mean absolute deviation (MAD)e) exponential smoothing


39. What is the shortest distance between two locations using north-south and east-west movements called?a) Euclidean distanceb) triangulated distancec) rectilinear distanced) Socratic distancee) latitude-longitude (LL) distance


40. Using a relationship chart to develop acceptable layouts is part of a classic layout technique calleda) Real layout planningb) systematic layout planningc) systematic from-to planningd) systematic layout planninge) SRP

Ans:Section Ref: Designing Process LayoutsLevel: hard

41. Which type of movement is most like rectilinear?a) driving cross-country on an interstate highwayb) flying an airplanec) climbing a mountaind) driving in New York Citye) riding a roller coaster


42. How many different layout solutions are possible with 7 departments?a) 7b) 720c) 28d) 7000e) 5040

Ans:Section Ref: Special Cases of Process LayoutLevel: hard

43. How many different layout solutions are possible with 7 departments?a) 7!b) 6!c) 7! 1d) (1!)(2!)(3!)(4!)(5!)(6!)(7!)e) 8!

Ans:Section Ref: Special Cases of Process LayoutLevel: moderate

44. What are two of the most popular facility layout software packages?a) CONWIP and CRAFTb) ALDEP and CRAFTc) CONWIP and MRPd) ALDEP and MRP

e) ALDEP and CONWIP

Ans:Section Ref: Special Cases of Process LayoutLevel: easy

45. Which popular facility layout software package works from an REL chart?a) CONWIPb) MRPc) ALDEPd) LAYOUTe) CRAFT


46. Which popular facility layout software package uses a from-to matrix?a) CONWIPb) MRPc) ALDEPd) LAYOUTe) CRAFT


47. Which facility layout software was developed for designing multistory layouts?a) MULTICRAFTb) MULTISTORYc) CRAFT++d) SPACECRAFTe) SUPERLAYOUT


48. Warehouse layouts have the key characteristics of process layouts excepta) number of loads is not a design considerationb) location isn’t a major consideration

c) there is movement between the storage areasd) from trips are the only consideratione) there is no movement between the storage areas


49. For the general warehouse layout problem, which department should be located furthest from the dock?a) least trips neededb) most area neededc) highest ratio of trips needed to area neededd) smallest ratio of area needed to trips needede) smallest ratio of trips needed to area needed


50. Approximately how much of the U.S. workforce works in an office environment? a) 10%b) 25%c) 50%d) 75%e) 90%

Ans:Section Ref: Designing Product LayoutsLevel: hard

51. Studies mentioned in the text have shown that workers that are in close proximity to each other are more likely to ________________________________________.a) catch a coldb) date each otherc) get on each other’s nervesd) have greater understanding, tolerance, and trust for one anothere) play practical jokes on each other

Ans:Section Ref: Designing Product LayoutsLevel: moderate

52. On which key tradeoff does the textbook focus concerning office layouts?a) cost vs. comfortb) pictures vs. windowsc) cubes vs. doorsd) network printers vs. individual printerse) proximity vs. privacy


53. One important consideration in designing any layout isa) consistencyb) flexibilityc) equitabilityd) uniformitye) tenure


54. What is the term for the number of units we wish to produce over a specific period of time?a) job flowb) output ratec) cycle timed) output flowe) flow time

Ans:Section Ref: Designing Product LayoutsLevel: easy

55. What is the term for the maximum amount of time each workstation has to complete its assigned task?a) output rateb) task timec) station timed) cycle timee) output time

Ans:

Section Ref: Designing Product LayoutsLevel: easy

56. What term tells us how frequently a product is completed?a) output rateb) task timec) station timed) cycle timee) output time


57. Which of the following statements is not true?a) A perfectly balanced line has no bottlenecks.b) It might be possible to split a bottleneck task into two smaller non-bottleneck tasks.c) A production process always has at least one bottleneck.d) A bottleneck task is the longest task in a process.e) The bottleneck determines the lowest possible cycle time.


58. What is the longest task in a process called?a) obstructionb) bottleneckc) blockaded) hindrancee) constrainer


59. The bottleneck determines ______________________________.

a) which station has the minimum cycle timeb) the minimum cycle time of the whole processc) the maximum cycle time of the whole processd) the point at which a product layout converts to a process layout

e) which station has the maximum output rate

Ans:Section Ref: Designing Product LayoutsLevel: hard

60. Assigning tasks to workstations is known as _____________________________.

a) offsetting the lineb) harmonizing the linec) stabilizing the lined) balancing the linee) counterbalancing the line


61. The theoretical minimum number of stations is the number of workstations that would be needed if:a) all stations were balanced.b) all task times were the same.c) the line was 100% efficient.d) every task had a separate station.e) the company had no absenteeism.


62. When line balancing, which rule does the textbook suggest for assigning tasks to workstations?a) shortest task timeb) first come first servedc) fewest predecessorsd) longest task timee) most successors


63. Which production line shapes are particularly useful for the sharing of resources?a) S and Ub) L and Oc) O and Sd) L and Se) O and U

Ans:Section Ref: Group Technology (Cell) LayoutsLevel: moderate

64. What is the amount by which the efficiency of a production line falls short of 100%?a) balance delayb) efficiency deficiencyc) efficiency delayd) balance shortfalle) percentage deficiency


65. What is the term for a system in which the product being worked on is physically attached to the line and automatically moved to the next station when the cycle time has elapsed?a) cyclical lineb) paced linec) autolined) continuous linee) constrained line

Ans:Section Ref: Group Technology (Cell) LayoutsLevel: easy

66. Group technology creates groupings of products primarily based on what?a) product costb) raw materials requirementsc) similar processing requirementsd) operating characteristicse) market segmentation

Ans:

Section Ref: Group Technology (Cell) LayoutsLevel: moderate

67. The items listed below are stored in a one-dock warehouse. Which of them should be stored at the very back (furthest away from the dock)?

Item Trips Area Needed (blocks) A 300 60 B 220 3 C 72 1 D 60 10E 24 3

a) Ab) Bc) Cd) De) E

Ans:Response: See pages 357-358 (Trip ratio = trips/area needed: A = 300/60 = 5; B= 220/3 = 73.3; C = 72/1 = 72; D = 60/10 = 6; E = 24/3 = 8: A lowest trip ratio store furthest from dock)Level: moderate

68. Consider a production line that has a station with two machines, and each unit produced at the station needs to be processed by both of the machines. (A unit cannot be worked on by both machines simultaneously.) Each machine has a production capacity of 4 units per hour. What is the lowest possible cycle time of the station?a) 4 minutes per unitb) 8 minutes per unitc) 7.5 minutes per unitd) 30 minutes per unite) 15 minutes per unit


69. Which of the following is true?a) A line with a lower cycle time has greater output than one with a higher cycle time.b) A line with a higher cycle time has greater output than one with a lower cycle time.c) Cycle time is unrelated to output rate.d) A line must be arranged such that capacity grows with each successive station.e) Cycle time cannot be greater than the task time of the bottleneck.


70. The items listed below are stored in a one-dock warehouse. Which of them should be stored at the very back (furthest away from the dock)?

Item Trips Area Needed (blocks)“Star Trek” videos 2000 5Ballet videos 5 1Tom Cruise videos 200 2“The Simpsons” videos 1000 2Operations Management videos 500 1

a) “Star Trek” videosb) ballet videosc) Tom Cruise videosd) “The Simpsons” videose) operations management videos


71. The items listed below are stored in a one-dock warehouse. Which of them should be stored at the very front (closest to the dock)?

Item Trips Area Needed (blocks) A 300 60 B 220 3 C 74 1 D 60 10 E 24 3

a) Ab) Bc) Cd) De) E


72. The items listed below are stored in a one-dock warehouse. Which of them should be stored at the very front (closest to the dock)?

Item Trips Area Needed (blocks)“Star Trek” videos 2000 5Ballet videos 5 1Tom Cruise videos 200 2“The Simpsons” videos 1000 2Operations Management videos 500 3

a) “Star Trek” videosb) ballet videosc) Tom Cruise videosd) “The Simpsons” videose) operations management videos

Ans:Section Ref: Special Cases of Process LayoutLevel: Moderate

73. Which of the following production line shapes is least likely to be found in a factory?a) Nb) Sc) Ud) Oe) L

Ans:Section Ref: Group Technology (Cell) LayoutsLevel: hard

74. What is Wal-Mart’s primary consideration for its store layout decision regarding the number and size of aisles in its stores?a) predictabilityb) comfortc) ease of navigation through the stored) customer exposure to merchandisee) inventory control

Ans:Section Ref: Types of LayoutsLevel: hard

75. The company’s ______ dictates type of layout the company will have.a) locationb) processc) union agreementsd) HR policiese) market share

Ans:Section Ref: Facility Layout Within OM: How it all Fits TogetherLevel: moderate

True/False

1. An assembly line is an example of an intermittent processing system.


2. A process layout is seen in companies with continuous processing systems.


3. A hospital is an example of process layout.


4. As compared to a process layout, a product layout generally requires less skilled workers.


5. In general, scheduling resources is less challenging under a process layout than it would be under a product layout.


6. At Wal-Mart, to maximize customer comfort and enjoyment, layouts are designed with a limited number of aisles, but each of which is very wide, rather than with multiple but narrow aisles.

Ans:Section Ref: Types of LayoutsLevel: hard

7. In product layouts, the material moves continuously and uniformly through a series of workstations until the product is completed.


8. Load-distance calculations are very concerned with the direction of the move.


9. Maximizing worker proximity minimizes privacy issues.


10. In a fixed position layout, resources are fixed in various locations and the products move from one resource location to the next.


11. A predecessor can be worked in parallel with a successor.


12. Managers use a from-to matrix for facility layout design to identify both the number of trips and the direction of those trips.


13. Typically, an REL chart is more subjective than a from-to matrix.


14. An REL chart can contain ratings of both desirability of closeness and undesirability of closeness.


15. The shortest distance between two locations is called rectilinear distance.


16. When possible, managers should purchase and use CRAFT because it gives an optimal solution to the facility layout problem.

Ans:Section Ref: Special Cases of Process Layout

Level: moderate

17. A heuristic solution always provides the best possible answer.


18. For the general warehouse layout problem the department with the highest ratio of trips to areas needed should be located closest to the dock.


19. The cycle time of a production line is based on the workstation with the highest potential output rate.


20. If a process has a “faster” cycle time, then its cycle time has decreased.


21. As the cycle time of a process decreases, its output also decreases.


22. The theoretical minimum number of stations results in the production of daily requirements when no inefficiency exists.

Ans:

Section Ref: Special Cases of Process LayoutLevel: moderate

23. Group Technology has the advantage of bringing the efficiencies of a process layout to a product layout environment.

Ans:Section Ref: Group Technology LayoutsLevel: hard

24. A product layout can look like an S-curve.

Ans:Section Ref: Group Technology (Cell) LayoutsLevel: moderate

25. Marketing is not highly affected by layout planning.

Ans:Section Ref: Facility Layout Across the OrganizationLevel: easy

Essay

1. What are the two broad categories of operating systems?

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2. What are the four basic layout types?

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3. How does material move in a product layout?

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4. What is another name for cell layout?

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5. What is the term for a layout in which the product cannot be moved due to its size, and all the resources have to come to the production site?

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6. What are the three steps in designing process layouts?

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7. What is a table that gives the number of trips or units of product moved between any pair of departments called?

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8. What is a table that reflects opinions of managers with regard to the importance of having any two departments close together called?

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9. What is the maximum amount of time that each workstation has to complete its assigned task called?

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10. Compare the minimum versus maximum cycle time of a process.

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11. Describe what group technology is.

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12. Discuss why facility layout is important to a supply chain

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Problems

1. Consider the following layout of departments.

Compute the ld score given the following from-to matrix.

Trips Between DepartmentsDepartment A B C D E F

A 12 45 3 14 29B 16 72 5 42C 30 20 90D 10 4E 12F

Answer:

2. Consider the following two layouts of departments.

Layout 1Layout 2

Compute the ld score for each and choose the best, given the following from-to matrix.

Trips Between DepartmentsDepartment A B C D E

A 18 8 3 4B 16 22 5

A B C

D F E

D E C

A B

C D B

A E

C 50 20D 90E

Answer:

3. A firm has four departments to locate in the following space.

Department A has a daily average of 20, 10, and 60 trips to Departments B, C, and D, respectively; Department B has a daily average of 25 and 30 trips to Departments C and D, respectively; and Department C has a daily average of 50 trips to Department D. While there are 24 different layout combinations, only three are effectively different (in terms of distances between departments). Calculate the ld score for the three different combinations and choose the best.

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4. The items listed below are stored in a one-dock warehouse. Rank them in order from closest to the dock to furthest away.

Item Trips Area Needed (blocks) A 200 5 B 100 4 C 78 3 D 60 2 E 35 1

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5. The items listed below are stored in a one-dock warehouse. Rank them in order from closest to the dock to furthest away.

Item Trips Area Needed (blocks)Golf balls 300 1Basketballs 420 3Ballet shoes 10 1Aerobics tapes 20 1Volleyballs 360 3

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6. If a production line produces 800 units per 8-hour workday, what is the cycle time in minutes?

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7. Suppose that assembly of a product involves three different tasks taking 10 seconds, 20 seconds, and 30 seconds, respectively. What is the maximum possible output per hour of the system?

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8. Maxine’s cookie factory bottleneck is the oven. It takes 45 seconds to cook a batch of 144 cookies. What is the maximum number of cookies that Maxine can produce every hour?

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9. Maxine has identified the following process times and desired output. What is the theoretical minimum number of work stations?mix dough 90 sec desired output 30 batches/hourshape cookie 50 seccook 45 seccool 75 sec

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10. Suppose that assembly of a product involves four different tasks taking 40 seconds, 20 seconds, 30 seconds, and 80 seconds, respectively. What is the theoretical minimum number of stations?

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11. Suppose that an assembly line consists of two stations. Station 1 involves three tasks, taking 40 seconds, 20 seconds, and 30 seconds, respectively. Station 2 involves

one task that takes 80 seconds. Compute the efficiency and balance delay of the assembly line.

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12. The following table provides tasks on an assembly line, along with their predecessors and task times.

ImmediateTask Predecessor Time (seconds) A None 45 B None 30 C A, B 48 D B 20 E C 10 F D, E 20 G E 40

If desired output is 75 units per hour, compute (a) the associated cycle time, (b) the assignment of tasks to stations using the longest task time rule, and (c) the efficiency of your solution.

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Short Answer

1. Managers' opinions about the importance of paired departments being near each other are recorded in ________________________

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2. The number of trips or products moved between pairs of departments is recorded in a ________________________

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3. The ________________________ distance between two locations on north-south and east-west axes is used in the ________________________ model.

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4. The load-distance model tells us which departments should be closest to each other by ________________________

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5. While traditional walls and doors provide privacy, they reduce ________________________ and opportunities for _______________________ .

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6. Cycle time assumes that each workstation has ________________________ time to work on a product.

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7. Since there are 3600 seconds per hour, a process that is expected to produce 40 units per hour has a cycle time of ________________________

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8. Bottlenecks determines determine maximum output because it ________________________

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9. What is the formula for the theoretical minimum number of work stations? ________________________

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10. What is the formula efficiency? ________________________

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11. A single-model line is _______ to produce only ______ version of a product.

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12. Facility layout decisions are ______ with a number of other _____ ____.

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File: ch11, Chapter 11: Job Design and Work Measurement

Multiple Choice

1. Part of the operations strategy is designing a work system that:a) is easy to build.b) provides an appropriate risk/reward structure.c) provides the structure for the productivity of the company.d) provides a structure for the HR recruiting function.e) provides the structure for determining the company objectives.

Ans:Feedback: Designing A Work SystemLevel: moderate

2. What technique eliminates unnecessary tasks and improves the process for completing tasks?a) methods analysisb) job designc) work measurementd) task inversione) cycle counting

Ans:Section Ref: The Work EnvironmentLevel: moderate

3. Job design ensures that each employee’s _____ and ________ are geared towards achieving the company’s mission.a) compensation, teams b) duties, teamsc) satisfaction, compensationd) duties, responsibilitye) compensation, responsibility

Ans:Section Ref: The Work EnvironmentLevel: easy

4. Technical Feasibility of a job is the degree to which an individual or group of individuals is:a) able to understand the instructions.b) physically and mentally able to do the job.c) able to control the process.d) physically and mentally able to provide suggestions.e) able to meet the organization’s mission.

Ans:Section Ref: Job DesignLevel: hard

5. Determining if the best financial opportunity is to have an individual perform the task or automate the task is which of the following?a) Technical Feasibilityb) Behavioral Feasibilityc) Activity Based Accounting Feasibilityd) Job Enrichment Feasibilitye) Economic Feasibility


6. The challenge with behavioral feasibility is to design a job and that adds value.a) that is socially acceptableb) that will not get the worker in troublec) without doing something that is morally wrongd) that the worker feels good about doinge) fits in with the norms of society


7. Which of the following is an advantage of specialization in job design?a) high turnover ratesb) minimal training neededc) intrinsic satisfaction of employeesd) increased opportunity for advancement of employeese) low scrap rates

Ans:Section Ref: Job DesignLevel: moderate

8 From the employee’s perspective, which of the following is not an advantage of job specialization?a) reasonable wagesb) minimal training neededc) minimal mental effort neededd) minimal responsibilitiese) minimal credentials needed


9. What is the approach to job design which involves an increase in responsibility for work planning and/or inspection?a) job enlargementb) job rotationc) job enrichmentd) job involvemente) job enhancement


10. Which of the following most closely describes job enrichment?a) vertical expansionb) transferring workers through a series of jobs to increase their scope of experience

c) increasing the amount of workspace assigned to a workerd) horizontal expansione) assigning two jobs to the same worker


11. Having waiters cook and having the cooks wait on tables is an example of _____________________.a) job enlargementb) job rotationc) job enrichmentd) job involvemente) job enhancement


12. What are small groups of employees who meet to identify, analyze, and solve operational problems called?a) traditional work groupsb) cross-functional teamsc) self-managed teamsd) problem-solving teamse) special-purpose teams


13. Which of the following is typically not associated with problem solving teams?a) employees typically volunteerb) employees are trained in problem solving techniquesc) employees contribute on a short term basisd) employees engage in data gatheringe) employee participation is on an ongoing basis


14. Which of the following issues would best be handled by a special-purpose team?a) A machine on the shop floor occasionally malfunctions.b) Particular items in a warehouse are difficult to find.c) A proposal has been made to switch from rail to truck for both transporting incoming parts and product distribution.d) Customers are complaining that they get charged twice for their purchases.e) Forklifts have difficulty moving material in the factory because there is too much congestion in the aisles.


15. A difference between self-directed and self-managed teams is:a) who defines the team’s working goalb) who defines the team’s compensation packagec) who defines the team rulesd) where the work is performede) what means of job enrichment will be applied


16. What is the approach that moves the work to the worker rather than the worker to the workplace?a) teleworkingb) virtual officec) office at homed) office on the movee) the alternative workplace

Ans:Section Ref: Methods AnalysisLevel: moderate

17. Which of the following is not a form of alternative workplace arrangements?a) hot deskingb) desk sharingc) working from the hotel room on an occasional business tripd) telework centere) virtual office

Ans:Section Ref: Job DesignLevel: easy

18. Advantages of the alternative workplace include all except which of the following?a) eliminating offices that people do not needb) reducing overhead expensesc) offers more flexibility to balance work and familyd) increased cohesiveness among employeese) employees devote more time to customers and/or meaningful work activities

Ans:Section Ref: Methods AnalysisLevel: hard

19. To determine whether the alternative workplace is right for your organization, which of the following questions should be positively answered?a) are you out of space?b) does your organization have an open culture?c) does your organization allow the employee to set their own expectations?d) does your organization subscribe to the ‘new’ work force program?e) does the organization plan office parties?


20. Methods analysis can ________________________________________________.a) improve efficiencyb) analyze the fairness of pay systemsc) improve how teams functiond) evaluate job performancee) help select issues that need to be brought to management’s attention


21. The approach that details the tasks of a job and how to do them is ___________________________.a) work measurement

b) job evaluationc) methods analysisd) job designe) work sampling


22. What results from methods analysis?a) a graph of how long each step takesb) an evaluation of current employeesc) time standardsd) guidance for designing jobse) a standard, detailed procedure for an operation


23. What is the methods analysis chart that describes the overall sequence of operation, movement, inspection, delay, and storage?a) process flowchartb) worker machine chartc) simultaneous motion (simo) chartd) efficiency/time of day charte) operations chart

Ans:Section Ref: Work MeasurementLevel: hard

24. Which of the following is not taken into consideration when dealing with the effects of working conditions on worker productivity, quality and safety?a) cafeteria locationb) temperaturec) relative humidityd) ventilatione) lighting


25. What is the governmental agency that has inspectors who check for safety conditions?a) ISOb) OSHAc) FCCd) IRSe) HEW

Ans:Section Ref: Work MeasurementLevel: hard

26. What does work measurement determine?a) how long it should take to do a jobb) what is the best way to do a jobc) who is the best workerd) where work should be donee) why a particular step must be included in an operation

Ans:Section Ref: Work MeasurementLevel: moderate

27. The time is the time it should take a qualified operator, working at a sustainable pace and using the appropriate tools and process, to do the job.a) performanceb) observedc) normald) standarde) ideal

Ans:Section Ref: Setting Standard TimesLevel: moderate

28 The formula to determine standard labor costs for costing a product is:a) standard labor time x hourly labor costb) standard labor time x normal labor costc) normal labor time x hourly labor costd) normal labor time x normal labor coste) adjusted normal time x adjusted normal labor cost


29. A company uses standard times for ___________________________________.a) public relationsb) advertisingc) financial accountingd) the winter monthse) costing


30. The use of standard times for costing allows the company to do all except which of the following?a) evaluate quantitative methodsb) evaluate new product proposalsc) evaluate use of new equipmentd) evaluate new techniques for building a producte) evaluate individual operator proficiency

Ans:Section Ref: Setting Standard TimesLevel: easy

31. Standard times can be used to measure performance of individual workers. If a worker fails to match the standard time, the company should do what?a) put the worker on probationb) ignore the situationc) change the standard timed) provide training to improve the worker’s performancee) fire the worker


32. Which of the following is not a commonly used process for setting standard times?

a) elapsed timesb) time studyc) elemental time datad) predetermined time datae) work sampling


33. The steps involved in a time study include all except which of the following?a) Break the job into easily recognizable units.b) Tell the worker whose job you will be studying.c) Calculate the number of cycles you must observe.d) Time each element, record the times, and rate the worker’s performance.e) Determine the probability distribution that best fits the observed times.

Ans:Section Ref: Setting Standard TimesLevel: hard

34. Typically the job chosen for the time study will be ________________________________________.a) a routine job that is labor intensiveb) a simple job performed by many different peoplec) done primarily by machined) done only occasionallye) insignificant


35. For the step in a time study that involves breaking the job down into easily recognizable elements, each of these elements should __________________________________________.a) overlapb) not be stand-alonec) not involve the workerd) have clear starting and ending pointse) be semi-continuous

Ans:Section Ref: Setting Standard Times

Level: moderate

36. The formula for determining the number of observations needed depends upon all except which of the following values?a) the number of standard deviations needed for the desired confidenceb) the maximum observed value in the samplec) the standard deviation of the sample observationsd) the mean of the sample observationse) the desired accuracy


37. How many standard deviations is required for a 98% confidence level?a) 2b) 2.05c) 2.17d) 2.33e) 2.58


38. What is the effect of an increase in the desired confidence level on the number of observations necessary in a time study?a) increasesb) decreasesc) unchangedd) may increase or decreasee) impossible to say


39. When performing a time study, the analyst converts the observed time into the time an "average" worker would require working at an acceptable pace by using which of the following?a) allowance factorb) mean time modulation

c) methods analysisd) performance rating factore) analysis of efficiency


40. Which of the following values for performance rating factor would be for an above-average work pace?a) 90%b) 100%c) 65%d) 140%e) 78%


41. Establishing a performance factor is an attempt to: a) fudge the actual times.b) punish the worker who does not perform fast enough.c) counterbalance any unusual patterns noted.d) allow management to ‘encourage’ greater productivity.e) use the ISO 9000 approval process.


42. In calculating the time standard, the frequency of occurrence for a work element is _________________.a) how many times the work element is repeated in doing the job onceb) how many other jobs have the same work elementc) the fraction of the time the work element needs to be done when the job is doned) the number of times the work element took longer than all the other work elementse) the inverse of the wave length for the work element


43. For each work element in the time study, multiplying the mean observed time by the performance rating factor by the frequency of occurrence results in what?a) the normal time for the elementb) the average observed time for the elementc) the standard time for the elementd) the average delay for the elemente) the standard time for the job


44. In a time study, personal time, fatigue, and unavoidable delays (PFD) during the typical work day are accounted for in what?a) the normal timeb) an allowance factorc) the performance ratingd) how the work elements are definede) costs


45. The allowance factor is computed by adding one to PFD (personal time, fatigue, and unavoidable delays) when the allowance is based on what?a) normal timeb) the performance rating factorc) job timed) time workede) standard time


46. If OT = the mean observed time, PRF = the performance rating factor, F = the frequency of occurrence, and PFD = the percentage allowance based on time worked, what is the formula to compute the normal time?a) (OT)(PRF)(F)b) (OT)(PRF)(F)(1 + PFD)c) (OT)(PRF)(F) / (1 – PFD)d) (OT)(PRF) / (F)

e) (OT)(PRF)(F) / (1 + PFD)


47. If OT = the mean observed time, PRF = the performance rating factor, F = the frequency of occurrence, and PFD = the percentage allowance based on time worked, what is the formula to compute the standard time?

a) (OT)(PRF)(F)b) (OT)(PRF)(F)(1 + PFD)c) (OT)(PRF)(F) / (1 – PFD)d) (OT)(PRF) / (F)e) (OT)(PRF)(F) / (1 + PFD)


48. If OT = the mean observed time, PRF = the performance rating factor, F = the frequency of occurrence, and PFD = the percentage allowance adjustment based on job time, what is the formula to compute the standard time?

a) (OT)(PRF)(F)b) (OT)(PRF)(F)(1 + PFD)c) (OT)(PRF)(F) / (1 – PFD)d) (OT)(PRF) / (F)e) (OT)(PRF)(F) / (1 + PFD)


49. A company’s accepted time studies are stored in a(n) for possible future use.a) file cabinetb) time study vaultc) warehoused) jare) elemental time database

Ans:Section Ref: Setting Standard Times

Level: easy

50. Typical work elements that occur in many jobs include all except which of the following?a) insert somethingb) tighten somethingc) position an itemd) figure out the instructionse) reach for materials


51. Which of the following steps is not included when a time study analyst uses standard elemental times?a) Identify the standard elements of the job.b) Determine the performance rating factor.c) Adjust the database times if needed.d) Check the database for time studies done on these elements.e) If no valid studies exist for this or a similar work element, do a time study for the new work element.


52. is a published database of elemental time data used for establishing standard times.a) Predetermined time datab) Time elementsc) Time historiesd) Performance timese) Time samples


53. Which of the following would not be a basic element into which a job would be split when using predetermined time data?a) reach

b) sortc) graspd) inserte) turn


54. Which of the following is an advantage of using predetermined time data?a) You can calculate standard times before the job begins.b) Very little skill is required.c) There is universal agreement in assessing the level of difficulty of different work elements.d) No calculations are required.e) You do not need to know much about the job.


55. What is a technique for estimating the proportion of time an employee or machine spends on different work activities?a) predetermined time datab) time elementsc) stopwatch time studyd) work samplinge) simultaneous motion study


56. In work sampling, when should observations be taken?a) at the same time each dayb) once per weekc) at random timesd) once per houre) once per day

Ans:Section Ref: CompensationLevel: moderate

57. Which of the following is a basic difference of work sampling compared to a time study?a) It does not require any observations.b) It requires fewer observations to accomplish the same thing.c) It is better suited for short, repetitive tasks.d) It does not provide standard times.e) It is suitable only for assembly lines.


58. Which of the following is not a step in work sampling?a) Estimate the proportion of time spent on the given activity.b) Estimate the sample size based on the desired level of accuracy and confidence.c) Define the activities to be observed.d) Identify the worker or machine to be sampled.e) Divide the job into basic elements.

Ans:Section Ref: CompensationLevel: hard

59. Companies need to design compensation systems that ______________________________________.a) punish poor performanceb) reinforce the behaviors needed to meet the company’s objectivesc) are easy to administerd) do not differ significantly from those of other firms in the industrye) are innovative


60. Which of the following is not characteristic of time based compensation systems?a) wages are easily calculatedb) employees know what they will get in their regular paycheckc) simplicityd) normally used when measuring output per employee is not applicablee) lower cost per unit than output based systems


61. Output-based incentive systems are based on the assumption that some workers ____________________.a) mentally calculate their pay by keeping track of their outputb) are motivated by money and produce more when pay is linked to performancec) like to work in a competitive environmentd) like to work overtimee) work harder than others

Ans:Section Ref: Learning CurvesLevel: moderate

62. Which of the following is not characteristic of output based compensation systems?a) can be used to compensate individualsb) can be used to compensate groupsc) can include a base salaryd) often include an upper limit on how much an individual can be compensated each daye) need to be linked to quality as well as quantity to be successful


63. Profit sharing and gain sharing are two methods of ____________________________.a) group incentive plansb) keeping costs downc) calculating pay for top managementd) employee retirement planse) keeping expense account costs under control


64. Disadvantages of individual incentive systems include all except which of the following?a) They undermine teamwork.b) A study has shown they had no effect on worker performance.c) They avoid the “free-rider” problem.d) They need a significant amount of data collection.e) They give employees a short-term focus.

Ans:Section Ref: Learning CurvesLevel: hard

65. The fact that human activities typically improve when they are done on a repetitive basis is described by a(an) _________________ curve.a) normal distributionb) learningc) binomial distributiond) lognormal distributione) S-shaped

Ans:Section Ref: Learning CurvesLevel: easy

66. A worker performed a particular task for the first time, and it took 10 minutes. If we assume a 90% learning curve, how long will it take the worker the fourth time she performs the task?a) 10.0 minutesb) 9.0 minutesc) 8.1 minutesd) 7.29 minutese) 6.561 minutes


67. Which one of the following would learning curves affect the most?a) layout analysisb) statistical process controlc) planning labor requirementsd) location analysise) robots


68. The first unit of a product took 400 hours to complete. If an 80% learning curve is expected, how long will the 18th unit take to complete?

a) 157.6 hoursb) 163.8 hoursc) 400.0 hoursd) 3886.4 hourse) 7200.0 hours


69. The first unit of a product took 400 hours to complete. If an 80% learning curve is expected, how long will it take to complete the first 18 units?



70. The first unit of a product took 400 hours to complete. The firm plans to produce 8 units in the first month and 10 units in the second month. If an 80% learning curve is expected, how many hours will the firm use to work on the product during the second month?



71. The first unit of a product took 80 hours to complete. If a 75% learning curve is expected, how long will the 22nd unit take to complete?



72. The first unit of a product took 80 hours to complete. If a 75% learning curve is expected, how long will it take to complete the first 22 units?



73. The first unit of a product took 80 hours to complete. The firm plans to produce 10 units in the first month and 12 units in the second month. If a 75% learning curve is expected, how many hours will the firm use to work on the product during the second month?



74. _____________ is the world’s largest privately held software manufacturer.a) Microsoftb) Corelc) GAMSd) SASe) IBM


75. At SAS, employees are not allowed to work later than ________________________.a) 5:00 p.m.b) 6:00 pm.c) 7:00 p.m.d) 9:00 p.m.e) midnight


True/False

1. Job design ensures that each employee’s activities are closely timed.

Ans:Section Ref: Designing A Work SystemLevel: easy

2. When deciding if the firm should participate in alternative workplace arrangements you must ensure that the same level of direct report control is maintained.

Ans:Section Ref: Methods AnalysisLevel: easy

3. Methods analysis eliminates unnecessary tasks and improves the process for completing tasks.


4. The degree to which an individual or group of individuals can physically and mentally handle the job is its technical feasibility.


5. Problem-solving teams are small groups of employees who meet to identify, analyze, and solve operational problems.


6. The process flowchart describes the overall sequence of operation, movement, inspection, delay, and storage.

Ans:Section Ref: The Work EnvironmentLevel: hard

7. FCC is the governmental agency that has inspectors who check for safety conditions.


8. Work measurement determines how long it should take to do a job.


9. The standard time is the time it should take a qualified operator, working at a sustainable pace and using the appropriate tools and process, to do the job.


10. Typically the job chosen for the time study will be a routine job that is labor intensive.


11. An increase in the desired confidence level will decrease the number of observations necessary in a time study.


12. In calculating the time standard, the frequency of occurrence for a work element is how many times the work element is repeated in doing the job once.


13. In a time study, personal time, fatigue, and unavoidable delays (PFD) during the typical work day are accounted for in the allowance factor.


14. If OT = the mean observed time, PRF = the performance rating factor, F = the frequency of occurrence, and PFD = the percentage allowance adjustment based on job time, the formula to compute the standard time is (OT)(PRF)(F)(1 + PFD).


15. If OT = the mean observed time, PRF = the performance rating factor, F = the frequency of occurrence, and PFD = the percentage allowance based on time worked, the formula to compute the normal time is (OT)(PRF)(F).


16. If OT = the mean observed time, PRF = the performance rating factor, F = the frequency of occurrence, and PFD = the percentage allowance based on time worked, the formula to compute the standard time is (OT)(PRF)(F).


17. Predetermined time data is a published database of elemental time data used for establishing standard times.


18. An advantage of using predetermined time data is that you can calculate standard times before the job begins.


19. In work sampling, observations should be taken at random times.


20. Output-based incentive systems are based on the assumption that some workers are motivated by money and produce more when pay is linked to performance.


21. Gain Sharing emphasized profit levels so employees can share the benefits of increased profits.


22. The fact that human activities typically improve when they are done on a repetitive basis is described by a learning curve.

Ans:Section Ref: Learning CurvesLevel: easy

23. The table containing the Learning Curve Coefficients allows one to calculate both the time it should take to build the nth unit as well as the total production time required to build the entire production run when the nth unit is the last one completed.


24. Human resources is not really involved in work sampling as this is a production facility process.

Ans:Section Ref: Work System Design Across The OrganizationLevel: moderate

Essay

1. What are the approaches to eliminating employee boredom? Briefly describe each.

Ans: Section Ref: Job DesignLevel: moderate

2. What are the characteristics of self-managed teams?

Ans:

3. What are the advantages of the alternative workplace?

Ans: Section Ref: Methods AnalysisLevel: hard

4. What are the steps in methods analysis?

Ans: Section Ref: Methods AnalysisLevel: hard

5. With respect to costing, what uses does a company have for standard times?

Ans: Level: hard

6. What are the ways that standard times can help in planning and scheduling?

Ans: Section Ref: Setting Standard TimesLevel: moderate

7. What are the steps involved in doing a time study?

Ans:

Section Ref: Setting Standard TimesLevel: hard

8. What are the steps involved when a time study analyst uses standard elemental times?

Ans: Section Ref: Setting Standard TimesLevel: hard

9. What are the steps involved in work sampling?

Ans: Section Ref: etting Standard TimesLevel: hard

10. What are the characteristics of time based compensation systems?

Ans: Section Ref: CompensationLevel: moderate

11. Describe why understanding learning curves is important to the organization.

Ans:

12. Discuss how job design is related to the supply chain.

Ans:Level: easy

Short Answer

1. Jobs that are physically and mentally doable are said to be ________________________

Ans: Section Ref: Job DesignDifficulty: hard

2. Jobs that cost less than the value they add are said to be ________________________

Ans:Section Ref: Job DesignDifficulty: hard

3. Jobs that are intrinsically satisfying to the employee are said to be ________________________

Ans:Section Ref: Job DesignDifficulty: hard

4. Expanding a job horizontally through increasing the scope of work assigned is called ________________________


5. Expanding a job vertically through increased worker responsibility is called ________________________


6. Studying the detailed process for doing a job is called ________________________

Ans: Section Ref: Methods AnalysisDifficulty: hard

7. Studying the time it takes to do a job is called ________________________

Ans: Section Ref: Work Measurement Difficulty: hard

8. The time it should take a qualified worker using appropriate process and tools to complete a specific job allowing time for personal fatigue and unavoidable delays is called ________________________

Ans: Section Ref: Work Measurement Difficulty: hard

9. Developing standard time by observing an operator is called ________________________

Ans: Section Ref: Setting Standard TimesDifficulty: hard

10. The average observed time for each work element is its ________________________

Ans: Section Ref: Setting Standard TimesDifficulty: hard

11 .Research on twenty Social Security Administration offices’ individual incentive systems showed that an individual merit pay system had _______________.

Ans: Section Ref: CompensationLevel: moderate

12. Calculating the learning rate is a means for ____________.

Ans:Section Ref: Learning Curves

Level: moderate

Problems

1. Consider the following information.

Standard Deviation Mean Observed TimeWork Element (minutes) (minutes)

Performance Rating1 0.4 2.20.92 0.1 1.21.23 0.4 4.40.84 0.2 3.61.0

(a) Determine the sample size needed if the standard time estimate is to be within 1% of the true mean 90% of the time.(b) Calculate the normal time for each work element.(c) Using an allowance factor of 10% based on job time, calculate the standard time for each work element and for the entire job.(d) Based on the standard time, how many units should an employee performing at 100% of standard complete during an 8-hour day?

Ans:

2. You’ve been assigned to use work sampling to determine how much time Frank spends sorting the mail. You’ve decided that a preliminary estimate of sample size is required to determine the proportion of time spent sorting the mail with a 97% confidence level and within 5% of the true value. What is the preliminary estimate of sample size?

Ans: Section Ref: Setting Standard TimesLevel: easy

3. Frank’s appliance store has just employed a new repair technician. The factor says that the re is a 90% learning curve. Typically the first refrigerator repair takes 2 hours. How long should it take this technician to repair the 8th refrigerator?

AnsSection Ref: Learning CurvesLevel: easy


Standard deviation Mean Observed TimeWork Element (minutes) (minutes)

Performance Rating1 1.2 22.21.12 0.9 31.21.43 1.3 44.40.64 0.6 13.61.25 0.4 22.80.9

(a) Determine the sample size needed if the standard time estimate is to be within 2% of the true mean 99% of the time.(b) Calculate the normal time for each work element.(c) Using an allowance factor of 20% based on the amount of time worked, calculate the standard time for each work element and for the entire job.(d) Based on the standard time, how many units should an employee performing at 110% of standard complete during an 8-hour day?

Ans: Section Ref: Setting Standard TimesLevel: hard


Standard Deviation Mean Observed TimeWork Element (minutes) (minutes)

Performance Rating1 0.8 8.21.32 0.6 9.21.13 0.5 4.40.8

(a) Determine the sample size needed if the standard time estimate is to be within 5% of the true mean 99% of the time.

(b) Calculate the normal time for each work element.(c) Using an allowance factor of 15% based on job time, calculate the standard time for each work element and for the entire job.(d) Based on the standard time, how many units should an employee performing at 100% of standard complete during an 8-hour day?

Ans:


Element 1 Element 2 Element 3 Element 4Element 5

Observations (minutes) (minutes) (minutes) (minutes)(minutes)

Cycle 1 2.79 3.27 9.34 4.121.37

Cycle 2 2.97 3.07 8.76 4.421.22

Cycle 3 2.59 3.21 8.82 4.011.57

Cycle 4 2.47 3.32 9.25 3.871.77

Cycle 5 3.21 3.46 8.85 4.451.98

Cycle 6 2.88 3.33 9.09 4.211.45

Cycle 7 2.56 3.01 8.66 4.001.47

Cycle 8 2.76 2.98 8.81 3.931.22

Cycle 9 2.69 3.45 8.71 4.341.59

Cycle 10 2.35 3.12 9.11 4.221.42

Performance rating factor 1.1 0.8 1.0 1.20.7

Frequency 1 1 1 1 1

(a) Calculate the mean observed time for each work element.(b) Calculate the normal time for each work element.(c) Using an allowance factor of 10% based on job time, calculate the standard time for each work element and for the entire job.(d) Based on the standard time, how many units should an employee performing at 100% of standard complete each hour?

Ans

7. Consider the following information.Element 1 Element 2 Element 3

Observations (minutes) (minutes) (minutes)Cycle 1 4.82 8.27 7.34Cycle 2 4.97 8.37 7.67Cycle 3 4.69 8.21 7.82Cycle 4 4.87 8.23 8.25Cycle 5 4.41 8.46 7.35Cycle 6 4.88 8.03 8.09Cycle 7 4.65 8.61 7.83Cycle 8 4.86 7.98 7.81Cycle 9 4.99 8.57 7.71Cycle 10 5.01 8.05 7.11Performance rating factor 1.3 0.9 1.1Frequency 1 1 1

(a) Calculate the mean observed time for each work element.(b) Calculate the normal time for each work element.(c) Using an allowance factor of 15% based on the amount of time worked, calculate the standard time for each work element and for the entire job.(d) Based on the standard time, how many units should an employee performing at 120% of standard complete each hour?

Ans:

8. Consider the following information.Element 1 Element 2 Element 3 Element 4

Element 5Observations (minutes) (minutes) (minutes) (minutes)

(minutes)Cycle 1 4.99 6.27 4.34 5.76

3.47Cycle 2 - 6.07 -

5.82 3.33Cycle 3 4.79 6.21 4.82 5.51

3.57Cycle 4 4.67 6.32 - 5.47

3.47Cycle 5 - 6.66 4.65

5.92 3.21Cycle 6 4.88 6.44 - 5.71

3.45Cycle 7 4.76 6.01 - 5.55

3.47Cycle 8 - 5.99 -

5.63 3.36

Cycle 9 - 6.45 4.715.89 3.19

Cycle 10 4.41 6.33 - 5.663.32

Performance rating factor 1.3 1.1 0.8 0.91.0

Frequency 0.6 1 0.4 11

(a) Calculate the mean observed time for each work element.(b) Calculate the normal time for each work element.(c) Using an allowance factor of 20% based on job time, calculate the standard time for each work element and for the entire job.(d) Based on the standard time, how many units should an employee performing at 110% of standard complete each hour?

Ans:

9. You have been asked to observe the office manager at Wolf Mountain Christian School to estimate the proportion of time she spends handling visitors to the school who stop by the office. Your 50 observations have revealed the following:

Number ofActivity Observed Times observedTalking on phone 13Handling student problems 5Directing work of others 12Handling visitors 3Working on computer 11Other 6

(a) Based on the preliminary data, calculate the proportion of time she spends handling visitors to the school who stop by the office.(b) Calculate the sample size needed to estimate the proportion of time she spends handling visitors to the school who stop by the office. Assume a 95% confidence that the results will lie within 5% of the true value.

Ans: (

10. You have been asked to observe the shift supervisor at the process test plant for Hudson Chemical Co. to estimate the proportion of time she spends answering questions for the operators. Your 30 observations have revealed the following:

Number ofActivity Observed Times observedTalking on the phone to engineers 3Answering questions for operators 6Observing work of others 12

Working on computer 4Other 5

(a) Based on the preliminary data, calculate the proportion of time she spends answering questions for the operators.(b) Calculate the sample size needed to estimate the proportion of time she spends answering questions for the operators. Assume a 90% confidence that the results will lie within 5% of the true value.

AnsSection Ref: Setting Standard TimesLevel: moderate

11. The first unit of a product took 180 hours to complete. A 70% learning curve is expected. (a) How long will the 19th unit take to complete? (b) How long will it take to complete the first 19 units?

AnsSection Ref: Work System Design Within OM: How It All Fits TogetherLevel: moderate

12. The first unit of a product took 180 hours to complete. The firm plans to produce 4 units in the first month and 15 units in the second month. If a 70% learning curve is expected, how many hours will the firm use to work on the product during the second month?

Ans:

File: ch12, Chapter 12: Inventory Management Policies

Multiple Choice

1. What does WIP stand for?a) work-in-processb) waiting inventory positionc) warning of inventory positiond) weight of inventory positione) waiting inventory potential

Ans: Section Ref: How Companies Use Their InventoryLevel: easy

2. What are purchased items or extracted materials that will be transformed into components or products called?a) work-in-process inventoryb) finished goods inventoryc) raw materials inventoryd) distribution inventorye) MRO inventory

Ans: Section Ref: Types of InventoryLevel: easy

3. Hand tools, lubricants, and cleaning supplies are usually examples of what?a) WIP inventoryb) finished goods inventoryc) raw materials inventoryd) distribution inventorye) MRO inventory

Ans: Section Ref: How Companies Use Their InventoryLevel: moderate

4. Finished goods in transit to the customer are called what?a) WIP inventoryb) components inventoryc) raw materials inventoryd) distribution inventorye) MRO inventory


5. Which inventory function specifically is designed to allow the company to maintain a level production strategy?a) anticipation inventoryb) fluctuation inventory

c) lot-size inventoryd) transportation inventorye) speculative inventory


6. Which inventory function provides a cushion against unexpected supply shortage?a) anticipation inventoryb) fluctuation inventoryc) lot-size inventoryd) transportation inventorye) speculative inventory


7. Which inventory function helps firms garner quantity discounts?a) anticipation inventoryb) fluctuation inventoryc) lot-size inventoryd) transportation inventorye) speculative inventory


8. Which of the following inventory functions does not involve end products sold to customers?a) anticipation inventoryb) fluctuation inventoryc) lot-size inventoryd) MRO inventorye) speculative inventory


9. Which is the primary inventory function that is activated after coupons are distributed to customers?a) anticipation inventoryb) fluctuation inventoryc) lot-size inventoryd) MRO inventorye) speculative inventory


10. Which inventory function provides a hedge against inflation?a) anticipation inventoryb) fluctuation inventoryc) lot-size inventoryd) MRO inventorye) speculative inventory


11. Which inventory function exists between the manufacturing plant and the distribution plant?a) anticipation inventoryb) fluctuation inventoryc) lot-size inventoryd) transportation inventorye) speculative inventory


12. Which of the following allow you to calculate the average amount of inventory in transit?a) ATI – (365*d)/tb) ATI – (t/365)*dc) ATI = 365*t*dd) ATI = (tD)/365 e) ATI – (365*t)/d


13. In inventory management, when discussing customer service we mean:a) whether the customer is available when the product is.b) whether the product is available regardless if the customer desires it or not.c) whether the product is available when the customer wants it.d) whether the customer wants the available product.e) whether repair of the product is available.

Ans: Section Ref: Objectives of Inventory ManagementDifficulty: easy

14. Percentage of orders shipped on schedule is a good measure of finished goods customer service if:a) all orders and customers have similar cost impacts.b) all orders and customers have similar value.c) all orders and customers have similar backorder requirements.d) later deliveries are not considered.e) late deliveries contribute to the overall demand.

Ans: Section Ref: Objectives of Inventory ManagementDifficulty: hard

15. Percentage of Line Items Shipped on Schedule recognizes that:a) not all orders are equal but fails to take into account the dollar value of orders.b) not all orders are equal but this can be compensated for.c) their are differences in orders in terms of both line items and dollar value.d) an absolute measure of manufacturing or service time lost because material or parts are not available.e) all orders and customers should be treated equally.

Ans: Section Ref: Objectives of Inventory ManagementDifficulty: medium

16. What is the formula for inventory turnover?a) annual cost of goods sold / average inventory in dollarsb) annual sales / average inventory in dollarsc) average inventory in dollars / annual cost of goods soldd) average inventory in dollars / annual salese) annual cost of goods sold / annual holding cost

Ans: Section Ref: Objectives of Inventory ManagementLevel: easy

17. Companies can achieve cost-efficient operations by using which of the following inventory ways?a) work-in-process to buffer operationsb) inventory building to leverage reduced setup costsc) JIT inventory to reduce overall costd) level work force maintenance through e) speculative selling

Ans: Section Ref: Objectives of Inventory ManagementLevel: moderate

17. If a company carries 13 weeks of supply, what is the inventory turnover?a) 0.077b) 4c) 7.77d) 676e) 0.25


18. The formula to calculate a week’s of supply is?a) weeks of supply = average weekly usage in dollars/average inventory on hand in dollarsb) weeks of supply = average weekly usage/12 * average inventory on hand in dollarsc) weeks of supply = average inventory on hand in dollars/average weekly usage in dollarsd) weeks of supply = average inventory on hand * average weekly usage in dollarse) weeks of supply – average inventory on hand * average annual usage in dollars * 12

Ans: Section Ref: Relevant Inventory CostsLevel: hard

19. Which of the following is not affected by decisions about how much inventory to hold?a) item costsb) holding costsc) depreciationd) ordering costse) stockout costs

Ans: Section Ref: Relevant Inventory CostsLevel: moderate

20. All of the following affect holding costs except:a) storage costsb) obsolescence costc) damage costd) setup coste) insurance cost


21. If inventory records fail to accurately reflect the quantity of materials available, all except which of the following may occur?a) poor customer serviceb) continuous operationsc) lower productivityd) poor material planninge) excessive expediting

Ans: Section Ref: Inventory Record AccuracyLevel: easy

22. In the service industry it is considered good performance when a company has an inventory loss of only:a) 1%b) 2%c) 3%d) 4%e) 5%

Ans:

Section Ref: Inventory in Service OrganizationsLevel: moderate

23. A SKU is a ______ at a _____ ______geographic location.a) cost, uniquely identifiedb) profit, generally classifiedc) specific item, generally classifiedd) specific item, particulare) general item, particular

Ans: Section Ref: Determining Order quantitiesLevel: moderate

24. In a periodic review inventory system, how many units are ordered?a) Target inventory levelb) Target inventory level − on hand balancec) Max inventory level − min inventory leveld) The EOQe) Average demand during review period + average demand during lead time

Ans: Section Ref: Periodic Review SystemLevel: moderate

25. Which of the following is an assumption of the basic EOQ model?a) Lead time is unknown.b) Demand may be seasonal.c) Orders can arrive in partial shipments.d) Quantity discounts are not considered.e) Lost sales are allowed, but not back orders.

Ans: Section Ref: Mathematical Models for Determining Order QuantityLevel: moderate

26. Which of the following is an assumption of the basic EOQ model?a) Lead time is known and constant.b) Demand may be seasonal.c) Orders can arrive in partial shipments.d) Quantity discounts are considered.e) Lost sales are allowed, but not back orders.


27. Which of the following is an assumption of the basic EOQ model?a) Lead time is unknown.b) Demand is known and constant.c) Orders can arrive in partial shipments.d) Quantity discounts are considered.e) Lost sales are allowed, but not back orders.


28. Which of the following is an assumption of the basic EOQ model?a) Lead time is unknown.b) Demand may be seasonal.c) Orders arrive at once (in one lot). d) Quantity discounts are considered.e) Lost sales are allowed, but not back orders.


29. What costs are considered in the basic EOQ model?a) annual ordering costs + annual holding costsb) annual purchasing costs + annual holding costsc) annual ordering costs + annual holding costs + annual shortage costsd) annual purchasing costs + annual ordering costs + annual holding costs + annual shortage costse) ordering costs per order + annual holding costs

Answer: aSection Ref: Mathematical Models for Determining Order QuantityLevel: easy

30. If annual demand is 24,000 units, orders are placed every 0.5 months, and the cost to place an order is $50, what is the annual ordering cost?a) $50

b) $1,200,000c) $2,400,000d) $1,200e) $600,000


31. If annual demand is 48,000 units, orders are placed in quantities of 2000 units at a time, and the cost to place an order is $80, what is the annual ordering cost?a) $1,920b) $3,840,000c) $160,000d) $80e) $4,160


32. For the basic EOQ model, what is the formula for the total annual cost?a) b) (D/Q)S + (Q/2)Hc) (Q/D)S + (Q/2)Hd) DQ/S + 2Q/He)


33. For the basic EOQ model, how many units should be ordered each time that an order is placed?a) b) (D/Q)S + (Q/2)Hc) (Q/D)S + (Q/2)Hd) DQ/S + 2Q/He)


34. If the EOQ is ordered, which of the following is true?a) Annual ordering cost exceeds annual holding cost.b) Annual holding cost exceeds annual ordering cost.c) Annual ordering cost is equal to annual holding cost.d) The sum of annual ordering cost plus annual holding cost is maximized.e) The annual holding cost curve is decreasing.


35. If the EOQ is ordered, which of the following represents the total annual cost of ordering and holding?a) b) c) d) e)

Ans: Section Ref: Mathematical Models for Determining Order QuantityLevel: hard

36. What does EPQ stand for?a) ensuring purchasing qualityb) economic production quotac) economic production quantityd) economic purchasing quotae) economic purchasing quantity

Ans: Section Ref: Mathematical Models for Determining Order QuantityLevel: easy

37. Which basic EOQ assumption does the EPQ model relax?a) Lead time is known and constant.b) Demand is known and constant.c) Quantity discounts are not considered.d) Orders arrive at once.e) Back orders are not allowed.

Ans:

Section Ref: Mathematical Models for Determining Order QuantityLevel: moderate

38. If the costs (S and H) and demands (D) are the same, which of the following is not true with regard to the EPQ model as compared to the EOQ model?a) The EPQ model produces a lower total annual cost.b) The maximum inventory level is lower under the EPQ model than under the EOQ model.c) Both models use the same formula to compute annual ordering cost.d) The inventory depletion rate is the same for both models.e) Both models use the same formula to compute annual holding cost.


39. If the costs (S and H) and demands (D) are the same, which of the following is not true with regard to the EPQ model as compared to the EOQ model?a) The EPQ model produces a higher total annual cost.b) The maximum inventory level is lower under the EPQ model than under the EOQ model.c) Both models use the same formula to compute annual ordering cost.d) The inventory depletion rate is the same for both models.e) The two models use different formulas to compute annual holding cost.


40. If the costs (S and H) and demands (D) are the same, which of the following is not true with regard to the EPQ model as compared to the EOQ model?a) The EPQ model produces a lower total annual cost.b) The maximum inventory level is lower under the EPQ model than under the EOQ model.c) The two models use different formulas to compute annual ordering cost.d) The inventory depletion rate is the same for both models.e) The two models use different formulas to compute annual holding cost.


41. If the costs (S and H) and demands (D) are the same, which of the following is not true with regard to the EPQ model as compared to the EOQ model?a) The EPQ model produces a lower total annual cost.b) The maximum inventory level is lower under the EPQ model than under the EOQ model.c) Both models use the same formula to compute annual ordering cost.d) The inventory depletion rate is not the same for both models.e) The two models use different formulas to compute annual holding cost.


42. If the costs (S and H) and demands (D) are the same, which of the following is true with regard to the EPQ model as compared to the EOQ model?a) The lot size under the EPQ model is bigger than under the EOQ model.b) The maximum inventory level is higher under the EPQ model than under the EOQ model.c) The two models use different formulas to compute annual ordering cost.d) The inventory depletion rate is not the same for both models.e) Both models use the same formula to compute annual holding cost.


43. A (an) _________________ inventory record provides an up-to-date inventory balance by recording all inventory transactions as they happen.a) infiniteb) everlastingc) constantd) permanente) perpetual

Ans: Section Ref: Mathematical Models for Determining Order QuantityResponse: See page 437Level: easy

44. In a two-bin system, what does the quantity in the second bin represent?a) the EOQb) the EPQc) demand during replenishment lead timed) the quantity in the first bin

e) safety stock


45. Which of the following statements is not true?a) A two-bin system allows a firm to not have to keep perpetual inventory records.b) Using perpetual inventory records results in different order quantities than using a two-bin system.c) In a two-bin system, units in the second bin are not used until the first bin is empty.d) In a two-bin system, the size of the second bin should equal the demand during replenishment lead time.e) Perpetual inventory records are appropriate when using the EPQ model.


46. What costs are considered in the quantity discount model?a) annual ordering costs + annual holding costsb) annual purchasing costs + annual holding costs + annual ordering costsc) annual ordering costs + annual holding costs + annual shortage costsd. annual purchasing costs + annual ordering costs + annual holding costs + annual shortage costse. ordering costs per order + annual holding costs


47. How can the EPQ model be economically reconciled with just-in-time (JIT) production?a) Reduce annual demand (D).b) Increase annual holding cost per unit (H).c) Decrease ordering cost (S).d) b and ce) The two cannot be reconciled.

Ans: Section Ref: Inventory Record AccuracyLevel: moderate

48. _____________________ is the probability that demand during lead time will not exceed on-hand inventory.a) EOQ service levelb) Fill ratec) Stockout riskd) Order-cycle service levele) Lead time service level

Ans: Section Ref: Determining Safety Stock LevelsLevel: easy

49. The formula for calculating safety stock when an estimate of demand during lead time and its standard deviation are known is?a) SS = lead time * standard deviationb) SS = lead time * zc) SS = z* standard deviationd) SS = z*σdle) SS = σdl* mean

Ans: Section Ref: Determining Safety StockLevel: moderate

50. Which of the following is used in determining the order quantity in the periodic review system?a) reorder pointb) critical ratioc) target inventory leveld) EOQe) EPQ

Ans: Section Ref: Periodic Review SystemLevel: easy

51. Under a periodic review system, enough inventory must be carried to protect against stockout for the ______.a) replenishment lead timeb) review periodc) replenishment lead time plus the review periodd) bottleneck cycle timee) bottleneck cycle time plus the replenishment lead time


52. What are the two major decisions to be made when using the periodic review system?a) the time between orders and the target inventory levelb) the time between orders and the on-hand inventoryc) the target inventory level and the on-hand inventoryd) the time between orders and the order quantitye) the target inventory level and the order quantity

Ans: Section Ref: Periodic Review SystemLevel: hard

53. What are two logical ways in which to base the time between orders in a periodic review system?a) replenishment lead time or EOQ calculationsb) replenishment lead time or bottleneck cycle timec) convenience or replenishment lead timed) convenience or EOQ calculationse) convenience or bottleneck cycle time


54. What does TBO stand for?a) time-based optimizationb) target-based orderingc) target-based optimizationd) time-based orderinge) time between orders


55. In a periodic review system, if you are basing your time between orders on the EOQ, what should be its length in weeks?

a) EOQ / 52b) EOQ / average weekly demandc) average weekly demand / EOQd) 52 / EOQe) (EOQ)(average weekly demand)


56. Consider a periodic review inventory system with a lead time of two weeks and a review period of seven weeks. If the standard deviation of weekly demand is 200 and the desired cycle-service level is 86%, what should the safety stock equal?a) 305b) 516c) 600d) 648e) 1944


57. Consider a periodic review system with a lead time of two weeks and a review period of seven weeks. If the average demand per week is 1000 units and 300 units of safety stock are held, what should the target inventory level be?a) 7300b) 1300c) 9000d) 9300e) 3300


58. Consider a periodic review system. The target inventory level is 1000 units. It is time to review the item, and the on-hand inventory level is 200 units. How many units should be ordered?a) 800b) 1000c) 1200d) the EOQ amounte) the safety stock amount


59. What implies that about 20% of the inventory items will account for about 80% of the inventory value?a) Little’s lawb) Friedman’s lawc) Pablo’s propositiond) Keyne’s lawe) Pareto’s law

Ans: Section Ref: ABC Inventory ClassificationLevel: easy

60. The ranking in ABC inventory analysis is based on what?a) annual dollar usageb) annual demand in unitsc) alphabetical orderd) unit pricee) item number


61. ABC inventory assumes that a company’s inventory is ____ equal and _______________ the same level of ____. a) fully, does demand approximately, costsb) counted, requires control for, profitc) not, does not need, controld) not, does not need, orderinge) not, does not need, sales


62. Which of the following statements is true?a) Periodic counting and cycle counting generally both count every item in stock.

b) Periodic counting and cycle counting generally both do not count every item in stock.c) Periodic counting generally counts every item in stock, whereas annually cycle counting generally does not daily. d) Cycle counting generally counts every item in stock, whereas periodic counting generally does not. e) Periodic counting generally occurs more frequently than cycle counting.

Ans: Section Ref: Inventory Record AccuracyLevel: moderate

63. Suppose that a plant manager uses economic batch sizes for production of a product. Suppose further that the setup cost is $50 per batch, the holding cost per unit per year is $10, the annual demand is 30,000 units, the firm operates (and experiences demand) 300 days per year, and the production rate per day is 1000 units. What will be the maximum inventory level that this product ever reaches?a) 577b) 30c) 519d) 27,000e) 58


64. For product V, a firm has an annual holding cost percentage of 25%, an ordering cost of $70 per order, and annual demand of 1000 units. If they order less than 120 units at a time, the purchase price is $40.00. If they order between 120 and 149 units at a time, the purchase price for all units is $35.00. If they order at least 150 units, then the purchase price for all units is only $30.00. How much should the firm order at one time?a) 150b) 120c) 119d) 126e) 136


65. For product W, a firm has an annual holding cost percentage of 20%, an ordering cost of $110 per order, and annual demand of 15,000 units. The following price schedule applies to the firm’s purchases.

Units Ordered Price Per Unit 1-250 $30.00 251-500 $28.00 501-750 $26.00 ≥ 751 $25.00

What is the optimal order quantity?a) 251b) 501c) 696d) 751e) 812


66. Consider a continuous review inventory system with a lead time of two weeks. If the standard deviation of demand during lead time is 212.132 and the desired order-cycle service level is 86%, what should the safety stock equal?a) 115b) 229c) 182d) 171e) 458


67. A company that makes door knobs has found that the demand for its base model is fairly constant at the rate of 60,000 units per year. Each model of door knob is made using the same equipment, and it costs $120 in lost production and scrap every time that a change is made from producing one model of door knob to another. The cost of materials and labor in each door knob is $10, and the inventory holding cost is 40% of the per-unit cost per year. If the base model door knobs are produced at the rate of 800 per day, how many should be produced in each production run based on 300 working days per year?a) 2683b) 2191c) 3098d) 3394

e) 5367


68. How can both the JIT and EOQ inventory theories effectively be reconciled?a) They can’t. A firm must choose either one or the other.b) by using MRPc) by considering the setup cost as a variable instead of a parameterd) by applying Kanban cards to the EOQ systeme) by assuming a finite production rate

Ans: Section Ref: Justifying Smaller Order Quantities Level: moderate

69. Consider the following all-units quantity discount schedule and calculated EOQs.

Units Ordered Price Per Unit EOQ at that Price 0-999 $36.00 1200 1,000-1,999 $32.00 1450 2,000-4,999 $30.00 2500 5,000-8,000 $26.00 2780 ≥ 8,000 $20.00 6000

Which of the following sets of order quantities is guaranteed to contain the optimal solution?a) {1450, 2500}b) {1450, 999}c) {0, 1000, 2000, 5000, 8000}d) {1200, 1450, 2500, 2780, 6000}e) {2500, 5000, 8000}


70. Consider a firm with a daily demand of 100 units, a production rate per day of 500 units, a setup cost of $200, and an annual holding cost per unit of $10. Suppose that the firm operates 300 days per year. How many units of inventory must their storage area be able to hold?a) 1095b) 1225

c) 876d) 1081e) 980


71. When is the basic EOQ model a special case of the EPQ model?a) The demand per day approaches the demand per year.b) The production rate per day approaches 0.c) The production rate per day approaches infinity.d) The back order cost approaches infinity.e) d/p = 1.

Ans: Section Ref: Inventory Management Across the OrganizationLevel: hard

72. Consider the basic EOQ model. If annual demand doubles, what happens to the total annual setup and holding cost?a) It doubles.b) It increases by 41.42%.c) It remains the same.d) The impact depends upon the value of the setup cost.e) It quadruples (increases by 400%).


73. Which of the following is not an identified reason why manufacturing firms do not use optimal EOQ order quantities?a) do not have known uniform demandb) some suppliers have a minimum order quantityc) how the material is shippedd) what the sales price ise) insufficient storage space

Ans: Section Ref: Why Companies Don’t Always Use the Optimal Order QuantityLevel: moderate

74. Which of the following is not one of the six ways to use inventory?a) seasonal inventoryb) JIT inventoryc) pipeline inventoryd) hedge inventorye) MRO inventory

Ans: Section Ref: How Companies Use Their Inventory Level: hard

75. The inventory objective of customer service is measured by any of the following except _______________.a) weeks of supplyb) percentage of dollar volume shipped on schedulec) idle time due to component and material shortagesd) percentage of orders shipped on schedulee) percentage of line items shipped on schedule

Ans: Section Ref: Relevant Inventory CostsLevel: hard

True/False

1. World-class companies are known for having zero WIP inventory in their facilities.

Ans: Section Ref: How Companies Use Their InventoryLevel: hard

2. Firms that “chase” demand by hiring more workers have less need for anticipation inventory.


3. Anticipation inventory is also called cycle stock.


4. When order quantities are higher, average transportation inventory is higher.

Ans: Section Ref: How Companies Use Their InventoryLevel: hard

5. A long production run implies a large setup cost per unit.


6. Inventory turnover is the reciprocal of weeks of supply.


7. Inventory turnover is the reciprocal of years of supply.

Ans: Section Ref: Objectives of Inventory ManagementLevel: hard

8. In general, if car company A has a smaller weeks of supply than car company B does, then car company A is using its inventory more effectively.

Ans: Section Ref: Objectives of Inventory ManagementLevel: hard

9. Any inventory turnover less than 4 is considered to be poor performance.


10. Even if the company already owns the storage space and incurs no additional expense for storing the inventory, we still include the cost of that storage space as part of holding costs.


11. Whenever demand exceeds supply, the company experiences a lost sale.


12. Even though loss of customer goodwill is an intangible cost, it is considered a type of shortage cost.


13. Lot-for-lot ordering is commonly used in materials requirements planning systems.


14. A min-max inventory system implies a larger average inventory than a periodic review inventory system.


15. In the basic EOQ model, the maximum inventory level equals the economic order quantity.


16. The reorder point is used in determining the order quantity in the periodic review system.


17. Under a periodic review system, enough inventory must be carried to protect against stockout for the replenishment lead time plus the review period.


18. The two major decisions to be made when using the periodic review system are the target inventory level and the order quantity.


19. In a periodic review system, the time between orders should never be based on the EOQ calculation.


20. In general, companies use periodic review systems for items that are expensive and/or critical to the company.

Ans:

Section Ref: The Single-Period Inventory ModelLevel: moderate

21. The single-period inventory model objective is to balance the sale of a unit with the cost incurred for each unit sold.

Ans: Section Ref: The Single-Period Inventory ModelLevel: hard

22. Inventory record accuracy is especially critical for master production schedule users.

Ans: Section Ref: Inventory Management Within OM: How it All Fits TogetherLevel: easy

23. Manufacturing’s cost efficiency is not affected by inventory decisions.

Ans: Section Ref: Inventory Management Across the OrganizationLevel: moderate

24. Inventory management is a key component of effective supply chain performance.

Ans: Section Ref: The Supply Chain LinkLevel: easy

Essay

1. What does WIP stand for?


2. What are items used in support of manufacturing and maintenance called?


3. What inventory function protects against supply shortages?

Ans: Section Ref: Objectives of Inventory ManagementLevel: easy

4. What is another name for speculative inventory?


5. What is the formula for inventory turnover?


6. What are the three major categories of holding costs?


7. When a company experiences a stockout, what are the two possibilities?

Ans: Section Ref: Determining Order Quantities Level: moderate

8. Discuss some of the factors on how much safety stock will be kept on hand.

Ans: Section Ref: Determining Safety Stock LevelsLevel: moderate

9. Describe advantages and disadvantages of periodic review systems.

Ans:Level: hard

10. Define periodic review system.

Ans:

11. List some advantages of small order quantities.

Ans:Section Ref: Justifying Smaller Order QuantitiesLevel: moderate

12. What are the characteristics of a single-period inventory model?

Ans: Section Ref: The Single-Period Inventory ModelLevel: hard

Problems

1. If a firm has an annual demand of 50,000 units and average transit time (in days) is 15, what is the average transportation inventory?


2. Suppose that the annual cost of goods sold is $4,000,000, annual sales amount to $6,000,000, and average inventory in dollars equals $2,000,000. What is the inventory turnover?


3. What is the target inventory if Frank’s dairy inventory review is every 7 days and they consume an average of 15 cases of milk cartons every day? Frank’s new milk carton supplier says they can deliver an order every 5 days. While Frank’s material coordinator says they should order 45 cases at a time, what is their target inventory level if they do not want to maintain a safety stock?


4. Tom’s tire shop annual demand is 1,460 tires and they are capable of producing 2,920 tires per year per shift. Tom’s production manager plans to order 12 tires at a time. What is the maximum inventory level?


5. Suppose that the annual EOQ cost (ordering plus inventory holding) for a product stored in a warehouse is $10,000. What would the total company EOQ cost be if the firm decided to equally allocate the demand among five warehouses instead of one?


6. Consider a firm with an annual demand of 6000 units, a setup cost of $20 per order, and an annual holding cost per unit of $2. If the company purchases 1200 units every time that they order, what are the total annual setup and holding costs?


7. Troy Enterprises uses a continuous review inventory control system. The firm operates 50 weeks per year, with an annual demand of 50,000 units, an ordering cost of $35 per order, a holding cost of $1 per unit per year, a lead time of 3 weeks, and a standard deviation of demand during lead time equal to 216.51 units.(a) How many units should be ordered at a time (rounded to the nearest unit)?(b) What is the reorder point if a 94% order-cycle service level is desired?


8. Jefferson Products offers the following all-units quantity discount schedule for its 4 feet by 8 feet sheets of quality plywood.

Order Size Price 1-9 sheets $2510-49 sheets $2350-99 sheets $21100 sheets or more $18

Washington Home Furnishings orders plywood from Jefferson Products. The firm has an ordering cost of $50, an annual inventory holding cost percentage of 20%, and an annual demand of 250 sheets. What should the order size be every time that an order is placed?


9. For a continuous review policy, 92% order-cycle service level, and standard deviation of replenishment lead time of 189.31 units, how many units of safety stock should be held?

Ans:Section Ref: Determining Safety Stock LevelsLevel: moderate

10. For a continuous review policy, if the standard deviation of replenishment lead time is 171.58 units and 266 units of safety stock are held, what is the implied order-cycle service level?

Ans:

Section Ref: Determining Safety Stock LevelsLevel: hard

11. Consider a periodic review system with a lead time of 2 weeks, a review period of 4 weeks, average weekly demand of 100 units, standard deviation of weekly demand of 20 units, and a desired cycle-service level of 90%. (a) What is the target inventory level? (b) If it is time to review the item and 10 units are on hand, how many units should be ordered?


12. Suppose that your company sells a product for which the annual demand is 10,000 units. Holding costs are $1.00 per unit per year, and setup costs are $200 per order(a) What is the economic order quantity for your product?(b) What is the total annual cost of ordering and holding?(c) Now suppose that instead of purchasing the product, you decide to produce it yourself. Assume the same demand and cost structure as above. In addition, your average production rate would be 200 units per day, and you have 200 working days per year. What batch size should you use?(d) Given your answer to part c, now what is the total annual cost of ordering and holding?(e) What conclusions can you make regarding the impact of production rate on the holding and ordering costs?

Ans:

Short Answer

1. What is ABC Widget Company's inventory turns if it sells goods whose cost is $7,350,000 and its average inventory is $1,225,000? ________________________

Ans: Section Ref: Objectives of Inventory ManagementDifficulty: moderate

2. The text discusses that in the service industry it is not uncommon for retailers not to be able to ______ specific merchandise.

Ans: Section Ref: Inventory in Service OrganizationsDifficulty: easy

3. The inventory method that places a maximum order when the on-hand inventory falls below a predetermined minimum level is called the ____________

Ans: Section Ref: Determining Order QuantitiesDifficulty: moderate

4. The reorder point for a product that is delivered two days after an order is placed and whose average daily demand is 100 is ________________________

Ans: Section Ref: Mathematical Models for Determining Order Quantity Difficulty: easy

5. What is the total annual inventory cost (using basic EOQ )of a product whose annual demand is 12,000 units, daily demand is 40, daily production is 60, order cost is $80, and holding cost is $6? ________________________ Round to the nearest dollar.

AnsSection Ref: Mathematical Models for Determining Order Quantity Difficulty: hard

6. What is the basic EOQ for a product whose annual demand is 48000 with setup cost $15 and holding cost $5? ________________________

Ans: Section Ref: Mathematical Models for Determining Order Quantity Difficulty: hard

7. What is the maximum inventory of a product that is produce in batches of 1000 when 500 units are produced per day and 250 units are sold per day? ________________________

Ans: Section Ref: Mathematical Models for Determining Order Quantity

Difficulty: hard

8. What is the EPQ for a product whose annual demand is 48,000 with setup cost = $15, holding cost = $6, daily demand 1,250, and daily production = 1500? ________________________


9. What is the total annual inventory cost (using basic EPQ )of a product whose annual demand is 15,000 units, daily demand is 40, daily production is 60, order cost is $80, and holding cost is $6? ________________________ Round to the nearest dollar.


10. How much safety stock should an organization hold if it wants to provide a 95% order-cycle service level for an item whose annual demand is 12000 units with standard deviation of 300 units per year and 30 units during lead time. The organization uses 1.96 standard deviations for this purpose. ________________________

Ans: Section Ref: Why Companies Don't Always Use the Optimal Order Quantity Difficulty: moderate

File: ch13, Chapter 13: Sales and Operations Planning

Multiple Choice

1. A company’s plan is a statement of the resources available to the operations group during the next 6 to 18 months.a) aggregateb) masterc) strategic

d) projecte) tactical

Ans: Section Ref: The Role of Aggregate PlanningLevel: easy

2. Sales and operations planning integrates the medium-range functional plans for all except which of the following?a) marketing b) operationsc) human resourcesd) engineeringe) finance

Ans: Section Ref: The Role of Aggregate PlanningLevel: moderate

3. All except which of the following are detailed by the aggregate plan?a) purchases of components from vendorsb) the aggregate production ratec) subcontractingd) the amount of overtime authorizede) back ordering of customer orders

Ans: Section Ref: The Role of Aggregate PlanningLevel: hard

4. The Marketing Plan identifies all but which of the following: a) targeted market segmentsb) necessary market sharec) qualityd) flexibilitye) resources


5. The Production Plan is usually updated and reevaluated:

a) weeklyb) monthlyc) quarterlyd) semi-annuallye) annually


6. The goal of developing an aggregate plan using composite product information is:a) group like things togetherb) reduce the number of calculationsc) keep it simple for senior managementd) help marketing plane) provide detail reports


7. The master production schedule is reviewed:a) weeklyb) monthlyc) quarterlyd) semi-annuallye) annually


8. The master production schedule is typically stated as:a) resource requirementsb) sales quotasc) work-in-processd) specific finished goodse) composite products


9. The next level down in the planning process after development of the aggregate plan is the _____________.a) materials requirements planb) engineering planc) rough-cut capacity pland) master production schedulee) purchasing plan


10. What type of aggregate plan maintains a constant workforce and produces the same amount of product in each time period?a) uniformb) levelc) chased) mixede) steady


11. For the level aggregate plan, fluctuations in demand are absorbed by ____________________________.a) inventory and subcontractingb) back orders and price changesc) inventory and back ordersd) price changes and subcontractinge) subcontracting and back orders


12. A disadvantage of the level aggregate plan is ___________________________.a) workforce instabilityb) excess hiringc) layoffsd) possible poor customer service from extensive use of backorderse) excessive purchase of additional tools and equipment


13. In level production plan equipment capacity is set equal to a) number of trained and qualified operatorsb) average demandc) mean demandd) maximum number of equipment minus 10% contingency reservese) peak demand

Ans: Section Ref: Types of Aggregate PlansLevel: easy

14. Raissa’s Pizza parlor has an average monthly demand of 1200 pizzas. Statistically, each employee can produce 10 pizzas per hour. The parlor is open 20 days each month. How many employees must they employee to meet the demand using a level aggregate plan?a) 4b) 5c) 6d) 7e) 8


15. Using a level production plan how many oil changes must each employee be capable of to meet a weekly demand of 1400 oil changes in a five day work week if there are 4 employees?a) 40b) 50c) 60d) 70e) 80

Ans: Section Ref: Types of Aggregate PlansLevel: moderate

16. . What type of aggregate plan sets labor and equipment capacity to satisfy demand each period?a) uniformb) levelc) chased) mixede) steady


17. An advantage of the chase aggregate plan is ____________________________________________.a) workforce instabilityb) excess hiringc) space requirementsd) minimizes finished good holding costse) excessive purchase of additional tools and equipment


18. What type of aggregate plan keeps a stable workforce and uses backorders to compensate for excess demand needs?a) uniformb) levelc) chased) hybride) steady


19. Using a chase strategy with the following 4 month demand and starting employee count, how many employees will be fired and how many will be hired if each employee can fix 4 engines a day?November = 25 Starting Employee Count = 6December = 10January = 15February = 12a) 2, 2

b) 2, 4c) 3, 6d) 3, 8 e) 4. 4


20. A proactive marketing approach in aggregate planning involves _________________________________.a) varying inventory levelsb) modifying work force sizec) back ordersd) shifting the demand patterns to level demand fluctuationse) varying overtime rate

Ans: Section Ref: Aggregate Planning OptionsLevel: moderate

21. Which of the following is an advantage of producing at average demand levels?a) inventory fluctuatesb) allows for a lower investment in capacityc) minimizes space needs for inventoryd) minimizes finished good holding costse) makes it difficult to calculate average production


22. Companies that use back orders are asking their customers to __________________________________.a) wait for delivery of the productb) resubmit their ordersc) check back to see what their last order wasd) receive the product immediately and pay for it latere) send back their last order


23. A difficulty with back orders, even when the customer waits, can be ______________________________.a) finding space to store the productb) extra administrative costsc) added inventory holding costsd) possible deterioration of the producte) that other customers will want back orders also


24. Shifting demand makes sense when the company has _______________________________________.a) lots of space for inventoryb) low inventory carrying costsc) equipment that is highly flexible with respect to production volume changesd) high fixed costs and low variable costse) excess capacity

Ans: Section Ref: Aggregate Planning OptionsLevel: hard

25. What is the most common method for increasing output capacity?a) outsourcingb) hiring tempsc) overtimed) back orderse) purchasing more machines


26. Which of the following is not typical of overtime?a) 50% wage premiumb) workers’ output rate increasesc) productivity decreasesd) quality may decreasee) cost of labor per unit increases


27. One disadvantage of using undertime isa) employee hourly rate decreasesb) employee hourly rate increasesc) product labor cost decreasesd) product labor cost increasese) product labor cost is constant


28. How does subcontracting differ from strategic outsourcing?a) provides additional output capacity during periods of high demandb) it is a strategic decisionc) cost per unit is less for subcontracting d) used when a company has no in-house capabilitye) it defines the company’s core business


29. Which of the following is not true for firing permanent employees?a) Deciding who will go and who will stay is difficult.b) Keeping senior employees is always the least cost effective approach.c) It can involve severance pay.d) Valuable knowledge may leave with the employee.e) It can harm morale.


30. In evaluating the current situation, the is the percentage of normal capacity at which the company is currently operating.a) point of departureb) amount of subcontracting neededc) magnitude of the change

d) duration of the changee) rated capacity

Ans: Section Ref: Evaluating the Current SituationLevel: easy

31. When you are considering different production planning approaches, the magnitude of change:a) is not important from an aggregate planning perspective.b) is important from an aggregate planning perspective.c) drives the point of departure.d) reduces the point of departure.e) modifies the duration of change.

Ans: Section Ref: Evaluating the Current Situation

32. The comparison of aggregate plans is difficult when they produce different quantities and thus _________.a) have different ending inventoriesb) have different staffing levelsc) have different amounts of overtimed) have different amounts of subcontractinge) have different revenues

Ans: Section Ref: Developing the Aggregate Plan Level: moderate

33 The first step in developing the production plan is:a) identification of the point of departure.b) identification of the magnitude of change.c) identification of the duration of changed) development of the target aggregate plan rate.e) selection of the aggregate plan that matches your company’s objectives.

Ans: Section Ref: Developing the Aggregate PlanDifficulty: moderate

34. Evaluating an aggregate plan in terms of employment stability is using what perspective?a) costb) customer servicec) qualityd) operationse) human resources


35. Evaluating an aggregate plan in terms of inventory levels is using what perspective?a) costb) customer servicec) qualityd) operationse) human resources

Ans: Section Ref: Developing the Aggregate Plan Level: hard

36. Evaluating an aggregate plan in terms of number of back orders is using what perspective?a) costb) customer servicec) qualityd) operationse) human resources


37. Which of the following is not an input to the aggregate planning process?a) beginning workforceb) demand forecastc) beginning inventoryd) master production schedulee) overtime available per period

Ans:

Section Ref: Developing the Aggregate Plan Level: moderate

38. Once you implement a new aggregate plan you must then:a) begin the planning process again.b) evaluate the plan’s performance in terms of cost.c) evaluate the plan’s performance in terms of customer service.d) evaluate the plan’s performance in terms of human resources.e) b - d

Ans: Section Ref: Developing the Aggregate PlanLevel: easy

39. When evaluating the production plan you should use all but which of the following:a) total/unit costb) inventory levelsc) number of back ordersd) effect on marketing plane) effect on workforces

Ans: Section Ref: Developing the Aggregate PlanLevel: moderate

40. For the following data, what is the cost of meeting the identified demand with a level production plan?

Cost Data Demand Labor cost Jan 400 Regular 20 $/hr Feb 250

Over Time 30 $/hr Mar 275

Hiring 250 $/employeeApril 325

Firing 400 $/employee May 350

Inventory Holding 10 $/unit/period

Shortage 15 $/unit/period material 45 $/unit/periodCapacity

Workforcebeginning 15 employees

Inventory initial 100 units

Manufacturing rate 8 hrs/unit

Regular time 160 hrs/period/employee Over time available 40 hrs/period/employee

a) $115,250b) $117,250c) $263800 d) $309550e) $311300

Ans: Section Ref: Aggregate Plans for Companies With Tangible ProductsDifficulty: hard

41. For the following data, what is the cost of meeting the identified demand with a chase production plan?

Cost Data Demand Labor cost Jan 400 Regular 20 $/hr Feb 250

Over Time 30 $/hr Mar 275

Hiring 250 $/employeeApril 325

Firing 400 $/employee May 350

Inventory Holding 10 $/unit/period

Shortage 15 $/unit/period material 45 $/unit/periodCapacity

Workforcebeginning 15 employees

Inventory initial 100 units

Manufacturing rate 8 hrs/unit

Regular time 160 hrs/period/employee Over time available 40 hrs/period/employee

a) $115,250b) $117,250c) $263800 d) $309550e) $311300

Ans:

Section Ref: Aggregate Plans for Companies With Tangible ProductsDifficulty: hard

42. When a company’s product is nontangible (a service), which of the following is no longer a viable option?a) hiring permanent employeesb) subcontractingc) inventoryd) working overtimee) increasing normal capacity

Ans: Section Ref: Aggregate Plans for Service Companies with Nontangible ProductsLevel: easy

43. You are developing a nontangible production plan. What is the total cost, using a chase production plan, for the following data if overtime is NOT allowed?Labor Month # calls Labor Cost March 2000 regular 16 $/hr April 1850 over time 24 $/hr May 1950 hiring 125 $/employee June 1700 firing 200 $/employeeCapacity employee initial 2 employee

call duration

0.25 hrs/call

regular time 160

hr/time period/employee

over time 40hr/time period/employee

a) $35840b) $36215c) $36615d) $42240e) $42365

Ans: Section Ref: Aggregate Plans for Service Companies with Nontangible ProductsLevel: hard

44. You are developing a nontangible production plan. What is the total cost, using a chase production plan, for the following data if overtime is allowed? Due to union agreements, if you allow overtime the employees will work a 12 hour day for the full period. Labor Month # calls Labor Cost March 2000 regular 16 $/hr April 1850 over time 24 $/hr May 1950 hiring 125 $/employee June 1700 firing 200 $/employeeCapacity employee initial 2 employee

call duration

0.25 hrs/call

regular time 160



a) $35840b) $36215c) $36615d) $42240e) $42365

Ans: Section Ref: Aggregate Plans for Service Companies with Nontangible ProductsLevel: hard

45. If you allocate scarce resources to customers at prices that maximize the yield to the company you are using:a) level aggregate planningb) chase production planningc) price fixingd) yield managemente) price compression


46. Which of the following is not typically indicated as part of the resources authorized in an aggregate plan?a) number of machines to be usedb) size of the workforcec) authorized level of overtime and undertimed) number of units to be subcontractede) level of inventory held


47. Which of the following is not a primary objective of the master production schedule?a) minimize shipping costsb) achieve the desired customer service level.c) make the best use of the company’s resources: material, labor, and equipment.d) ensure that the inventory investment is at the appropriate levele) none of the above


48. Which of the following is not a way to increase capacity?a) Change depreciation methods.b) Use overtime.c) Employ temporary workers.d) Subcontract.e) Use alternative manufacturing processes.


49. Accounting uses the aggregate plan for all the following except:a) projecting cash flowsb) making short term loansc) calculating the capital needed to support operationsd) projecting earningse) benchmarking operation effectiveness

Ans: Section Ref: Aggregate Planning Across the Organization

Level: easy

50. Manufacturing learns from the aggregate plan all except:a) whom to employ b) how much work to subcontractc) how much inventory can be heldd) when to add/subtract employeese) when to use overtime

Ans: Section Ref: Aggregate Planning Across the OrganizationLevel: easy

51. ___ Naturally Fresh is a salad and vegetable growing company based in the United Kingdom.a) H’sb) T’sc) G’sd) B’se) C’s


52. Which of the following is not typically contained in the marketing plan?a) product designb) target marketsc) new productsd) profit margine) competitive focus


53. The master production schedule is shared:a) only internally.b) only with management.c) only to marketing and engineering.d) to all members of the executive team, exclusively.e) to all members of the supply chain.

Ans: Section Ref: The Supply Chain LinkLevel: easy

True/False

1. The aggregate plan is usually updated and reevaluated monthly by the operations group.


2. The chase aggregate plan maintains a constant workforce and produces the same amount of product in each time period.


3. An advantage of the chase aggregate plan is that it minimizes finished good holding costs.


4. An advantage of producing at average demand levels is that it allows for a lower investment in capacity.


5. Shifting demand makes sense when the company has high fixed costs and low variable costs.


6. Overtime is the most common method for increasing output capacity.


7. In evaluating the current situation, the point of departure is the size of the change that is needed.

Ans: Section Ref: Aggregate Planning OptionsLevel: easy

8. The comparison of aggregate plans is difficult when they produce different quantities and have different ending inventories.

Ans: Section Ref: Evaluating the Current Situation Level: moderate

9. When a company’s product is nontangible (a service), inventory is no longer a viable option.

Ans: Section Ref: Aggregate Plans for Service Companies with Nontangible Products Level: moderate

10. A master production schedule is more specific (tactical) than an aggregate plan.

Ans: Section Ref: Aggregate Plans for Service Companies with Nontangible ProductsLevel: moderate

11. The master production schedule is a statement of upcoming demand.


12. A primary objective of the master production schedule is to achieve the desired customer service level.


13 Sales and operations planning can be used in a variety of business environments.

Ans: Section . The Role of Aggregate PlanningLevel: easy

14. The purpose of the aggregate plan is to develop production rates and authorize resources that accommodate the engineering plan.Ans: Section Ref: The Role of Aggregate Planning Level: moderate

15. The financial plan indicates the sources and uses of funds, expected cash flows, anticipated profits and projected budgets.


16. There are a limited number of options that are applicable to a hybrid aggregate plan. Ans: Section Ref: Types of Aggregate PlansLevel: moderate

17. Demand-based options include two reactive options and two proactive options.

Ans: Section Ref: Aggregate Planning OptionsLevel: easy

18. During overtime worker productivity increases due to the increase salary received


19. Nontangible capacity can be added by the use of an on-call labor pool.

Ans: Section Ref: Aggregate Planning Within OM: How It All Fits Together Level: moderate

20. Aggregate planning, master production scheduling, and rough-cut capacity affect a select area of the organization.

Ans: Section Ref: Aggregate Planning Across the Organization Level: moderate

Essay

1. What are the characteristics of the marketing plan?

Ans:

2. What are the difficulties associated with back orders?

Ans:

3. What are the capacity-based options in aggregate planning?

Ans:

4. What are the characteristics of overtime?

Ans:

5. What are the characteristics of undertime?

Ans:

6. What are the disadvantages for hiring permanent employees?

Ans:

7. What are the disadvantages for firing permanent employees?

Ans:

8. What are the steps involved in developing the aggregate plan?

Ans:

9. What are the inputs to the aggregate planning process?

Ans:

10. Discuss some of the human resource concerns you should evaluate the production plan.

Ans:

11. Briefly discuss a negative outcome of using a level production plan in a nontangible (service) organization.

Ans:

Problems

Input data for problems 1-4 follows:

Cost dataRegular time labor cost per hour $10Overtime time labor cost per hour $15Subcontracting cost per unit (labor only) $80Back order cost per unit per period $20Inventory holding cost per unit per period $10Hiring cost per employee $500Firing cost per employee $400

Capacity dataBeginning workforce 40 employeesBeginning inventory 0 unitsBeginning back orders 0 unitsProduction standard per unit (hours) 2 hours of labor per unitRegular time available per period (hours) 160 hours per period per

employeeOvertime time available per period (hours) 30 hours per period per

employee

Demand dataPeriod 1 3,920 units Period 5 3,800 unitsPeriod 2 2,480 units Period 6 4,340 unitsPeriod 3 2,200 units Period 7 4,820 unitsPeriod 4 3,280 units Period 8 4,600 units

1. Develop a level aggregate plan using inventory and back orders (data given above).(a) What is the production rate per period?(b) No overtime is to be used. What is the required workforce level and how many

workers are hired or fired at the beginning of period 1?(c) What is the maximum ending inventory and when does it occur?(d) What is the maximum amount of back orders and when does it occur?(e) What is the total cost?(f) What is the cost per unit?

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2. Develop a chase aggregate plan without inventory and back orders. Do no hiring or firing. When demand exceeds regular production, use overtime up to its maximum

and then subcontracting. When demand is less than regular production, use undertime (data given above).(a) What are the total hours of overtime per employee for the plan?(b) How many total units are produced using subcontracting?(c) What are the total hours of undertime per employee for the plan?(d) What is the total cost?(e) What is the cost per unit?

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3. Develop a chase aggregate plan without inventory and back orders. Use no undertime or subcontracting. When demand exceeds regular plus maximum overtime production, hire enough employees to meet demand, working as much overtime as possible. When demand is less than regular time production, fire just enough workers to avoid undertime (you may then use a minimal amount of overtime to get production back up to demand) (data given above).(a) What is the workforce at the end of the last period? How many total were hired? How many total were fired?(b) How many total units were produced using overtime?(c) What is the total cost?(d) What is the cost per unit?

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4. Develop a hybrid aggregate plan with inventory, but no back orders. Also, use no undertime and no subcontracting. Also use no firing, since the company is projecting a 20% annual growth rate per year over the next several years. When demand minus opening inventory exceeds regular plus maximum overtime production, hire enough employees to meet demand, working as much overtime as possible. When demand is less than regular time production, work no overtime and add to inventory (data given above).(a) What is the workforce at the end of the last period? How many total were hired?(b) How many total units were produced using overtime?(c) What is the maximum ending inventory and when does it occur?(d) What is the total cost?(e) What is the cost per unit?

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5. Sam’s dry cleaning store has 3 employees who fold the clothes. Each employee can fold 45 shirts every hour. Assuming a level aggregate program how many employees will Sam need if to meet a demand of 1600 shirts per day if everyone works an 8 hour shift?a) 3

b) 5c) 7d) 12e) 35


6. If Frank has 200 chickens in stock and he forecasts the following monthly demands. Using a level production plan how many chickens will Frank need to supply each month to meet the demand?January = 300 February =250March = 180April = 175May =200June = 240July = 220

a) 175b) 195c) 223d) 232e) 1565


7. Given the following calculate (a) cost using a level production plan, (b) cost using a chase aggregate plan, and identify the lowest cost option. In the level production plan backorders are allowed but for each unfilled order it costs the company $10/unit. The employees work an 8 hour day and overtime is not allowed

Demand Period 1 240 Initial Employees 6Period 2 235 Capacity/employee 40

Period 3 265Hourly cost/employee $18

Period 4 220 Inventory Holding $20 Period 5 220 Shortage Cost $10 Period 6 260 Hiring Cost $230

Firing Cost $190

a) A=5834, B = 5472, C = levelb) A=5472, B = 5834, C = levelc) A=5834, B = 5472, C = chased) A=5472, B = 5834, C = chasee) A =5834, B = 5472, C = either

Ans: Level Production Plan

Production Over/short Cumulative Inventory CostEmployee

Cost240 0 0 $0 $864 240 5 5 $50 $864 240 -25 -20 ($200) $864 240 20 0 0 $864 240 20 20 $400 $864 240 -20 0 0 $864

Total $

650.00 $5,184

Chase Production Plan

Demand Production Hire FireTotal

EmployeePeriod 1 240 6 0 0 6Period 2 235 5.875 0 0 6Period 3 265 6.625 1 0 7Period 4 220 5.5 0 1 6Period 5 220 5.5 0 0 6Period 6 260 6.5 1 0 7

Total 2 1 38Cost $460 $190 $5,472

Section Ref: Aggregate Plans For Companies With Tangible ProductsLevel: moderate

Using the following for questions 5, 6, & 7Labor #units

Labor Cost Period 1 200

regular 24 $/hrPeriod 2 150

over time 32 $/hrPeriod 3 185

hiring 125 $/employeePeriod 4 210

firing 200 $/employeeCapacity

employee initial 2 employee

fabrication 3.6 hrs/unit

regular time 160



8. Calculate the total cost to meet the demand using a chase production plan without using overtime.a) $72,960b) $73,460c) $73,660d) $76,800e) $77,175

Ans: Section Ref: Aggregate Plans for Service Companies With Nontangible ProductsLevel: moderate

9. Calculate the total cost to meet the demand using a chase production plan with overtime. Once overtime is approved the workers are on the job 12 hours each day for the full period.a) $72,960b) $73,460c) $73,660d) $76,800e) $77,175

Ans: Section Ref: Aggregate Plans for Service Companies With Nontangible ProductsLevel: moderate

10. Calculate the total cost to meet the demand using a level production plan with overtime. Once overtime is approved the workers are on the job 12 hours each day for the full period. Each unit that cannot be completed with a level product plan costs the firm $150. Assume that the employees can only finish a whole unit and round up/down accordingly.a) $72,960b) $73,460c) $75,870d) $76,800e) $77,175

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Section Ref: Aggregate Plans for Service Companies With Nontangible ProductsLevel: moderate

Short Answer

1. If the marketing plan does not meet the strategic business objectives, top management and marketing revise either the ______ or the _______ _____.

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2. The master production schedule is a(n) ______ production schedule and is typically stated as _______ finished goods.

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3. ________________________ is an important advantage of level production plans.

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4. An important advantage of chase aggregate plans is that they ________________________

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5. Subcontracting has unattractive ________________________ effects.

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6. At CCM _____ and _____ _______ is the basis for all planning, manufacturing, and supply chain activities.

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7. In the level production plan you do not add ______, _____ or ______ to meet peak demand.

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8. In proactive option demand-based aggregate planning, marketing tries to _____ the _____ pattern.

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9. Subcontracting provides _____ output capacity during periods of ____ ___.

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10. In a level production plan, if you do not allow backorders, you will need to ensure the _____ is sufficient to meet the average demand.

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File: ch14, Chapter 14: Materials Planning

Multiple Choice

1. What does ERP stand for?a) educational resources planningb) enterprise resource planningc) enterprise reliability productiond) end routing proceduree) easy resource planning

Ans:Section Ref: Enterprise Resource PlanningLevel: easy

2. ERP is software designed for _____ and ____ business processes.

a) calculating, budgetingb) deleting, changingc) organizing, managingd) organizing, budgetinge) selecting, managing


3. What is an information system designed to integrate internal and external members of the supply chain?a) material requirements planningb) master production schedulec) capacity requirements planningd) aggregate planninge) enterprise resource planning


4. Owens Corning reported savings of ______________ by using ERP.a) $6 millionb) $16 millionc) $65 milliond) $600 millione) $660 million

Ans:Section Ref: Enterprise Resource PlanningLevel: hard

5. Which of the following is not one of the four basic categories of ERP modules?a) finance and accountingb) information systemsc) sales and marketingd) production and materials managemente) human resources

Ans:Section Ref: Enterprise Resource PlanningLevel: moderate

6. Which ERP module includes investment management?a) finance and accountingb) information systemsc) sales and marketingd) production and materials managemente) human resources


7. Which ERP module handles billing?a) finance and accountingb) information systemsc) sales and marketingd) production and materials managemente) human resources


8. Which ERP module includes work-flow analysis?a) finance and accountingb) information systemsc) sales and marketingd) production and materials managemente) human resources


9. What proportion of U.S. companies with greater than $1 billion in annual revenues has implemented ERP?a) 10%b) 20%c) 40%d) 75%e) 95%

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Section Ref: Enterprise Resource PlanningLevel: hard

10. The ERP system provides a single interface:a) to operations only.b) to operations and inventory control only.c) to external members of the supply chain as well.d) to the company management structure only.e) to customers only.

Ans:Section Ref: The Evolution of ERPLevel: moderate

11. Second generation ERP systems addressed the first generation deficiency of:a) inadequate statisticsb) interdepartmental communicationsc) integrated modulesd) continuous planning capabilitiese) forecasting capabilities


12. ERP systems provide _____ and _____ benefits.a) tangible, HRb) intangible, marketingc) marketing, operationd) tangible, intangiblee) CEO, CFO

Ans:Section Ref: The Benefits of ERPLevel: moderate

13. Second-generation ERP systems are referred to as ________________________ software.a) scheduling b) MRPc) inventory managementd) MPS

e) supply chain management


14. _______________ MRP is an MRP system that includes production planning, master production scheduling, and capacity requirements planning.a) Fully-integratedb) Closed-loopc) Open-loopd) Wide-rangee) Enterprise

Ans:Section Ref: The Cost of ERP SystemsLevel: easy

15. The most critical factors for successful EPR implementation are ______ and ______ ______ ______a) leadership, top management commitmentb) leadership, technological transfer managementc) management, technological transfer managementd) funding, top management commitmente) leadership, detailed technical specifications

Ans:Section Ref: The Cost of ERP SystemsLevel: moderate

16. What information system enables companies to have the right material in the right amounts available at the right time?a) manufacturing resources planningb) multifunctional requirements planningc) material requirements planningd) material relationships planninge) manufacturing requirements planning


17. Companies use to check that enough work is scheduled for operations and that the amount of work scheduled is feasible.a) capacity managementb) closed-loop requirements planningc) cut requirements planning d) capacity resources planninge) capacity requirements planning


18. Independent demand is the demand for ________________________________.a) finished productsb) subassembliesc) partsd) raw materialse) components

Ans:Section Ref: Material Planning SystemsLevel: easy

19. In the mid-1970’s, MRPII, was developed. One of its major components is:a) leadershipb) inventory managementc) operations executiond) strategic managemente) marketing

Ans:Section Ref: Material Planning SystemsLevel: moderate

20. Which of the following most closely describes dependent demand?a) demand generated by suppliersb) demand that is seasonalc) demand estimates using regression analysisd) demand derived from finished productse) demand for repair parts


21. A computer-based information system designed to manage dependent demand inventory is _____________.a) manufacturing resources planningb) multifunctional requirements planningc) material relationships planningd) material requirements planninge) manufacturing requirements planning


22. The file lists the materials needed to build a product.a) master production scheduleb) bill of materialc) inventory recordsd) material needse) build structure


23. CRP systems are used to check that the amount of work: a) meets the MRP directive.b) meets the ERP directive.c) will make a profit.d) is feasible.e) meets OSHA requirements.

Ans:Section Ref: An Overview of MRPLevel: easy

24. The details the company’s planned products, quantity, and the schedule used by marketing when promising deliveries.a) master production scheduleb) bill of materialc) inventory recordsd) material product salese) promised deliveries

Ans:Section Ref: Types of DemandLevel: moderate

25. The is (are) checked for the materials on hand and those that need to be procured.a) master production scheduleb) bill of materialc) inventory recordsd) material inventoriese) promised deliveries

Ans:Section Ref: Objectives of MRPLevel: moderate

26. MRP develops a that shows future demand, supply and inventories by time period.a) DSI reportb) snapshot forecastc) requirements pland) material movements schedulee) time-phased schedule


27. In MRP, the starting points for each part and material needed to accomplish the master production schedule are the ________________________.a) net requirementsb) gross requirementsc) planned releasesd) scheduled receiptse) planned receipts


28. Which of the following is not true concerning replenishment orders?

a) They are generated when there is not enough inventory.b) MRP specifies when to place the order.c) The order may be for material from a supplier.d) They are orders for the final product.e) The order may be for material from the manufacturing floor.


29. Which of the following is an objective of MRP?a) Keep priorities updated and valid.b) Keep track of material movements on the shop floor.c) Provide information for expediting orders.d) Allocate scarce parts to products.e) Provide information for activity based costing.


30. The authorized MPS is a statement of _____________________________________________________.a) manufacturing orders that have been authorized for release to the shop floorb) which workers are authorized to work on which machinesc) what the company expects to build and when it expects to build itd) authorized payments to vendorse) where different end products are authorized to be manufactured


31. The quantity of the replenishment order is based on the __________________________________.a) capacity availableb) size of the itemc) number of workers availabled) inventory space availablee) lot sizing rule used


32. Information that may be contained in the inventory records file includes all except which of the following?a) part numbersb) run times for manufactured partsc) part namesd) lead timese) safety stock requirements

Ans:Section Ref: Objectives of MRP Level: moderate

33. The time interval necessary to either manufacture or purchase an item is its ______________________.a) time fenceb) lead timec) safety timed) time buckete) receipt time


34. Information in the inventory records file that can change with inventory transactions includes the ________.a) part numberb) lot size rulec) projected inventory leveld) lead timee) safety stock requirement

Ans:Section Ref: Objectives of MRP Level: hard

35. An error in replenishment ordering can result from a(n) ____________________________________.a) inaccuracy in the inventory records fileb) breakdown of equipmentc) expediting of an order

d) circumstance of working excessive overtimee) error in accounts receivables

Ans:Section Ref: Objectives of MRP Level: hard

36. What is a technique for improving inventory record accuracy?a) cycle countingb) drum, buffer, ropec) Kanban d) tracking signale) statistical process control


37. Gross requirements for finished products are taken from _____________________________________.a) the inventory records fileb) the order entry filec) the authorized MPSd) the bill of materials filee) forecasted sales

Ans:Section Ref: MRP InputsLevel: moderate

38. When there is insufficient inventory to satisfy the forecast for a particular period a(n)____ order must be placed.a)BOMb) restockc) inventory requestd) MPSe) MRP


39. Scheduled receipts are _________________________________________.a) planned orders

b) planned orders offset by lead timec) gross requirements offset by lead timed) gross requirements minus inventorye) replenishment orders that have been placed but not yet received


40. For every scheduled receipt in an MRP table, there is also in the organization a(n) __________________.a) shop floor orderb) order that has been placed but not yet been receivedc) planned orderd) period ordere) dispatch list

Ans:Section Ref: MRP InputsLevel: hard

41. For any period the beginning inventory, plus any replenishment orders due, less the gross requirement equalsa) planned ordersb) projected available quantityc) scheduled receiptsd) lead timee) safety stock


42. The beginning inventory for any time period is equal to _____________________________________.a) safety stock plus gross requirements from the previous periodb) scheduled receipts plus projected available quantityc) planned orders plus scheduled ordersd) projected available quantity from at the end of the previous periode) gross requirements less scheduled orders


43. Which of the following is not true for planned orders?a) They are necessary only for finished products.b) They result when there is not enough inventory to cover the gross requirements.c) The quantity is calculated using the lot-sizing rule.d) The lead time is required to determine when the order should be placed.e) The inventory records file is updated for the order.


44. The MRP file that contains data on specific materials used to make final products and their correct quantities is the ___________________________________________.a) authorized master production scheduleb) bill of materials filec) inventory records filed) part status filee) routing file


45. When there is insufficient inventory to cover the gross requirements for a period a) an MRP is placedb) an ERP is placedc) a planned order is placedd) a scheduled order is placede) a rush order occurs

Ans:Section Ref; MRP InputsLevel: moderate

46. The MRP input listing the intermediate assemblies, subassemblies, component parts, raw materials, and the quantities of each needed to produce one final product is the _____________________________________.a) authorized master production scheduleb) bill of materials filec) inventory records filed) part status filee) assembly time chart


47. Which of the following is not true concerning indented bills of materials?a) Subsequent levels are indented further to the right.b) Children are indented toward the right.c) The highest level parents are closest to the left margin.d) Quantity required is shown for each part number.e) Lead times determine how far children are indented.


48. A visual depiction of the subassemblies and components that are needed to produce a finished product is called a(n) ____________________________________.a) assembly time chartb) product structure treec) pegd) product charte) blueprint


49. An item that has no parents is a(n) _________________________________________________.a) subassemblyb) end itemc) child itemd) intermediate assemblee) component


50. The cumulative lead time is __________________________________________________________.

a) the sum of the lead times for all the componentsb) the sum of the lead time and the safety timec) the number of time buckets used in the MRPd) the longest route in terms of time from the low level items to the end item in the product structure treee) lead time less the safety time


51. The lead time can be less than the cumulative lead time when ____________________________________.a) the company has inventory on handb) the order has already been shippedc) the supply chain is well tunedd) there is no safety timee) the order is expedited


52. The gross requirements of a given component part are determined from __________________________.a) scheduled receipts plus projected availableb) gross requirements of the parentc) planned orders of the parent d) projected available of the end iteme) planned orders of the end item

Ans:Section Ref: The MRP Explosion ProcessLevel: moderate

53. Which of the following is not true for action notices that are produced by MRP systems?a) An action notice is produced when a planned order needs to be released.b) An action notice is produced when due dates of orders need to be adjusted.c) An action notice is produced when the lead time is not sufficient for a planned order.d) An action notice is produced when inventory is moved to the manufacturing floor.e) They indicate actions that need to be taken by inventory planners.


54. The current time period is referred to as ______________________________.a) time zerob) the point of departurec) the start timed) the action buckete) this year


55. A positive quantity in the current period’s planned order row means that _________________________.a) lead time is too longb) the projected available is negativec) gross requirements are too larged) the planned order is due to be completed in the current periode) an order must be released


56. Production and inventory planners release orders to ______________________________________.a) the expediterb) either an external supplier or to the shop floorc) the logistics managerd) either the shop floor or to the warehousee) marketing


57. An order released to a supplier authorizes _________________________________________________.a) the shipment of the material so that it arrives as needed

b) movement of the material from the warehouse to the supplierc) the sending of information concerning production to the supplierd) accounting to set up an accounts receivable entrye) the logistics manager to start investigating shipment options


58. An action notice is generated __________________________________________________________.a) for planned orders in any periodb) only for orders that are to be released to the shop floorc) only for movements to and from the warehoused) only when marketing needs to be notifiede) when a planned order needs to be released

Ans:Section Ref: The MRP Explosion ProcessLevel: hard

59. If an order is not scheduled to arrive in time, the planner tries to _______________________________.a) find a replacement orderb) cancel the orderc) split the order in twod) expedite the ordere) talk marketing into changing the due date


60. Which of the following is not a lot size rule?a) lot for lotb) fixed order quantityc) overall factorsd) least total costse) parts period balancing


61. Different lot size rules determine the quantity of the order and ___________________________.a) the qualityb) change the frequency of replenishment ordersc) how projected available is calculatedd) the lead timee) the backorder cost


62. If setup costs are essentially zero (negligible when compared to carrying costs), which approach should be used for lot sizing?a) lot for lotb) fixed order quantityc) period order quantity with POQ = 6 periodsd) period order quantity with POQ = 2 periodse) period order quantity with POQ = 4 periods

Ans:Section Ref: Action NoticesLevel: hard

63. Selection of the lot size rule to be used should be based on minimizing __________________________.a) the order sizeb) late shipmentsc) total processing timed) quality problemse) the sum of ordering and carrying costs

Ans:Section Ref: Action NoticesLevel: easy

64. Capacity requirements planning uses data from __________________________________________.a) MRPb) rough-cut capacity planning c) aggregate planningd) MPS

e) the bill of labor file

Ans:Section Ref: Action NoticesLevel: moderate

65. For capacity requirements planning, loads for critical work centers are calculated based on ___________.a) open external supplier orders and planned external supplier ordersb) gross requirements for the end productc) open shop orders and planned shop ordersd) safety stocke) the sum of ordering and carrying costs

Ans:Section Ref :The Role of Capacity Requirements Planning (CRP)Level: moderate

66. Which of the following is not a direct input to capacity requirements planning?a) planned shop ordersb) open shop ordersc) setup time and run time per unit for shop ordersd) current inventory levelse) quantity for shop orders


67. With capacity requirements planning, the calculated workload for a work center is compared with _____.a) available capacityb) calculated workloads for other work centersc) the cost of expanding the work centerd) standard capacitye) design capacity


68. If the available capacity at a work center is not adequate, the company can ______________________.a) decrease run times per pieceb) authorize overtimec) expedited) decrease order quantitiese) hold up payment


69. Capacity requirements planning enables the company to evaluate ____________________.a) employee moraleb) its suppliersc) its manufacturing costsd) qualitye) how well it is using its critical work centers

Ans:Section Ref: The Role of Capacity Requirements Planning (CRP)Level: moderate

70. Dell practices _____________________________.a) focused customizationb) make to stock productionc) mass merchandisingd) mass customizatione) frozen assembly schedules


71. Which of the following is not a major supplier of ERP systems?a) SAP AGb) PeopleSoftc) Oracled) Baane) IBM

Ans:Section Ref: The Benefits of ERP

Level: hard

72. Setup time is changed:a) once each day regardless of product changes.b) each time the operator begins the machine.c) each time the machine is prepared to produce the desired item quantity.d) for each shift that works on the desired item quantity manufacturing.e) on rare occasions if it takes significant time.

Ans:Section Ref: The Role of Capacity Requirements Planning (CRP)Level: easy

73. According to the text, most manufacturing operations, production or inventory control planners are responsible for working with MRP. Planners are typically responsible for all but which of the following:a) end item inventory itemsb) subassemblies inventory itemsc) component inventory itemsd) raw material pricing

Ans:Section Ref: Resource Planning Across the OrganizationLevel: moderate

74. Which of the following does not share a common ERP database?a) internal to the organizationb) suppliersc) customersd) the supply chaine) CEO strategic plan

Ans:Section Ref: The Supply Chain LinkLevel: easy

True/False

1. Material requirements planning is an information system designed to integrate internal and external members of the supply chain.


2. The primary objective of ERP is to integrate all departments and functions, internal and external, onto a single computer system to serve the enterprise’s needs.


3. ERP systems are more commonly found in small companies than in large ones.


4. ERP modules are fully integrated.


5. Supply chain intelligence enables strategic decision-making along the supply chain.


6. ERP and e-commerce systems should not interface with each other.

Ans:Section Ref: The Evolution of ERP Level: hard

7. MRP develops a time-phased schedule that shows future demand, supply and inventories by time period.


8. The company forecasts dependent demand based on independent demand input.Ans:Section Ref: Types of DemandLevel: moderate

9. The authorized MPS is a statement of what the company expects to build and when it expects to build it.


10. An error in replenishment ordering can result from an inaccuracy in the inventory records file.

Ans:Section Ref: Objectives of MRPLevel: hard

11. Gross requirements for finished products are taken from the order entry file.


12. Scheduled receipts are replenishment orders that have been placed but not yet received.


13. For any period the beginning inventory, plus any replenishment order due, less the gross requirement equals planned orders.


14. A product structure tree is a visual depiction of the subassemblies and components that are needed to produce a finished product.

Ans:Section Ref: MRP InputsLevel: easy

15. An end item has no parents.


16. The lead time can be less than the cumulative lead time when the company has inventory on hand.


17. The gross requirements of a given component part are determined from planned orders of the parent.


18. Production and inventory planners release orders to the expediter.


19. The explosion process calculates the demand for the parent of the children.


20. An order released to the shop floor authorizes withdrawal of the needed materials and the start of production.

Ans:Section Ref: The MRP Explosion ProcessLevel: hard

21. If an order is not scheduled to arrive in time, the planner tries to cancel the order.

Ans:Section Ref: The MRP Explosion ProcessLevel: easy

22. Under lot for lot, order sizes are essentially determined directly from gross requirements.

Ans:Section Ref: Action NoticesLevel: moderate

23. Capacity requirements planning enables the company to evaluate how well it is using its critical work centers.


24. Companies use a single lot-sizing technique to standardize processes.


Essay

1. Explain how Dell Computer has become able to implement mass customization.

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2. List the major users of ERP systems.

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3. What is the primary objective of ERP?

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4. What are the objectives of second-generation ERP systems?

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5. What are some technological motivations for implementing ERP systems?

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6. What transactions can cause information in the inventory records file to change?

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7. What are the characteristics of indented bills of materials?

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8. Under what conditions are action notices generated?

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9. Name some lot size rules.

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10. Discuss the difference between the production and inventory control planners’ release order to external suppliers versus the shop floor.

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11. Describe how workload is computed for a work center for capacity requirements planning.

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12. Discuss how MRP reports are used by the production and inventory planners.

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Problems

1. Given the following data:Usage per Lead Time

Item Parent (weeks) J - 3 K 3 2 L 1 1 M 2 2 N 4 3 O 2 2 P 1 1 Q 6 2

The end product J is made from components K, L, and M. K is made from N and O. O is made from P and Q.(a) What is the replenishment lead time for J, assuming there are no inventories?(b) Calculate the gross requirements for each of the components if the company plans to build 10 of its J model. Assume that there are no beginning inventories.

(c) Calculate the gross requirements for each of the components if the company plans to build 10 of its J model if you have these beginning inventories: 60 N and 60 O.(d) What is the replenishment lead time if the company plans to build 10 of its J model, assuming the beginning inventories given in (c) above?

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2. Given the following data:Usage per Lead Time

Item Parent (weeks) J - 1 K 4 2 L 2 3 M 4 1 N 1 4 O 5 2 P 3 2 Q 8 1 R 2 3 S 4 2

The end product J is made from components K and L. K is made from M and N. L is made from O and P. P is made from Q, R, and S.(a) What is the replenishment lead time for J, assuming there are no inventories?(b) Calculate the gross requirements for each of the components if the company plans to build 10 of its J model. Assume that there are no beginning inventories.(c) Calculate the gross requirements for each of the components if the company plans to build 10 of its J model if you have these beginning inventories: 20 K, 10 L, and 30 P.(d) What is the replenishment lead time if the company plans to build 10 of its J model, assuming the beginning inventories given in (c) above?

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3. Given the following data:

Usage per Lead TimeItem Parent (weeks) J - 1 K 4 3 L 2 2 M 4 3 N 1 1 O 2 2

The end product J is made from components K, and L. K is made from M, N, and O.

(a) What is the replenishment lead time for J, assuming there are no inventories?(b) Calculate the gross requirements for each of the components if the company plans to build 10 of its J model. Assume that there are no beginning inventories.(c) Calculate the gross requirements for each of the components if the company plans to build 10 of its J model if you have these beginning inventories: 20 K and 80 M.(d) What is the replenishment lead time if the company plans to build 10 of its J model, assuming the beginning inventories given in (c) above?

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Usage per Lead Time Beginning Lot SizeItem Parent (weeks) Inventory Rule J - 3 0 L4L K 3 2 40 L4L L 4 1 60 L4L

The end product J is made from components K and L. The authorized MPS calls for 10 J to be completed in week 4 and 30 J to be completed in week 7.(a) What are the gross requirements for K and L?(b) What are the planned orders for K and L?

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Usage per Lead Time Beginning Lot SizeItem Parent (weeks) Inventory Rule J - 1 0 L4L K 3 1 40 FOQ = 200 L 4 3 40 L4L M 2 1 400 L4L N 1 1 200 L4L

The end product J is made from components K and L. Component K is made from M and N. The authorized MPS calls for 10 J to be completed in week 2, 30 J to be completed in week 3, 40 J to be completed in week 5, and 50 J to be completed in week 6. There is a scheduled receipt of 120 L in week 2.(a) What are the gross requirements for K, L, M and N?(b) What are the planned orders for K, L, M and N?

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Usage per Lead Time Beginning Lot SizeItem Parent (weeks) Inventory Rule J - 1 0 L4L K 8 1 850 FOQ =

2,000 L 6 1 1,250 L4L

The end product J is made from components K and L. The authorized MPS calls for 200 J to be completed in week 3, 300 J to be completed in week 5, and 300 J to be completed in week 6. There is a scheduled receipt of 400 L in week 2.(a) What are the gross requirements for K and L?(b) What are the planned orders for K and L?

Ans:

7. For the data provided determine the Inventory Record using a FOQ lot size rule for the hinge.

Ans:

8. For the data provided determine the Inventory Record using a FOW lot size rule for the screw (H).

Ans:


Period 1 2 3 4 5 6 7 8Gross Requirements 20 20 50 50 80 80 50 50

The beginning inventory is 0 and there are no scheduled receipts. The order cost is $50 and the holding cost is $1 per part per period. (a) What are the order costs, carrying costs, and totals cost over the 8 periods using the lot-for-lot size rule?(b) What are the order costs, carrying costs, and totals cost over the 8 periods using the fixed order quantity rule with FOQ = 100?(c) What are the order costs, carrying costs, and totals cost over the 8 periods using the period order quantity rule with POQ = 2?

Ans:


Period 1 2 3 4 5 6 7 89Gross Requirements 70 30 90 30 80 20 90 6080

The beginning inventory is 0 and there are no scheduled receipts. The order cost is $90 and the holding cost is $1 per part per period.(a) What are the order costs, carrying costs, and totals cost over the 9 periods using the lot-for-lot size rule?(b) What are the order costs, carrying costs, and totals cost over the 9 periods using the fixed order quantity rule with FOQ = 100?(c) What are the order costs, carrying costs, and totals cost over the 9 periods using the period order quantity rule with POQ = 3?

Ans:

11. Given the following data:Run TimePer unit in

Item Setup Time StandardNumber Period Quantity (Hours) HoursKE738 3 400 3.6 0.45KR376 4 550 2.7 0.25KM276 4 800 1.60.70KW718 5 200 4.00.15KJ395 5 350 3.9 0.60KA729 3 100 5.6 0.20KP237 4 700 1.0 0.55KF823 5 300 7.2 0.15KH489 3 600 6.6 0.80KE812 3 300 3.9 0.35

(a) What are the workloads for periods 3, 4, and 5?(b) There are 168 hours of operating time per machine each period. How many machines should be operated for periods 3, 4, and 5?

Ans:


Run Time

Per unit in Item Setup Time StandardNumber Period Quantity (Hours) HoursKE738 3 600 7.6 0.25KR376 4 350 3.7 0.55KM276 4 700 7.60.70KW718 3 400 5.00.25KJ395 4 250 8.9 0.40KA729 3 500 3.6 0.30KP237 4 600 5.0 0.65

(a) What are the workloads for periods 3 and 4?(b) There are 168 hours of operating time per machine each period. How many machines should be operated for periods 3 and 4?

Ans:

Short Answer

1. Scheduling all the activities that must be done by a due date from that point of view is called ________________________ scheduling.

Ans:Section Ref: Enterprise Resource PlanningDifficulty: easy

2. ________________________ uses a database that supports processes across functional areas.

Ans:Section Ref: Enterprise Resource PlanningDifficulty: moderate

3. Computer programs that are designed to improve supply chain decision making are called ________________________ software.

Ans: Section Ref: The Evolution of ERPDifficulty: moderate

4. Supply chain intelligence enables _____ _____ _____ along the supply chain.

Ans: Section Ref: The Evolution of ERPDifficulty: moderate

5. An __________ sets up and runs ERP systems.

Ans:Section Ref: The Evolution of ERPDifficulty: moderate

6. The most critical factors in successful ERP programs are ________________________ and ________________________ .

Ans: Section Ref: The Cost of ERP SystemsDifficulty: hard

7. A ________________________ is the primary output of an MRP system.

Ans: Section Ref: Types of DemandDifficulty: hard

8. MRP systems require ________________________ , ________________________ , and ________________________ as inputs.

Ans:Section Ref: Types of DemandDifficulty: hard

9. Items that are sold as complete or repair parts are called ________________________

Ans:Section Ref: MRP InputsDifficulty: hard

10. ________________________ assumes that we make enough of everything to build the required quantity, ignoring beginning inventory.

Ans: Section Ref: The Role of Capacity Requirements Planning (CRP)Difficulty: hard

11. ________________________ uses planned order releases from the MRP, which considers beginning inventory.

Ans:Section Ref: The Role of Capacity Requirements Planning (CRP)Difficulty: hard

12. ________________________ uses the planned orders generated by MRP to evaluate the feasibility of long-term or blanket contracts and to determine delivery need.

Ans: Section Ref: Resource Planning within OM: How It All Fits TogetherDifficulty: hard

File: ch15, Chapter 15: Operations Scheduling

Multiple Choice

1. Which of the following is not a feature of flow operations?a) a process layoutb) fixed routingsc) special-purpose equipment and tooling d) high volume productione) high levels of labor and equipment utilization

Ans:Section Ref: High-Volume OperationsLevel: moderate

2. Flow operations can be _____ or _____ operations.a) intermittent, continuousb) intermittent, repetitivec) repetitive, single shotd) repetitive, continuouse) single shot, continuous

Ans:Section Ref: High-Volume OperationsLevel: easy

3. Scheduling in the high-volume environment is typically done through what?a) priority rulesb) line design and balancingc) Thompson’s ruled) Simpson’s rulee) Johnson’s rule


4. Which of the following is not a feature of job-shop operations?a) a process layoutb) highly skilled employeesc) special-purpose equipment and tooling d) highly customized productse) low volume production


5. A well designed high-volume system will minimize ____ inventory and reduce __________ __________for the product or service.a)work-in-process, throughput timeb) raw material, storage capacityc) finished, throughput timed) work-in-process, storage capacitye) finished, transportation cost

Ans:Section Ref: High-Volume Operations

Level: moderate

6. Which of the following techniques loads jobs up to a predetermined capacity level?a) finite loadingb) infinite loadingc) forward schedulingd) backward schedulinge) input/output control

Ans:Section Ref: Low-Volume OperationsLevel: easy

7. A progress chart shows the relationship between:a) a Gantt chart and PERT chartb) vacation schedule and work schedulec) forecast and historical performanced) planned and actual performancee) planned and actual efficiency


8. Which of the following techniques loads jobs without regard to the capacity available to do the work?a) finite loadingb) infinite loadingc) forward schedulingd) backward schedulinge) input/output control


9. The two different approaches to load work centers in job-shop scheduling are _____________________.a) load chart and process chartb) finite loading and infinite loadingc) input control and output controld) fixed routings and line balancing

e) makespan and linear programming

Ans:Section Ref: Low-Volume OperationsLevel: moderate

10. Which of the following scheduling techniques tends to break down over the long term?a) finite loadingb) infinite loadingc) forward schedulingd) backward schedulinge) input/output control

Ans:Section Ref: Scheduling WorkLevel: moderate

11. Which of the following scheduling techniques can be used to identify resource bottlenecks?a) finite loadingb) infinite loadingc) forward schedulingd) backward schedulinge) input/output control

Ans:Section Ref: Scheduling WorkLevel: hard

12. Which of the following scheduling techniques determines the earliest possible completion time for a job?a) finite loadingb) infinite loadingc) forward schedulingd) backward schedulinge) input/output control

Ans:Section Ref: Scheduling WorkLevel: easy

13. Which of the following is most likely the reason you may have to wait at the doctor’s office?a) infinite loadingb) finite loadingc) forward schedulingd) backward schedulinge) none of the above


14. Slack can be calculated if ________________________________________________.a) infinite loading and finite loading are used togetherb) infinite loading and forward scheduling are used togetherc) finite loading and backward scheduling are used togetherd) finite loading and forward scheduling are used togethere) forward scheduling and backward scheduling are used together


15. Which of the following techniques determines when the job must begin in order to be completed by the due date?a) infinite loadingb) finite loadingc) forward schedulingd) backward schedulinge) input/output control


16. If the schedule shows a 5 day slack between the end of Task A and start of Task B.this means:a) you must start Task B as soon as Task A ends.b) Task B start is late.c) Task A is taking longer to complete.d) Task A and Task B should be performed concurrently.e) Task B start can be delayed up to 5 days after Task A’s scheduled completion.


17. Which of the following techniques is used to monitor work flow at individual work centers?a) infinite loadingb) finite loadingc) forward schedulingd) backward schedulinge) input/output control


18. Which of the following scheduling rules is a global priority rule?a) first come, first servedb) last come, first servedc) earliest due dated) shortest processing timee) slack per remaining operations

Ans:Section Ref: How to Sequence JobsLevel: moderate

19. Slim-Quick Inc. produces a variety of nutritional diet products. Management wants to evaluate the performance of Work Center 10, the bottleneck in the packaging line. They are particularly worried about the backlogging problem in the work center. The following input/output report is given.

Input InformationPeriod 1 2 3Planned Input (hours) 110 80 130Actual Input (hours) 80 120 100

Output InformationPeriod 1 2 3Planned Output (hours) 100 100 100Actual Output (hours) 80 70 110

The initial backlog was 100 hours. Based on the above information, calculate the backlog hours of Work Center 10 at the end of period 3.

a) 100b) 110c) 140d) 150e) 200

Ans:Section Ref: Scheduling WorkLevel: hard

20. Quick-Slim Inc. produces a variety of nutritional diet products. Management wants to evaluate the performance of Work Center 10, the bottleneck in the packaging line. The following input report is given.


Calculate the cumulative deviation of the input at the end of period 3.a) -20b) -30c) 10d) 20e) 30

Ans:Section Ref: Scheduling WorkLevel: hardLevel: moderate

21. A Dallas firm manufactures dishwashing liquid. The manager wants to evaluate the performance of station 3, the bottleneck in the filling operation. The following output report is given.


Calculate the cumulative deviation of the output at the end of period 3.a) -20b) -40c) 10d) 20e) 40


22. What is Period 3’s standard hour deviation for Frank’s manufacturing firm, based on the following input/output information?Input InformationPeriod 1 2 3 4Planned Input 48 68 54 62Actual Input 47 72 56 48Output InformationPeriod 1 2 3 4Planned Output 50 65 55 65Actual Output 52 60 53 67a) 4, -5b) -3, 2c) 3, -2d) 2, -2e) -14, 2

Ans dSection Ref: Scheduling WorkLevel: moderate

23. Which of the following is not an assumption of priority rules?

a) There is no variability in the setup time.b) There is no variability in the run time of the job.c) Multiple jobs are waiting to be processed.d) Only a single job is waiting to be processed.e) None of the above is correct.


24. Operation sequencing creates a work center plan based on available _______ and ______.a) capacity, prioritiesb) demand, prioritiesc) capacity, demandd) capacity, rulese) staff, management


25. The following jobs are waiting to be scheduled. Today is day 9. Determine the sequence of jobs by using SPT as a priority rule.

Job Number Arrival Date (day #) Processing Time (days)Due Date (day #)

A 4 212

B 5 1230

C 1 621

D 2 114

E 3 1028

a) D-A-C-E-Bb) B-E-C-A-Dc) C-D-E-A-Bd) B-A-E-D-Ce) A-D-C-E-B


26. The following jobs are waiting to be scheduled. Today is day 9. Determine the sequence of jobs by using LPT as a priority rule.


A 4 212

B 5 1230

C 1 621

D 2 114

E 3 1028



27. The following jobs are waiting to be scheduled. Today is day 9. Determine the sequence of jobs by using EDD as a priority rule.


A 4 212

B 5 1230

C 1 621

D 2 114

E 3 1028



28. The following jobs are waiting to be scheduled. Today is day 9. Determine the sequence of jobs by using FCFS as a priority rule.


A 4 212

B 5 1230

C 1 621

D 2 114

E 3 1028



29. The following jobs are waiting to be scheduled. Today is day 9. Determine the sequence of jobs by using LCFS as a priority rule.


A 6 212

B 1 1230

C 10 621D 12 114E 3 10

28

a) D-C-A-E-Bb) A-B-C-D-Ec) B-E-A-C-Dd) B-E-C-A-De) B-E-C-D-A


30. The jobs listed below have not yet been scheduled. Today is day 0. Using the critical-ratio technique, in what sequence would you schedule these jobs?

Job Due Date Duration (days)A 3 1B 10 11C 5 4D 12 6

E 8 8a) B-E-C-D-Ab) A-D-C-E-Bc) A-C-E-B-Dd) A-C-D-E-Be) E-C-D-A-B


31. The jobs listed below have not yet been scheduled. Using the S/RO technique, in what sequence would you schedule these jobs?

Job Slack Remaining Operations A 3 1B 10 11C 5 4D 12 6

E 8 8a) B-E-C-D-Ab) A-D-C-E-Bc) A-C-E-B-Dd) A-C-D-E-Be) E-C-D-A-B


32. Using the S/RPO rule, which of the following jobs will be scheduled first?a) the first job that arrives at a work centerb) the job with the least slack per remaining operationsc) the job with the highest slack per remaining operationsd) the job with the smallest ratio of time remaining until due date to process time remaininge) the job with the largest ratio of time remaining until due date to process time remaining

Ans:Section Ref: Scheduling Work

Level: moderate

33. If using CR as the priority rule, which of the following jobs will be scheduled first?a) the first job arrives at a work centerb) the job with the least slack per remaining operationsc) the job with the highest slack per remaining operationsd) the job with the smallest ratio of time remaining until due date to process time remaininge) the job with the largest ratio of time remaining until due date to process time remaining


34. What does job flow time measure?a) the time a job spends in the shopb) due-date performance c) the amount of time it takes to finish a batch of jobsd) job tardiness e) job lateness

Ans:Section Ref: How to Sequence JobsLevel: easy

35. If your company is concerned with customer response time you will measure scheduling effectiveness in terms of:a) job reject ratesb) job profit ratioc) response timed) input timee) makespan

Ans:Section Ref: Measuring PerformanceLevel: easy

36. What does makespan measure?a) WIP inventoryb) due-date performance

c) the amount of time it takes to finish a batch of jobsd) job tardiness e) job lateness


37. A measure of response time is:a) makespan b) job flow timec) due dated) job latenesse) job schedule time


38. What does average number of jobs in the system measure?a) WIP inventoryb) due-date performance c) makespand) job tardiness e) job lateness


39. Which of the following is a measure of whether the job is done ahead of, on, or behind schedule?a) average number of jobs in systemb) mean flow timec) makespand) job tardiness e) job lateness


40. Sweet-Dreams Inc. manufactures custom pillows. Five jobs are waiting to be processed. Job A has a flow time of 8 days, job B has a flow time of 10 days, job C has a flow time of 15 days, job D has a flow time of 20 days, and job E has a flow time of 27 days. What is the mean flow time?a) 8 daysb) 10 daysc) 7 daysd) 0 dayse) 16 days


41. Heavy Eyes Inc. manufactures custom pillows. Five jobs are waiting to be processed using the SPT priority rule. Their processing times are shown in the following table. What is the mean flow time?

Job Processing TimeA 6B 2C 10D 8E 1

a) 57 daysb) 11.4 daysc) 17 daysd) 5.4 dayse) 27 days

Ans:Section Ref: Measuring PerformanceLevel: moderate

42. The following jobs must be processed in the Super Clean motor shop. Assume that the company operates seven days per week. Today is November 10. Using FCFS as the priority rule, calculate average job tardiness.

Job Arrival Date Work Required (in Days) Due DateA Nov. 1 8 Nov. 16B Nov. 4 1 Nov. 11C Nov. 2 20 Nov. 21D Nov. 3 5 Nov. 13E Nov. 6 3 Dec 2F Nov. 5 4 Dec 10

a) 18.2 daysb) 8.3 daysc) 9.2 daysd) 19.3 dayse) 14.2 days

Ans:Section Ref: Measuring PerformanceLevel: hard

43. Sweet-Dreams Inc. manufactures custom pillows. Five jobs are waiting to be processed using the SPT priority rule. Their processing times are shown in the following table. What is the average number of jobs in the system?


a) 66b) 13.2c) 27d) 5.4e) 2.4


44. Green Inc. manufactures a variety of wooden desks. Five jobs are waiting to be processed using the LPT priority rule. Their processing times are shown in the following table. What is the makespan?


a) 66b) 13.2c) 27

d) 5.4e) 2.4

Ans: (makespan = completion time of last job – beginning time of 1st job)Section Ref: Measuring PerformanceLevel: moderate

45. A greater number of jobs in the system implies what?a) a higher work-in-process inventory level and a longer response timeb) a lower work-in-process inventory level and a longer response timec) a higher work-in-process inventory level and a shorter response timed) a lower work-in-process inventory level and a shorter response timee) more jobs will certainly be tardy.


46. Job A is due on day 15, and it is finished on day 12. What is its lateness?a) –3b) 0c) 3d) both a) and b)e) none of the above


47. Which of the following is a measure of how long after the due date the job is completed?a) job belatednessb) mean flow timec) makespand) job overdueness e) job tardiness


48. Which of the following scheduling rules is often considered the fairest rule?

a) first come, first servedb) last come, first servedc) earliest due dated) shortest processing timee) longest processing time


49. Which of the following scheduling rules minimizes the average number of jobs in the system?a) first come, first servedb) last come, first servedc) earliest due dated) shortest processing timee) longest processing time


50. Which of the following scheduling rules minimizes mean job flow time?a) first come, first servedb) last come, first servedc) earliest due dated) shortest processing timee) longest processing time


51. Using the following data, calculate the average job lateness.

Job Completion Date Due DateA 15 12B 11 24C 25 22D 18 19a) -2 daysb) 3 daysc) 13 daysd) -8 days

e) 1.5 days


52. Using the following data, calculate the average job tardiness.

Job Completion Date Due DateA 15 12B 11 24C 25 22D 18 19a) 6 daysb) 1.5 daysc) -2 daysd) -8 dayse) 3 days


53. Five jobs must be scheduled. Each of the jobs must be processed on two machines (A and B) in the same order. The processing times are listed below. According to Johnson’s rule, in what order should the jobs be processed?

Job Machine A Machine BA 6 30B 23 2C 1 7D 4 3E 8 8

a) C-B-D-A-Eb) C-D-A-E-Bc) B-E-A-D-Cd) C-A-E-D-Be) C-D-E-B-A

Ans:Section Ref: Comparing Priority RulesLevel: moderate

54. What does “negative lateness” mean?a) The job is finished after its due date.b) The job is finished on its due date.c) The job is finished before its due date.d) The job is not finished.e) The job has not started.

Ans:Section Ref: Comparing Priority RulesLevel: moderate

55. Job A is due on day 15, and it is finished on day 12. What is its tardiness?a) –3b) 0c) 3d) both a) and b)e) none of the above


56. Seven jobs must be scheduled. Each of the jobs must be processed on two machines (A and B) in the same order. The processing times are listed below. According to Johnson’s rule, in what order should the jobs be processed?

Job Machine A Machine BA 6 25B 12 2C 11 7D 4 3EFG 7 918 8 1 5

a) A-E-C-G-D-B-Fb) A-C-E-G-D-B-Fc) F-B-D-G-C-E-Ad) F-D-B-G-E-C-Ae) G-D-B-F-A-E-C

Ans:Section Ref: Comparing Priority Rules

Level: moderate

57. Which of the following sequencing rules is used for minimizing makespan in a two-stage, unidirectional process? a) first come, first servedb) slack over remaining operationsc) shortest processing timed) critical ratioe) Johnson’s rule

Ans:Section Ref: Comparing Priority Rules Level: easy

58. Which of the following is the least effective tactic for managing a bottleneck station?a) Assign extra workers to the bottleneck station if necessary in order to keep it running.b) Increase the production rate at the bottleneck station.c) Inspect items just as soon as they come out of the bottleneck station.d) Subcontract part of the workload at that station to other companies.e) Assign your best people to that station to improve efficiency.

Ans:Section Ref: Sequencing Jobs Through Two Work CentersLevel: hard

59. Consider a production line with five stations. Stations one through five can process a unit in 10, 15, 20, 5, and 12 minutes, respectively. What is the maximum throughput per hour?a) 6 unitsb) 4 unitsc) 3 unitsd) 12 unitse) 5 units

Ans:Section Ref: Scheduling Bottlenecks Level: moderate

60. Consider a production line with five stations. The first station can process a unit in 8 minutes. The second station has two identical machines, each of which can

process a unit in 18 minutes (each unit only needs to be processed on one of the two machines). The third station can process a unit in 4 minutes. The fourth station has two different machines, one can process a unit in 5 minutes, and the other one can process a unit in 9 minutes (each unit needs to be processed on both machines). The fifth station can process a unit in 10 minutes. Which station is the bottleneck station?a) Station 1b) Station 2c) Station 3d) Station 4e) Station 5

Ans:Section Ref: Scheduling Bottlenecks Level: hard

61. Which of the following statements is not a valid scheduling principle?a) Balance the process rather than the flow.b) Non-bottleneck usage is determined by some other constraint in the system.c) Usage and activation of a resource are the same.d) The process batch should be variable.e) An hour lost at a bottleneck resource is an hour lost forever.


62. What is throughput?a) the quantity of finished goods that can be soldb) the quantity of items moved at the same time from one resource to the nextc) the quantity of work-in-process inventoryd) the quantity produced at a resource before the resource is switched over to produce another producte) the average flow time of the system

Ans:Section Ref: Scheduling Bottlenecks Level: easy

63. What is a process batch?a) the quantity of finished goods that can be soldb) the quantity of items moved at the same time from one resource to the nextc) the quantity of work-in-process inventoryd) the quantity produced at a resource before the resource is switched over to produce another product

e) the set of machines used to make products


64. What is a transfer batch?a) the quantity of finished goods that can be soldb) the quantity of items moved at the same time from one resource to the nextc) the quantity of work-in-process inventoryd) the quantity produced at a resource before the resource is switched over to produce another producte) the quantity of items needed to attain a full truckload (TL) shipping rate


65. The process batch should:a) match the transfer batch.b) exceed the transfer batch.c) be smaller than the transfer batch.d) be fixed.e) be variable.


66. Which of the following statements is not true?a) An hour lost at a bottleneck is an hour lost forever.b) An hour lost at a non-bottleneck is just a mirage. c) Bottlenecks determine throughput and system inventory.d) The transfer batch does not have to equal the process batch.e) Lead times are predetermined.


67. Which of the following is mostly like to be an internal resource constraint?a) increasing market demand

b) raw material shipping problemsc) decreasing market demandd) no overtimee) a regular bottleneck in the product process


68 Which of the following is mostly like to be a market constraint?a) strike at the supplier’s plantb) raw material shipping problemsc) decreasing market demandd) no overtimee) a regular bottleneck in the product process


69. Which of the following is mostly like to be a policy constraint?a) strike at the supplier’s plantb) raw material shipping problemsc) decreasing market demandd) no overtimee) a regular bottleneck in the product process


70. Only Roses Flower Shop currently operates 7 days per week. The staffing needs for each day are shown in the following table. Each of the employees must have two consecutive days off in a week. (Since Monday is used as the first day of the pay week, an employee cannot be off on both Sunday and Monday.) What is the minimum number of employees that needs to be hired?

Days of Week Monday Tuesday Wednesday Thursday FridaySaturday Sunday

Staff Need 2 3 4 4 5 4 6a) 5b) 6c) 7d) 8

e) 9

Ans:Section Ref: Scheduling for Service OrganizationsLevel: hard

71. Jim-O’s fast focus restaurant is opening up a new branch. Based on demand forecast the following service personnel levels are anticipated. What is the number of employees needed for Thursday-Friday pair?Days of Week Monday Tuesday Wednesday Thursday Friday

Saturday SundayStaff needs 5 4 3 4 6 6 5a) 7b) 9c) 10d) 11e) 12

Ans:Section Ref: Scheduling for Service OrganizationsLevel: easy

72. Jim-O’s fast focus restaurant is opening up a new branch. Based on demand forecast the following service personnel levels are anticipated. What days will employee #1 have off?Days of Week Monday Tuesday Wednesday Thursday Friday

Saturday SundayStaff needs 5 4 4 3 6 6 5a) Mon - Tueb) Tue - Wedc) Wed - Thurd) Thur - Frie) Fri - Sat

Ans:Section Ref: Scheduling for Service OrganizationsLevel: moderate

73. When were Gantt charts developed?a) early 1800sb) early 1900sc) early 1920sd) early 1940se) early 1960s

Ans:Section Ref: High-Volume OperationsLevel: hard

74. Optimized production technology (OPT) was introduced by Eli ________________________.a) Goldrattb) Manningc) Jeffersond) Rosenblatte) Strasburg

Ans:Section Ref: Sequencing Jobs Through Two Work CentersLevel: hard

True/False

1. Flow operations are often related to high volume production.

Ans:Section Ref: High-Volume OperationsLevel: easy

2. A Gantt chart is usually used for a company with low flexibility in both product variation and product volume.


3. A Gantt chart is a basic scheduling tool for low-volume systems.


4. In a service organization, a doctor’s office is a good example of finite loading.


5. Forward scheduling sometimes causes inventory buildup if items are not delivered by the due date.


6. Backward scheduling determines the earliest possible completion time for a job.


7. The backlog at a work center increases when the work center receives more work than it finishes.


8. Priority rules are more useful in sequencing jobs in high-volume systems than in low-volume systems.


9. A local priority rule sets priority based only on the jobs waiting at that individual work center.


10. If using critical ratio (CR) as the scheduling rule, the job with the smallest ratio of time remaining until due date to the processing time remaining has the lowest priority.


11. If using slack per remaining operations (S/RO) as the scheduling rule, the job with the least slack per remaining operations has the highest priority.


12. Makespan has a link to customer due dates.

Ans:Section Ref: Measuring Performance Level: moderate

13. Makespan is a measure of WIP.


14. If customer service is important to the company, average job lateness is probably a more relevant measurement than average job tardiness.


15. EDD always minimizes mean job flow time.


16. Negative lateness means the job is finished before the due date.

Ans:Section Ref: Comparing Priority RulesLevel: easy

17. Firms should balance the flow rather than the process.

Ans:Section Ref: Sequencing Jobs Through Two Work CentersLevel: moderate

18. Schedules should be established by considering all constraints simultaneously.

Ans:Section Ref: Scheduling BottlenecksLevel: moderate

19. Usage and activation of a resource are not the same.


20. According to the text, a system’s input is determined by three kinds of constraints: internal resource constraint, market constraint, and policy constraint.

Ans:Section Ref: Theory of ConstraintsLevel: moderate

21. The transfer batch should always equal the process batch.

Ans:Section Ref: Scheduling BottlenecksLevel: hard

22. The process batch should be variable.


23. Using the Tibrewala, Phillippe, and Brown technique for a Monday through Sunday work week a regular, full time employee can end up with a Sunday-Monday set of days off.

Ans:Section Ref: Developing a Workforce ScheduleLevel: moderate

24. Marketing uses flow time metrics to determine if deliveries are made on time.

Ans:Section Ref: Scheduling Across the OrganizationLevel: moderate

Essay

1. What are some important considerations to make when developing an operational schedule?

Ans:Level: hard

2. What are the two major kinds of Gantt charts?

Ans: Section Ref: High-Volume OperationsLevel: easy

3. Based on the definition in the ninth edition of the APICS Dictionary, what is operation sequencing?

Ans:

4. Discuss how companies can benefit from both infinite and finite loading.

Ans:

5. Discuss what slack is.

Ans:

6. Define job lateness.

Ans:

7. Define job tardiness.

Ans:

8. Define Johnson’s rule.

Ans:

9. Optimized production technology (OPT) was introduced by whom in the late 1970s, and what does it do?

Ans:

10. What is a transfer batch?

Ans:

11. What are the three kinds of constraints defined by TOC?

Ans:

12. What does the term floating employees refer to?

Ans:

Problems

1. Desire Inc. produces a variety of pediatric nutritional products. Management wants to evaluate the performance of Work Center 17, the bottleneck in the packaging line. Managers are particularly worried about the backlogging problem in the work center. The following input/output report is given.



The initial backlog was 50 hours. Based on the above information, calculate the backlog hours of Work Center 17 for periods 1, 2, and 3, respectively.

Ans:

2. Terry’s cycle shop standard hour input/output report is below. Calculate the output deviation and backlog hours for periods 1, 2, 3, and 4.Input InformationPeriod 6 7 8 9Planned Input 59 68 54 62Actual Input 55 72 62 48

Output InformationPeriod 6 7 8 9Planned Output 50 65 55 65Actual Output 52 60 53 67

Backlog 75

Ans:

3. Job A has a flow time of 20 days, job B has a flow time of 13 days, job C has a flow time of 12 days, and job D has a flow time of 15 days. If the time it takes to finish all four jobs (as a whole batch) is 15 days, what is the average number of jobs in the system?

Ans:

4. Using the following data, calculate the average job lateness and average job tardiness.

Job Completion Date Due DateA 13 10B 19 24C 25 20D 18 18

Ans:

5. What is the mean job flow time for Bob’s body and fender shop for the following repair jobs? Fender job finishes day 8; hood replacement finishes day 7, front end repair finished day 4, trunk fix finishes on day 12, and the door repair finishes on day 6.

Ans:

6. Perfect Inc manufactures a variety of wooden chairs. The following data were reported by the control system for order processing at the assembly station. The current date is day 100. The number of remaining operations and the work time remaining includes the operations at the assembly station. All jobs are available for processing, and none have been started yet.

JobDue Date Remaining Operations Work Time RemainingA 110 10 9B 115 9 5C 118 1 7

D 106 8 4E 120 5 12

Using the S/RO priority rule, sequence the above jobs.

Ans:-

7. Jackie is the owner and the manager of an auto repair company. In order to be fair to all the customers, Jackie decides to use the FCFS priority rule in job sequencing. Currently, four cars need to be repaired. Assume that the cars arrive in the order listed, that is, A first, then B, then C, then D. The estimated labor times (in days) and promise dates are shown in the following table. Customers usually do not pick up their cars early. Today is day 0.

Car Estimated Labor TimePromise DateA 5 5B 10 18C 1 12D 3 15

Based on the FCFS sequence, calculate the following performance measures: (a) makespan, (b) average job flow time, (c) average number of jobs in the system, (d) average job tardiness.

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8. The following jobs need to be processed at J. J. Rupper’s work center.

Job Arrival Date Production Days Needed Due DateA 5 20 75B 15 30 95C 17 16 70D 20 10 125E 25 18 105

In what sequence would the jobs be ranked according to the following rules: (a) FCFS, (b) SPT, (c) LPT, (d) EDD?

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9. The following jobs are waiting to be processed at J. J. Rupper’s work center.

Job Production Days Needed Due DateA 20 135

B 30 190C 16 140D 10 125E 18 150

Customers usually do not pick up orders before the due date. Today is day 100. Using the SPT priority rule, calculate the (a) mean flow time, (b) average number of jobs in the system, and (c) average job tardiness.

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10. The following jobs must be processed in the Super Clean motor center. Assume that the company operates seven days per week.

Job Arrival Date Work Required (in Days) Due DateA Nov. 1 8 Nov. 16B Nov. 4 1 Nov. 11C Nov. 2 20 Nov. 21D Nov. 3 5 Nov. 13E Nov. 6 3 Dec. 2F Nov. 5 4 Dec. 10

Today is November 10. If the company decides to use EDD as the priority rule, calculate the (a) average flow time, (b) average number of jobs in the system, and (c) average job tardiness.

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11. Six jobs are to be processed through a two-stage operation. The first operation involves drill pressing, and the second involves lathing. Process times are as follows

Job Operation 1 Operation 2A 15 12B 11 24C 25 22DEF 1810 8 1915 9

Determine a sequence that will minimize the total completion time for these jobs.

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12. Steve’s Steak House currently operates 7 days per week. The staffing needs for each day are shown in the following table. Each of the employees must have two consecutive days off in a week. (Since Monday is used as the first day of the pay week, an employee cannot be off on Sunday and Monday.) Develop a schedule to satisfy staffing needs as well as minimize excess capacity by using the technique developed by Tibrewala, Philippe, and Brown.

Days of Week Monday Tuesday Wednesday Thursday FridaySaturday Sunday

Staff Need 3 2 4 2 5 4 5

Ans:

Short Answer

1. Load and progress charts are examples of ________________________

Ans: Section Ref: Low-Volume OperationsDifficulty: easy

2. Operational schedules that consider work center capacity use ________________________

Ans:Section Ref: Scheduling WorkDifficulty: moderate

3. The formula (due date - remaining processing time)/(number of remaining operations measures the ________________________

Ans:Section Ref: How to Sequence JobsDifficulty: hard

4. The time a job spends in the shop is called its ________________________

Ans: Section Ref: Measuring PerformanceDifficulty: moderate

5. What is the formula for makespan? ________________________

Ans:Section Ref: Measuring PerformanceDifficulty: hard

6. The greater the number of jobs in the system, the longer the queues and subsequently the longer the ____ ____ ____.

Ans: Section Ref: Measuring PerformanceDifficulty: moderate

7. If all jobs are available at the same time, their flow time is the same as their:

Ans:Section Ref: Comparing Priority RulesDifficulty: easy

8. A scheduling technique for jobs that follow the same path through two operations is ________________________

Ans: Section Ref: Sequencing Jobs Through Two Work Centers Difficulty: moderate

9. Eli Goldratt's bottleneck scheduling system is called ________________________

Ans: Section Ref: Scheduling BottlenecksDifficulty: moderate

10. Eli Goldratt's approach to continuous improvement is called ________________________

Ans: Section Ref: Theory of ConstraintsDifficulty: moderate

11. Under OPT, lead times are ________________________ rather than ________________________

Ans: Section Ref: Scheduling BottlenecksDifficulty: hard

12. Employees who perform a variety of services and are assigned where they are needed each day are said to ________________________

Ans: Section Ref: Scheduling for Service OrganizationsDifficulty: moderate

File: ch16, Chapter 16: PERT, CPM, and Critical Clash

Multiple Choice

1. What is a unique, one-time event that is intended to achieve an objective in a given time period?a) a projectb) a jobc) a taskd) an activitye) an event

Ans: Section Ref: Project Life CycleLevel: easy

2. Which of the following is not characteristic of a project?a) has a specific objectiveb) has multiple activities

c) typically performed by external consultantsd) activities have defined precedence relationshipse) to be completed in a specified time period

Ans: Section Ref: Project Life CycleLevel: moderate

3. Which of the following is not characteristic of a project?a) has a life cycleb) uses no resourcesc) involves a unique, one-time eventd) consists of several taskse) typically some activities may be done simultaneously


4. Which of the following would probably not benefit from the use of critical path scheduling?a) constructing a new bridge over the Mississippi Riverb) moving the company’s credit card center to a new cityc) building a new natural gas pipelined) receiving orders for the company’s products by phonee) developing a new computer system for financial planning


5. Which phase in the project life cycle involves identifying the need for the project?a) conceptionb) feasibility analysis or studyc) planningd) executione) termination


6. Which phase in the project life cycle involves evaluating expected costs, benefits, and risks?a) conceptionb) feasibility analysis or studyc) planningd) executione) termination


7. Which phase in the project life cycle involves analyzing the work to be done and developing time estimates for completing each of the activities?a) conceptionb) feasibility analysis or studyc) planningd) executione) termination


8. Which phase in the project life cycle involves analyzing the project risk?a) conceptionb) feasibility analysis or studyc) planningd) executione) termination


9. Which phase in the project life cycle involves carrying out the activities that make up the project?a) conceptionb) feasibility analysis or studyc) planningd) executione) termination

Ans:

Section Ref: Project Life CycleLevel: easy

10. Which phase in the project life cycle involves ending the project?a) conceptionb) feasibility analysis or studyc) planningd) executione) termination

Ans: Section Ref: Project Life CycleLevel: easy

11. Which of the following is not a benefit of network planning techniques?a) graphical display of the project, including the relationships and sequence of activities b) estimate of the expected project lengthc) resources are clearly identifiedd) identification of activities that are critical to the timely completion of the projecte) identification of the amount of slack associated with individual activities

Ans: Section Ref: Network Planning TechniquesLevel: moderate

12. Two type of network diagramming notation include:a) AON and AOAb) AON and Nodec) AON and NOAd) Node and AOAe) Node and Arrow


13. Actions that consume resources and/or time are project ______________________.a) eventsb) activitiesc) nodes

d) arrowse) tasks


14. structure the sequencing of activities.a) Evaluation of costsb) Crashingsc) Work breakdownsd) Backschedulese) Precedence relationships


15. Project managers use network planning techniques to _____________________________.a) evaluate costsb) assign resources to activitiesc) estimate how long it will take to assign activitiesd) calculate the expected completion time of the projecte) invert activities


16. What does AON stand for?a) action-oriented-networkb) activity-on-networkc) activity-on-noded) activity-oriented-networke) activity-overrun-network


17. Which of the following is not a step involved in using network planning techniques?a) define deliverablesb) describe the projectc) diagram the networkd) monitor the project’s progressione) estimate the project’s completion time


18. The critical path is the sequential path of interrelated activities which has the ____________________.a) most activitiesb) longest timec) most nodesd) most eventse) most arrows


19. If a delay in an activity will delay completion of the whole project, the activity ____________________.a) is on the critical pathb) has slackc) is costlyd) is a dummye) is represented by a node


20. The longest connected route through the path network is the _________________________________.a) planning matrixb) final deliverablec) crash pathd) connectore) critical path

Ans: Section Ref: Network Planning TechniquesLevel: easy

21. The sum of the activity times on the critical path determines ____________________________________.a) total slack availableb) total labor time required for the projectc) minimum time to complete the projectd) the number of milestonese) amounting of crashing that needs to be done


22. When we are unsure about the duration of project activities, we use time estimates.a) variableb) probabilisticc) estimatedd) deterministice) cumulative


23. We use time estimates when we can make a reliable estimate.a) variableb) probabilisticc) estimatedd) deterministice) cumulative


24. The process of calculating ES and EF ____________________________________________________.a) requires only a forward pass through the network

b) requires only a backward pass through the networkc) requires both a forward and backward pass through the network d) cannot be accomplished until slack is first determinede) is sufficient for calculating the critical path


25. The process of calculating LS and LF __________________________________________.a) requires only a forward pass through the networkb) requires only a backward pass through the networkc) requires both a forward and backward pass through the network d) cannot be accomplished until slack is first determinede) is sufficient for calculating the critical path


26. The last project activity ES and LS times are:a) differentb) calculated using termination rulesc) the same d) required probabilistic calculationse) involving risk analysis


27. In making a forward pass through a network, three activities are immediate predecessors for activity T. What is the early start time for activity T?a) the smallest ES for the three activities that are immediate predecessors for activity Tb) the largest ES for the three activities that are immediate predecessors for activity Tc) the smallest EF for the three activities that are immediate predecessors for activity Td) the largest EF for the three activities that are immediate predecessors for activity Te) the activity time for activity T

Ans: Section Ref: Network Planning Techniques

Level: hard

28. In making a forward pass through a network, activities L, M, and P are immediate predecessors for activity T, which has an activity time of 7. The early start times for activities L, M, and P are 22, 17, and 27, respectively. The early finish times for activities L, M, and P are 29, 27, and 33, respectively. What is the early start time for activity T?a) 17b) 24c) 27d) 33e) 40


29. In making a forward pass through a network, activities L, M, and P are immediate predecessors for activity T, which has an activity time of 7. The early start times for activities L, M, and P are 22, 17, and 27, respectively. The early finish times for activities L, M, and P are 29, 27, and 33, respectively. What is the early finish time for activity T?a) 17b) 24c) 27d) 33e) 40

Ans: Section Ref: Network Planning TechniquesLevel: hard

30. In making a backward pass through a network, activity L has an activity time of 4 and immediately precedes activities M, P, and T. The late start times for activities M, P, and T are 22, 17, and 27, respectively. The late finish times for activities M, P, and T are 29, 27, and 33, respectively. What is the late finish time for activity L?a) 13b) 17c) 22d) 33e) 37


Level: moderate

31. In making a backward pass through a network, activity L has an activity time of 4 and immediately precedes activities M, P, and T. The late start times for activities M, P, and T are 22, 17, and 27, respectively. The late finish times for activities M, P, and T are 29, 27, and 33, respectively. What is the late start time for activity L?a) 13b) 17c) 22d) 33e) 37


32. In making a backward pass through a network, activity T immediately precedes three activities. What is the late finish time for activity T?a) the smallest LS for the three activities that activity T immediately precedesb) the largest LS for the three activities that activity T immediately precedesc) the smallest LF for the three activities that activity T immediately precedesd) the largest LF for the three activities that activity T immediately precedese) the activity time for activity T


33. Activities on the critical path ________________________________________________________.a) are the ones with the longest activity timesb) always are connected directly to dummy activitiesc) have LS equal to LFd) have ES equal to EFe) have no slack


34. In critical path scheduling, slack is computed as the difference between ______________________.

a) latest and earliest timesb) optimistic and pessimistic timesc) mean and modal timesd) finish and start timese) observed and predicted times


35. Given this information about an activity: ES = 10, EF = 15, LS = 26, and LF = 31. The amount of slack associated with the activity is _____________________.a) 32b) 5c) 21d) 16e) 11






Level: moderate

38. Which of the following can be calculated for an activity once ES, EF, LS, and LF have been calculated for the activity?a) expected project duration b) slack timec) potential for crashingd) variance in project duratione) the relative time position for when the activity will be completed


39. With probabilistic time estimates for activities, (o) denotes the _______________________.a) median timeb) original timec) optimistic timed) pessimistic timee) most likely time


40. With probabilistic time estimates for activities, (p) denotes the _______________________.a) median timeb) probable timec) optimistic timed) pessimistic timee) most likely time


41. With probabilistic time estimates, when we calculate the expected time for an activity, we treat each activity time estimate as a random variable derived from a probability distribution.a) normal

b) betac) gammad) Poissone) uniform


42. The formula to calculate an activity’s probabilistic expected time isa) ET = ( M+4*O+P)/6b) ET = ( P+4*O+M)/6c) ET = ( P+4*M+O)/6d) ET = ( P+3*M+O)2/6e) ET = ( M+3*O+P)/4


43. An activity in a network diagram has an optimistic time estimate of five days, a most likely time estimate of seven days, and a pessimistic time estimate of 15 days. Its expected time is _________________.a) 5 daysb) 7 daysc) 8 daysd) 10 dayse) 15 days


44. Joe’s radio tower fabrication company has developed the following milestone project schedule. What is the expected time duration for the project?

ACTIVITY PRECEDENCE P M OA Complete design None 4 3 2B Develop BOMA 2 1 1C Order Materials B 3 2 1D Site Selection A 7 4 3E Receive Materials C 6 3 2F Obtain permitsA, D 4 2 1G Begin fabrication facility development E, F 6 5 3

a) 9b) 10c) 14d)14.33e) 17.33f) 21


45. What can be used to display graphically the scheduled times for activities?a) an AOA network diagramb) an AON network diagramc) a project structure treed) a Gantt charte) an affinity diagram


46. In monitoring the progress of a project, it is important to focus on _____________________________.a) activities on the critical pathb) activities with long completion timesc) activities with large slacksd) initiating eventse) terminating events


47. An activity in a network diagram has an optimistic time estimate of seven days, a most likely time estimate of 11 days, and a pessimistic time estimate of 19 days. Its variance is _________.a) 2b) 4c) 6d) 12e) 24

Ans:

Section Ref: Estimating the Probability of Completion Dates Level: moderate

48. There are four activities on the critical path, and they have standard deviations of 1, 2, 4, and 2. The standard deviation of the critical path is ______.a) 3b) 5c) 9d) 16e) 25

Ans: Section Ref: Estimating the Probability of Completion Dates Level: hard

49. There are four activities on the critical path, and they have variances of 1, 2, 4, and 2. The variance of the critical path is _______.a) 3b) 5c) 9d) 16e) 25

Ans: Section Ref: Estimating the Probability of Completion Dates Level: moderate

50. There are four activities on the critical path, and they have variances of 1, 2, 4, and 2. The standard deviation of the critical path is _________________.a) 3b) 5c) 9d) 16e) 25


51. The probability of completing a project in a specified amount of time is being calculated. For a particular

path through the project, the shows the path’s number of standard deviations that the specified time is past the expected path completion time.a) m-valueb) z-valuec) sigma-valued) s-valuee) alpha-value


52. Joe’s tower fabrication firm has revised their earlier project time estimates. Based on the new time estimates what is the critical path standard deviation?

ACTIVITY PRECEDENCE P M O ETA Complete design None 4 3 2 3B Develop BOMA 2 1 1 1.17C Order Materials B 3 2 1 2D Site Selection A 7 4 3 4.33E Receive Materials C 6 3 2 3.33F Obtain permitsA, D 5 2 1 2.33G Begin fabrication facility development E, F 6 5 3

4.83a) 0.94b) 1.0c) 1.14d) 1.25e) 1.3f) 1.35


53. For projects whose activities have probabilistic time estimates, the probability of completing the project in a specified amount of time is determined by _________________________________________________.a) the expected time for the critical path onlyb) the standard deviation for the critical path onlyc) the expected time and standard deviation for the critical path onlyd) the expected times for all pathse) the expected times and standard deviations for the critical path and paths whose expected times are close to that of the critical path

Ans: Section Ref: Estimating the Probability of Completion Dates

Level: hard

54. Joe’s tower fabrication company client would like to know what the probability is of completing the project in 60 days rather than the 58 estimated days. Based on Z values what is the probability that Joes’ tower fabrication will be able to meet the request if the variance is 1.25?a) -1.6b) 1.6c) -1.79d) 1.79e) 2


55. In calculating the estimated probability of completion value a negative number is obtained. This means:a) your calculation is wrong.b) the project will be delayed.c) the specified completion time is later than the expected completion time.d) the specified completion time is earlier than the expected completion time.e) the variance is incorrect.


56. Which of the following is not a valid reason for reducing the time spent finishing a particular project?a) deadlines b) promised completion datesc) penalty clauses for late completiond) the project started too earlye) the need to put resources on a new project

Ans: Section Ref: Reducing Project Completion Time Level: moderate

57. You may be able to speed up completion of a project by ______________________________________.

a) reducing the standard deviation of activitiesb) recalculating the critical pathc) making additional resources availabled) adding slack to critical activitiese) redoing some of the activities


58. Which of the following is not an example of a method that can be used to reduce the time to complete an activity?a) work on other activitiesb) faster shipments of materialsc) use special equipmentd) work overtimee) work around the clock

Ans: Section Ref: Reducing Project Completion Time Level: easy

59. Shortening the total time for completing a project by incurring higher costs from shortening activities is __.a) normal costb) backward passc) crashingd) levelinge) project control


60. Shortening a project is called the project.a) reducingb) crashingc) cutting shortd) wreckinge) shaking


61. Which of the following information about activities is not needed in determining how to crash a project?a) the normal costb) the crash costc) the crash time estimated) the normal time estimatee) how many dummy activities there are


62. Which of the following is not included in the approach for crashing projects?a) Determine which activity requires the most time.b) Crash the least expensive activity first.c) Determine how much the project needs to be reduced.d) Calculate the total costs associated with crashing the project.e) Determine which activities on the critical path can be reduced.


63. An approach for getting projects done faster and more consistently at or before the project due date is ____.a) business process reengineeringb) PERTc) project inversiond) backcastinge) the critical chain approach

Ans: Section Ref: The Critical Chain ApproachLevel: moderate

64. In the critical chain approach, the focus is on _____________________________________.a) deliverablesb) making activity times certainc) project milestonesd) the final due date of the project

e) individual activities

Ans: Section Ref: The Critical Chain ApproachLevel: hard

65. Which of the following is not characteristic of the critical chain approach?a) It can help get projects done faster and more consistently at or before the project due date.b) The focus is on project milestones.c) The idea is that project activities are uncertain.d) Safety time is added to project time estimates.e) Safety time is placed at the end of the critical path.


66. Which of the following is not characteristic of adding safety time in the critical chain approach?a) Probability and statistics provide no insights into the adding of safety time.b) It can be added by basing time estimates on pessimistic experiences.c) It is added at the end of the critical path.d) It can be added by having more safety factors added at each level of management.e) It can be added to offset possible global reductions in project length made by top management .


67. One way of wasting safety time in the critical chain approach is multitasking, which involves ___________.a) waiting until the last minute to start a projectb) interaction among project activitiesc) having the computer operating system do everythingd) using a person or resource for more than one projecte) reversing the order of the activities


68. A feeding buffer protects ______ path from delays in ______ ____.a) shortest, buffer overflowb) noncritical, critical pathc) critical, noncritical pathd) critical, longest variancee) noncritical, longest variance

Ans: Section Ref: The Critical Chain ApproachLevel: easy

69. An activity has eight weeks allotted to it, but we should be able to do it in five weeks. Waiting three weeks before getting started on it is an example of the _______________________.a) project buffer approachb) common sense approachc) professor approachd) academic approache) student syndrome


70. Removing safety time from the individual activities and putting the total safety time at the end of the critical path creates a(n) ____________________________.a) project safety netb) project bufferc) overconfident project managerd) activity shortagee) larger number of activities


71. PERT is credited with reducing the duration of the Polaris missile project by ___________________.a) one yearb) two yearsc) three yearsd) four yearse) five years

Ans: Section Ref: Network Planning Techniques Level: hard

72. Which of the following represents a way to waste safety time?a) dependencies between activitiesb) multitaskingc) student syndromed) a and b abovee) all of the above


True/False

1. A project is a unique, one-time event that is intended to achieve an objective in a given time period.

Ans: Section Ref: Network Planning Techniques Level: easy

2. Planning consists of adjusting the concept to meet the demand.


3. The termination phase in the project life cycle involves identifying the need for the project.


4. CPM was originally developed to conceive and plan maintenance projects in chemical plants.

Ans: Section Ref: Network Planning Techniques Level: moderate

5. Precedence relationships structure the sequencing of activities.


6. Project managers use network planning techniques to assign resources to activities.


7. The two kinds of network diagrams are activity-on-arrow and activity-on-node.


8. In network diagramming, dashed lines represent precedence relationships.


9. In network diagramming, arrows represent precedence relationships.


10. Backward scheduling develops the LS and LF times.


11. If a delay in an activity will delay completion of the whole project, the activity has slack.


12. The sum of the activity times on the critical path determines the total slack available.


13. When we are unsure about the duration of project activities, we use probabilistic time estimates.


14. In making a forward pass through a network, three activities are immediate predecessors for activity T. The early start time for activity T is the largest EF for the three activities that are immediate predecessors for activity T.


15. In critical path scheduling, slack is computed as the difference between finish and start times.


16. With probabilistic time estimates for activities, (m) denotes the mean time.


17. An activity in a network diagram has an optimistic time estimate of five days, a most likely time estimate of seven days, and a pessimistic time estimate of 15 days. Its expected time is eight days.


18. A Gantt chart can be use to display graphically the scheduled times for activities.


19. The probability of completing a project in a specified amount of time is being calculated. For a particular path through the project, the z-value shows the path’s number of standard deviations that the specified time is past the expected path completion time.

Ans: Section Ref: Reducing Project Completion TimeLevel: moderate

20. For projects whose activities have probabilistic time estimates, the probability of completing the project in a specified amount of time is determined by the standard deviation for the critical path only.

Ans: Section Ref: Estimating the Probability of Completion DatesLevel: hard

21. Crashing is shortening the total time for completing a project by incurring higher costs from shortening activities.

Ans: Section Ref: Reducing Project Completion TimeLevel: moderate

22. An approach for getting projects done faster and more consistently at or before the project due date is the critical chain approach.


23. The TOC focuses on correct placement of buffers.


24. Removing safety time from the individual activities and putting the total safety time at the end of the critical path creates a project buffer.


25. Accounting uses project management information to provide a time line for the marketing program.

Ans: Section Ref: Project Management OM Across The OrganizationLevel: easy

Essay

1. List and briefly describe the phases in the project life cycle.

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2. What are the benefits of network planning techniques?

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3. What are the steps involved in using network planning techniques?

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4. Discuss how to develop the critical path variance.

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5. Identify the variables required to predict the probability of meeting a project completion date.

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6. What are valid reasons for reducing the time spent finishing a particular project?

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7. Define crashing as it relates to project management.

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8. What information about activities is needed in determining how to crash a project?

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9. What is involved in the approach for crashing projects?

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10. What are the characteristics of the critical chain approach?

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11. Name and describe the three ways to add safety time in the critical chain approach.

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12. Name and describe the three ways to waste safety time in the critical chain approach.

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Problems

1. Consider a project having the following seven activities:

ImmediateActivity Predecessors Time (weeks)

A none 3B A 5C B 4D B 5E C 3F D 8G E, F 3

(a) What is the critical time?(b) What is the critical path?(c) What is the slack for each activity?

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A none 4

B none 6C A 9D A 7E B 4F D, E 5G F 4


Ans:

3. Consider a project having the following ten activities:


A none 7B none 3C A 5D A, B 6E C, D 4F D 4G C 9H E, G 8I E, F 6J H, I 5


Ans:


Optimistic Most likely PessimisticImmediate Time (o) Time (m) Time (p)

Activity Predecessors (weeks) (weeks) (weeks)A none 4 7 9B none 3 5 8C A 2 4 6D A, B 6 9 9E C, D 5 5 5F B 2 5 9G E, F 3 3 6

(a) What is the expected time for each activity?(b) What is the expected project completion time?(c) What is the critical path?(d) What is the variance for each activity?(e) What are the expected time and variance of each path?(f) What is the probability that the project will be completed in less than 22 weeks?

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Activity Predecessors (weeks) (weeks) (weeks)A none 2 3 4B A 4 4 8C A 3 5 7D B 5 5 5E B, C 3 6 7F D 4 5 9G E, F 3 3 7


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Activity Predecessors (weeks) (weeks) (weeks)A none 1 5 9B A 6 6 6C A 3 5 9D A 2 4 6E B, C 4 4 4F D 4 7 8G E 2 2 8H E, F 7 8 9I F 4 6 9J G, H, I 3 5 7


Ans:

7. For the following project,Activity Precedence P M OA None 17 15 13B A 13 12 9C A 20 17 15D A 15 14 13E C, D 24 21 18F B, E 20 19 16G B 17 15 10H G, F 8 4 3What is:a) estimated time for each activity (ET)b) critical path activitiesc) each activity varianced) critical path variance

Ans:

Section Ref: Network Planning TechniquesLevel: hard

8. For the project in question #7 what is the Z factor probability that the project will be complete on the 79th day?

9. Consider a project having the following seven activities:Normal Normal Crash Crash

MaximumImmediate Time Cost Time Cost Weeks

Activity Predecessors (weeks) ($) (weeks) ($) Reduced

A none 4 3,000 3 5,0001

B A 9 5,000 7 8,0002

C A 4 7,000 4 7,0000

D B, C 6 6,000 4 8,0002

E C 8 4,000 6 8,0002

F D 3 4,000 2 9,0001

G E, F 4 2,000 2 7,0002

(a) What is the expected project completion time?(b) What is the critical path?(c) What is the most economical way and how much will it cost to reduce the completion time of the project by three weeks? By five weeks?

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Normal Normal Crash CrashMaximum

Immediate Time Cost Time Cost WeeksActivity Predecessors (weeks) ($) (weeks) ($)

ReducedA none 4 3,000 3 6,000

1B none 3 5,000 2 7,000

1C A 9 2,000 7 4,000

2D A, B 2 3,000 2 3,000

0E B 9 4,000 6 7,000

3F C, D 8 4,000 6 9,000

2G E, F 5 2,000 3 5,000

2

(a) What is the expected project completion time?(b) What is the critical path?(c) What is the most economical way and how much will it cost to reduce the completion time of the project by three weeks? By five weeks?

Ans:


Normal Normal Crash CrashMaximum

Immediate Time Cost Time Cost WeeksActivity Predecessors (weeks) ($) (weeks) ($)

ReducedA none 7 3,000 6 6,000

1B A 8 5,000 6 9,000

2C A 2 2,000 1 3,000

1D A 4 3,000 4 3,000

0E B, C 9 4,000 7 6,000

2F C, D 6 4,000 4 9,000

2G E 2 3,000 2 3,000

0H E, F 9 4,000 7 7,000

2I G 1 4,000 1 4,000

0J H, I 8 2,000 6 7,000

2

(a) What is the expected project completion time?(b) What is the critical path?(c) What is the most economical way and how much will it cost to reduce the completion time of the project by three weeks? by five weeks?

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12. Consider an project activity that has an optimistic time of 3 weeks, a most likely time of 10 weeks, and a pessimistic time of 25 weeks. What is the expected time for that activity?

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Short Answer

1. Every project has a ________________________

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2. Project vary in terms of objectives but each has a _______________ of activities

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3. In politics, a _______________ is a candidates ____________ of the resources need to run a successful political campaign.

Ans: feasibility study, assessment Section Ref: Project Life CycleDifficulty: hard

4. CPM was initially developed to plan and _______________ maintenance projects in chemical plants.

Ans: Section Ref: Network Planning TechniquesDifficulty: moderate

5. Project managers can evaluate whether the __________ risk of completing the project on schedule is acceptable.

Ans: Section Ref: Network Planning TechniquesDifficulty: hard

6. Critical path shows the _______________ completion time for the project.

Ans: Section Ref: Network Planning TechniquesDifficulty: easy

7. Deterministic time estimate makes a _______________ time estimate for each project ___________.


8. The most likely time completion date is the _______________ of the beta distribution.

Ans: Section Ref: Network Planning TechniquesDifficulty: hard

9. Planning a project but _______________ is even more important.


10. In crashing a project you first consider _______________ activities on the _______.

Ans: Section Ref: Reducing Project Completion TimeDifficulty: moderate

11. In the TOC, if delays exceed the feeding buffer, the project completion date is still protected by the ___ ___.

Ans: Section Ref: The Critical Chain ApproachDifficulty: moderate

12. The project management approach indicates the timing and the quantity of resources needed. For manufacturing, this input is needed to develop a valid ____.

Ans: Section Ref: The Supply Chain LinkDifficulty: hard

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