Operations Management 1, 3-5

Which one of the following statements regarding operations management is true?
a.Inputs to a production system include capital and materials, but not human resources.
b.Operations management deals only with manufacturing organizations because service organizations do not have tangible outputs.
c.Typical inputs to a production system are processes and consumer goods.
d.Customer participation and information on performance are two special types of inputs to a production system.

Answer: d
Customer participation and information on performance are two special types of inputs to a production system.

Operations management is part of a production system that can be described in the following manner:
Organization: inputs>proceses>outputs.
Which one of the following correctly describes a production system?
a.Airline:pilots>planes>transportation
b.Bank:tellers>computer equipment>deposits
c.Furniture manufacturer:wood>sanding>chair
d.Telephone company: satellitescablescommunication

Answer: c
Furniture manufacturer: wood>sanding>chair

Which of the following is an example of a nested process?
a.At the start of the new semester, a student first pays tuition and then goes to the bookstore.
b.A customer service representative verifies a caller’s account information.
c.A candidate’s intent to graduate is checked for financial holds by the Bursar and for degree requirements by Advising before the diploma mill prints their sheepskin.
d.A stockbroker calls a client and advises her to sell silver short.

Answer: c
A candidate’s intent to graduate is checked for financial holds by the Bursar and for degree requirements by Advising before the diploma mill prints their sheepskin.

Which of the following statements is more of a general characteristic of a manufacturing organization, as compared to a service organization?
a.Short-term demand tends to be highly variable.
b.Operations are more capital intensive.
c.Outputs are more intangible.
d.Quality is more difficult to measure.

Answer: b
Operations are more capital intensive.

Which one of the following statements is more of a general characteristic of a service organization, as compared to a manufacturing organization?
a.Output can be inventoried.
b.The response time is longer.
c.There is less customer contact.
d.The facilities tend to be smaller.

Answer: d
The facilities tend to be smaller.

Service processes usually have:
a.physical, durable output.
b.low levels of customer contact.
c.output that can be inventoried.
d.low levels of capital intensity.

Answer: d
low levels of capital intensity.

Which of the following statements concerning manufacturing and service organizations is generally true?
a.A service facility is more likely to serve national or even international markets.
b.Manufacturing organizations generally have more difficulty in matching capacity with demand.
c.In many service organizations, such as hospitals and entertainment centers, customers themselves are inputs to the transformation processes.
d.Most service organizations can buffer themselves against uncertain demand by creating inventories and smoothing output levels.

Answer: c
In many service organizations, such as hospitals and entertainment centers, customers themselves are inputs to the transformation processes.

Refresh your understanding of the word customer in operations management and identify the statement that is TRUE.
a.Manufacturing systems can have only internal customers because other departments are responsible for serving the external customer.
b.Only service organizations have external customers because service is provided in the presence of a customer.
c.Customers can be internal or external in both manufacturing and service operations.
d.The concept of an external customer is no longer relevant because delivery is given by third-party distribution companies.

Answer: c
Customers can be internal or external in both manufacturing and service operations.

Which of the following statements is best? Operations management can be made more effective by:
a.focusing on aspects of operations that are directly related to production.
b.coordinating operations with other functional areas that impact operations.
c.making production early enough so that stockouts do not occur.
d.coordinating all activities related to operations directly or indirectly, both within and outside the organization.

Answer: d
coordinating all activities related to operations directly or indirectly, both within and outside the organization.

A set of activities that delivers value to external customers is a:
a.supply chain.
b.core process.
c.support process.
d.system

Answer: b
core process

The process that facilitates the placement of orders and identifies, attracts, and builds relationships with external customers is called the:
a.customer relationship process.
b.new service development process.
c.order fulfillment process.
d.supplier relationship process.

Answer: a
customer relationship process

The process that includes the activities required to produce and deliver the service or product to the customer is called the:
a.customer relationship process.
b.new service development process.
c.order fulfillment process.
d.supplier relationship process.

Answer: c
order fulfillment process.

In response to social and political moves to discourage cigarette smoking, major cigarette manufacturers have had to diversify into other products. Identifying the pressures against smoking is an example of:
a.environmental scanning.
b.market segmentation.
c.flow strategy.
d.mission statement development.

Answer: a
environmental scanning

Monitoring trends in the industry, the marketplace, and society for potential opportunities or threats is known as:
a.flow strategy.
b.market segmentation.
c.environmental scanning
d.mission statement development.

Answer: c
environmental scanning

Core competencies are:
a.product or service attributes that represent the needs of a particular market segment.
b.another name for competitive priorities.
c.various flow strategies.
d.the unique resources and strengths that management considers when formulating strategy.

Answer: d
the unique resources and strengths that management considers when formulating strategy.

All of the following are core competencies except:
a.facilities.
b.market and financial know-how.
c.systems and technology.
d.environmental scanning.

Answer: d
environmental scanning.

The Gap, Inc. has targeted teenagers and young adults needing casual clothes and, for its GapKids stores, the parents or guardians of infants through 12-year-olds. This is an example of:
a.market segmentation.
b.a collaborative effort between the company and its customers.
c.a needs assessment.
d.a mission statement.

Answer: a
market segmentation.

Competitive priorities define the dimensions on which the firm should excel with its products or services. Which one of the following statements regarding this concept is TRUE?
a.The strategy of emphasizing lower price is most appropriate when the product is highly differentiated.
b.McDonald’s restaurants emphasize high-performance design quality rather than consistent quality.
c.All nine dimensions of competitive priorities should be equally emphasized in order to service the increasingly competitive market of the 1990s.
d.Often there are trade-offs among competitive priorities; thus, the best emphasis is situational.

Answer: d
Often there are trade-offs among competitive priorities; thus, the best emphasis is situational.

Competitive priorities state the dimensions on which a firm can excel. Which one of the following statements about each dimension is TRUE?
a.Emphasizing low price is most appropriate for differentiated products in the growth stage of demand.
b.A firm that intends to excel at top quality can succeed only when its production volume is very high.
c.McDonald’s is a typical example of an organization that excels at volume flexibility rather than quality consistency.
d.For a firm that gives top priority to customization, volumes for any individual product tend to be low.

Answer: d
For a firm that gives top priority to customization, volumes for any individual product tend to be low.

A firm that competes based on development speed would not:
a.have critical suppliers participate in the process.
b.have a high level of cross-functional coordination between marketing and sales.
c.practice concurrent engineering.
d.have critical competitors engage in the design process.

Answer: d
have critical competitors engage in the design process.

The first three cars I bought all fell apart around 50,000 miles. It was called planned obsolescence and no one seemed to care until companies entered the market and promised 70,000, then 80,000, and finally 100,000 warranties. What sets a great car apart from a good one now is not the quality, which is assumed, but performance, safety and fuel economy. A car that can achieve all three is highly sought after. In the automotive market, performance, safety and fuel economy are sterling examples of:
a.order winners.
b.the voice of the engineer.
c.order qualifiers.
d.the voice of the customer.

Answer: a
order winners

An ethnic restaurant, in serving a lovely, four-hour, seven-course dinner for two for $250, is giving particular emphasis to which dimension of competitive priorities?
a.Price
b.Consistent quality
c.Delivery speed
d.Top quality

Answer: d
Top quality

A company’s ability to reconfigure processes to meet diverse types of customer needs would be best described by:
a.top quality.
b.variety.
c.customization.
d.delivery speed.

Answer: c
customization.

In an assembly operation at a furniture factory, six employees assembled an average of 450 custom cabinet drawers per 5-day week. What is the labor productivity of this operation?
a.90 chairs per worker per day
b.20 chairs per worker per day
c.15 chairs per worker per day
d.75 chairs per worker per day

Answer: c
15 chairs per worker per day

A manufacturing process requires 12 minutes of labor to make 10 units of production. Which of the following actions will increase productivity?
1. Increase labor per 10 units of production
2.Decrease labor per 10 units of production
3. Increase number of units per 10 minutes of labor
4.Decrease number of units per 12 minutes of labor
a.1. and 3. only
b.2. and 4. only
c.1. and 4. only
d.2. and 3. only

Answer: d
2. and 3. only

The details of weekly output and input for a fabrication process are as follows: output is 400 units, with a standard selling price of $100 per unit. For the week, total labor costs are: 10 workers at 40 hours for the week, paid $15 per hour. Total material costs for the 400 units are $5,000. Weekly overhead is charged at the rate of 1.5 times the labor costs. What is the multifactor productivity for the week?
a. 0.02
b.0.75
c.1.50
d.2.00

Answer: d
2.00

Which of the following would be considered an advantage of global competition?
a.ability to safeguard proprietary technology in working with offshore suppliers
b.a recent climate of low political risk and lessening nationalization
c.high levels of worker skills in foreign countries mean less required training
d.strong global competition and increased worldwide demand

Answer: d
strong global competition and increased worldwide demand

Which one of the following statements concerning process management is best?
a.Process management is a short-term decision, and thus it has a tactical rather than a strategic focus.
b.Process changes should be made only when introducing new products or services.
c.The variable underlying all four major process decisions is volume.
d.A company’s operations strategy is the primary output of its major process decisions.

Answer: c
The variable underlying all four major process decisions is volume.

Several key decisions must be made in building an effective process design. Which one of the following best identifies them?
a.Capital intensity, resource flexibility, facility location, process reengineering, and process choice
b.Product or service life cycle, capital intensity, process reengineering, process choice, and customer involvement
c.Capital intensity, process choice, inventory placement, resource flexibility, and customer involvement
d.Capital intensity, resource flexibility, customer involvement, and process structure

Answer: d
Capital intensity, resource flexibility, customer involvement, and process structure

A yacht maker produces customized yachts for a clientele that wants a one-of-a-kind watercraft. This process is said to be:
a.divergent.
b.complex.
c.specialized.
d.hybrid.

Answer: a
divergent

The process structure that best describes a waiter’s position at a restaurant would be classified as:
a.front office.
b.back office.
c.hybrid office.
d.inner office.

Answer: a
front office

Field service representatives are classified as a:
a.back office.
b.hybrid office.
c.front office.
d.mid office.

Answer: c
front office

Front offices typically emphasize:
a.low cost operations and on-time delivery.
b.top quality and customization.
c.on-time delivery and standardization.
d.top quality and low cost operations.

Answer: b
top quality and customization

Which of the following is sometimes called mass production?
a.Batch process and make-to-order strategy
b.Line process and make-to-stock strategy
c.Continuous flow process and assemble-to-order strategy
d.Job process and make-to-order strategy

Answer: b
Line process and make-to-stock strategy

A job process should be preferred when:
a.workforce and equipment are specialized.
b.products are made to stock type.
c.customization is high and volume is low.
d.customization is low and volume is high.

Answer: c
customization is high and volume is low

Which of the following statements about process choice is best?
a.A batch process typically has a standard sequence of operations through the facility.
b.Automobiles and appliances are examples of products created using a continuous flow process.
c.Continuous flow processes are very capital intensive.
d.A custom cake operation is an example of a batch process.

Answer: c
Continuous flow processes are very capital intensive

The product-process matrix used to analyze manufacturing operations brings together the elements of:
a.volume, process, and intensity.
b.process, intensity, and product design.
c.intensity, volume, and process.
d.customization, volume, and process.

Answer: d
customization, volume, and process

Which one of the following statements about process management is best?
a.When customization must be high, equipment should be general purpose, and employees need to perform a broader range of duties.
b.the traditional relationship between capital intensity and resource flexibility is that if one is high, so is the other.
c.Creating a more capital-intensive process tends to reduce the fixed cost and raise the variable unit cost.
d.Economies of scope mean that a process should be devoted to a single product or service to achieve high volumes.

Answer: a
When customization must be high, equipment should be general purpose, and employees need to perform a broader range of duties.

A company is considering two options for the production of a part needed downstream in the manufacturing process. Particulars are as follows:
Specialized automation:Fixed Costs = $9,000 / month
Variable Cost / Unit = $2
General automation:Fixed Costs = $3,000 / month Variable Cost / Unit = $5 What is the monthly break-even quantity for choosing between the two automation approaches?
a.1,000 units
b.2,000 units
c.6,000 units
d.12,000 units

Answer: b
2,000 units

For a monthly volume of 3,000 units, which automation approach should be chosen?
a.Specialized automation
b.General automation
c.Either approach is acceptable, because costs are the same for either option at 3,000 units.
d.Can’t be determined with information given.

Answer: a
Specialized automation

What does the company save each month by selecting this low-cost option (for monthly requirements of 3,000 units)?
a.$1,000
b.$3,000
c.$6,000
d.Can’t be determined with information given.

Answer: b
$3,000

More fixed automation typically means:
a.decreased labor productivity.
b.longer cycle time.
c.higher demand volumes.
d.lower sales.

Answer: c
higher demand volumes.

Which of the following statements regarding capital intensity is NOT true?
a.Capital intensity can be a prohibitive investment for low-volume operations.
b.Decreased amounts of automation increase capital intensity.
c.Automation refers to a system or piece of equipment that is self-regulating and self-acting.
d.Leasing is a method to acquire equipment while defraying financial risk.

Answer: b
Decreased amounts of automation increase capital intensity.

Which one of the following statements about flexible automation is best?
a.Investment cost is lower when a transfer machine handles many operations.
b.Chemical processing plants and oil refineries mainly utilize programmable automation.
c.It is an automatic process that can be reprogrammed to handle various products.
d.It achieves top efficiency; accommodating new products is difficult and costly.

Answer: c
It is an automatic process that can be reprogrammed to handle various products.

Low capital intensity is generally associated with:
a.low resource flexibility.
b.high customer involvement.
c.high levels of fixed automation.
d.high volumes.

Answer: b
high customer involvement

As it relates to process management, the concept of a flexible workforce is defined as:
a.a labor force that often changes in size because of hirings and firings.
b.workers who are willing to work large amounts of overtime when necessary.
c.workers who are capable of performing many different tasks.
d.a labor force with a high turnover rate.

Answer: c
workers who are capable of performing many different tasks.

Which statement about economies of scope is not true?
a.Economies of scope are often attained through programmable automation.
b.Economies of scope bring together two competitive priorities—customization and low price.
c.Economies of scope reflect the ability to produce multiple products more cheaply in combination than separately.
d.Economies of scope reflect low capital intensity and high resource flexibility

Answer: d
Economies of scope reflect low capital intensity and high resource flexibility

One method for a factory to gain operational focus is to:
a.build large enough factories to produce all products and services the company offers.
b.hire more specialists and supervisors to control the operations.
c.reorganize existing facilities to the plant-within-plant approach.
d.remodel stores to create the effect of many small boutiques under one roof.

Answer: c
reorganize existing facilities to the plant-within-plant approach.

Which one of the following statements concerning process reengineering is not true?
a.Reengineering is the fundamental rethinking and radical design of business processes.
b.Reengineering efforts should focus on functional departments.
c.Information technology is a major enabler of reengineering.
d.Reengineering requires a “clean slate” philosophy.

Answer: b
Reengineering efforts should focus on functional departments

Which statement on reengineering and process improvement is best?
a.Only process improvement programs make use of cross-functional teams.
b.Process improvement focuses only on critical or core processes such as order fulfillment.
c.Reengineering starts with a “clean slate” whereas process improvement looks for ways to incrementally improve.
d.Only reengineering focuses on business processes.

Answer: c
Reengineering starts with a “clean slate” whereas process improvement looks for ways to incrementally improve.

A team consisting of members from each functional area affected by the process change is referred to as a(n):
a.reengineering team.
b.cross-functional team.
c.process team.
d.improvement team.

Answer: b
cross-functional team

Process analysis focuses on:
a.how work is actually done.
b.who is responsible for the customer.
c.the customer’s needs.
d.the number of steps in between supplier and customer.

Answer: a
how work is actually done.

A voluntary system by which employees submit their ideas on process improvements is called:
a.process contribution.
b.a suggestion system.
c.a brainstorming session.
d.a Pareto system.

Answer: c
a brainstorming session.

The step in process analysis that immediately follows the scope definition phase is the:
a.document process phase.
b.evaluate performance phase.
c.redesign process phase.
d.implement changes phase.

Answer: a
document process phase.

The step in process analysis that immediately follows the performance evaluation phase is the:
a.document process phase.
b.define scope phase.
c.redesign process phase.
d.implement changes phase.

Answer: c
redesign process phase

A systematic approach to process analysis includes the step:
a.reengineering.
b.integration.
c.order fulfillment.
d.define scope.

Answer: d
define scope.

Performance measures such as average response times, repair times, and percent defective are referred to as:
a.benchmarks.
b.metrics.
c.targets.
d.tactics.

Answer: b
metrics

A flowchart traces the flow of all EXCEPT the following:
a.information through a process
b.customers through a process
c.equipment through a process
d.safety regulations through a process

Answer: d
safety regulations through a process

A flowchart created at the strategic level of an organization should show:
a.core processes and their linkages.
b.details of a process as bracketed by its scope.
c.individual steps that may have been aggregated at a higher level of analysis.
d.areas that are seen and unseen by the customer.

Answer: a
core processes and their linkages.

Cross-functional coordination is at particular risk where:
a.there is low process divergence.
b.there are handoffs in the process.
c.functional silos exist.
d.it is not possible to create a flowchart.

Answer: b
there are handoffs in the process.

An effective tool for showing steps of a service process with a high level of customer contact is a:
a.Pareto chart.
b.flowchart.
c.service blueprint.
d.check sheet.

Answer: c
service blueprint

A process chart activity that changes, creates, or adds something is a(n):
a.operation.
b.transportation.
c.inspection.
d.delay.

Answer: a
operation

Which one of the following groups of activities is likely to be shown on a process chart?
a.Operation, inspection, delay
b.Operation, capital intensity, flow strategy
c.Transportation, material flow, physical layout
d.Storage, delay, personnel involved

Answer: a
Operation, inspection, delay

A professor can grade a quiz in 30 seconds. Over the course of an academic year he has 6 sections of a course with an average of 30 students with 10 quizzes in each section. If he is paid $40 an hour, how much is his annual quiz-grading labor cost to the university?
a.$60
b.$100
c.$600
d.$36,000

Answer: c
$600

A welder can weld 2 angle irons together in 2 minutes. Over the course of an entire year she will assemble 1,000 units, each of which requires 3 such welds (i.e., welding two angle irons together is one step, and three such steps are needed per unit). If she is paid $25 an hour, how much is her annual welding labor cost?
a.$1,000
b.$1,250
c.$2,500
d.$3,000

Answer: c
$2,500

____ estimates the proportion of time spent by people or machines on different activities, based on randomized observations over time.
a.The time study method
b.The elemental standard data approach
c.The predetermined data approach
d.The work sampling method

Answer: d
The work sampling method

All of the following are steps in setting a time standard using the time study method EXCEPT:
a.consulting cost accounting data.
b.selecting the work elements.
c.determining the sample size.
d.timing the elements.

Answer: a
consulting cost accounting data.

____ uses a published database of normal times for a full array of micromotions that make up the elements of task being studied.
a.The time study method
b.The elemental standard data approach
c.The predetermined data approach
d.The work sampling method

Answer: c
The predetermined data approach

Which one of the following statements about work measurement is TRUE?
a.Work sampling is a technique to determine the proportion of time spent on different activities.
b.In determining the normal time for the cycle, using a rating factor less than one (1.0) will increase the total time allowed for a job to be performed, relative to the select time.
c.Performance rating factors are not needed in the derivation of time standards.
d.The time study method is most appropriate for non-repetitive jobs in which the nature of the task differs each time.

Answer: a
Work sampling is a technique to determine the proportion of time spent on different activities.

A time study analyst is attempting to determine the standard time for a work element. She observes a worker performing the work element at a higher-than-average pace. How will this fact be reflected in the time standard that is eventually created?
a.The frequency of the work element per cycle will be increased.
b.The proportion of allowance time will be increased above 1.0.
c.The performance rating factor will be set greater than 1.0.
d.The normal time for the work element will be increased.

Answer: c
The performance rating factor will be set greater than 1.0.

A manager is interested in setting a time standard for a machining operation. Which one of the following is LEAST likely to be of use?
a.Time-study method
b.Elemental standard data approach
c.Predetermined data approach
d.Work sampling method

Answer: d
Work sampling method

Which work measurement technique breaks down tasks into a series of generic micromotions?
a.Time study method
b.Elemental standard data approach
c.Predetermined data approach
d.Work-sampling method

Answer: c
Predetermined data approach

A Manager of a fiberglass molding operation suspects that the number of process failures is related to the number of total units produced of a particular product. A tool most useful in this analysis would be a:
a.checklist.
b.cause-and-effect diagram.
c.Pareto chart.
d.scatter diagram.

Answer: d
scatter diagram

Which one of the following techniques will help management trace customer complaints directly to the process involved?
a.Cause-and-effect diagram
b.Quality circles
c.Quality engineering
d.Specification management

Answer: a
Cause-and-effect diagram

A good brainstorming session has the characteristic of:
a.good judgment skills.
b.ability to think of creative ideas.
c.skill in identifying the best payoffs.
d.ability to analyze a process analytically.

Answer: b
ability to think of creative ideas.

Benchmarking involves four basic steps, which are:
a.plan, do, check, and act.
b.planning, analysis, integration, and action.
c.search, check, systematize, and act.
d.find, do, change, and calibrate.

Answer: b
planning, analysis, integration, and action

An accounting firm realizes it is woefully inadequate at cultivating new clients. It is allowed to observe a rival firm perform the new-client cultivation process in hopes of gleaning improved methods it can adopt. This is an example of:
a.competitive benchmarking.
b.functional benchmarking.
c.internal benchmarking.
d.generic benchmarking.

Answer: a
competitive benchmarking.

An accounting professor realizes she is woefully inadequate at performing research. She discusses the art of research with a colleague and gains important insights that permit her to establish a research agenda. This is an example of:
a.competitive benchmarking.
b.functional benchmarking.
c.internal benchmarking.
d.generic benchmarking.

Answer: c
internal benchmarking.

A benchmarking team meets for the first time and decides to try to improve its order delivery time and selects another firm as a benchmarking partner. This phase of the benchmarking process is called:
a.planning.
b.selection.
c.integration.
d.action.

Answer: a
planning.

Which one of the following statements about benchmarking is TRUE?
a.Benchmarking is useful only when a company compares itself against other companies.
b.Because of the power of benchmarking, specific plans of action are not necessary.
c.Benchmarking is the same as the plan-do-check-act cycle in continuous improvement.
d.Benchmarking focuses on setting quantitative goals for continuous improvement.

Answer: d
Benchmarking focuses on setting quantitative goals for continuous improvement.

When managing processes, it is vital that:
a.attention is paid to competitive priorities and strategic fit.
b.design teams are allowed to function creatively and set their own charter.
c.design teams are not held accountable since their involvement ends once the new process rolls out.
d.the organization is not satisfied unless fundamental reengineering changes are made

Answer: a
attention is paid to competitive priorities and strategic fit.

4 core processes or Supply chain

1.supplier relationship process
2.new service/product development process
3.order fulfillment process
4.Customer relationship process.

Competitive priorities:

the critical dimensions that a process or supply chain must posses to satisfy its internal or external customers, both now and in the future.

Job Shop

manufacturer’s operation that specializes in low-to-medium-volume production and utilizes job or batch processes. CUSTOMIZES

Assemble-to-order strategy

a strategy for producing a wide variety of products from relatively few subassemblies and components after the customer orders are received. FLEXIBLITY

Nested process

the concept of a process within a process.

Environmental scanning:

the process by which managers monitor trends in the environment for potential opportunities or threats.

Order qualifier

a demonstrated level of performance of an order winner that is required for a firm to do business in a particular market segment.

Productivity Formula

Output/Input

Front office

a process with high customer contact where the service provider interacts directly with the internal or external customers.

Assemble-to-order strategy

a strategy for producing a wide variety of products from relatively few subassemblies and components after the customer orders are received.

Fixed automation:

a manufacturing process that produces 1 type of part or product in a fixed sequence of simple operations.

Flexible automation

manufacturing process that can be changed easily to handle various products.

Reengineering

the fundamental rethinking and radical redesign of processes to improve performance dramatically in terms of cost quality, service, and speed.

Elemental standard data

a database of standards compiled by a firm’s analysts for basic elements that they can draw on later to estimate the time required for a particular job, which is most appropriate when products or services are highly customized, job processes prevail, and process divergence is great.

Steps in time study Formula

1.selecting elements
2.timing the elements
3.Determining sample size
4.Setting the final standard

Allowance Factors

time added to the normal time to adjust for certain factors.

Internal Benchmarking

involves using an organizational unit with superior performance as the benchmark for other units.

Competitive benchmarking

comparisions with a direct industry competitor.

Functional Benchmarking

compares areas such as administration, customer service, and sales operations with those outstanding firms in an industry.

4 steps of Benchmarking

1.Plan
2.Analysis
3.Integration
4.Action