operations management final review

Firms that design and build products entirely to the​ customer's specifications tend to use which of the following supply chain​ designs?

design-to-order (DTO)

____________ means keeping all the inventory of a product at a single location and shipping directly to each of its customers.

. Centralized placement

Ann's of Austin produces a premium Passion Fruit sorbet for local restaurants. Ann has unit costs of​ $1.60 per gallon​ (labor, 80​ cents; materials, 70​ cents; and​ overhead, 10​ cents) and she sells the product for​ $2.00 per gallon. What is her multifactor​ productivity?

1.25

A manager is looking for a new facility location. The annual fixed costs and variable costs for two alternatives follow. At what level of annual output would each location provide the same total​ cost? Location Fixed Costs per Year Variable Costs per Unit A ​$200,000 ​$10.00 B ​$250,000 ​$6.00

12,500 units per year

The production demand for widgets for a​ 250-workday year is​ 7,500 units. Ordering costs are​ $25.00 per order and holding costs are​ $9.00 per unit per year. Four days must be allowed between order placement and order receipt. What is the​ EOQ, assuming known and constant​ variables?

204

3) Use the information in Figure 5.4. If each task has a work time of one minute and there are 8 hours in a day, what is the minimum number of stations if 240 units should be produced each day? A) one B) two C) three D) four

3.D table 5.4

4) To meet seasonal demand Emma's Fancy Cakes needs a production line that can produce 100 cakes per week while operating 50 hours per week. There are four steps required to produce a cake with the following processing time: 5 minutes, 10 minutes, 25 minutes and 10 minutes. a) What should be the line's cycle time? b) What is the smallest number of work stations?

4. A) 30 sec B) 2 work stations (1.6 calculated and rounded up)

The Fine Feline Co. produces decorative collars for cats. Last week employees worked 320 hours and produced​ 32,000 cat collars. This week the workers worked the same 320​ hours, but produced​ 33,600 cat collars. Labor productively increased by​ _______ over last week.

5%

​Dave's Bar-B-Q operated a mobile kitchen that serviced construction​ sites, office​ buildings, and public parks. Beginning in​ June, snow cones were added to the menu. The weekly sales figures for June of the previous year are given in the following​ chart: Week Sales Forecast ​(alphaequals=​0.3) 1 4 5.0 2 6 4.7 3 4 4 5

5.1

1) Thermostats are subjected to rigorous testing before they are shipped to air conditioning technicians around the world. Results from the last five samples are shown in the table. Calculate control limits for a chart that will monitor performance to target. The correct control limits as (LCL,UCL) are: Unit # Sample 1 Sample 2 Sample 3 Sample 4 Sample 5 1 73.5 70.8 72.2 73.6 71.0 2 71.3 71.0 73.1 72.7 72.2 3 70.0 72.6 71.9 72.4 73.3 4 71.1 70.6 70.3 74.2 73.6 5 70.8 70.7 70.7 73.5 71.1 A) (70.46, 73.39) B) (68.94,74.89) C) (69.71,74.14) D) (69.80,74.05)

A

Which of the following events from the twentieth century defines the history of operations and supply chain​ management?

All of the above.

An operations manager has narrowed down the search for a new plant for Tim! to three locations. Fixed and variable costs follow. Location Fixed Cost Variable Cost A $100,000 $10 B $150,000 $7 C $200,000 $5 2) Use the information in Table 13.8 to address this question. For what range of output is each location superior?

Answer: Location A is preferred from an output volume of 0 through 16,666 units 100,000 + 10x = 150,000 + 7x 50,000 = 3x x = 16,666.66666 Location B is preferred from 16,667 to 25,000 units 150,000 + 7x = 200,000 + 5x 2x = 50,000 x = 25,000 Location C is preferred above 20,000 units

16) Use the information in Table 8.5. Using the exponential smoothing method, with alpha equal to 0.2, what is the forecasted demand for November? Use an initial value for the forecast equal to 277 units. A) fewer than or equal to 260 units B) greater than 260 but fewer than or equal to 275 units C) greater than 275 but fewer than or equal to 285 units D) more than 285 units

B

2) Thermostats are subjected to rigorous testing before they are shipped to air conditioning technicians around the world. Results from the last five samples are shown in the table. Calculate control limits for a chart that will monitor process consistency. The correct control limits as (LCL, UCL) are: Unit # Sample 1 Sample 2 Sample 3 Sample 4 Sample 5 1 73.5 70.8 72.2 73.6 71.0 2 71.3 71.0 73.1 72.7 72.2 3 70.0 72.6 71.9 72.4 73.3 4 71.1 70.6 70.3 74.2 73.6 5 70.8 70.7 70.7 73.5 71.1 A) (-5.37, 5.37) B) (0.00, 5.37) C) (0.00, 6.03) D) (0.00, 6.12)

B

4) The defect rate for a product has historically been about 2.0%. What are the upper and lower control chart limits if you wish to use a sample size of 100 and 3-sigma limits? All answers are in (LCL,UCL) format. A) (0.00, 0.048) B) (0.00, 0.062) C) (0.00, 0.059) D) (0.00, 0.067)

B

Which statement about the forecasting process is​ best?

Bias is the worst kind of forecast error.

15) Use the information in Table 8.5. Using the 4-month weighted moving-average technique and the following weights, what is the forecasted demand for November? Time Period Weight Most recent month 50% One month ago 20% Two months ago 20% Three months ago 10% A) fewer than or equal to 250 units B) greater than 250 but fewer than or equal to 265 units C) greater than 265 but fewer than or equal to 280 units D) more than 280 units

C

A​ dry-cleaning firm has decided to operate stores in five neighborhoods in which a market analysis has determined the demand levels. Its strategy is to investigate the best site to expand into a centralized plant to process the cleaning and pressing. The other stores will serve as collection and distribution points and as locations at which other personal services activities will be offered. Given the following relative map grid points and demand​ levels, identify the best store location to serve as the site of the plant. Assume that site A is not appropriate for expansion. Store A B C D E X 1 2 3 4.5 4.75 Y 1 4 2 0.5 4.25 Demand 50 75 60 45 80

C

A credit​ card-processing firm would be likely to list the following competitive priorities for its external​ customers:

Consistent quality

3) Thermostats are subjected to rigorous testing before they are shipped to air conditioning technicians around the world. Results from the last five samples are shown in the table. Create control charts that will fully monitor the process and indicate the result of X-bar and R chart analysis. Unit # Sample 1 Sample 2 Sample 3 Sample 4 Sample 5 1 73.5 70.8 72.2 73.6 71.0 2 71.3 71.0 73.1 72.7 72.2 3 70.0 72.6 71.9 72.4 73.3 4 71.1 70.6 70.3 74.2 73.6 5 70.8 70.7 70.7 73.5 71.1 A) x bar and r chart are both out of control B) x bar chart is in control but r chart is out of control C) x bar chart is out of control but r chart is in control D) x bar and r chart are both in control

D

1) Use the information in Table 4.1. How many Mark I machines are required to produce Union Manufacturing's for the year's production?

D) more than 8 machines

Which of the following outcomes is not a direct result of a market​ analysis?

Development of core competencies

Lewis Machine Tools is considering reducing lot size to reduce cycle inventory. Which of the following is a change that should be made for lot size reduction to be​ effective?

Increasing repeatability

Which of the following scenarios illustrates an order​ winner?

Ken had always been fascinated by shiny​ objects, so he plucked the​ chrome-plated thermos from the shelf and raced to the nearest checkout line.

A quantitative method used to evaluate single locations based primarily on proximity is called

Load-Distance Method

Which of the following are NOT advantages of a periodic review​ system?

Lower safety stock

The transportation method is a technique for location analysis that is categorized as which type of​ computer-based model?

Optimization

1) A store has collected the following information on one of its products: Demand = 10,000 units/year Standard deviation of weekly demand = 25 units Ordering costs = $30/order Holding costs = $4/unit/year Cycle-service level = 95% (z for 95% = 1.65) Lead-time = 2 weeks Number of weeks per year = 50 weeks a. If a firm uses the continuous review system to control the inventory, what would be the order quantity and reorder point? b. The firm decided to change to the periodic review system to control the item's inventory. For the most recent review, an inventory clerk checked the inventory of this item and found 200 units. There were no scheduled receipts or backorders at the time. How many units should be ordered? (HINT: Use the EOQ model to derive P, the time between reviews.)

Quiz 5 a. Qopt = = = 387.30 → 387 units R = + zσdLT = (10,000/50)2 + 1.65(25 ) = 400.00 +58.34 = 458.34 → 458 units b. TBOEOQ = (50 weeks/year) = (50) = 1.94 weeks → 2 weeks T = (P + L) + zσP+L = (2 + 2) + 1.65(25) = 800.00 + 82.50 = 883.00 units Order quantity = T - IP = 883 - 200 = 683 units

Which of the following are characteristics of service provider​ operations?

Perishable outputs

______ are the fundamental activities that organizations use to do work and achieve their goals.

Processes

Size of Sample Factor for UCL and LCL for x-bar-Charts A2 Factor for LCL for R-Charts D3 Factor for UCL for R-Charts D4 2 1.880 0 3.267 3 1.023 0 2.575 4 0.729 0 2.282 5 0.577 0 2.115 6 0.483 0 2.004 7 0.419 0.076 1.924 8 0.373 0.136 1.864 9 0.337 0.184 1.816 10 0.308 0.223 1.777 Source: 1950 ASTM Manual on Quality Control of Materials, copyright American Society for Testing Materials. Reprinted with permission.

Quiz 2

Table 8.5 July 240 August 310 September 280 October 250 14) Use the information in Table 8.5. Using the simple moving-average technique for the most recent three months, what will be the forecasted demand for November? A) fewer than or equal to 260 units B) greater than 260, but fewer than or equal to 275 units C) greater than 275, but fewer than or equal to 290 units D) more than 290 units

Quiz 4 C

A single facility is needed to meet the demands of four markets. The locations and demands of these four markets are shown below. Market Coordinates Demand A (8, 6) 10 B (4, 12) 15 C (3, 2) 10 D (9,6) 6 1) Using the data in Table 13.2, identify an optimal location for the new facility.

Quiz 6 Answer: Using the center of gravity method, the x-coordinate is calculated as: (8 × 10 + 4 × 15 + 3 × 10 + 9 × 6)/41 = 224/41 = 5.46 The y-coordinate is calculated as: (6 × 10 + 12 × 15 + 2 × 10 + 6 × 6)/41 = 296/41 = 7.22 Thus the location of the new site should be (5.46, 7.22)

​ __________ distance measures the distance between two points with a series of​ 90-degree turns, as along city blocks.

Rectilinear

A design feature for responsive supply chains include firms

that have high capacity cushions.

The Mickey and Mouse Cat Food Factory runs an aggressive marketing campaign and much to the​ delight, orders surge to twice their previous level. If their operations manager uses an EOQ​ policy, what is the impact on the order​ quantity?

The order quantity will be​ 40% higher.

Which of these statements is NOT required in order for the EOQ model to be a reasonable​ approach?

The​ setup/ordering cost must exceed the annual holding cost of one unit.

​Break-even analysis can help compare locations on the basis of factors that are expressed in terms of

Total Cost

SSS is a local restaurant serving the needs of college​ students, faculty, and staff. The manager is considering adding a website so​ carry-out customers can order in advance more easily. Which process would be a core process in this new​ undertaking?

Web design

An effective way of gaining a global presence when one firm has a core competency that another needs but is unwilling​ (or unable) to duplicate is

a collaborative effort.

2) An assistant manager is reviewing the costs associated with one of the store's better-selling products. The data available follows. Demand = 400 units/year Order cost = $25/order Holding cost = 50¢/unit/year a. They currently order a one-year supply. What are the total annual ordering cost and holding cost for this order size? b. What would be the EOQ and its associated ordering and holding costs?

a. Holding cost = H = 0.5 = $100 Ordering cost = S = (25) = $25 Total cost = H + S = 0.5 + 25 = $125 b. Qopt = = = 200 Holding cost = H = 0.5 = $50 Ordering cost = S = (25) = $50

Yellow​ Press, Inc., buys paper in​ 1,500-pound rolls for printing. Annual demand is 3 comma 0003,000 rolls. The cost per roll is ​$625625​, and the annual holding cost is 1616 percent of the cost. Each order costs ​$5555.

a. How many rolls should Yellow Press order at a​ time? Yellow Press should order 5757 rolls at a time. ​(Enter your response rounded to the nearest whole​ number.) b. What is the time between​ orders? (Assume 275275 workdays per​ year.) The time between orders is 5.25.2 days. ​(Enter your response rounded to one decimal​ place.)

Marianne​ Kramer, the owner of Handy Man​ Rentals, rents carpet cleaners to contractors and​ walk-in customers. She is interested in arriving at a forecast of rentals so that she can order the correct quantities of supplies that go with the cleaners. Data for the last 10 weeks are shown here. Week 1 2 3 4 5 6 7 8 9 10 Rentals 1717 1515 3131 1919 2626 1111 3030 2828 1313 1111

a. Prepare a forecast for weeks 6 through 10 by using a 4-week moving average LOADING... . ​(Enter your responses rounded to two decimal​ places.) Week Forecast 6 22.7522.75 7 21.7521.75 8 21.5021.50 9 23.7523.75 10 20.5020.50 What is the forecast for week​ 11? 20.5020.50 rentals. ​(Enter your response rounded to two decimal​ places.) b. The mean absolute deviation LOADING... as of the end of week 10 is 9.359.35 rentals. ​(Enter your response rounded to two decimal​ places.)

Mack's guitar fabrication shop produces low​ cost, highly durable guitars for beginners.​ Typically, out of the 100100 guitars that begin production each​ month, only 8080 percent are considered good enough to sell. The other 2020 percent are scrapped due to quality problems that are identified after they have completed the production process. Each guitar sells for ​$250250. Because some of the production process is​ automated, each guitar only requires 1010 labor hours. Each employee works an average of 160160 hours per month. Labor is paid at ​$1111 per​ hour, materials cost is ​$3838 per​ guitar, and overhead is ​$4 comma 2004,200.

a. The labor productivity ratio for​ Mack's guitar fabrication shop is ​$20.0020.00 per hour. ​(Enter your response rounded to two decimal​ places.) The multifactor productivity ratio for​ Mack's guitar fabrication shop is 1.051.05. ​(Enter your response rounded to two decimal​ places.) b. After some​ study, the operations manager Darren Funk recommends 3 options to improve the​ company's multifactor​ productivity: follows≻Option ​1: increase the sales price by 1616 percent follows≻Option ​2: improve quality so that only 1616 percent are​ defective, or follows≻Option ​3: reduce​ labor, materials, and overhead costs by 1616 percent. If​ Mack's guitar fabrication shop decides to implement Darren​ Funk's option 1 to improve the multifactor​ productivity, the new productivity level would be 1.221.22. ​(Enter your response rounded to two decimal​ places.) If​ Mack's guitar fabrication shop decides to implement Darren​ Funk's option 2 to improve the multifactor​ productivity, the new productivity level would be 1.111.11. ​(Enter your response rounded to two decimal​ places.) If​ Mack's guitar fabrication shop decides to implement Darren​ Funk's option 3 to improve the multifactor​ productivity, the new productivity level would be 1.241.24. ​(Enter your response rounded to two decimal​ places.) For increasing the multifactor productivity​ level, out of the three options identified by​ Darren, the option that provides the most improvement in productivity is Option 3 .

The Big Black Bird Company​ (BBBC) has a large order for special​ plastic-lined military uniforms to be used in an urgent military operation. Working the normal two shifts of 4040 hours each per​ week, the BBBC production process usually produces 2 comma 6002,600 uniforms per week at a standard cost of ​$120120 each. 7070 employees work the first shift and 3232 the second. The contract price is ​$220220 per uniform. Because of the urgent​ need, BBBC is authorized to use​ around-the-clock production six days per week. When each of the two shifts works 7272 hours per​ week, production increases to 4 comma 0004,000 uniforms per week but at a cost of ​$160160 each.

a. The multifactor productivity level decreased for two shifts working 7272 hours when compared to the level of the normal two shifts. The multifactor productivity ratio based on the normal two shifts changed by 24.5924.59​% as compared to two shifts working 7272 hours per week.​ (Enter your response rounded to two decimal​ places.) b. The labor productivity level decreased for two shifts working 7272 hours when compared to the level of the normal two shifts. The labor productivity ratio based on the normal two shifts changed by 14.5214.52​% as compared to two shifts working 7272 hours per week.​ (Enter your response rounded to two decimal​ places.) c. The weekly profits decreased as a result of production increasing to 4 comma 0004,000​, as compared to the normal production of 2 comma 6002,600 uniforms.

At​ Symtecks, the output of a process is valued at ​$9090 per unit. The cost of labor is ​$5050 per hour including benefits. The accounting department provided the following information about the process for the past four​ weeks: LOADING... Week 1 Week 2 Week 3 Week 4 Units Produced 1 comma 1421,142 1 comma 3061,306 1 comma 0961,096 985985 Labor​ ($) 12 comma 49912,499 14 comma 79214,792 10 comma 60310,603 9 comma 5769,576 Material​ ($) 21 comma 64221,642 24 comma 52324,523 20 comma 44220,442 18 comma 31418,314 Overheads​ ($) 8 comma 1568,156 10 comma 48010,480 8 comma 6868,686 7 comma 8487,848

a. The multifactor productivity ratio for week 1 is 2.432.43. ​(Enter your response rounded to two decimal​ places.) The multifactor productivity ratio for week 2 is 2.362.36. ​(Enter your response rounded to two decimal​ places.) The multifactor productivity ratio for week 3 is 2.482.48. ​(Enter your response rounded to two decimal​ places.) The multifactor productivity ratio for week 4 is 2.482.48. ​(Enter your response rounded to two decimal​ places.) b. The labor productivity for week 1 is 4.574.57 units per hour. ​(Enter your response rounded to two decimal​ places.) The labor productivity for week 2 is 4.414.41 units per hour. ​(Enter your response rounded to two decimal​ places.) The labor productivity for week 3 is 5.175.17 units per hour. ​(Enter your response rounded to two decimal​ places.) The labor productivity for week 4 is 5.145.14 units per hour. ​(Enter your response rounded to two decimal​ places.)

Companies that use a​ two-tier forecasting system first cluster​ (or "roll​ up") several similar services or products in a process called

aggregation

Forward integration can mean which of the​ following?

all of the above

Pitfalls that should be carefully explored before outsourcing include

all of the above

Which of the following would not be considered a qualitative location selection​ factor?

annual transportation costs

Inventory used to absorb uneven rates of demand or supply is referred to as

anticipation inventory.

A P system has an advantage over the Q system

because orders from multiple items from one supplier can be combined into a single purchase order.

The finance function influences operating decisions about

capacity expansion.

A demand management option for a company is to even out the load on resources by producing​ ___________ products, or services that have similar resource requirements but different demand cycles

complementary products

A fundamental purpose of supply chain design for manufacturers is to

control inventory by managing the flow of materials.

​ ________ process is a set of activities that delivers value to external customers.

core

2) A manufacturing plant is capable of producing 10 tons of product per day when it runs three shifts with no breakdowns and plenty of raw materials. Over the past week, the plant has produced an average of 7.3 tons per day because the third shift has devoted much of their time to preventive maintenance. What is the utilization of the plant?

d.) 73%

Operations strategy translates service or product plans and competitive priorities for each market segment into

decisions affecting the processes that support those market segments.

Companies that engineer products to customer specifications normally do not have​ _______________ as part of their supply chains.

distribution centers

A mass customization strategy has three important competitive advantages. Which of the following is NOT one of​ them?

eliminate raw material inventories

A firm has the least amount of control over external causes of​ supply-chain dynamics. External causes include

expected changes in customer demand.

Which of the following is an advantage of forward inventory​ placement?

faster delivery times

Efficient supply chains are used by firms that

have a competitive priority of consistent quality

Which of the following can put pressure on a company to carry small levels of​ inventory?

high cost of capital

When used to study supply chain logistics​ networks, the transportation method can be used to find

the best shipping pattern between plants and warehouses for a particular set of plant​ locations, each with a given capacity.

Which of the following is NOT considered a pressure to hold large​ inventories?

the cost of insurance

A disadvantage of centralized placement is

increased cost of shipping small quantities directly to distant customers.

What do all processes​ have?

inputs and outputs

The concept of critical mass is associated with which of the following service location​ factors?

location of competitors

Dominant factors in manufacturing include all of the following EXCEPT

location of competitors.

What are the three dimensions of​ multiple-facility location​ problems?

location, allocation, and capacity

Selecting the transportation mode​ (train, ship,​ truck, airplane, or​ pipeline) and scheduling both​ in-bound and outbound shipments is typically accomplished by which supply chain​ process?

logistics

What is the one popular design for efficient supply​ chains?

make-to-stock (MTS)

Which of the following is NOT one of the three basic ways inventories are​ reported?

material cost of goods sold

The three functionalities of data​ storage, map​ displays, and​ ________ are critical parts of an intelligent Geographic Information Systems​ (GIS), and are used in all GIS applications.

modeling

A form of shrinkage called​ ________ occurs when inventory cannot be used or sold at full​ value, owing to model​ changes, engineering​ modifications, or unexpectedly low demand.

obsolescence

The three mainline functions of any business are

operations, marketing, and finance

Which core process includes the activities required to produce and deliver the service or product to the external​ customer?

order fulfillment process

Which of the following inventory classifications is one of the four forms that represent how the inventory was​ created?

pipeline inventory

Design features for efficient supply chains include

predictable demand.

When quantifiable costs and other​ measures, as well as various qualitative​ factors, must be considered as parts of a complete​ evaluation, which tool is most​ useful?

preference matrix

Regardless of how departments and functions are individually​ managed, they are always linked together through

processes.

The total cost for a continuous review system with uncertain demand excludes consideration of

product cost.

The Union Manufacturing Company is producing two types of products: A and B. The demand forecasts, batch size, and time standards follow: Product A Product B Demand forecast (units/yr) 1,000 4,000 Batch size (units/batch) 20 10 Processing time (hr/unit) 3.2 4.5 Setup time (hr/batch) 10 20 Both products are produced on the same machine, called Mark I. The company works 250 days per year and operates 2 shifts, each covering 8 hours. A 20 percent capacity cushion is maintained and the company does not use any short-term capacity options.

quiz 3

What is the primary lever to reduce cycle​ inventory?

reduce the lot sizes

if​ every process and every person in an organization has​ customers," then

some customers are external and some are internal.

ecisions that tend to focus on the entire​ organization, cutting across departmental​ lines, and have​ long-term consequences are called

strategic

A reorder point will fall if

the lead time falls.

In a periodic review inventory​ system, the protection interval for an individual SKU is equal to

the length of time between reviews of the​ SKU's inventory position plus the lead time of the SKU.

Backward integration is achieved through

the purchase of a controlling interest in the​ firm's supplier.

For the manufacturing​ firm, tier 2 suppliers provide​ ______________ with components.

tier 1 suppliers

Core competencies reflect the collective learning of the organization. Core competencies include

​ well-trained, flexible workforce.

What is the one popular design for efficient supply​ chains?

​make-to-stock (MTS)

The time period during which production processes increase volume in order to meet customer demands while coping with quality problems and​ last-minute design changes is called

​ramp-up