SCM Exam 1 True/False

A cause-and-effect diagram helps identify the source of a problem.

True

A firm's process strategy is its approach to transforming resources into goods and services.

True

A multinational corporation has extensive international business involvements

True

A useful tactic for increasing capacity is to redesign a product in order to get more throughput

True

A value-stream map includes both (1) inventory quantities, and (2) symbols for customers and suppliers.

True

All organizations, including service firms such as banks and hospitals, have a production function.

True

An example of a "hidden" production function is money transfers at banks.

True

An organization's ability to generate unique advantages over competitors is central to a successful strategy implementation

True

Automated storage and retrieval systems are commonly used in distribution facilities of retailers.

True

Between 1980 and 2005, the amount of money (bank deposits, government and corporate debt securities, and equity securities) invested in global capital markets more than tripled.

True

Boeing's development of the 787 Dreamliner is an example of a company obtaining a competitive advantage via product differentiation/innovation

True

By their very nature, projects have a limited lifetime, and that sets project management apart from the management of more traditional activities

True

Changes in capacity may lead, lag, or straddle the demand

True

Continuous improvement is based on the philosophy that any aspect of an organization can be improved.

True

Critical Success Factors are those activities that are key to achieving competitive advantage

True

Decisions that involve what is to be made and what is to be purchased fall under the heading of supply chain management.

True

Design capacity is the theoretical maximum output of a system in a given period under ideal conditions.

True

Errors made within the location decision area may overwhelm efficiencies in other areas

True

Ethical and social dilemmas arise because stakeholders of a business have conflicting perspectives.

True

Ethical issues which can arise in projects include bid rigging, bribery, and "low balling."

True

Every network has at least one critical path

True

Expected output is sometimes referred to as rated capacity.

True

Experience differentiation is an extension of product differentiation, accomplished by using people's five senses to create an experience rather than simply providing a service

True

Fixed costs are those costs that continue even if no units are produced

True

Flexible manufacturing systems, because of easily changed control programs, are able to perform such tasks as manufacturing one-of-a-kind parts economically.

True

For the greatest chance of success, an organization's operations management strategy must support the company's strategy

True

Gantt charts give a timeline for each of a project's activities, but do not adequately show the interrelationships of activities.

True

High-quality products and services are the most profitable.

True

ISO 9000 has evolved from a set of quality assurance standards toward a quality management system.

True

Improved quality can increase profitability via flexible pricing.

True

In PERT analysis, the identification of the critical path can be incorrect if a noncritical activity takes substantially more than its expected time

True

In process-focused facilities, equipment utilization is low.

True

In project management, crashing an activity must consider the impact on all paths in the network

True

In selecting new equipment and technology, decision-makers look for flexibility—the ability to respond with little penalty in time, cost, or customer value.

True

In the past half-century, the number of people employed in manufacturing has more or less held steady, but each manufacturing employee is manufacturing about 20 times as much

True

Intermittent processes are organized around processes.

True

Internal failure costs are associated with scrap, rework, and downtime

True

Kaizen is similar to TQM in that both are focused on continuous improvement.

True

Line employees need the knowledge of TQM tools.

True

NAFTA seeks to phase out all trade and tariff barriers among Canada, Mexico, and the United States.

True

One essential ingredient of mass customization is modular design

True

One limitation of the net present value approach to investments is that investments with identical net present values may have very different cash flows.

True

One of the ways that Just-In-Time (or JIT) influences quality is that by reducing inventory, bad quality is exposed.

True

One phase of a large project is scheduling

True

One reason for global operations is to gain improvements in the supply chain

True

One reason to globalize is to learn to improve operations

True

One reason to study operations management is to learn how people organize themselves for productive enterprise

True

One responsibility of a project manager is to make sure that the project meets its quality goals.

True

One use of camera-and-computer-based vision systems is to replace humans doing tedious and error-prone visual inspection activities.

True

Operations management is the set of activities that create value in the form of goods and services by transforming inputs into outputs.

True

Optical checkout scanners and ATMs are examples of technology's impact on services.

True

Pareto charts are a graphical way of identifying the few critical items from the many less important ones.

True

Philip Crosby is credited with both of these quality catch-phrases: "quality is free" and "zero defects."

True

Price changes are useful for matching the level of demand to the capacity of a facility

True

Process control is the use of information technology to monitor and control a physical process.

True

Processes can be environmentally friendly and socially responsible while still contributing to profitable strategies

True

Production processes are being dispersed to take advantage of national differences in labor costs

True

Productivity is more difficult to improve in the service sector

True

Project managers have their own code of ethics, established by the Project Management Institute

True

Quality circles empower employees to improve productivity by finding solutions to work-related problems in their work area.

True

Service blueprinting is a process analysis technique that focuses on the customer and the provider's interaction with the customer.

True

Slack is the amount of time an activity can be delayed without delaying the entire project

True

Some of the operations-related activities of Hard Rock Café include designing meals and analyzing them for ingredient cost and labor requirements.

True

Southwest Airlines' core competence is operations.

True

Students wanting to pursue a career in operations management will find multidisciplinary knowledge beneficial.

True

TQM is important because quality influences all of the ten decisions made by operations managers

True

The ES of an activity that has only one predecessor is simply the EF of that predecessor

True

The PIMS study indicated that high ROI firms tend to have high product quality

True

The World Trade Organization has helped to significantly reduce tariffs around the world.

True

The World Trade Organization helps provide governments and industries around the world with protection from firms that engage in unethical conduct.

True

The assembly line is a classic example of a repetitive process

True

The definition of quality adopted by The American Society for Quality is a customer-oriented definition.

True

The operations manager performs the management activities of planning, organizing, staffing, leading, and controlling of the OM function.

True

The phrase Six Sigma has two meanings. One is statistical, referring to an extremely high process capability; the other is a comprehensive system for achieving and sustaining business success.

True

The relative importance of each of the ten operations decisions depends on the ratio of goods and services in an organization

True

The term focused processes refers to the quest for increased efficiency, whether in goods or services, that results from specialization.

True

The tool that calculates which process has the lowest cost at any specified production volume is a crossover chart.

True

Time-function mapping is a flow diagram with time added to the horizontal axis.

True

To attract and retain global talent, and to expand a product's life cycle, are both reasons to globalize

True

"How much inventory of this item should we have?" is within the critical decision area of managing quality.

False

A decision tree for analyzing capacity would have future demands or market favorability as the decision alternatives.

False

A decision tree indicates at what quantity profit changes from negative to positive

False

A knowledge society is one that has migrated from work based on knowledge to one based on manual work.

False

A process map with the addition of a time axis becomes a process chart

False

A product will always be in the same stage of its product life cycle regardless of the country

False

A project organization works best for an organization when the project resides in only one of its functional areas.

False

Activity times should not be included in a service blueprint

False

An example of the postponement strategy for improving service productivity is having the customer wait until you have sufficient time to serve the customer

False

An improvement in quality must necessarily increase costs.

False

An organization's strategy is its purpose or rationale for an organization's existence

False

Benchmarking requires the comparison of your firm to other organizations; it is not appropriate to benchmark by comparing one of your divisions to another of your divisions.

False

Break-even analysis identifies the volume at which fixed costs and revenue are equal

False

Break-even analysis is a powerful analytical tool, but is useful only when the organization produces a single product

False

Building an additional warehouse is an incremental expansion, not a one-step expansion.

False

Capacity decisions are based on technological concerns, not demand forecasts

False

Conforming to standards is the focus of the product-based definition of quality.

False

Critical success factors and core competencies are synonyms

False

Customer interaction is often high for manufacturing processes, but low for services.

False

Dell's approach to personal computer manufacturing is to use a product focus, which gives the company its low-cost competitive advantage.

False

Deming's writings on quality tend to focus on the customer and on fitness for use, unlike Juran's work that is oriented toward meeting specifications.

False

Firms using the global strategy can be thought of as "world companies

False

For most, if not all organizations, quality is a tactical rather than a strategic issue

False

Harley-Davidson, because it has so many possible combinations of products, utilizes the process strategy of mass customization.

False

Henry Ford is known as the Father of Scientific Management.

False

In order to have a career in operations management, one must have a degree in statistics or quantitative methods.

False

Low-cost leadership is the ability to distinguish the offerings of the organization in any way that the customer perceives as adding value

False

Managers at Arnold Palmer Hospital take quality so seriously that the hospital typically is a national leader in several quality areas—so that continuous improvement is no longer necessary.

False

Manufacturing now constitutes the largest economic sector in postindustrial societies

False

Manufacturing organizations have ten strategic OM decisions, while service organizations have only eight

False

Measuring the impact of a capital acquisition on productivity is an example of multi-factor productivity.

False

Most services are tangible; this factor determines how the ten decisions of operations management are handled differently for goods than for services.

False

NAFTA seeks to phase out all trade and tariff barriers between the United States and Asia.

False

Of the several determinants of service quality, access is the one that relates to keeping customers informed in language they can understand.

False

Operations strategies are implemented in the same way in all types of organizations.

False

PERT, but not CPM, has the ability to consider the precedence relationships in a project.

False

Process maps use distance, but not time, to show the movement of material, product, or people through a process.

False

Production technology has had a major impact on services, but as yet there has been little reduction in service labor requirements

False

Productivity is the total value of all inputs to the transformation process divided by the total value of the outputs produced.

False

Professional services typically require low levels of labor intensity.

False

Quality is mostly the business of the quality control staff, not ordinary employees

False

SWOT analysis identifies those activities that make a difference between having and not having a competitive advantage

False

Shewhart's contributions to operations management came during the Scientific Management Era

False

Shortening the project's duration by deleting unnecessary activities is called "project crashing."

False

Source inspection is inferior to inspection before costly operations

False

Successful process redesign focuses on departmental areas where small, continuous improvements can be made

False

The Japanese use the term "poka-yoke" to refer to continuous improvement.

False

The PERT pessimistic time estimate is an estimate of the minimum time an activity will require

False

The critical path can be determined by use of either the "forward pass" or the "backward pass."

False

The fundamental difference between PERT and CPM is that PERT uses the beta distribution for crashing projects while CPM uses cost estimates.

False

The multidomestic OM strategy maximizes local responsiveness while achieving a significant cost advantage

False

The net present value of $10,000 to be received in exactly three years is considerably greater than $10,000.

False

The production process at Hard Rock Café is limited to meal preparation and serving customers.

False

The quality loss function indicates that costs related to poor quality are low as long as the product is within acceptable specification limits.

False

The shortest of all paths through the network is the critical path.

False

The standard deviation of project duration is the average of the standard deviation of all activities on the critical path.

False

The typical full-service restaurant uses a product-focused process.

False

Utilization is the number of units a facility can hold, receive, store, or produce in a period of time.

False

Work Breakdown Structure is a useful tool in project management because it addresses the timing of individual work elements.

False