Operations Management Test 1

Increasing the service offered to the customer makes it more difficult to compete on the basis of: A. order qualifiers. B. customization. C. quality. D. price. E. flexibility.

D. price. More extensive service can be more costly, and more costly outputs make price-based strategies more difficult.

Where a firm locates would typically not affect that firm's: A. costs. B. convenience for customers. C. delivery times. D. strategy. E. transportation costs.

D. strategy. Typically, strategy dictates where firms will locate, rather than location dictating strategy.

41. Which of the following is not a type of operations?

E. all the above involve operations All of these involve taking inputs and transforming them.

23. Operations managers, who usually use quantitative approaches, are not really concerned with ethical decision-making.

FALSE Ethics issues are touching on all areas of management, including operations.

25. Managers should most often rely on quantitative techniques for important decisions since quantitative approaches result in more accurate decisions.

FALSE Just as other techniques do, quantitative techniques have limitations.

35. The lean production philosophy has been slow to be adopted in service industries.

FALSE Lean concepts apply very well in service industries.

National productivity is determined by averaging the productivity measures of various companies or industries. (True / False)

FALSE National productivity is determined by dividing inputs by outputs across a national economy; averaging industry measures would lead to a distorted estimate.

19. Most people encounter operations only in profit-making organizations.

FALSE Operations are also relevant to not-for-profit organizations such as the Red Cross.

4. Operations, marketing, and finance function independently of each other in most organizations.

FALSE Operations, marketing and finance are naturally dependent upon one another

11. Assembly lines achieved productivity but at the expense of standard of living.

FALSE Productivity and standard of living go hand in hand.

Tracking productivity measures over time enables managers to judge organizational performance and decide where improvements are needed. (True / False)

TRUE Productivity trends direct attention toward problems and opportunities.

24. The optimal solutions produced by quantitative techniques should always be evaluated in terms of the larger framework.

TRUE Quantitative techniques have limitations that must be considered.

The manager of a carpet store is trying to determine the best installation crew size. He has tried various crew sizes with the results shown below. Based on productivity, what crew size do you recommend? 2 - 716 4 - 1298 3 - 1017 3 - 1002 4 - 1278 2 - 702 A. 2 B. 3 C. 4

A. 2 Crews of two workers are most productive.

Gourmet Pretzels bakes soft pretzels on an assembly line. It currently bakes 800 pretzels each eight-hour shift. If the production is increased to 1,200 pretzels each shift, then productivity will have increased by: A. 50 percent. B. 33 percent. C. 25 percent. D. 67 percent.

A. 50 percent. Divide the difference in productivity by the original productivity.

Which of the following would be least important in the pursuit of a time-based strategy? A. cost minimization B. quick changeover times C. operational agility D. reduced complaint resolution times E. flexible technology

A. cost minimization Many means for minimizing cost would have the effect of making a time-based strategy less feasible.

53. Which is not a significant difference between manufacturing and service operations?

A. cost per unit Manufacturing operations aren't necessarily more or less efficient than service operations.

With regard to operations strategy, organization strategy should, ideally, take into account: A. operations' strengths and weaknesses. B. inventory levels. C. labor productivity. D. product mix. E. production processes.

A. operations' strengths and weaknesses. Formulation of organization strategy should take into account the realities of operations' strengths and weaknesses, capitalizing on strengths and dealing with weaknesses.

65. Modern firms increasingly rely on other firms to supply goods and services instead of doing these tasks themselves. This increased level of _____________ is leading to increased emphasis on ____________ management.

A. outsourcing; supply chain Supply chain management takes a more systemic view of the firm, its operations, and its suppliers.

Which of the following is least likely to affect the cost an organization incurs in producing its products or services? A. price B. productivity C. location D. quality E. inventory management

A. price Relative to the other choices, price is least likely to affect cost.

Product design and choice of location are examples of _______ decisions. A. strategic B. tactical C. operational D. customer-focused E. design

A. strategic These decisions are made high in the hierarchy.

70. Which of the following is essential to consider with respect to managing a process to meet demand?

A. strategy B. demand forecasts C. capacity D. random variability E. all of the above All of these play a role in determining whether a process can meet demand.

40. Business organizations consist of three major functions which, ideally:

A. support one another Finance, Marketing and Operations are these major functions.

A firm pursuing a strategy based on customization and variety will tend to structure and manage its supply chain to accommodate more _____________ than a firm pursuing a strategy based on low cost and high volume. A. variation B. streamlined flow C. quality D. capacity E. productivity

A. variation Customization and variety lead to variation that must be accommodated.

A productivity increase in one operation that does not improve overall productivity of the business is not A. worthwhile. B. trivial. C. competence-destroying. D. an order winner. E. an order qualifier.

A. worthwhile. Only system-wide productivity improvement makes the organization more productive.

The weekly output of a fabrication process is shown below, together with data for labor and material inputs. Standard selling price is $125 per unit. Overhead is charged weekly at the rate of $1,500 plus .5 times direct labor cost. Assume a 40-hour week and an hourly wage of $16. Material cost is $10 per foot. What is the average multifactor productivity? A. 1.463 B. 1.457 C. 1.431

B. 1.457 Calculate multifactor productivity for each week, then average the two.

The Balanced Scorecard is a useful tool for helping managers translate their strategy into action in the following areas: A. Sustainability; Flexibility; Efficiency; Technology B. Customers; Financial; Internal Business Processes; Learning and Growth C. Customization; Standardization; Efficiency; Effectiveness D. The Environment; The Community; Suppliers; Other Stakeholders E. Strategy; Tactics; Productivity; Profitability

B. Customers; Financial; Internal Business Processes; Learning and Growth These are the four core areas addressed by the Balanced Scorecard.

Which of the following is not typically considered a cure for poor competitiveness? A. Remove communications barriers within organizations. B. Minimize attention to the operations function. C. Put less emphasis on short-term financial results. D. Recognize labor as a valuable asset and act to develop it. E. Improve quality.

B. Minimize attention to the operations function. Operations is a prime area for improving competitiveness.

58. The fact that a few improvements in a few key areas of operations will have more impact than many improvements in many other areas is consistent with the:

B. Pareto phenomenon Pareto phenomena direct our attention to the difference between the "important few" and the "trivial many."

Which of the following is not among the chief reasons organizations fail? A. overemphasis on short-term financial performance B. emphasizing labor productivity in labor-intensive environments C. poor internal communications D. not investing in capital and human resources E. overemphasis on product (or service) design

B. emphasizing labor productivity in labor-intensive environments In labor-intensive environments, emphasizing labor productivity is a good idea.

For firms competing in worldwide markets, conducting ______________ is more complex, since what works in one country or region might not work in another. A. productivity analysis B. environmental analysis C. strategy implementation D. sustainability analysis E. growth forecasting

B. environmental analysis Environmental analysis takes into account the relevant factors in the environment; there are more of these if there are more markets to consider.

67. Marketing depends on operations for information regarding ___________.

B. lead time Marketing uses lead time information to make promises to customers.

An example of an operational operations management decision is inventory level management. (True / False)

True Inventory management is an operational decision.

Scheduling personnel is an example of an operations management: A. mission implementation. B. operational decision. C. organizational strategy. D. functional strategy. E. tactical decision.

B. operational decision. Staffing-level decisions are made low in the hierarchy.

46. Manufacturing work sent to other countries is called:

B. outsourced Outsourcing is increasingly a part of operations management.

48. The responsibilities of the operations manager are:

B. planning, organizing, staffing, directing, and controlling The scope of operations management ranges across the organization.

The ratio of good output to quantity of raw material input is called A. nondefective productivity. B. process yield. C. worker quality measurement. D. total quality productivity. E. quantity/quality ratio.

B. process yield. This is sometimes a useful productivity measure in service industries.

In an assembly operation at a furniture factory, six employees assembled an average of 450 standard dining chairs per five-day week. What is the labor productivity of this operation? A. 90 chairs/worker/day B. 20 chairs/worker/day C. 15 chairs/worker/day D. 75 chairs/worker/day E. 60 chairs/worker/day

C. 15 chairs/worker/dayC. 15 chairs/worker/day Divide the output of 450 chairs by the inputs of 30 worker-days.

50. Which of the following is not true about systems approach?

C. A systems approach concentrates on efficiency within subsystems. Subsystem efficiency doesn't necessarily translate into overall system efficiency.

Which of the following is true? A. Corporate strategy is shaped by functional strategies. B. Corporate mission is shaped by corporate strategy. C. Functional strategies are shaped by corporate strategy. D. External conditions are shaped by corporate mission. E. Corporate mission is shaped by functional strategies.

C. Functional strategies are shaped by corporate strategy. Corporate strategy shapes strategies at lower levels.

39. A 'product package' consists of:

C. a combination of goods and services Most firms are not pure service or manufacturing firms; they produce combinations of goods and services.

49. Knowledge skills usually don't include:

C. communication skills Communication skills generally are considered to be people skills.

59. The process of comparing outputs to previously established standards to determine if corrective action is needed is called:

C. controlling Controls are used to maintain performance.

For an organization to grow its market share, it must: A. advertise using multimedia. B. reduce prices. C. exceed minimum standards of acceptability for its products or services. D. establish an Internet Web site. E. broaden its mission statement.

C. exceed minimum standards of acceptability for its products or services. Only by exceeding standards can an organization grow its market share.

The key to successfully competing is understanding what customers want and then __________ satisfy those wants. A. training production workers to B. finding suppliers who can C. finding the best way to D. designing products and services that E. hiring enough workers to

C. finding the best way to To successfully compete, two basic issues must be addressed: What do the customers want? What is the best way to satisfy those wants?

38. Operations management involves continuous decision-making; hopefully most decisions made will be:

C. informed Informed decisions incorporate all relevant issues.

60. Which of the following does not relate to system design?

C. inventory management Inventory management is a system operation decision area.

In the 1970s and early 1980s in the United States, organizations concentrated on: A. operations strategies. B. improving quality. C. marketing and financial strategies. D. revising mission statements. E. environmental issues.

C. marketing and financial strategies. This led to U.S. firms being not very competitive with regard to their operations.

Which of the following factors would tend to reduce productivity? A. improvements in workplace safety B. reductions in labor turnover C. more inexperienced workers D. reductions in the scrap rate E. less variety in the product mix

C. more inexperienced workers More inexperienced workers tend to be less productive.

56. Farming is an example of:

C. non-manufactured goods Farm operations are not manufacturing operations.

The external elements of SWOT analysis are: A. strengths and weaknesses. B. strengths and threats. C. opportunities and threats. D. weaknesses and opportunities. E. strengths and opportunities.

C. opportunities and threats. Opportunities and threats relate to the organization and its external environment.

Years ago in the overnight delivery business, providing package tracking capability gave some firms a competitive advantage. Now, all firms must offer this capability simply to be in this line of business. This is an example of ______________ becoming ____________ over time. A. tactical implications; strategic B. strategic implications; tactical C. order winners; order qualifiers D. profitability factors; productivity factors E. order qualifiers; order winners

C. order winners; order qualifiers What is an order qualifier and what is an order winner changes over time.

Competitiveness doesn't include: A. productivity. B. effectiveness. C. profitability. D. operations strategy. E. operations management.

C. profitability. A company can be competitive relative to similar companies and still be unprofitable if the competitive environment is inherently unprofitable.

57. Dealing with the fact that certain aspects of any management situation are more important than others is called:

C. recognition of priorities Solutions tend to be targeted toward higher priority aspects of a situation.

45. Which one of the following would not generally be classified under the heading of transformation?

C. staffing Staffing doesn't involve transforming resources so much as it involves acquiring them.

55. Which of the following is a recent trend in business?

C. supply chain management Supply chain management involves a broader systemic view of operations.

61. Taking a systems viewpoint with regard to operations in today's environment increasingly leads decision-makers to consider ______________ in response to the ___________.

C. sustainability; threat of global warming Sustainability is a relatively recent operations management consideration.

47. Product design and process selection are examples of _______ decisions.

C. system design These major decisions affect decisions made at lower levels.

42. Technology choices seldom affect:

C. union activity. Union activity can affect a firm's technology choices, but not the other way around.

64. Which of the following is not a benefit of using models in decision making?

D. All of the above are benefits. Models are useful tools for making decisions without confronting the actual situation with all of its complexity.

69. Which of the following statements about variation is FALSE?

D. Any variation makes a production process less productive. The choice to offer customers greater variety might increase variation but increase productivity even more.

62. Some companies attempt to maximize the revenue they receive from fixed operating capacity by influencing demands through price manipulation. This is an example of __________________:

D. Revenue management Revenue management is used to ensure that as much perishable capacity as possible is sold.

51. What is credited with gains in industrial productivity, increased standards of living and affordable products?

D. assembly lines Mass production has played a prominent role in increasing standards of living.

Unique attributes of firms that give them a competitive edge are called: A. functional strategies. B. Balanced Scorecards. C. supply chains. D. core competencies. E. sustainable initiatives.

D. core competencies. Core competencies can be translated into competitive advantage.

54. Which of the following is not a characteristic of service operations?

D. easy measurement of productivity The productivity of service operations is often hard to measure.

43. Measurements taken at various points in the transformation process for control purposes are called:

D. feedback Feedback is used to monitor and improve processes.

44. Budgeting, analysis of investment proposals, and provision of funds are activities associated with the _______ function.

D. finance These are the primary tasks for the finance function.

63. Which of the following is not an ongoing trend in manufacturing?

D. mass production for greater economies of scale Manufacturers are moving away from mass production for economies of scale.

The fundamental purpose for the existence of any organization is described by its: A. policies. B. procedures. C. corporate charter. D. mission statement. E. bylaws.

D. mission statement. A mission statement is the organization's attempt to justify its existence.

Productivity is expressed as: A. output plus input. B. output minus input. C. output times input. D. output divided by input. E. input divided by output.

D. output divided by input. Productivity is the ratio of outputs to inputs.

Which of the following is not a reason for poor performance of our organization in the marketplace? A. placing too much emphasis on product/service design and too little on process design B. failing to take into account customer wants and needs C. putting too much emphasis on short-term financial performance D. taking advantage of strengths/opportunities, and recognizing competitive threats E. failing to monitor the external environment

D. taking advantage of strengths/opportunities, and recognizing competitive threats Taking advantage of strengths/opportunities and recognizing competitive threats would enable good performance.

__________ is generally used to facilitate an organization strategy that emphasizes low cost. A. Speed to market B. Flexibility C. Customization D. Sustainability E. Standardization

E. Standardization Standardization is a powerful means of achieving low-cost production.

Which of these factors would be least likely to affect productivity? A. methods and technology B. workers C. management D. product mix E. advertising

E. advertising Advertising could increase the value of the outputs, but it is less likely to affect productivity than these other factors.

Which of the following is not a key step toward improving productivity? A. developing productivity measures for all operations B. improving the bottleneck operations C. establishing reasonable goals for improvement D. considering incentives to reward workers E. converting bond debt to stock ownership

E. converting bond debt to stock ownership A firm's productivity is independent of its capital structure.

Time-based approaches of business organizations focus on reducing the time to accomplish certain necessary activities. Time reductions seldom apply to: A. product/service design time. B. processing time. C. delivery time. D. response time for complaints. E. internal audits.

E. internal audits. Internal audits have little to do with core value-adding efforts.

66. Operations and sales are the two ________ functions in businesses.

E. line Others are support functions.

An organization's mission statement serves as the basis for: A. environmental scanning. B. core competencies. C. operating procedures. D. distinctiveness. E. organizational goals.

E. organizational goals. Organizations' missions serve as the broad underpinning for their goals.

Value added can be calculated by: A. average productivity gains over time. B. inputs divided by the outputs. C. outputs divided by the inputs. D. input plus output divided by two. E. outputs minus inputs.

E. outputs minus inputs. Value added represents the change in value of the original inputs.

Which of the following is not a factor that affects productivity? A. computer viruses B. design of the workspace C. use of the Internet D. standardizing processes E. product price

E. product price These don't lead to fundamental changes in operations.

Core competencies in organizations generally do not relate to: A. cost. B. quality. C. time. D. flexibility. E. sales price.

E. sales price. What a firm charges for its outputs is not a core competency. What it can charge, however, is potentially related to a core competency.

Which of the following is not a key factor of competitiveness? A. price B. product differentiation C. flexibility D. after-sale service E. size of organization

E. size of organization Competitiveness often has nothing to do with organization size.

52. Production systems with customized outputs typically have relatively:

E. skilled workers Skilled workers are necessary to accommodate the variation inherent in customized outputs.

31. Operations management and marketing are the two functional areas that exist to support activities in other functions such as accounting, finance, IT and human resources.

FALSE Operations management and marketing are supported by these functions.

36. Operations Management activities will be less important in the future because many firms are becoming service-oriented operations rather than goods producing operations.

FALSE Operations management is just as important for service firms.

27. A systems approach means that we concentrate on efficiency within a subsystem and thereby assure overall efficiency.

FALSE Subsystem efficiency doesn't necessarily translate into overall efficiency.

If people would only work harder, productivity would increase. (True / False)

FALSE Working harder can actually reduce productivity in some cases.

Productivity tends to be only a very minor factor in an organization's ability to compete. (True / False)

FALSE An organization's ability to compete is directly affected by its productivity.

Competitiveness relates to the profitability of an organization in the marketplace. (True / False)

FALSE Competitiveness relates to how effectively an organization meets the wants and needs of customers relative to other organizations that offer similar goods or services.

Global competition really only applies to multinational organizations. (True / False)

FALSE Domestic-only organizations experience competition from organizations in other countries.

Improving efficiency will guarantee a similar improvement in productivity. (True / False)

FALSE Efficiency is narrower than productivity.

Organizational strategy should be determined without considering the realities of functional area strengths and weaknesses since they can be changed to meet our strategy. (True / False)

FALSE Functional strengths and weaknesses serve as the building blocks of organizational strategy.

Mission statements should be as specific as possible regarding exactly how they will be accomplished. (True / False)

FALSE Mission statements are very long-term and should provide enough room to accommodate major changes in direction.

Outsourcing tends to improve quality but at the cost of lowered productivity. (True / False)

FALSE Outsourcing can lead to both quality and productivity improvements.

An organization that is twice as productive as its competitor will be twice as profitable. (True / False)

FALSE Productivity advantages don't necessarily translate into profitability advantages.

Productivity is defined as the ratio of input to output. (True / False)

FALSE Productivity is the ratio of outputs to inputs.

As long as we match a competitor on quality and price we will gain market share. (True / False)

FALSE We usually have to better a competitor to win market share.

16. Measurement of productivity in service is more straightforward than in manufacturing since it is not necessary to take into account the cost of materials.

FALSE Materials cost must be considered in services as well.

9. The use of models will guarantee the best possible decisions.

FALSE Models are useful, but their use does not guarantee the best decisions.

3. Companies are either producing goods or delivering services. This means that only one of the two types of operations management strategies are used.

FALSE Most systems involve a blend of goods and services.

6. Goods producing organizations are not involved in service activities.

FALSE Most systems involve a blend of goods and services.

1. Operations managers are responsible for assessing consumer wants and needs and selling and promoting the organization's goods or services.

FALSE Operation managers are not responsible for promoting goods/services.

7. Service operations require additional inventory because of the unpredictability of consumer demand.

FALSE Service operations cannot use inventory as a hedge against unpredictable demand.

14. 'Value added' by definition is always a positive number since 'added' implies increases.

FALSE Some transformations result in the output being worth less than the inputs.

17. Special-purpose technology is a common way of offering increased customization in manufacturing or services without taking on additional labor costs.

FALSE Special-purpose technology typically reduces costs through standardization.

13. The word "technology" is used only to refer to "information technology".

FALSE Technology also refers to the technology involved in resource transformations.

12. The operations manager has primary responsibility for making operations system design decisions, such as system capacity and location of facilities.

FALSE The operations manager plays a role in these decisions but is not primarily responsible for them.

Government statistics are a good source of data about productivity trends in the service sector. (True / False)

False The service sector is often omitted in government statistics.

An example of a strategic operations management decision is the choice of where to locate. (True / False)

True Location decisions are strategic in nature.

Productivity is defined as the ratio of output to input. (True / False)

TRUE Divide outputs by inputs to get productivity.

An example of a tactical operations management decision is determining employment levels. (True / False)

TRUE Staffing is an ongoing, tactical decision.

Productivity is directly related to the ability of an organization to compete. (True / False)

TRUE A more productive organization is a more competitive organization.

28. Prior to the Industrial Revolution, goods were produced primarily by craftsmen or their apprentices using custom made parts.

TRUE After the Industrial Revolution, more standardized approaches became common.

30. Among Ford's many contributions was the introduction of mass production, using the concept of interchangeable parts and division of labor.

TRUE Ford made mass production a practical success.

34. Lean production systems use a highly skilled work force and flexible equipment.

TRUE Lean depends on a skilled workforce.

32. Lean production systems incorporate the advantages of both mass production and craft production.

TRUE Lean production blends the best of both worlds.

26. Many operations management decisions can be described as tradeoffs.

TRUE Managing tradeoffs is the essence of operations management.

33. As an abstraction of reality, a model is a simplified version of a real phenomenon.

TRUE Models are valuable abstractions and simplifications of real, complex phenomena.

37. A modern firm has two supply chain considerations - external links with suppliers and customers, and an internal network of flows to and between the operations function itself.

TRUE Supply chain considerations are at play both in and beyond the modern firm.

29. Elton Mayo's "Hawthorne Experiment" was the focal point of the Human Relations Movement, which emphasized the importance of the human element in job design.

TRUE The Hawthorne Experiments were the beginning of the Human Relations Movement.

Services often don't fit simple yield measurements. (True / False)

TRUE Comparing one service output to another is difficult to do accurately.

The hierarchy and sequence of planning and decision making is: mission, organizational strategy, tactics, and operational decisions. (True / False)

TRUE Mission is at the highest level of the hierarchy, while operational decisions are at the lowest.

A characteristic that was once an order winner may become an order qualifier, and vice versa. (True / False)

TRUE Order qualifiers and order winners are shaped by the environment.

Strategy includes both organizational and functional strategies. (True / False)

TRUE Organizational strategies shape functional strategies.

A business that is rated highly by its customers for service quality will tend to be more profitable than a business that is rated poorly. (True / False)

TRUE Service quality is a powerful tool for improving profitability.

Standardization has the advantage of reducing variability. (True / False)

TRUE Standardization leads to reduced variability.

A mission statement should provide a guide for the formulation of strategies for the organization. (True / False)

TRUE Strategy-making is constrained by the mission statement.

Environmental scanning is a search for events or trends that present either threats or opportunities to the organization. (True / False)

TRUE These events or trends should be taken into account when strategy is being formulated.

The majority of our textbook deals with tactical operations that support established functional strategies. (True / False)

TRUE This represents the majority of ongoing decision making in operations.

Traditional strategies of business organizations have tended to emphasize cost minimization or product differentiation. (True / False)

TRUE Time- and quality-based strategies are more recent developments.

Wage and salary increases that are not accompanied by productivity increases tend to exert inflationary pressures on a nation's economy. (True / False)

TRUE True increases in standards of living come about through productivity improvements.

2. Often, the collective success or failure of companies' operations functions will impact the ability of a nation to compete with other nations.

TRUE A nation is often only as competitive as its companies.

0. Service involves a much higher degree of customer contact than manufacturing.

TRUE Customer contact tends to be much higher in services.

8. The value of outputs is measured by the prices customers are willing to pay for goods or services.

TRUE Customers' willingness to pay for goods or services sets the value of these outputs.

5. The greater the degree of customer involvement, the more challenging the design and management of operations.

TRUE Greater customer involvement leads to more complexity in the design and management of operations.

18. One concern in the design of production systems is the degree of standardization.

TRUE How standardized outputs will be is a critical consideration in the system design question.

10. People who work in the field of operations should have skills that include both knowledge and people skills.

TRUE Operations management requires a blend of knowledge and people skills.

21. A systems approach emphasizes interrelationships among subsystems, but its main theme is that the whole is greater than the sum of its individual parts.

TRUE Optimizing the performance of individual subsystems does not guarantee optimal performance from the overall system.

22. The Pareto phenomenon is one of the most important and pervasive concepts that can be applied at all levels of management.

TRUE Pareto phenomena can be observed in a wide variety of organization situations.

15. Service often requires greater labor content, whereas manufacturing is more capital intensive.

TRUE Service operations tend to be more labor-intensive than manufacturing.

68. Two widely used metrics of variation are the __________ and the _________.

The mean and standard deviation summarize important facets regarding the variation in a process. . mean; standard deviation