Management Chapter 16

A firm wants to develop a level material use schedule based on the following data. What should be the setup cost? Desired lot size: 60 Annual demand: 40,000 Holding cost: $20 per unit per year Daily production rate: 320 Work days per year: 250 A) $0.45 B) $4.50 C) $45 D) $450 E) $500

A) $0.45

Which of the following is specifically characterized by continuous and forced problem solving via a focus on throughput and reduced inventory? A) Just-in-time (JIT) B) Toyota Production System (TPS) C) Lean operations D) Material requirements planning (MRP) E) kanban

A) Just-in-time (JIT)

If a factory wants to cut its current lot size in half, by what proportion must setup cost change? A) Setup cost must be cut to one fourth its current value. B) Setup cost must also be cut in half from its current value. C) Setup cost must double from its current value. D) Cannot be determined. E) Setup cost must quadruple from its current value.

A) Setup cost must be cut to one fourth its current value.

Concerning relationships with suppliers, which of the following combinations is critical to the success of JIT? A) close relationships with trust B) close relationships with skepticism C) distant relationships with trust D) distant relationships with skepticism E) none of the above

A) close relationships with trust

The list of 5Ss, although it looks like a housekeeping directive, supports lean production by: A) identifying non-value items and removing them, in the "sort/segregate" category. B) reducing inventory, in the "standardize" category. C) increasing variability through standardized procedures, in the "standardize" category. D) eliminating wasted motion through ergonomic studies, in the "support" category. E) building good safety practices, in the "shine/sweep" category.

A) identifying non-value items and removing them, in the "sort/segregate" category.

How can a reduction of in-transit inventory be encouraged? A) supplier location near plants B) high setup costs C) low carrying costs D) use of trains, not trucks E) low-cost, global suppliers

A) supplier location near plants

A product has annual demand of 100,000 units. The plant manager wants production to follow a four- hour cycle. Based on the following data, what setup cost will enable the desired production cycle? d = 400 per day (250 days per year), p = 4000 units per day, H = $40 per unit per year, and Q = 200 (demand for four hours, half a day). A) $2.00 B) $7.20 C) $18.00 D) $64.00 E) $1,036.80

B) $7.20

If the goals of JIT partnerships are met, which of the following is a result? A) For incoming goods, receiving activity and inspection are outsourced. B) In-transit inventory falls as suppliers are located closer to facilities. C) Suppliers maintain a variety of customers to reduce risk. D) In-plant inventory replaces in-transit inventory. E) All of the above are consequences of meeting the JIT partnership goals.

B) In-transit inventory falls as suppliers are located closer to facilities.

Which one of the following statements is TRUE regarding JIT inventory? A) It exists just in case something goes wrong. B) It is the minimum inventory necessary to keep a perfect system running. C) It hides variability. D) It is minimized with large lot production. E) It increases if setup costs decrease.

B) It is the minimum inventory necessary to keep a perfect system running.

What does TPS stand for? A) Total Production Streamlining B) Toyota Production System C) Taguchi's Production S's D) Total Process Simplification E) Transparent Processing System

B) Toyota Production System

Which of the following is specifically characterized by a focus on continuous improvement, respect for people, and standard work practices? A) Just-in-time (JIT) B) Toyota Production System (TPS) C) Lean operations D) Material requirements planning (MRP) E) kanban

B) Toyota Production System (TPS)

Which one of the following is NOT a layout tactic in a JIT environment? A) work cells for families of products B) fixed equipment C) minimizing distance D) little space for inventory E) poka-yoke devices

B) fixed equipment

The cook in a fast-food restaurant knows that 2 hamburger patties and an order of fries should be started for each car that is waiting in line. This is best an example of: A) keiretsu. B) kanban. C) push production. D) kaizen. E) EOQ.

B) kanban

20) Characteristics of just-in-time partnerships do NOT include: A) removal of in-transit inventory. B) large lot sizes to save on setup costs and to gain quantity discounts. C) long-term contracts. D) produce with zero defects. E) focus on core competencies.

B) large lot sizes to save on setup costs and to gain quantity discounts.

Great Lakes Barge and Baggage Company makes, among other things, battery-operated bilge pumps. Which of the following activities is NOT part of JIT? They: A) communicate their schedules to suppliers. B) produce in long production runs to reduce the impact of setup costs. C) use a pull system to move inventory. D) continuously work on reducing setup time. E) produce in small lots.

B) produce in long production runs to reduce the impact of setup costs.

Which of the following is not characteristic of a TPS employee? A) knowledgeable B) strict job classifications C) know more about their job than anyone else D) empowered E) All of the above characterize a TPS employee.

B) strict job classifications

The number of kanbans should be equal to which of the following? A) one B) the ratio of (demand during lead time + safety stock) to container size C) one-half of the EOQ D) one full day's production divided by the EOQ E) the ratio of demand during lead time to (container size + safety stock)

B) the ratio of (demand during lead time + safety stock) to container size

Which one of the following is not a benefit of JIT implementation? A) cost reduction B) variability increase C) rapid throughput D) quality improvement E) rework reduction

B) variability increase

Which of the following is an illustration of employee empowerment? A) UPS drivers are trained to perform several motions smoothly and efficiently. B) Unionization of the work place brings better morale and therefore better quality. C) "No one knows the job better than those who do it." D) all of the above E) none of the above

C) "No one knows the job better than those who do it."

Lead time for computers is 7 days with daily demand of 5 computers and a safety stock of 1 day. Each kanban holds 8 computers. What is the correct number of kanbans? A) 4.5 B) 1 C) 5 D) 7 E) 8

C) 5

Which of the following is NOT a source of variability? A) Employees, machines, and suppliers produce units late. B) Customer demand is unknown. C) Employees, machines, and suppliers produce units that conform to standards. D) Engineering drawings are inaccurate. E) Drawings or specifications are incomplete.

C) Employees, machines, and suppliers produce units that conform to standards.

JIT makes quality cheaper because: A) the cost of low quality can be hidden as inventory cost. B) JIT adds more buffers to the system. C) JIT prevents long runs of defects. D) B and C E) A, B and C

C) JIT prevents long runs of defects.

Which of the following is specifically characterized by the elimination of waste through a focus on exactly what the customer wants? A) Just-in-time (JIT) B) Toyota Production System (TPS) C) Lean operations D) Material requirements planning (MRP) E) kanban

C) Lean operations

Which of the following is NOT one of the Seven Wastes? A) overproduction B) transportation C) assignment D) defective product E) motion

C) assignment

What does the Japanese word "kanban" mean? A) low inventory B) employee empowerment C) card D) continuous improvement E) lot size of one

C) card

Which one of the following is a concern expressed by suppliers in JIT partnerships? A) having too many customers B) delivery to the point of use C) having limited ability to respond to changes in product and quality D) large lot sizes E) customers' infrequent engineering changes

C) having limited ability to respond to changes in product and quality

Which of the following is NOT an attribute of lean operations? A) eliminating almost all inventory through just-in-time techniques B) minimizing space requirements by reducing the distance a part travels C) pushing responsibility to the highest level possible through centralized decision making D) educating suppliers to accept responsibility for helping meet customer needs E) building worker flexibility through cross-training and reducing job classifications

C) pushing responsibility to the highest level possible through centralized decision making

Which one of the following scenarios represents the use of a kanban to reduce inventories? A) A supervisor tells the operators to stay busy and start producing parts for next month. B) A "supplier" work center signals the downstream workstation that a batch has been completed. C) A supervisor signals to several work centers that the production rate should be changed. D) A "customer" work center signals to the "supplier" workstation that more parts are needed. E) An operator asks the next station's operator to help him fix his machine.

D) A "customer" work center signals to the "supplier" workstation that more parts are needed.

A manufacturer took the following actions to reduce inventory. Which of these is generally not accepted as a JIT action? A) It used a pull system to move inventory. B) It produced in ever smaller lots. C) It required deliveries directly to the point of use. D) It picked the supplier that offered the lowest price based on quantity discounts. E) It worked to reduce the company's in-transit inventory.

D) It picked the supplier that offered the lowest price based on quantity discounts.

Which of the following statements regarding a pull system is TRUE? A) Large lots are pulled from upstream stations. B) Work is pulled to the downstream stations before it is actually needed. C) Manufacturing cycle time is increased. D) Problems become more obvious. E) None of the above is true of a pull system.

D) Problems become more obvious.

Who is credited with coining the phrase, "Inventory is evil"? A) Poka Yoke B) Pat "Keiretsu" Morita C) Kanban Polka D) Shigeo Shingo E) Taiichi Ohno

D) Shigeo Shingo

A grocery store is attempting to implement a kanban system. Which of the following would not be an application of kanbans? A) An empty doughnut tray signaling the bakery to produce 2 dozen glazed doughnuts. B) A line of 5 people in the Chinese department signaling the department to heat 5 Crab Rangoon. C) A red light on top of the cashier's lane signals that the cashier needs additional change replenished. D) The meat department stocking up on turkeys before Thanksgiving. E) All of the above are kanban applications.

D) The meat department stocking up on turkeys before Thanksgiving.

Kanban is associated with all EXCEPT which of the following? A) small lot sizes B) signals, such as cards, lights, or flags C) moving inventory only as needed D) increased material handling E) reductions in inventory

D) increased material handling

Which of the following is not a goal of JIT partnerships? A) removal of unnecessary activities B) removal of in-plant inventory C) removal of in-transit inventory D) inspect all incoming shipments to ensure zero defects E) All of the above are goals of JIT partnerships.

D) inspect all incoming shipments to ensure zero defects

Excess bags of basic commodities such as flour and sugar that are stored in a restaurant's kitchen represent which of the following wastes? A) overproduction B) queues C) transportation D) inventory E) defective product

D) inventory

Which of the following is characteristic of lean operations? A) inventory buffers between each workstation to minimize system downtime B) easy, mindless jobs C) specialty workers with no cross-training D) low space requirements E) no supplier partnerships

D) low space requirements

Which one of the following is a characteristic of a JIT partnership? A) third-party logistics never used B) maximal product specifications imposed on supplier C) active pursuit of vertical integration D) removal of incoming inspection E) frequent deliveries in large lot quantities

D) removal of incoming inspection

Lead time for computers is 5 days with daily demand of 25 and safety stock of 5 computers. If management wants to use 10 kanbans how many computers should each one hold? A) 25 B) 1 C) 5 D) 10 E) 13

E) 13

Lead time for cakes is 2 days with daily demand of 10 cakes and a safety stock of ½ a day. Each container (kanban) holds 1 cake. What is the correct number of kanbans? A) 4 B) 1 C) 5 D) 10 E) 25

E) 25

Lean operations are known for their: A) employee development. B) supplier education. C) supplier partnerships. D) challenging jobs. E) All of the above are attributes of lean operations.

E) All of the above are attributes of lean operations.

Which of the following is NOT a goal of JIT partnerships? A) removal of unnecessary activities B) removal of in-plant inventory C) removal of in-transit inventory D) obtain improved quality and reliability E) All of the above are goals of JIT partnerships.

E) All of the above are goals of JIT partnerships.

Which of the following is TRUE regarding the steps to reducing setup times? A) The first step involves performing as much setup preparation as possible while the process/machine is operating. B) The cycle of steps is repeated until setup time is reduced to under a minute. C) The standardization of both tooling and work procedures is advantageous to setup time reduction. D) Move material closer and improve material handling are done before operator training. E) All of the above are true.

E) All of the above are true.

Which of the following is NOT a concern of suppliers as they prepare to enter into JIT partnerships? A) Suppliers feel that they would be less at risk if they contracted with more than one customer. B) Suppliers are concerned that customers will present frequent engineering changes with inadequate lead time to deal with them. C) Suppliers feel that their processes are suited for larger lot sizes than the customer wants. D) Suppliers are concerned that frequent delivery of small quantities is economically prohibitive. E) All of the above represent JIT supplier concerns.

E) All of the above represent JIT supplier concerns.

The 5Ss: A) have the "flavor" of a housekeeping list. B) are a checklist for lean operations. C) have become a list of seven items in American practice. D) can be used to assist with necessary changes in organizational culture. E) All of these are true.

E) All of these are true.

Which of the following is FALSE regarding the links between JIT and quality? A) Inventory hides bad quality; JIT immediately exposes it. B) JIT reduces the number of potential sources of error by shrinking queues and lead times. C) As quality improves, fewer inventory buffers are needed; in turn, JIT performs better. D) If consistent quality exists, JIT allows firms to reduce all costs associated with inventory. E) JIT increases the cost of obtaining good quality.

E) JIT increases the cost of obtaining good quality.

Which one of the following statements is TRUE about the kanban system? A) The quantities in the containers are usually large to reduce setup costs. B) It is associated with a push system. C) It is useful to smooth operations when numerous quality problems occur. D) The supplier workstation signals the customer workstation as soon as a batch is completed. E) The customer workstation signals to the supplier workstation when production is needed.

E) The customer workstation signals to the supplier workstation when production is needed.

27) Just-in-time systems make demands on layouts, including the need for: A) distance reduction. B) increased flexibility. C) reduced space and inventory. D) cross-trained, flexible employees. E) all of the above

E) all of the above

In JIT partnerships, suppliers have several concerns. Which of the following is NOT such a concern? A) desire for diversification B) poor customer scheduling C) small lot sizes D) producing high enough quality levels E) customers' infrequent engineering changes

E) customers' infrequent engineering changes

Which of the following is generally found in most lean environments? A) a push or pull system, depending upon the rate of demand B) a push system for high margin items and a pull system for low margin items C) a push system for purchased parts and a pull system for manufactured parts D) push systems E) pull systems

E) pull systems

Manufacturing cycle time is best defined as the: A) length of the work shift, expressed in minutes per day. B) time it takes a unit to move from one workstation to the next. C) time between the start of one unit and the start of the next unit. D) sum of all the task times to make one unit of a product. E) time from raw materials receipt to finished product exit.

E) time from raw materials receipt to finished product exit.

A push system means providing the next station with exactly what is needed when it is needed.

False

Because most services cannot be inventoried, there is little place for JIT to help service organizations achieve competitive advantage.

False

Customer demand will always remain an unknown, so it is not considered a source of variability.

False

Employee empowerment is unnecessary in the Toyota Production System, because automation and powerful information systems reduce the need for employee creativity and decision making.

False

In a JIT system, product inspection adds value by identifying defective items.

False

Increasing inventory exposes variability in production processes.

False

JIT brings about competitive advantage by faster response to the customer regardless of cost.

False

JIT systems carry inventory just in case something goes wrong.

False

Level scheduling means producing at a constant rate, regardless of customer demands.

False

TPS stands for Total Production Streamlining.

False

The number of kanbans decreases as safety stock is increased.

False

The quality management tool called poka-yoke is not relevant to JIT systems.

False

With level schedules, a few large batches, rather than frequent small batches, are processed.

False

A common JIT layout tactic is to minimize distance.

True

A kanban system requires that the process has little variability in lead time because shortages impact the entire production system.

True

A scheduler may find that freezing the portion of the schedule closest to the due dates allows the production system to function and the schedule to be met.

True

Cross-training is a common JIT layout tactic to improve flexibility.

True

Hidden problems are generally uncovered during the process of reducing inventory.

True

JIT suppliers have concerns that the JIT firm's demands for small lot sizes are simply a way of transferring holding cost from the JIT firm to the suppliers.

True

Many suppliers feel that having a variety of customers is better than being tied to long-term contracts with one customer.

True

One goal of JIT partnerships is the removal of in-plant inventory by delivery in small lots directly to the using department as needed.

True

Product storage is an example of waste in the sense that no value is added.

True

TPS stands for Toyota Production System.

True

The 5Ss—sort/segregate, simplify/straighten, shine/sweep, standardize, and sustain/self discipline—are important to lean production because they act as a means to reduce waste.

True

The Toyota Production System requires that activities have built-in, automatic tests to signal problems.

True

The first step in reducing setup times is the separation of setup into preparation activities and actual setup, so that as much work as possible can be done while the machine or process is operating.

True

Variability in manufacturing can occur because engineering drawings or specifications are incomplete or inaccurate.

True

Waste is anything that does not add value from the consumer's perspective.

True

When implemented as a comprehensive operations strategy, JIT, TPS, and lean systems sustain competitive advantage and result in increased overall returns.

True