OM FINAL EXAM

How does the pursuit of a response strategy impact the supply chain decisions of: (1) primary supplier selection criteria, (2) supply chain inventory, (3) distribution network, and (4) product design characteristics?

(1) Suppliers should be selected primarily based on capacity, speed, and flexibility. (2) The firm should use buffer stocks to ensure speedy supply. (3) The firm should use fast transportation, and it should provide premium customer service. (4) Products should have low setup times, and they should be poised for rapid production ramp-up.

Identify the ten opportunities in managing the integrated supply chain.

(1) accurate "pull" data; (2) lot size reduction; (3) single-stage control of replenishment; (4) vendor-managed inventory; (5) collaborative planning, forecasting, and replenishment (CPFR); (6) blanket orders; (7) standardization; (8) postponement; (9) electronic ordering and funds transfer; (10) drop shipping and special packaging

Supply chain managers outsource logistics to meet what three goals?

(1) drive down inventory investment; (2) lower delivery costs; (3) improve delivery reliability and speed

Identify three common occurrences that contribute to distortions of information about what is really occurring in the supply chain.

(1) local optimization; (2) incentives (sales incentives, quantity discounts, quotas, and promotions); (3) large lots

Identify nine areas of technology that enhance production and productivity.

(1) machine technology, (2) automatic identification systems (AIS), (3) process control, (4) vision systems, (5) robots, (6) automated storage and retrieval systems (ASRSs), (7) automated guided vehicles (AGVs), (8) flexible manufacturing systems (FMSs), and (9) computer-integrated manufacturing (CIM)

Identify three common features of contracts between buyers and suppliers.

(1) quantity discounts; (2) buybacks; (3) revenue sharing

Identify the four types of inventory.

(1) raw material inventory; (2) work-in-process inventory; (3) maintenance/repair/operating supply (MRO) inventory; and (4) finished-goods inventory

Identify the four stages of supplier selection.

(1) supplier evaluation; (2) supplier development; (3) negotiations; (4) contracting

Identify the nine major categories of supply chain risk.

(1) supplier failure to deliver; (2) supplier quality failures; (3) logistics delays or damage; (4) distribution; (5) information loss or distortion; (6) political; (7) economic; (8) natural catastrophes; (9) theft, vandalism, and terrorism

What are the four functions of inventory?

(1) to provide a selection of goods for anticipated customer demand and to separate the firm from fluctuations in that demand; (2) to decouple various parts of the production process; (3) to take advantage of quantity discounts; and (4) to hedge against inflation

A firm is about to undertake the manufacture of a product, and it is weighing the process configuration options. There are two intermittent processes under consideration, as well as a repetitive focus. The smaller intermittent process has fixed costs of $3,000 per month and variable costs of $10 per unit. The larger intermittent process has fixed costs of $12,000 per month and variable costs of $2 per unit. A repetitive focus plant has fixed costs of $50,000 per month and variable costs of $1 per unit. a. At what output does the large intermittent process become cheaper than the small one? b. At what output does the repetitive process become cheaper than the larger intermittent process?

(a) at 1125 units, the large job shop becomes cheaper than the small job shop; (b) at 38,000 units, the repetitive shop is cheaper than the larger job shop.

An organization is considering three process configuration options. There are two different intermittent processes, as well as a repetitive focus. The smaller intermittent process has fixed costs of $3,000 per month and variable costs of $10 per unit. The larger intermittent process has fixed costs of $12,000 per month and variable costs of $2 per unit. A repetitive focus plant has fixed costs of $50,000 per month and variable costs of $1 per unit. a. If the company produced 20,000 units, what would be its cost under each of the three choices? b. Which process offers the lowest cost to produce 40,000 units? What is that cost?

(a) at 20,000 units, the costs are: small intermittent = $203,000; large intermittent = $52,000; and repetitive = $70,000 (b) at 40,000 units, repetitive process is cheapest, at $90,000 (small intermittent = $403,000, and large intermittent = $92,000).

The local convenience store makes personal pan pizzas. Currently, its process makes complete pizzas, fully cooked, for the customer. This process has a fixed cost of $20,000, and a variable cost of $1.75 per pizza. The owner is considering a different process that can make pizzas in two ways: completely cooked (as before), or partially cooked and then flash frozen for the customer to finish heating at home. This alternate process has a fixed cost of $24,000, but a lower variable cost (because much less energy is used in baking) of $1.25 per pizza. a. What is the crossover point between the existing process and the proposed process? b. If the owner expects to sell 9,000 pizzas, should he get the new oven?

(a) the crossover is 8,000 units (b) for production quantities of 8,000 or larger, the new, more flexible process has a lower cost.

Big John's Manufacturing currently produces its lead product on a machine that has a variable cost of $0.32 per unit, and fixed costs of $75,000. Big John is considering purchasing a new machine that would drop the variable cost to $.28 per unit, but has fixed costs of $150,000. What is the cross-over point between the two machines?

1,875,000 units

Identify and describe briefly the six sourcing strategies.

1. With the many suppliers strategy, a supplier responds to the demands and specifications of a "request for quotation," with the order usually going to the low bidder. 2. The strategy of few suppliers develops long-term "partnering" relationships with a few dedicated suppliers who will work with the purchaser in satisfying the end customer. 3. Vertical integration is developing the ability to produce goods or services previously purchased or actually buying a supplier or a distributor. 4. Joint ventures represent a formal collaboration between firms, without implying any change of ownership. 5. Suppliers become part of a company coalition in the keiretsu strategy. 6. With the virtual companies strategy, firms rely on a variety of supplier relationships to provide services on demand.

A three sigma program has how many defects per million

2700

A six sigma program has how many defects per million

3.4

A non-profit organization is planning a raffle to raise money. It has two options for tickets. The first option is to do the tickets by hand, with fixed costs of $50 and variable costs of $.05 per ticket. The second option is to outsource production. This would result in fixed costs of $500 and variable costs of $.01. If the organization plans to sell 10,000 tickets which option should it choose?

50 + .05V = 500 + .01V, V = 11,250 tickets (students may solve for the cross-over point and realize higher VC option is cheaper at 10,000 since it is below the cross-over point). Another viable method is to find the cost for each option, yielding Option 1 = 50 + .05(10,000) = $550 and Option 2 = 500 + .01(10,000) = $600. Thus the organization should choose the first option.

Brandon's computer shop is considering two different configuration options. The first one is to have each computer built by the sales associates when they have free time. The second option is to hire a dedicated assembly technician. Option A has variable costs of $50 per computer and no fixed costs. Option B has a fixed cost of $1,000 but variable costs of only $5 per computer. What is the cross-over point?

50V = 1000 + 5V, V (cross-over point) = 22.2 computers

Describe a reverse auction (also known as a Dutch auction).

A buyer initiates the process by submitting a description of the desired product or service. Potential suppliers then submit bids, which may include price and other delivery information. Thus, price competition occurs on the selling side of the transaction—bidding the price down.

Identify the five major tools of process analysis and design. Describe them in a sentence or two each.

A flowchart is a schematic or drawing of the movement of material, product, or people. Time-function mapping is a flow chart, with the addition of time on the horizontal axis. Value-stream mapping shows how to add value in the flow of materials and information through the entire production process. Process charts use symbols, time, and distance to provide an objective and structured way to analyze and record the activities that make up a process. Service blueprinting focuses on the customer and the provider's interaction with the customer.

What is a keiretsu?

A keiretsu is a network of suppliers who become part of a company coalition. It is part collaboration, part purchasing from a few suppliers, and part vertical integration. Usually the suppliers are partially owned or debtors to the purchasing organization. This structure is quite common in Japan.

A firm wants to develop a level material use schedule based on the following data. What should be the setup cost?

A) $0.45

A local club is selling Christmas trees and deciding how many to stock for the month of December. If demand is normally distributed with a mean of 100 and standard deviation of 20, trees have no salvage value at the end of the month, trees cost $20, and trees sell for $50 what is the service level?

A) .60

With cross-sourcing, how many suppliers provide each component on a regular basis (i.e., excluding backup suppliers)?

A) 1

A work center had actual input of 280 hours and actual output of 270 hours. What is the change in backlog?

A) 10

An order for 50 units of Product A and 60 of B has been placed. There are currently 25 units of Product B on hand. Each A requires 2 units of Part C; each B requires 5 units of C. There are 160 units of C available. What are the net requirements for C?

A) 115

Consider a firm with an annual net income of $20 million, revenue of $60 million and cost of goods sold of $25 million. If the balance sheet amounts show $2 million of inventory and $500,000 of property, plant & equipment, what is the inventory turnover?

A) 12.50

A specific product has demand during lead time of 100 units, with a standard deviation during lead time of 25 units. What safety stock (approximately) provides a 95% service level?

A) 41

The jobs listed below need to be completed. Assume that it is now day 140. If the jobs are sequenced according to the shortest processing time rule, what is the average completion time?

A) 47.6 days

If the demand for product A is 50 units, how many units of component E will be needed? (2)

A) 50

Process A has fixed costs of $1000 and variable costs of $5 per unit. Process B has fixed costs of $500 and variable costs of $15 per unit. What is the crossover point between process A and process B?

A) 50 units

Which of the following items is mostly likely managed using a single-period order model?

A) Christmas trees

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)

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.

What directly results from disaggregation of an aggregate plan?

A) a master production schedule

Which of the following best describes a gross material requirements plan?

A) a schedule that shows total demand for an item, and when it must be ordered from a supplier or when production must be started

The fixed-period inventory system requires more safety stock than a fixed-quantity system because:

A) a stockout can occur during the review period as well as during the lead time.

Which of the following products is likely to be assembled on a repetitive process line?

A) automobiles

Disaggregation:

A) breaks the aggregate plan into greater detail.

The correct sequence from longest to smallest duration scheduling is:

A) capacity planning, aggregate planning, master schedule, short-term scheduling.

Which of the following is NOT tracked by scheduling optimization systems used in retail stores?

A) cars parked in the parking lot

Which of the following aggregate planning strategies is a demand option?

A) changing price

Concerning relationships with suppliers, which of the following combinations is critical to the success of JIT?

A) close relationships with trust

What term describes a supply chain that is designed to optimize both forward and reverse flows?

A) closed-loop supply chain

Computer-integrated manufacturing (CIM) includes manufacturing systems that have:

A) computer-aided design, a flexible manufacturing system, inventory control, warehousing and shipping integrated.

What type of negotiating strategy requires the supplier to open its books to the purchasers?

A) cost-based price model

What is the priority rule that sequences jobs using the smallest ratio of due date from today to processing time?

A) critical ratio

EDD stands for what?

A) earliest due date

Q is to ________ systems as P is to ________ systems.

A) fixed quantity, fixed period

What is a drawing of the movement of material, product, or people?

A) flowchart

What value of the bullwhip measure would indicate that the bullwhip effect exists?

A) greater than 1

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.

In the basic EOQ model, if the cost of placing an order doubles, and all other values remain constant, the EOQ will:

A) increase by about 41%.

Which of the following is NOT a key benefit of MRP?

A) increased quality

The main trait of a single-period model is that:

A) inventory has limited value after a certain period of time.

By convention, what is the top level in a product structure?

A) level 0

What lot-sizing technique is generally preferred when inventory holding costs are extremely high?

A) lot-for-lot

Which of the following lot-sizing techniques results in the lowest holding costs?

A) lot-for-lot

Which of the following phrases best describes process focus?

A) low volume, high variety

In MRP, system nervousness is caused by:

A) management's attempt to continually respond to minor changes in production requirements.

Align Technology uses a ________ approach to produce clear plastic removable aligners.

A) mass customization

The objective of aggregate planning is to meet forecast demand while ________ over the planning period.

A) minimizing cost

If an assignment problem consists of 5 workers and 4 projects:

A) one worker will not get a project assignment.

Local optimization is a supply-chain complication best described as:

A) optimizing one's local area without full knowledge of supply chain needs.

Which of the following is a requirement of Q systems?

A) perpetual inventory system

What is the practice of keeping a product generic as long as possible before customizing?

A) postponement

The use of information technology to monitor and control a physical process is known as:

A) process control.

Goods made to order are typical of ________ and ________ approaches while goods made to forecast are typical of ________ and ________ approaches.

A) process, mass customization; repetitive, product

Which of the following is a primary supplier selection criterion for a firm pursuing a differentiation strategy?

A) product development skills

Warehouses sometimes perform certain other functions besides storing goods. Which of the following is NOT typically one of those functions?

A) purchasing

By which distribution system is more than 90 percent of U.S. coal shipped?

A) railroads

Which of the following are all strategies for improving productivity in services?

A) separation, self-service, automation, and scheduling

Under which of the following do planning tasks associated with job assignments, ordering, job scheduling, and dispatching typically fall?

A) short-range plans

Which of the following dispatching rules ordinarily gives the best results when the criterion is lowest time for completion of the full sequence of jobs?

A) shortest processing time (SPT)

What are the four stages of supplier selection?

A) supplier evaluation, supplier development, negotiations, and contracting

How can a reduction of in-transit inventory be encouraged?

A) supplier location near plants

What is a scheduling technique used to achieve an optimum, one-to-one matching of tasks and resources?

A) the assignment method

Which of the following is NOT an element of the disaster risk decision tree model?

A) the buyer's financial loss incurred in a supply cycle if supplier i were disrupted

Which of the following elements of the factor weighting technique in supplier selection analysis does NOT contain a certain degree of subjectivity?

A) the formula used to calculate the total weighted score for each supplier

Distribution management focuses on which of the following?

A) the outbound flow of products

Three jobs are to be assigned to three machines. Cost for each job-machine combination appears in the table below. Perform the first two steps of the assignment method (subtract the smallest number in each row and subtract the smallest number in each column; then cover with straight lines). At this point in the problem-solving process:

A) the row for Job 1 contains the values 5, 6, and 0.

Which of the following actions is consistent with the use of level scheduling?

A) use inventory to meet demand requirements

What is the formula for the bullwhip measure?

A) variance of orders / variance of demand

_______ is a method for dividing on-hand inventory into three classifications based on annual dollar volume.

ABC analysis

Describe ABC inventory analysis in one sentence. Identify three policies that may be based upon the results of an ABC analysis.

ABC inventory analysis is a method for dividing on-hand inventory into three classifications based on annual dollar volume. Some policies include: (1) purchasing resources expended on supplier development should be much higher for individual A items than for C items; (2) A items should have tighter physical inventory control; and (3) forecasting A items may warrant more care than forecasting other items.

A company is deciding where to assign its summer intern. The manager estimates that the intern can save the company $10,000 in supply chain costs. Given the table below, what increase in sales (revenue) by the intern is required to show an equal profit?

Additional sales would increase costs by (.35+.25) × Sales. Profit would therefore be X - .6X = .4X, where X is the increase in sales (revenue). Solve for when .4X = 10,000 or X = $25,000 required in increased sales to account for the same profit level.

Identify the advantages and disadvantages of using the "few suppliers" sourcing strategy.

Advantages: long-term suppliers are more likely to understand the broad objectives of the procuring firm and the end customer; using few suppliers can create value by allowing suppliers to have economies of scale and a learning curve that yields both lower transaction costs and lower production costs; and the strategy also encourages those suppliers to provide design innovations and technological expertise. Disadvantages: concern about trade secrets and suppliers venturing out on their own; the high cost of changing partners; and risk of poor supplier performance.

________ is an approach to determine the quantity and timing of production for the intermediate future.

Aggregate planning

Compare the assumptions of the production order quantity model to those of the basic EOQ model.

All are the same, except for the assumption that receipt of inventory is instantaneous, which holds for the EOQ, but not the POQ.

________ is a computer-controlled warehouse that provides for the automatic placement of parts into and from designated places within the warehouse.

Automated storage and retrieval system or ASRS

Suppose that the manager of a company has estimated the probability of a super-event sometime during the next three years that will disrupt all suppliers as 2%. In addition, the firm currently uses four suppliers for its main component, and the manager estimates the probability of a unique-event that would disrupt one of them sometime during the next three years to be 20%. Supplier management costs during this period are $50,000 per supplier. The financial cost incurred if all four suppliers are disrupted at the same time is estimated to be $10,000,000. What is the expected monetary value (cost) of the current supplier diversification arrangement?

B) $415,680

Suppose that a product's value is $1000. The manufacturer experiences a holding cost of 2.5% per month. The firm ships the product across country by truck, and it arrives six days later. The shipping cost is $80 per unit. What is the holding cost on each unit shipped? (Assume 30 days per month.)

B) $5.00

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).

B) $7.20

A product has a demand of 4000 units per year. Ordering cost is $20, and holding cost is $4 per unit per year. The EOQ model is appropriate. The cost-minimizing solution for this product will cost ________ per year in total annual inventory (holding and setup) costs.

B) $800

A manager is applying the transportation model of linear programming to solve an aggregate planning problem. Demand in period 1 is 100 units, and in period 2, demand is 150 units. The manager has 125 hours of regular employment available for $10/hour each period. In addition, 50 hours of overtime are available for $15/hour each period. If holding costs are $2 per unit each period, how many hours of regular employment should be used in period 1? (Assume demand must be met in both periods 1 and 2 for the lowest possible cost and that production is 1 unit per hour.)

B) 125

A product has a demand of 4000 units per year. Ordering cost is $20, and holding cost is $4 per unit per year. The cost-minimizing solution for this product is to order:

B) 200 units per order.

A production order quantity problem has a daily demand rate = 10 and a daily production rate = 50. The production order quantity for this problem is approximately 612 units. What is the average inventory for this problem?

B) 245

A work center is interested in limiting work-in-process by not allowing production to start again until the current batch is finished. The best solution most likely involves:

B) ConWIP cards.

An inventory decision rule states, "When the inventory level goes down to 14 gearboxes, 100 gearboxes will be ordered." Which of the following statements is TRUE?

B) Fourteen is the reorder point, and 100 is the order quantity.

If the goals of JIT partnerships are met, which of the following is a result?

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

Which one of the following statements is TRUE regarding JIT inventory?

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

Which of the following statements regarding the production order quantity model is TRUE?

B) It relaxes the assumption that all the order quantity is received at one time.

Which of the following characteristics best describes repetitive focus?

B) Its output is a standardized product produced from modules.

Which of the following dispatching rules tends to minimize job flow time?

B) SPT: shortest processing time

Which of the following is NOT one of the five parts of the Supply Chain Operations Reference (SCOR) model?

B) Sell

Which of the following statements regarding Amazon.com is FALSE?

B) The company was founded as, and still is, a "virtual" retailer with no inventory.

Which of the following is TRUE regarding services scheduling?

B) The emphasis is on staffing levels, not materials.

Which of the following statements is TRUE about the MRP plan when using lot-for-lot ordering?3

B) The quantity of gross requirements for a child item is equal to the quantity of planned order release(s) multiplied by the number of child items used in the parent assembly.

If the variance of orders of a manufacturer equals 800, and the variance of orders of its supplier equals 750, what is happening at this part of the supply chain?

B) The supplier is providing a dampening (anti-bullwhip) effect.

Suppose that in month 1, both the retailer and the wholesaler in a supply chain ordered 20,000 units. Then in month 2, the retailer decreases its order size by 1000 units. If the wholesaler then decreases its order size in month 2 by 700 units, which of the following is TRUE?

B) The wholesaler is providing a dampening (anti-bullwhip) effect.

Which of the following is FALSE regarding repetitive processes?

B) They allow easy switching from one product to the other.

Which of the following statements regarding lot-sizing is TRUE?

B) Too much concern with lot-sizing results in false accuracy.

What does TPS stand for?

B) Toyota Production System

Which of the following is specifically characterized by a focus on continuous improvement, respect for people, and standard work practices?

B) Toyota Production System (TPS)

Consider the disaster risk decision tree model. Using the notation from the model, what is the expected monetary value (cost) of choosing two suppliers?

B) [1-P(2)] × 2C + P(2) × (L + 2C)

Vertical integration appears particularly advantageous when the organization has:

B) a large market share.

Distribution resource planning (DRP) is:

B) a time-phased stock replenishment plan for all levels of a distribution network.

Which of these is among the demand options of aggregate planning?

B) back-ordering during high-demand periods

Which of the following is NOT a potential cause of the bullwhip effect?

B) channel coordination

Which choice below best describes the counterseasonal product demand option?

B) developing a mix of products that smoothes out their demands

A furniture maker has delivered a dining set directly to the end consumer rather than to the furniture store. The furniture maker is practicing which of the following?

B) drop shipping

Cycle counting:

B) eliminates annual inventory adjustments.

Which one of the following is NOT a layout tactic in a JIT environment?

B) fixed equipment

A rice mill in south Louisiana purchases the trucking firm that transports packaged rice to distributors. This is an example of which of the following?

B) forward integration

A product whose EOQ is 400 units experiences a 50% increase in demand. The new EOQ is:

B) increased by less than 50%.

Under which of the following do planning tasks associated with production planning and budgeting, as well as setting employment, inventory, and subcontracting levels, typically fall?

B) intermediate-range plans

E-procurement:

B) is the same thing as Internet purchasing.

Forward scheduling is the scheduling of:

B) jobs as soon as the requirements are known.

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:

B) kanban.

Japanese manufacturers often pursue a strategy that is part collaboration, part purchasing from a few suppliers, and part vertical integration. What is this approach called?

B) keiretsu

Characteristics of just-in-time partnerships do NOT include:

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

To use revenue management strategies, a business should have which combination of costs?

B) low variable and high fixed

Under the disaster risk decision tree model, which of the following conditions would create the HIGHEST incentive to use FEWER suppliers?

B) lower L, higher C

Under the disaster risk decision tree model, which of the following conditions would create the HIGHEST incentive to use MORE suppliers?

B) lower S, higher U

Which sourcing strategy is particularly common when the products being sourced are commodities?

B) many suppliers

Firms making many different final products use ________ to facilitate production scheduling.

B) modular bills

A product whose EOQ is 40 units experiences a decrease in ordering cost from $90 per order to $10 per order. The revised EOQ is:

B) one-third as large.

Which one of the following products is most likely made in a job shop environment?

B) paper forms

Which lot-sizing technique orders the quantity needed during a predetermined time between orders?

B) periodic order quantity

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:

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

Frito-Lay is to ________ focus as Harley Davidson is to ________ focus.

B) product, repetitive

In most manufacturing industries, which of the following would likely represent the largest cost to the firm?

B) purchasing

Designing distribution networks to meet customer expectations suggests what three criteria?

B) rapid response, product choice, and service

For the lot-sizing technique known as lot-for-lot to be appropriate:

B) setup cost should be relatively small.

Which of the following is not characteristic of a TPS employee?

B) strict job classifications

Dependence on an external source of supply is found in which of the following aggregate planning strategies?

B) subcontracting

In aggregate planning, which one of the following is not a basic option for altering demand?

B) subcontracting

In the service sector, which of the following aggregate planning strategies might direct your client to a competitor?

B) subcontracting

A restaurant runs a special promotion on lobster and plans to sell twice as many lobsters as usual. When this large order is sent to the distributor, the distributor assumes the large size is a trend, not a one-time event. The distributor therefore places an even larger order with the lobsterman. This behavior is the result of which of the following?

B) the bullwhip effect

The number of kanbans should be equal to which of the following?

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

ABC analysis is based upon the principle that:

B) there are usually a few critical items, and many items that are less critical.

An advantage of the fixed-period inventory system is that:

B) there is no physical count of inventory items when an item is withdrawn.

Which of the following is NOT an advantage of a virtual company?

B) total control over every aspect of the organization

Industries in which revenue management techniques are easiest to apply are those where:

B) use tends to be predictable, and pricing tends to be variable.

Which of these aggregate planning strategies is a capacity option?

B) using part-time workers

Which one of the following is not a benefit of JIT implementation?

B) variability increase

Which of the following is NOT required to be known in order to schedule process-focused facilities?

B) which workers are assigned to each work center

There are two jobs to be assigned to two workers. The profit for worker A on job 1 is $5 and on job 2 is $8. The profit for worker B on job 1 is $10 and on job 2 is $12. How should the work be divided using the assignment method?

B) worker A assigned to job 2 and worker B assigned to job 1

_______ scheduling begins with the due date and schedules the final operation first and the other job steps in reverse order.

Backward

________ are the time units in a material requirements planning (MRP) system.

Buckets

Which of the following is an illustration of employee empowerment?

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

For a certain item, the cost-minimizing order quantity obtained with the basic EOQ model is 200 units, and the total annual inventory (carrying and setup) cost is $600. What is the inventory carrying cost per unit per year for this item?

C) $3.00

A firm practices a pure chase strategy. Production last quarter was 1000. Demand over the next four quarters is estimated to be 900, 700, 1000, and 1000. Hiring cost is $20 per unit, and layoff cost is $5 per unit. Over the next year, what will be the sum of hiring and layoff costs?

C) $7,500

A work center had planned outputs of 10, 15, 13, and 20 hours with actual outputs of 12, 14, 13, and 18 hours. What is the cumulative deviation in output?

C) -1

Suppose that papers for a newspaper stand cost $0.40 and sell for $0.80. They currently have no salvage value. If the stand owner is able to find an outlet that would provide a salvage value of $0.10, what would be the increase in service level?

C) .07

If job 5 takes 3, 4 or 5 hours to be completed by workers A, B, and C, respectively, what would the row values for job 5 be after performing Step 1A of the assignment method?

C) 0, 1, 2

Eight jobs have been sequenced at a single work center. Total processing time for the eight jobs is 34 hours, and total flow time for the sequence is 85 hours. For this schedule, utilization is ________ and the average number of jobs in the system is ________.

C) 0.400 or 40 percent; 2.5

What is the value of the bullwhip measure for a company with a standard deviation of demand equal to 20, and a variance of orders equal to 450?

C) 1.125

A certain type of computer costs $1,000, and the annual holding cost is 25% of the value of the item. Annual demand is 10,000 units, and the order cost is $150 per order. What is the approximate economic order quantity?

C) 110

If daily demand is normally distributed with a mean of 15 and standard deviation of 5, and lead time is constant at 4 days, a 90 percent service level will require how much safety stock?

C) 13 units

In the basic EOQ model, if D = 6000 per year, S = $100, and holding cost = $5 per unit per month, what is the economic order quantity?

C) 141

In a safety stock problem where both demand and lead time are variable, demand averages 150 units per day with a daily standard deviation of 16, and lead time averages 5 days with a standard deviation of 1 day. What is the standard deviation of demand during lead time?

C) 154 units

An order for 110 units of Product A has been placed. There are currently 60 units of Product A on hand. Each A requires 4 units of Part B. There are 20 units of B available. What are the net requirements for B?

C) 180

The assumptions of the production order quantity model are met in a situation where annual demand is 3650 units, setup cost is $50, holding cost is $12 per unit per year, the daily demand rate is 10 and the daily production rate is 100. What is the production order quantity for this problem?

C) 184

What is the typical time horizon for aggregate planning?

C) 3 to 18 months

An order for 110 units of Product M has been placed. There are currently 30 units of Product M on hand. Each M requires 4 units of Component N. There are 20 units of N on hand. What are the net requirements for N?

C) 300

If daily demand is constant at 10 units per day, and lead time averages 12 days with a standard deviation of 3 days, 95 percent service requires how much safety stock?

C) 49 units

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?

C) 5

A grocery store is trying to find a new supplier for carrots. Its three most important supplier criteria are freshness, lot size, and cost, with factor weights of 0.6, 0.1, and 0.3, respectively. What would a supplier with ratings of 6, 8, and 10 in the three respective categories score as a weighted total?

C) 7.4

If the demand for product A is 30 units, and there are 10 units of B on hand and none of C, how many units of part D will be needed?

C) 70

Which of the following statements about aggregate planning is TRUE?

C) A pure chase strategy allows lower inventories when compared to a pure level scheduling.

In what type of auction does a buyer initiate the process by submitting a description of the desired product or service?

C) Dutch

Which of the following statements regarding control of service inventories is TRUE?

C) Effective control of all goods leaving the facility is one applicable technique.

Which of the following is NOT a source of variability?

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

Which of the following is FALSE concerning enterprise resource planning (ERP)?

C) It is inexpensive to implement.

JIT makes quality cheaper because:

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?

C) Lean operations

Which of the following statements regarding aggregate planning is TRUE?

C) Mixed strategies in aggregate planning may utilize inventory, work force, and production rate changes over the planning horizon.

Process X has fixed costs of $10,000 and variable costs of $2.40 per unit. Process Y has fixed costs of $9,000 and variable costs of $2.25 per unit. Which of the following statements is TRUE?

C) Process Y is cheaper than process X at all volumes.

Which of the following statements is true regarding the leverage of supply chain savings?

C) Supply chain savings exert more leverage as the firm's net profit margin decreases.

The Great East Japan Earthquake of 2011 was centered off of the Pacific coast of which region of Japan?

C) Tohoku

Which of the following statements regarding Wheeled Coach is FALSE?

C) Wheeled Coach's MRP system allowed the company to meet tight schedules, but caused inventory to rise.

Which of the following is an aid used to monitor jobs in progress?

C) a Gantt schedule chart

Low-level coding means that:

C) a component item is coded at the lowest level at which it appears in the BOM structure.

A system using an automated work cell controlled by electronic signals from a common centralized computer facility is called:

C) a flexible manufacturing system.

The assignment method is:

C) a form of linear programming for optimally assigning tasks or jobs to resources.

Which of the following is NOT one of the four things needed for aggregate planning?

C) a mathematical model that will minimize costs over the intermediate planning period

Which one of the following distribution systems offers speed and reliability when emergency supplies are needed overseas?

C) airfreight

Product focused processes:

C) are processes that are specialized for relatively few products or customer groups.

Which of the following is NOT one of the Seven Wastes?

C) assignment

The short-term scheduling activity called "loading":

C) assigns jobs to work centers

A fried chicken fast-food chain that acquired feed mills and poultry farms has performed which of the following?

C) backward integration

Which of the following characteristics makes revenue management UNATTRACTIVE to organizations that have perishable inventory?

C) capacity is easily changed

What does the Japanese word "kanban" mean?

C) card

Which of the following describes using one supplier for a component and a second supplier for another component, where each supplier acts as a backup for the other?

C) cross-sourcing

Typically, a more expensive shipping option is:

C) faster with a lower holding cost.

Orders are processed in the sequence in which they arrive if (the) ________ rule sequences the jobs.

C) first come, first served

"Operators simply load new programs, as necessary, to produce different products" describes:

C) flexible manufacturing systems.

Which one of the following is a concern expressed by suppliers in JIT partnerships?

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

A product-focused process is commonly used to produce:

C) high-volume, low-variety products.

What three logistics-related costs are relevant when analyzing the choice of number of facilities in a distribution network?

C) inventory costs, transportation costs, and facility costs

If the actual order quantity is the economic order quantity in a problem that meets the assumptions of the economic order quantity model shown below, the average amount of inventory on hand: Q* =

C) is one-half of the economic order quantity.

When Daimler and BMW pooled resources to develop standardized auto components, the sourcing strategy could best be described by which of the following?

C) joint venture

The Japanese concept of a company coalition of suppliers is:

C) keiretsu.

Which critical ratio value implies that a job is already late?

C) less than 1

Which of the following is NOT an advantage of the "few suppliers" sourcing strategy?

C) less vulnerable trade secrets

A firm uses graphical techniques in its aggregate planning efforts. Over the next twelve months (its intermediate period), it estimates the sum of demands to be 105,000 units. The firm has 250 production days per year. In January, which has 22 production days, demand is estimated to be 11,000 units. A graph of demand versus level production will show that:

C) level production of 420 units per day is below the January requirement.

Which of the following is NOT one of the successful techniques for controlling the cost of labor in services?

C) little flexibility in worker hours to decrease the burden on management

Top executives tend to focus their attention on which type of forecasts?

C) long-range

Which MRP lot-sizing technique should be considered to be the goal (i.e., the technique of choice under ideal conditions)?

C) lot-for-lot

Frito-Lay uses aggregate planning to match capacity with demand because of the ________ associated with its specialized processes.

C) low variable cost and high fixed cost

Which of the following is NOT an advantage of level scheduling?

C) matching production exactly with sales

MRP II is accurately described as:

C) material resource planning.

Drop shipping:

C) means the supplier will ship directly to the end consumer, rather than to the seller.

A paint company mixes ten different base colors into 3,000 different color options. If production scheduling is organized around the ten different base colors , then the bills of material are classified as which of the following?

C) modular

Which of the following is NOT a remedy for the bullwhip effect?

C) order batching

What is the process of tracing upward in the bill of material from the component to the parent item in order to determine the cause for the component requirement?

C) pegging

Three of the four types of processes are:

C) process focus, repetitive focus, and product focus.

Which of the following best describes vertical integration?

C) produce goods or services previously purchased

In level scheduling, what is kept uniform from month to month?

C) production/workforce levels

The Institute for Supply Management:

C) publishes the principles and standards for ethical supply management conduct.

Which of the following is NOT an attribute of lean operations?

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

An assembly line is an example of a:

C) repetitive process.

Among which of the following industries are purchasing costs the LOWEST percentage of sales?

C) restaurants

Sequencing (or dispatching):

C) specifies the order in which jobs should be done at each center.

Which of the following aggregate planning options is NOT associated with manipulation of product or service demand?

C) subcontracting

A material requirements plan contains information with regard to all of the following EXCEPT:

C) the capacity needed to provide the projected output rate.

One fundamental difference between a process chart and a flowchart is that:

C) the process chart is more like a table, while the flowchart is more like a schematic diagram.

If a load report (resource requirements profile) shows a work center scheduled beyond capacity:

C) the work center's load may be smoothed by such tactics as operations splitting or lot splitting.

What is one of the tools that is particularly useful in reducing system nervousness in an MRP system?

C) time fences

The two most basic inventory questions answered by the typical inventory model are:

C) timing of orders and order quantity.

Average completion time for a schedule sequence at a work center is the ratio of:

C) total flow time to the number of jobs.

Most inventory models attempt to minimize:

C) total inventory-based costs.

The U.S. ________ program, designed to stimulate the economy and improve fuel efficiency, produced an unintended bullwhip effect in the automobile industry.

Cash for Clunkers

________ postpones final assembly of a product so the distribution channel can assemble it.

Channel assembly

Why is channel assembly popular in the personal computer industry?

Channel assembly is popular in the personal computer industry because of better market response with less investment. This is possible because the late-stage assembly and customization is a natural part of a rapidly changing industry. With this strategy, finished-goods inventory is reduced because units are built to a shorter, more accurate forecast.

________ cards are used to control the amount of work in a work center, aiding input-output control.

ConWIP or Continuous work-in-process

________ describes using one supplier for a component and a second supplier for another component, where each supplier acts as a backup for the other.

Cross-sourcing

________ is a continuing reconciliation of inventory with inventory records.

Cycle counting

What is cycle counting?

Cycle counting is a continuing audit to reconcile inventory with inventory records.

The jobs listed below need to be completed. Assume that it is now day 140. If the jobs are sequenced according to the longest processing time rule, what is the lateness of job A?

D) 10.0 days

A bakery wants to determine how many trays of doughnuts it should prepare each day. Demand is normal with a mean of 5 trays and standard deviation of 1 tray. If the owner wants a service level of at least 95%, how many trays should he prepare (rounded to the nearest whole tray)? Assume doughnuts have no salvage value after the day is complete.

D) 7

Which one of the following scenarios represents the use of a kanban to reduce inventories?

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

Which of the following statements about ABC analysis is FALSE?

D) ABC analysis is based on the presumption that all items must be tightly controlled to produce important cost savings.

All EXCEPT which of the following statements about ABC analysis are true?

D) ABC analysis suggests that all items require the same high degree of control.

Which one of the following technologies is used ONLY for material handling, NOT actual production or assembly?

D) AGVs

Which of the following provides automatic placement and withdrawal of parts and products into and from designated places in a warehouse?

D) ASRS

Which of these statements about the production order quantity model is FALSE?

D) All else equal, the smaller the ratio of demand rate to production rate, the larger is the production order quantity.

Outsourcing:

D) All of the above are true of outsourcing.

Dependent demand and independent demand items differ in that:

D) All of the above are true.

Which of the following is TRUE regarding vision systems?

D) All of the above are true.

Which of the following is true regarding the concept of flexibility?

D) All of the above are true.

What is a method of input-output control that uses a system of cards to limit the amount of work at a work center and also to control lead time and monitor backlog?

D) ConWIP cards

Which of the following is TRUE regarding the POQ lot-sizing method?

D) Each order quantity is recalculated at the time of the order release.

Which of the following statements about the basic EOQ model is FALSE?

D) If annual demand were to double, the EOQ would also double.

Which choice best describes level scheduling?

D) Inventory goes up or down to buffer the difference between demand and production.

A manufacturer took the following actions to reduce inventory. Which of these is generally not accepted as a JIT action?

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?

D) Problems become more obvious.

Which of the following is NOT an assumption of the economic order quantity model shown below? Q* =

D) Production and use can occur simultaneously.

Which of the following technologies could enable a cashier to scan the entire contents of a shopping cart in seconds?

D) RFID

Which of the following statements regarding MRP in services is TRUE?

D) Services such as restaurant meals illustrate dependent demand, and they require product structure trees, bills-of-material, and scheduling.

Who is credited with coining the phrase, "Inventory is evil"?

D) Shigeo Shingo

Which of the following is NOT true about reverse logistics as compared to forward logistics?

D) Speed is often very important.

Which of the following statements about quantity discounts is FALSE?

D) The larger the annual demand, the less attractive a discount schedule will be.

A grocery store is attempting to implement a kanban system. Which of the following would not be an application of kanbans?

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

As the number of facilities increases, total logistics costs tend to follow a curve that first declines, then rises. Why?

D) Transportation costs first decline steeply, then rise, while facility and inventory costs always rise.

It is week 1 and there are currently 20 As in stock. We need 300 As at the start of week 5. If there are scheduled receipts planned for week 3 and week 4 of 120 As each and A has a lead time of 1 week, when and how large of an order should be placed to meet the requirement of 300 As?

D) Week 4, 40 As

Which of the following is NOT REQUIRED information to obtain to conduct the factor weighting technique in supplier selection analysis?

D) a qualitative scale on which to rate suppliers

If demand is not uniform and constant, then stockout risks can be controlled by:

D) adding safety stock.

Which of the following is the term used for intermediate-range capacity planning with a time horizon of three to eighteen months?

D) aggregate planning

Revenue (or yield) management is best described as:

D) allocation of scarce resources to customers at prices that will maximize revenue.

Among the advantages of cycle counting is that it:

D) allows more rapid identification of errors and consequent remedial action than is possible with annual physical inventory.

Enterprise resource planning (ERP):

D) automates and integrates the majority of business processes.

Which of the following aggregate planning strategies is a capacity option?

D) changing inventory levels

The purpose of safety stock is to:

D) control the likelihood of a stockout due to variable demand and/or lead time.

What are the three classic types of negotiation strategies?

D) cost-based price model, market-based price model, and competitive bidding

What technique does the text use to determine the best number of suppliers to manage disaster risk?

D) decision tree

A carpet manufacturer has delivered carpet directly to the end consumer rather than to the carpet dealer. The carpet manufacturer is practicing which of the following?

D) drop shipping

A recent advance in short-term scheduling that makes use of expert systems and simulation in solving dynamic scheduling problems is:

D) finite capacity scheduling.

Service blueprinting:

D) focuses on the provider's interaction with the customer.

Short-term schedules are prepared:

D) from master schedules, which are derived from aggregate plans.

Advances in technology:

D) have had a dramatic impact on customer interaction with services and with products.

Which of the following phrases best describes product focus?

D) high fixed costs, low variable costs

Which of the following is NOT a key direct benefit from effective internal or external scheduling?

D) higher quality

In mass service and professional service, the operations manager should focus extensively on:

D) human resources.

Kanban is associated with all EXCEPT which of the following?

D) increased material handling

Which of the following is not a goal of JIT partnerships?

D) inspect all incoming shipments to ensure zero defects

A job shop is an example of a(n):

D) intermittent process.

Excess bags of basic commodities such as flour and sugar that are stored in a restaurant's kitchen represent which of the following wastes?

D) inventory

A firm uses the pure chase strategy of aggregate planning. It produced 1000 units in the last period. Demand in the next period is estimated at 800, and demand over the next six periods (its aggregate planning horizon) is estimated to average 900 units. Which of the following tactics would be most representative of following a chase strategy?

D) lay off workers to match the 200-unit difference

What value of the bullwhip measure would indicate that a dampening scenario exists?

D) less than 1

Which of the following is NOT an opportunity for effective management in the supply chain?

D) local optimization

Which of the following is characteristic of lean operations?

D) low space requirements

Arnold Palmer Hospital uses which focus?

D) mass customization

If an assignment problem consists of 6 workers and 7 projects:

D) one project will not get a worker assigned.

The transfer of some of what are traditional internal activities and resources of a firm to outside vendors is:

D) outsourcing.

Hewlett-Packard withholds customization of its laser printers as long as possible. This is an example of which of the following?

D) postponement

What is the objective of scheduling?

D) prioritize and allocate demand to available facilities

In MRP, the number of units projected to be available at the beginning of each time period refers to:

D) projected on hand.

Which of the following is NOT a typical benefit of centralized purchasing?

D) reduce lead times

Which of the following characteristics is NOT common to all four of Darden Restaurants' supply channels?

D) refrigeration

Which one of the following is a characteristic of a JIT partnership?

D) removal of incoming inspection

Which of the following is NOT one of the risk mitigation tactics for the supply chain risk category of suppliers failing to deliver?

D) require overnight delivery

Which of the following is NOT one of the four main types of inventory?

D) safety stock inventory

What is the effort to plan the coordination of demand forecasts with functional areas of the firm and its supply chain?

D) sales and operations planning

The proper quantity of safety stock is typically determined by:

D) setting the level of safety stock so that a given stockout risk is not exceeded.

Which one of the following is NOT one of the six sourcing strategies?

D) short-term relationships with few suppliers

A disadvantage of the fixed-period inventory system is that:

D) since there is no count of inventory during the review period, a stockout is possible.

Which of the following is NOT a condition that favors the success of vertical integration?

D) small market share

While freight rates are often based on very complicated pricing systems, in general, the primary freight price factor is based on which of the following attributes?

D) speed of shipment

Forward scheduling:

D) starts the schedule as soon as the job requirements are known.

A disadvantage of the "few suppliers" sourcing strategy is:

D) the high cost of changing partners.

"An optimal plan for minimizing the cost of allocating capacity to meet demand over several planning periods" best describes which of the following?

D) the transportation method

Which of the following aggregate planning methods does not work if hiring and layoffs are possible?

D) the transportation method

One of the similarities between process focus and mass-customization is:

D) the variety of outputs.

Demand for a given item is said to be dependent if:

D) there is a clearly identifiable parent.

Flow time represents the time:

D) to complete an order, including time spent in processing and in waiting.

Which of the following would NOT generally be a motive for a firm to hold inventories?

D) to minimize holding costs

What is the primary purpose of the basic economic order quantity model shown below? Q* =

D) to minimize the sum of setup cost and holding cost

The crossover point is that production quantity where:

D) total costs for one process equal total costs for another process.

Aggregate planning would entail which of the following production aspects at BMW for a 12-month period?

D) total number of cars to produce

Harley Davidson:

D) uses work cells to feed its assembly line.

Which of the following is NOT consistent with level scheduling?

D) varying production levels and/or work force to meet demand requirements

Which of the following aggregate planning strategies is known to lower employee morale?

D) varying work force size by hiring or layoffs

What is DRP?

DRP is a time-phased stock replenishment plan for all levels of a distribution network.

Explain what "decoupling" means in the context of inventory management.

Decoupling means to separate various parts of the production process. Each of the parts can then function at its own best pace.

________ is the process of breaking the aggregate plan into greater detail.

Disaggregation

What is disaggregation?

Disaggregation is the process of breaking the aggregate plan into greater detail.

________ management focuses on the outbound flow of products.

Distribution

Suppose that the manager of a company has estimated the probability of a super-event sometime during the next five years that will disrupt all suppliers as 0.23%. In addition, the firm currently uses three suppliers for its main component, and the manager estimates the probability of a unique-event that would disrupt one of them sometime during the next five years to be 1.4%. What is the probability that all three suppliers will be disrupted at the same time at some point during the next five years?

E) 0.2303%

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?

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?

E) 25

If the demand for product A is 50 units, how many units of component E will be needed?

E) 300

Consider a firm with an annual net income of $20 million, revenue of $60 million and cost of goods sold of $25 million. If the balance sheet amounts show $2 million of inventory and $500,000 of property, plant & equipment, how many weeks of supply does the firm hold?

E) 4.16

An industrial producer is searching for a supplier for ball bearings. Its three most important supplier criteria are price, quality, and delivery reliability. The firm has decided that quality and delivery reliability should carry the same weight, and that each of them are twice as important as price. If the weights sum to 100%, what would a supplier with ratings of 40, 90, and 75 in the three respective categories score as a weighted total?

E) 74

The minimum record accuracy required for successful MRP is approximately which of the following?

E) 99%

A grill assembly takes 20 washers. Instead of listing these washers separately, they are grouped into a single kit for production. How is the bill of material for the washers classified?

E) A and B

What is the difference between P and Q inventory systems?

E) A and B

Which of the following companies use a mass customization approach?

E) A and B

Distortion in MRP systems can be minimized when safety stock is held at the:

E) A and C

High fixed costs and low variable costs are typical of which approach?

E) A and C

A quasi-custom product:

E) All but D are true.

Lean operations are known for their:

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

Which of the following is consistent with a pure chase strategy?

E) All of the above are consistent with a pure chase strategy.

Which of the following is an element of inventory holding costs?

E) All of the above are elements of inventory holding costs.

Which of the following is a function of inventory?

E) All of the above are functions of inventory.

Which of the following is NOT a goal of JIT partnerships?

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

Which of the following is a limitation of rules-based dispatching systems?

E) All of the above are limitations.

Capacity planning in closed-loop MRP:

E) All of the above are true.

In supply chain management, ethical issues:

E) All of the above are true.

The bullwhip effect:

E) All of the above are true.

Value-stream mapping:

E) All of the above are true.

Which of the following is TRUE regarding the steps to reducing setup times?

E) All of the above are true.

Which of the following statements is TRUE regarding the 2011 Tohoku earthquake and tsunami?

E) All of the above are true.

Which of the following statements regarding the gross material requirements plan is TRUE?

E) All of the above are true.

Which of the following statements regarding the reorder point is TRUE?

E) All of the above are true.

Which of the following would NOT be subject to negotiation between a buyer and supplier?

E) All of the above could be negotiated.

Which of the following would NOT be considered (in addition to delivery speed) when choosing a mode of transportation?

E) All of the above may be considered.

Which of the following is NOT a concern of suppliers as they prepare to enter into JIT partnerships?

E) All of the above represent JIT supplier concerns.

Which of the following statements about the basic EOQ model is TRUE?

E) All of the above statements are true.

The 5Ss:

E) All of these are true.

Service level is:

E) B and D

What does the use of the shortest processing time sequencing rule generally produce?

E) B and D

Using LPT priority would result in what sequence for Jobs A, B, C, and D if their process times are 4, 6, 5, and 2 respectively?

E) BCAD

If the standard deviation of demand is six per week, demand is 50 per week, and the desired service level is 95%, approximately what is the statistical safety stock?

E) Cannot be determined without lead time data.

Which of the following statements regarding scheduling at Delta Airlines is FALSE?

E) Delta's rapid rescheduling promotes air safety and limits traveler inconvenience, but has not resulted in money savings for Delta.

What does the POQ interval equal?

E) EOQ / average demand per period

Which of the following is an advantage of the FCFS dispatching rule when used in services?

E) FCFS seems fair to customers.

Which of the following is FALSE regarding the links between JIT and quality?

E) JIT increases the cost of obtaining good quality.

When a set of jobs must pass through two workstations whose sequence is fixed, ________ is the sequencing rule most commonly applied.

E) Johnson's rule

Which of the following statements regarding aggregate planning in services is FALSE?

E) Level scheduling is far more common than using a chase strategy.

Which of the following statements best compares modular bills and phantom bills?

E) Modular bills represent subassemblies that actually exist and are inventoried, while phantom bills represent subassemblies that exist only temporarily and are not inventoried.

Which one of the following statements is TRUE about the kanban system?

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

Which of the following is NOT one of the four key tasks that Wheeled Coach insists are necessary for successful MRP implementation?

E) The process must adhere to stringent quality control standards.

Just-in-time systems make demands on layouts, including the need for:

E) all of the above

Process redesign:

E) all of the above

Which of the following devices represents an opportunity for technology to improve security of container shipments?

E) all of the above

Which of the following is the prescribed remedy when the bullwhip effect is caused by shortage gaming?

E) allocate orders based on past demand

Revenue management is MOST likely to be used in which one of the following situations?

E) an airline attempting to fill "perishable" seats at maximum revenue

ABC analysis divides on-hand inventory into three classes, generally based upon which of the following?

E) annual dollar volume

Effective use of MRP and other dependent demand models does not require which of the following?

E) cost of individual components

In JIT partnerships, suppliers have several concerns. Which of the following is NOT such a concern?

E) customers' infrequent engineering changes

In the mass service and service factory quadrants of the service process matrix, the operations manager could focus on all of the following except:

E) customization.

If safety stock is desired, it should be built into which portion of MRP?

E) either C or D

An aggregate plan satisfies forecast demand by potentially adjusting all EXCEPT which of the following?

E) facility capacity

Which of the following considers process capacity when scheduling?

E) finite loading

What have restaurants such as Steakhouses and Stacked Restaurants replaced their traditional paper menus with?

E) iPad menus

Which of the following would NOT typically be considered as part of a manufacturing firm's supply chain?

E) landscaping contractors

All EXCEPT which of the following are "opportunities" in managing the integrated supply chain?

E) line balancing

For which corporate strategy(ies) should supply chain inventory be minimized?

E) low cost and differentiation

Which of the following is not one of the strategies for improving service productivity?

E) mass customization

Which of the following is NOT an input to S&OP?

E) master production schedule

Which of the following is not an effectiveness criterion for scheduling?

E) maximizing flow time

When quantity discounts are allowed, the cost-minimizing order quantity:

E) minimizes the sum of holding, ordering, and product costs.

Demand for dishwasher water pumps is 8 per day. The standard deviation of demand is 3 per day, and the order lead time is four days. The service level is 95%. What should the reorder point be?

E) more than 40

Which category of inventory holding costs has a much higher percentage than average for rapid-change industries such as PCs and cell phones?

E) pilferage, scrap, and obsolescence

Aggregate planning for service firms that provide intangible output deals mainly with:

E) planning for human resource requirements and managing demand.

Which of the following aggregate planning options attempts to manipulate product or service demand?

E) price cuts

Which of the following is generally found in most lean environments?

E) pull systems

Which of the following is an advantage of the postponement technique?

E) reduction in inventory investment

Which of the following statements does NOT accurately explain what occurs when the number of facilities in a distribution network increases?

E) response time first decreases, then increases

Which of the following industries is most likely to have low equipment utilization?

E) restaurants

Which of the following should be higher in P systems than Q systems?

E) safety stock

Which of the following would most likely fall under the scope of only an operations manager?

E) setting inventory levels

TAL Apparel's management of its supply chain for Stafford shirts sold in JCPenney in an example of which of the following?

E) single-stage control of replenishment

What term is used to describe the outsourcing of logistics?

E) third-party logistics (3PL)

Manufacturing cycle time is best defined as the:

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

Which of the following best describes Vizio's sourcing strategy?

E) virtual company

________ is the term describing purchasing facilitated through the Internet.

E-Procurement

Define EDI.

Electronic data interchange is a standardized data-transmittal format for computerized communications between organizations.

A flowchart with the addition of a time axis becomes a process chart.

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

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

FALSE

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

FALSE

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

FALSE

Professional services typically require low levels of labor intensity.

FALSE

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

FALSE

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

FALSE

FedEx chose Memphis, Tennessee, for its central location, or "hub," primarily because of the incentives offered by the city of Memphis and the state of Tennessee.

False

For a location decision, labor productivity may be important in isolation, but low wage rates are a more important criterion.

False

Generally, the objective of the location decision is to maximize the firm's profit.

False

In location decisions, intangible costs are easier to measure than tangible costs.

False

Industrial location decisions often assume that costs are relatively constant for a given area.

False

Location decisions are based on many things, including costs, revenues, incentives, attitudes, and intangibles, but not on ethical considerations.

False

PDCA, developed by Shewhart, stands for Plan-Develop-Continue-Act

False

Starbucks Coffee's approach to choosing new café locations is largely based on executive intuition, not sophisticated models and site selection technology.

False

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

False

The center-of-gravity method finds the location of a centralized facility, such as a distribution center, that will maximize the organization's revenue.

False

The location decisions of goods-producing firms will generally pay more attention to parking, access, and traffic counts than will service location decisions.

False

The transportation model calculates an optimal shipping system between a central facility and several outlying customers.

False

________ uses computerized short-term scheduling to overcome the disadvantages of rule-based systems by providing the user with interactive computing and graphical output.

Finite capacity scheduling

________ involves the ability to respond with little penalty in time, cost, or customer value.

Flexibility

Why do modern operations managers look for flexibility in their equipment?

Flexibility in equipment provides managers with the ability to respond to changes in demand with little penalty in time, cost, or customer value. And in this age of rapid technological change and short product life cycles, adding flexibility to the production process can be a major competitive advantage.

________ represent an organization's attempt to gain increased efficiency through specialization, which can include, for example, concentrating on certain classes of customers.

Focused processes

What is the link between focused processes and specialization? What kinds of focus are possible?

Focused processes are a means of obtaining increased productivity through forms of specialization. Focus can take several forms, including concentrating on specific classes of customers, working only with products in selected product families, specializing in a specific service, or working with a narrow range of technology.

In an affluent society, how do we produce a wide number of options for products at low cost?

For mass customization, products should be built-to-order. Product design must be imaginative. Process design must be flexible and able to accommodate changes in both design and technology. Inventory management requires tight control. Tight schedules are needed that track orders and material from design through delivery. Responsive partners in the supply chain can yield effective collaboration.

For the disaster risk decision tree model, explain why an increase in S and an increase in U have the opposite impact on the choice of how many suppliers to use. What is the implication of these two phenomena taken together?

From formula (S11-1), we notice that when S increases, (1 - S) decreases; therefore, the disruption risk probability due to all suppliers individually failing at the same time receives less weight. In other words, there's a higher chance that all will be disrupted by a super-event anyway, so there is less incentive to increase the supplier base to handle the case where every supplier has a unique-event at the same time. Mathematically, the impact of a higher n in the second term is smaller because it's being multiplied by (1 - S), which is smaller. Having said that, a larger S does increase the overall probability of total disruption, so it's never a desired occurrence--it just means that simply adding more suppliers may not be quite as effective of a mitigation strategy. On the other hand, when U increases, the impact of the second term of formula (S11-1) increases, so adding another supplier (raising n by 1) has even more impact. This makes sense--the greater the chance that each supplier will individually fail, the more likely it is that we will want more suppliers.

________ are planning charts used to schedule resources and allocate time.

Gantt charts

______ for developing aggregate plans work with a few variables at a time and are easy to understand and use.

Graphical Techniques

Describe the difference between a fixed-quantity and a fixed-period inventory system?

In a fixed-quantity inventory system, when the quantity on hand reaches the reorder point, an order is placed for the specified quantity. In a fixed-period inventory system, an order is placed at the end of the review period. The quantity ordered is that needed to bring inventory up to a specified level.

Describe vendor-managed inventory (VMI). How is it related to outsourcing? Cite an example from your experiences as a shopper.

In vendor-managed inventory, the supplier maintains material for the buyer, often delivering directly to the buyer's using department. It is a form of outsourcing, because the buying firm has transferred the shipping, stocking, and receiving tasks to an external vendor. There are many instances of VMI in today's retail model, e.g., shelves of snack foods and soft drinks are routinely managed by the distributor, not the retailer.

The ________ is an organization that has developed principles and standards for ethical supply management conduct.

Institute for Supply Management

What is a fixed-period system?

It is a system in which inventory orders are made at regular time intervals.

An approach to sequencing that can handle the situation where jobs must pass through two or more work centers in a fixed sequence is ________.

Johnson's rule

________ is the minimum inventory necessary to keep a perfect system running.

Just-in-time inventory

________ is the Japanese word for card that has come to mean "signal."

Kanban

________ is a Japanese term that describes suppliers who become part of a company coalition.

Keiretsu

________ allows manufacturing work cells and offices to be easily rearranged.

Layout flexibility

________ is the time between placement and receipt of an order.

Lead time

________ involve scheduling products so that each day's production meets the demand for that day.

Level schedules

________ maintains a constant output rate, or work force level, over the planning horizon.

Level scheduling

________ is the assignment of jobs to work or processing centers.

Loading

________ is an approach that seeks efficiency of operations through the integration of all material acquisition, movement, and storage activities.

Logistics management

________ is a lot-sizing technique that generates exactly what is required to meet the plan.

Lot-for-lot

What is MRO an acronym for? What is the function of MRO inventories?

MRO inventories are devoted to maintenance/repair/operating supplies. They exist because the need and timing for maintenance and repair of some equipment are unknown.

Kirstin is thinking about opening a Chinese restaurant and needs to buy a rice cooker. Machine A has fixed costs of $100 and variable costs of $1/pound. Machine B has fixed costs of $500 and variable costs of $.1/pound. If Kirstin plans to sell 100 pounds of rice, which machine should she choose? What is the cross-over point?

Machine A costs 100 + 1(100) = $200 Machine B costs $500 + .1(100) = $510 Thus she should buy machine A. Crossover occurs when 100+V = 500 + .1V, or V = 444.4 pounds of rice

________ is a rapid, low-cost production process that caters to constantly changing unique customer desires.

Mass customization

What is mass customization?

Mass customization is rapid, low-cost production of goods and services that fulfill increasingly unique customer desires. It brings us the variety of products traditionally provided by the process focus, with low costs associated with standardized high volume production (the product focus).

________ is a system that allows, with MRP in place, inventory data to be augmented by other resource variables.

Material requirements planning II or material resource planning or MRP II

________ is a dependent demand technique that uses a bill of material, inventory, expected receipts, and a master production schedule to determine material requirements.

Material requirements planning or MRP

How are modules useful in manufacturing processes?

Modules are parts or components of a product previously prepared. By using modules, the final product can be quickly assembled. Using a different combination of modules allows for quasi-customization.

A manufacturing plant averaged $740 of raw materials, $230 of work-in-process inventory, and $1030 of finished goods inventory during the month. If the cost of goods sold this month amounted to $10,000, what is the inventory turnover for the month?

Monthly cost of goods sold / Inventory Investment = $10,000 / ($740 + $230 + $1030) = 5

________ are the result of adjusting gross requirements for inventory on hand and scheduled receipts.

Net material requirements (or Net requirements plans)

A product is currently made in a process-focused shop, where fixed costs are $8,000 per year and variable cost is $40 per unit. The firm currently sells 200 units of the product at $200 per unit. A manager is considering a repetitive focus to lower costs (and lower prices, thus raising demand). The costs of this proposed shop are fixed costs = $24,000 per year and variable cost = $10 per unit. If a price of $80 will allow 400 units to be sold, what profit (or loss) can this proposed new process expect? Do you anticipate that the manager will want to change the process? Explain.

Old: TR = $40,000, TC = $16,000, therefore Profit = $24,000. New: TR = $80 × 400 = $32,000, TC = $24,000 + $10 × 400 = $28,000, for a profit of $4,000. The manager should not change. The larger repetitive process is less profitable than the smaller process-focused shop.

Karla's candle factory is considering two different manufacturing options. Option A is highly automated with fixed costs of $25,000 and variable costs of $.1/candle. Option B uses hand labor with fixed costs of $10,000 and variable costs of $.5/candle. If demand for Karla's candles is 25,000, which option should she pick?

Option A: $25,000 + .1(25,000) = $27,500 Option B: $10,000 + .5(25,000) = $22,500 Karla should pick Option B

Bridget is considering how to get to work over the summer. She has two options. Option A is to buy a seasonal bus pass for $100. Option B is to pay $.25 for each ride. Identify the fixed and variable costs for each option. If she has to ride both to and from work, how many days of work would it take for the seasonal pass to cost the same amount as Option B?

Option A: VC = 0 FC = 100 Option B: VC = .25 FC= 0 100 = .25V, V = 400 rides, since she has to take 2 rides each time she works, she would need to work 200 days for the two options to cost the same amount.

How are outsourcing and vertical integration related? Can a single firm successfully do both?

Outsourcing transfers what were traditional internal activities to outside vendors. It is a way of increasing specialization which allows the firm to focus on its core strengths, and not try to do all possible tasks. Vertical integration is much the opposite, decreasing a firm's specialization so that it can perform additional functions along its supply chain. Vertical integration has become increasingly difficult in the face of increasing specialization. It seems unlikely that firms that make significant use of outsourcing would do much vertical integration, but it is possible that a firm's set of competitive advantages would support outsourcing in some functions and vertical integration in others.

The process improvement technique that sorts the vital few from the trivial many is

Pareto analysis

Identify three specific measures that indicate how well assets are utilized. What are the formulas for each measure?

Percent invested in inventory = (Total inventory investment/Total assets) × 100 Inventory turnover = Cost of goods sold/Inventory investment Weeks of supply = Inventory investment/(Annual cost of goods sold/52 weeks)

A(n) ________ is a bill of material for components, usually subassemblies, that exist only temporarily; they are never inventoried.

Phantom bill of material

_______ involves delaying any modifications or customization to the product as long as possible in the production process.

Postponement

________ determine the sequence of jobs in process-oriented facilities.

Priority rules

________ is the use of information technology to control a physical process.

Process control

Identify the four basic process strategies, and describe them in a complete sentence or two each.

Process focus is a job shop—high variety and low volume; repetitive focus is an assembly line—relatively standardized products with options from modules; product focus is for high volume, low-variety, products, such as oil refining and flour milling; and mass customization is for high volume, high variety.

________ is the fundamental rethinking of business processes to bring about dramatic improvements in performance.

Process redesign

What is e-procurement?

Purchasing facilitated through the Internet.

________ inventory is material that is usually purchased, but has yet to enter the manufacturing process.

Raw material

________ is a process strategy based on a product-oriented production process that uses modules.

Repetitive focus

________ involves capacity decisions that determine the allocation of resources to maximize revenue or yield.

Revenue management (or Yield management)

________ is the process of sending returned products back up the supply chain for value recovery or disposal.

Reverse logistics

________ is extra stock that is carried to serve as a buffer.

Safety stock

Identify the typical elements in a process control system.

Sensors collect data, which are read on a periodic basis. Measurements are digitized and transmitted to a computer. Computer programs read the file and analyze the data. Output is produced in the form of signals, diagrams, charts, messages, etc.

________ determines the order in which jobs should be done at each work center.

Sequencing

________ is a process analysis technique that focuses on the customer and the producer's interaction with the customer.

Service blueprinting

________ is the complement of the probability of a stockout.

Service level

Define shrinkage. Identify three or more examples of shrinkage.

Shrinkage is retail inventory that is unaccounted for between receipt and sale. Examples will vary, but may include damage and theft as well as sloppy paperwork.

________ involves reducing the number of variations in materials and components as an aid to cost management.

Standardization

The ________ is a set of processes, metrics, and best practices developed by the Supply Chain Council.

Supply Chain Operations Reference model or SCOR model

________ describes the coordination of all supply chain activities, starting with raw materials and ending with a satisfied customer.

Supply chain management

A grocery chain is interested in exploring the impact effective supply chain management would have. Suppose that for every $1 of sales, 4% is profit, 50% is spent in the supply chain, and the remaining 46% is evenly divided between fixed and production costs. If the chain can save $1 in the supply chain it would take how many dollars of increased sales to have the same increase in profit? Assume that fixed costs are fixed so that the portion of increased sales allocated to fixed costs is instead profit (27% profit margin combined now).

Suppose initially the firm sells $100 of merchandise. $50 is spent in the supply chain, $23 in fixed costs, $23 in variable costs, and $4 is profit. An increase in sales of $X would increase revenue by X but increase costs by X ∗ (.5 + .23). Therefore profit would be increased by revenue - costs = X - (.73X). Therefore .27X(profit % ∗ sales) = 1(profit req) and solving gives X = $3.70 of increased sales yields an additional $1 of profit.

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

TRUE

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

TRUE

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

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

In process-focused facilities, utilization of facilities is low.

TRUE

Intermittent processes are organized around processes.

TRUE

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

TRUE

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

TRUE

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

TRUE

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

TRUE

The assembly line is a classic example of a repetitive process.

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 flowchart with time added to the horizontal axis.

TRUE

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

TRUE

A working MRP system allows a firm to react to even minor changes in production requirements. Discuss both the advantage and disadvantage of having such ability.

The advantage is that it allows the firm to react quickly and, conceivably, to minimize costs. The disadvantage is that the reaction to a large number of minor changes may introduce instability (nervousness) into the purchasing and production departments, which can create havoc.

What are several advantages of shipping by truck?

The advantages of shipping by truck include flexibility, on-time behavior, no damage, paperwork in order, and low cost.

Mary is considering purchasing a machine from one of two suppliers. Supplier A's machine has an annual fixed cost of $10,000 and a unit variable cost of $2.10. Supplier B's machine has an annual fixed cost of $16,000 and a unit variable cost of $3.00. How large should Mary's annual demand be in order to make Supplier B's machine the better choice?

The answer is that there is no demand for which Supplier B's machine will be better. Both Supplier B's fixed and variable costs are higher than Supplier A's.

A product is currently made in a process-focused shop, where fixed costs are $9,000 per year and variable costs are $50 per unit. The firm is considering a fundamental shift in process, to repetitive manufacturing. The new process would have fixed costs of $90,000, and variable costs of $5. What is the crossover point for these processes? For what range of outputs is each process appropriate?

The crossover is at 1800 units annually. For volumes under 1800, the process focus is cheaper; for volumes over 1800 units, the repetitive focus is cheaper.

Provide an example of the focus strategy for improving service productivity.

The focus strategy refers to restricting the offerings. Examples will vary, but a restaurant with a limited menu would be one example.

A company is deciding where to assign its summer intern. The manager estimates that the intern can save $10,000 in the supply chain or increase sales (revenue) by $25,000. If sales (revenue) is divided into the three categories shown in the table, where should the manager assign the intern to maximize profits?

The intern would save $10,000 in the supply chain, or show a profit of $10k. Profit from the increase in sales would be equal to revenue - costs. If revenue is X, then costs would be (.35+.25)X. Thus profit would be X - .6X or simply .4X. $25,000(.4) = $10,000 so the manager is neutral on where to assign the intern.

Provide an example of the postponement strategy for improving service productivity.

The postponement strategy refers to customizing the product at delivery, not at production. Examples will vary, but a home builder might leave some tasks unfinished until the house is sold, so that the buyer can make those final decisions. Carpeting, paint colors, cabinet doors, and some appliance choices might be good examples. Another example would be cars or vans.

As the corporate and operations management strategies vary from low cost to response to differentiation, how does this impact the criteria used for selecting suppliers?

The supply chain must support the operations management strategy. For a firm using the low-cost strategy, supplier selection should be based primarily on cost. When using the response strategy, the selection criteria are capacity, speed, and flexibility. For the differentiation strategy, the supplier is selected based on product development skills, the degree to which it is willing to share information, and the degree to which it can jointly and rapidly develop new products.

Of all areas of the organization, why is the supply chain especially vulnerable to ethical lapses?

The supply chain offers more opportunities for ethical issues than some other functions in the organization. Some of these opportunities arise from the large sums of money involved. Perhaps these opportunities arise because of the close and long-term personal contact between buyer and seller. Globalization adds even more complexity to the decisions made in the supply chain.

What are the three classic negotiation strategies? Briefly describe each of them.

The three classic strategies for negotiating with suppliers are the cost-based model, the market-based price model, and competitive bidding. In the cost-based model, contract price is a function of supplier costs, such as those for time and materials. In the market-based price model, price is set by some form of published, auction, or index price. Competitive bidding may be used when vendors are not open to the cost-based model, or where information is not perfect enough for market-based pricing. Bidding policies usually require that the purchasing agent has several potential suppliers and quotations from each.

Identify some technological advances that can serve to improve logistics management and also improve shipping security.

They include devices that can detect a broken seal on a shipping container; devices that can detect whether a container is in motion; devices that sense and transmit temperature and radioactivity; and devices that can transmit truck or container location, content, and condition.

________ are a way of allowing a segment of the master schedule to be designated as "not to be rescheduled."

Time Fences

If the explosion of the bill of material tells MRP how much of each part is needed, how does MRP learn when each of these parts is needed?

Timing is established with the time-phased product structure, which turns a bill of material on its side and adds lead times for each component. Each component is then offset to accommodate lead times.

Explain why once revenue and total logistics costs are considered together, the optimal number of facilities in a distribution network may well increase compared to the optimal number of facilities based on total logistics costs only. Include details about the behavior of relevant cost and revenue elements.

Total logistics costs are comprised of inventory, transportation, and facility costs. While inventory and facility costs always increase in the number of facilities, transportation costs first decline steeply, then rise. This causes the total logistics cost curve to first decline, then rise, suggesting a certain optimal number of facilities. However, on the revenue side, increasing the number of facilities always decreases response time, which should increase revenue (better customer service). Therefore, when these revenue implications are considered, the total profit (revenue - cost) may suggest more facilities than a cost analysis alone would imply.

TPS stands for ________.

Toyota Production System

What is the trucking industry doing to improve efficiency?

Trucking firms are using computers to monitor weather, find the most effective route, reduce fuel cost, and analyze the most efficient way to unload. To improve logistics efficiency, the industry is establishing Web sites such as Schneider National's connection (www.schneider.com), which lets shippers and truckers find each other.

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

True

A checklist is a type of poka-yoke

True

An example of an intangible cost, as it relates to location decisions, is the quality of education.

True

Labor cost and labor availability often drive the location decision in the call center industry.

True

Lists have been developed that rank countries on issues such as "competitiveness" and "corruption."

True

Manufacturers may want to locate close to their customers, if the transportation of finished goods is expensive or difficult.

True

One reason for a firm locating near its competitors is the presence of a major resource it needs.

True

PDCA, developed by Shewhart, stands for Plan-Do-Check-Act

True

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

True

Service firms choose locations based, in part, on the revenue potential of a site.

True

Starbucks Coffee's use of geocoded demographic and consumer data in site selection decisions is an example of the use of a Geographic Information System, or GIS.

True

The factor-rating method can consider both tangible and intangible costs.

True

The graphic approach to location break-even analysis displays the range of volume over which each location is preferable.

True

The ratio of labor cost per day to productivity, in units per day, is the labor cost per unit.

True

Unfavorable exchange rates can offset other savings in a location decision.

True

When innovation replaces cost as a firm's focus for location decisions, the presence of other state- of-the-art firms is a plus, not a negative, for the firm's competitiveness.

True

________ is a capacity option that works especially well in the service sector where labor needs are relatively unskilled.

Using part-time workers

Describe Value-stream mapping. Explain how it is different from process mapping.

Value-stream mapping is a variation on time-function mapping or process mapping. The most fundamental difference between them is that Value-stream mapping is not confined to the organization itself. In particular, in its analysis of where value is added, it extends the analysis to the organization's supply chain. Value-stream mapping takes into account not only the process but also the management decisions and information systems that support the process.

________ is any deviation from the optimum process that delivers perfect product on time, every time.

Variability

Suppose that a firm incurs a demand variance of 400 units per week, and the variance of orders that it places equals 750 per week. What is the value of the bullwhip measure for this company?

Variance of orders / Variance of demand = 750 / 400 = 1.875 (so amplification is present)

________ is developing the ability to produce goods or services previously purchased or actually buying a supplier or a distributor.

Vertical integration

________ rely on a variety of supplier relationships to provide services on demand.

Virtual companies

Why is Harley-Davidson identified as a repetitive manufacturer, not a mass customizer?

While Harley-Davidson's motorcycles variety, they are not as individualized as Dell's personal computers. The variety comes from choices in predefined modules, and there is apparently no place for a customer to get customization that would go beyond what is available in these modules.

A firm is seeking a new factory location, and is considering several countries worldwide. In some of these countries, child labor is prevalent; in others, working conditions and worker safety are inferior to conditions in the U.S. An operations manager paying attention to __________will factor these issues into the location decision. a. ethical and social responsibility issues b. critical success factors c. factor rating systems d. geographic information systems e. regression models

a

A location decision for an appliance manufacturer would tend to have a(n) a. cost focus b. labor focus c. revenue focus d. environmental focus e. education focus

a

A manufacturing firm finds a location that has a significant cost advantage over alternatives, but rejects that location because the educational infrastructure was insufficient to train the firm's workers in its special production technologies. The firm's action illustrates the link between __________ and location. a. innovation b. clustering c. tax incentives d. globalization e. proximity

a

Evaluating location alternatives by comparing their composite (weighted-average) scores involves a. factor rating analysis b. cost-volume analysis c. transportation model analysis d. linear regression analysis e. crossover analysis

a

Industrial location analysis typically attempts to a. reduce costs b. maximize sales c. focus more on human resources d. be environmentally friendly e. none of the above

a

LaQuinta Motor Inns has a competitive edge over its rivals because it a. uses regression analysis to determine which variables most influence profitability b. picks better locations than its rivals c. picks larger locations than its rivals d. builds only along interstate highways e. all of the above

a

Which of the following is a location analysis technique typically employed by a manufacturing organization? a. transportation method b. queuing theory c. correlation analysis and traffic counts d. simulation e. demographic analysis

a

Which of the following is a location analysis technique typically employed by a service organization? a. purchasing power analysis b. linear programming c. queuing theory d. crossover charts e. cost-volume analysis

a

Total quality management emphasizes

a commitment to quality that goes beyond internal company company issues to suppliers and customers

The ________ is a special class of linear programming models that involves assigning tasks or jobs to resources.

assignment method

A firm is considering two location alternatives. At location A, fixed costs would be $4,000,000 per year, and variable costs 0.30 per unit. At alternative B, fixed costs would be $3,600,000 per year, with variable costs of $0.35 per unit. If demand is expected to be 10 million units, which plant offers the lowest total cost? a. Plant A, because it is cheaper than Plant B for all volumes under 8,000,000 units b. Plant B, because it is cheaper than Plant A for all volumes over 8,000,000 units c. Plant A, because it is cheaper than Plant B for all volumes d. Plant B, because it has the lower variable cost per unit e. neither Plant A nor Plant B, because the crossover point is at 10 million units

b

An approach to location analysis that includes both qualitative and quantitative considerations is a. locational cost-volume b. factor rating c. transportation model d. assignment method e. make or buy analysis

b

Globalization of the location decision is the result of all of the following except a. market economics b. higher quality of labor overseas c. ease of capital flow between countries d. high differences in labor costs e. more rapid, reliable travel and shipping

b

Governmental attitudes toward issues such as private property, intellectual property, zoning, pollution, and employment stability may change over time. The term associated with this phenomenon is a. bureaucratic risk b. political risk c. legislative risk d. judicial risk e. democratic risk

b

Production and/or shipping costs are always considered in which of the following location decision methods? a. factor rating method b. transportation method c. locational break-even analysis d. center-of-gravity method e. crossover analysis

b

The transportation method, when applied to location analysis a. minimizes total fixed costs b. minimizes total production and transportation costs c. minimizes total transportation costs d. maximizes revenues e. minimizes the movement of goods

b

Which of the following is most likely to affect the location strategy of a manufacturing firm? a. appearance/image of the area b. utility costs c. purchasing power of drawing area d. competition in the area e. parking availability

b

Which of the following is not among the eight components of revenue and volume for a service firm? a. quality of the management b. shipment cost of finished goods c. purchasing power of the customer-drawing area d. uniqueness of the firm's and the competitor's locations e. competition in the area

b

Which of the following is the best example of the proximity rule that, for service firms, proximity to market is the most important location factor? a. Soft drinks are bottled in many local plants, where carbonated water is added to proprietary syrups that may have been shipped long distances. b. Few people will travel out-of state for a haircut. c. Patients will travel very long distances to have their hernia surgeries performed at Shouldice Hospital. d. Furniture makers choose to locate near the source of good hardwoods, even though it means locating near other furniture manufacturers. e. Metal refiners (smelters) locate near mines to accomplish significant weight reduction near the metal's source.

b

The process of identifying other organizations that are best at some facet of your operations and then modeling your organization after them is known as

benchmarking

A jewelry store is more likely than a jewelry manufacturer to consider __________ in making a location decision. a. transportation costs b. cost of raw materials c. parking and access d. climate e. taxes

c

A location decision for a traditional department store (Macy's) would tend to have a(n) b. labor focus c. revenue focus d. environmental focus e. education focus

c

A regional bookstore chain is about to build a distribution center that is centrally located for its eight retail outlets. It will most likely employ which of the following tools of analysis? a. assembly line balancing b. load-distance analysis c. center-of-gravity model d. linear programming e. all of the above

c

Geographic Information Systems can assist the location decision by a. automating center-of-gravity problems b. computerizing factor rating analysis c. combining geography with demographic analysis d. updating transportation method solutions e. giving good Internet placement for virtual storefronts

c

In location planning, environmental regulations, cost and availability of utilities, and taxes are a. global factors b. country factors c. regional/community factors d. site-related factors e. none of the above

c

Tangible costs include which of the following? a. climatic conditions b. availability of public transportation c. taxes d. quality and attitude of prospective employees e. zoning regulations

c

The center-of-gravity method does not take into consideration the a. location of markets b. volume of goods shipped to the markets c. value of the goods shipped d. combination of volume and distance e. center-of-gravity method considers none of the above

c

The center-of-gravity method is used primarily to determine what type of locations? a. service locations b. manufacturing locations c. distribution center locations d. supplier locations e. call center locations

c

Traffic counts and demographic analysis of drawing areas are associated with a. industrial location decisions b. manufacturing location decisions c. service location decisions d. the transportation method e. none of the above

c

Traffic counts and purchasing power analysis of drawing area are techniques associated with a. an industrial location decision b. a manufacturing location decision c. a retail or professional service location decision d. the factor rating method e. the transportation method

c

When making a location decision at the region/community level, which of these would be considered? a. government rules, attitudes, stability, incentives b. cultural and economic issues c. cost and availability of utilities d. zoning restrictions e. air, rail, highway, waterway systems

c

Which of the following is most likely to affect the location decision of a service firm rather than a manufacturing firm? a. energy and utility costs b. attitude toward unions c. parking and access d. cost of shipping finished goods e. labor costs

c

Which of the following methods best considers intangible costs related to a location decision? a. crossover methods b. locational break-even analysis c. factor rating analysis d. the transportation method e. the assignment method

c

Which of the following statements regarding FedEx is true? a. Its hub in Memphis, Tennessee, was selected because of its low cost. b. Memphis, Tennessee, is the only hub in the company's global flight network. c. FedEx believes the hub system helps reduce mishandling and delays due to better controls. d. FedEx uses a hub system in the U.S., but a city-to-city network in other countries. e. Memphis is FedEx's only hub airport in the United States.

c

Which of the following statements regarding Starbucks Coffee is false? a. The firm plans to open three new cafes per day around the world. b. The firm uses GIS to evaluate every site decision. c. The firm's cafes are exclusively in traditional settings: malls, tourist areas, and airports. d. The firm places cafes into ever more innovative locations. e. The firm put cafes in Japan, even though that country had no GIS data available.

c

Which of these assumptions is not associated with strategies for goods-producing location decisions? a. Most major costs can be identified explicitly for each site. b. Focus on identifiable cost. c. High customer contact issues are critical. d. Intangible costs can be evaluated. e. Location is a major determinant of cost.

c

Which of these factors would be considered when making a location decision at the site level? a. government rules, attitudes, stability, incentives b. cultural and economic issues c. zoning regulations d. cost and availability of utilities e. proximity to raw materials and customers

c

A fishbone chart is also known as a

cause-and-effect diagram

The ________ strategy sets production equal to forecasted demand.

chase

A(n) ________ provides feedback to the capacity plan, master production schedule, and production plan so planning can be kept valid at all times.

closed-loop MRP system

Kaizen is a Japanese term meaning

continuous improvement

PDCA is most often applied with regard to which aspect of TQM

continuous improvement

Developing a mix of ________ products is a widely used demand smoothing technique.

counterseasonal

Intangible costs include which of the following? a. quality of prospective employees b. quality of education c. availability of public transportation d. all of the above e. none of the above

d

Which of the following is usually not one of the top considerations in choosing a country for a facility location? a. availability of labor and labor productivity b. exchange rates c. attitude of governmental units d. zoning regulations e. location of markets

d

When demand is constant and lead time is variable, the safety stock computation requires three inputs: the value of Z, ________, and the standard deviation of lead time.

daily demand

Inventory that separates various parts of the production process performs a(n) ________ function.

decoupling

In the production order quantity model, the fraction of inventory that is used immediately and not stored is represented by the ratio of ________.

demand rate to production rate

If a safety stock problem includes parameters for average daily demand, standard deviation of demand, and lead time, then ________ is variable and ________ is constant.

demand; lead time

Local optimization, incentives, and large lots all contribute to ________ about what is really occurring in the supply chain.

distortions of information

Community attitudes, zoning restrictions, and quality of labor force are likely to be considered in which of the following location decision methods? a. transportation method b. locational break-even analysis c. center-of-gravity method d. simulation e. factor rating method

e

FedEx chose Memphis, Tennessee, as its U.S. hub because a. the city is in the center of the U.S., geographically b. the airport has relatively few hours of bad weather closures c. it needed a means to reach cities to which it did not have direct flights d. the firm believed that a hub system was superior to traditional city-to-city flight scheduling e. All of the above are true.

e

Location analysis techniques typically employed by service organizations include a. factor rating method b. center-of-gravity method c. purchasing power analysis of area d. traffic counts e. all of the above

e

On the crossover chart where the costs of two or more location alternatives have been plotted, the quantity at which two cost curves cross is the quantity at which a. fixed costs are equal for two alternative locations b. variable costs are equal for two alternative locations c. total costs are equal for all alternative locations d. fixed costs equal variable costs for one location e. total costs are equal for two alternative locations

e

Operations managers will need to consider ethical and social responsibility issues when location decisions involve a. child labor issues b. sweatshop conditions c. allegiance to the firm's current location d. corruption e. all of the above

e

What describes a system that stores and displays information that can be linked to a geographic location? a. AIS b. LOC c. GLOC d. LIS e. GIS

e

When making a location decision at the country level, which of these would be considered? a. corporate desires b. land/construction costs c. air, rail, highway, waterway systems d. zoning restrictions e. location of markets

e

Which of the following is among the eight components of revenue and volume for a service firm? a. uniqueness of the firm's and the competitor's locations b. quality of the competition c. quality of management d. purchasing power of the customer-drawing area e. all of the above

e

Which of the following statements regarding "proximity" in the location decision is false? a. Service organizations find that proximity to market is the most critical primary location factor. b. Manufacturers want to be near customers when their product is bulky, heavy, or fragile. c. Perishability of raw materials is a good reason for manufacturers to locate near the supplier, not the customer. d. Reduction in bulk is a good reason for a manufacturer to locate near the supplier. e. Clustering among fast food chains occurs because they need to be near their labor supply.

e

Which of the following worker characteristics would likely be least important for U.S. firms looking to open up call centers in different countries? a. willing to accept low wages b. have a high level of education c. speak English d. possess an in-depth knowledge of American popular culture e. are young

e

Which of these factors would be considered when making a location decision at the region/community level? a. government rules, attitudes, stability, incentives b. cultural and economic issues c. zoning restrictions d. environmental impact issues e. proximity to raw materials and customers

e

Building high morale organizations and building communication networks that include employees are both elements of

employee empowerment

A(n) ________ system is packaged business software that automates and integrates the majority of business processes, shares common data and practices across the entire enterprise, and produces information in a real-time environment.

enterprise resource planning or ERP

One of Britain's largest children's hospitals working with Ferrari Racing is an example of

external benchmarking

The ________ model adds objectivity to decision making when selecting suppliers.

factor weighting

The priority rule that appears fair to customers in service systems is ________.

first come, first served

A(n) ________ system triggers inventory ordering on a uniform time frequency.

fixed-period (or P)

A(n) ________ uses an automated work cell controlled by electronic signals from a common centralized computer facility.

flexible manufacturing system or FMS

A(n) ________ uses symbols to analyze the movement of people or material.

flowchart

Among the tools of TQM, the tool ordinarily used to aid in understanding the sequence of events through which a product travels is a

flowchart

Poka-yoke is the Japanese term for

foolproof

The primary trade-off in transportation mode analysis involves evaluating ________ against the cost of shipping.

holding cost

Virtual companies are also known as ________ .

hollow corporations or network companies

A hospital benchmarked against Ferrari Racing in an effort to

improve patient handoff quality

When suppliers are encouraged to locate near manufacturing plants, the goal of the JIT partnership is to reduce ________ inventory.

in-transit

In the EOQ model, for a given level of demand, annual holding cost is larger as the order quantity is ________.

larger

A(n) ________ can illustrate whether a work center has been scheduled beyond its capacity.

load report or resource requirements profile

The ________ decision involves choosing between producing a component or a service internally and purchasing it externally.

make-or-buy

The ________ is the time between the arrival of raw materials and the shipping of finished products.

manufacturing cycle time

A(n) ________ is the result of the disaggregation of an aggregate plan.

master production schedule

Wheeled Coach uses ________ as the catalyst for low inventory, high quality, tight schedules, and accurate records.

material requirements planning or MRP

The 4 M's of cause-and-effect diagrams are

material, machinery, manpower, and methods

In an economic order quantity problem, the total annual cost curve is at its ________ where annual holding costs equal annual setup costs.

minimum

Bills of material organized by major subassemblies or by product options are called ________.

modular bills

Pareto charts are used to

organize errors, problems, or defects

Transferring to external vendors a firm's activities that have traditionally been internal is known as ________.

outsourcing

A hotel room that goes unrented, a dental appointment that no patient booked, and an airline seat that went unsold, are all examples of ________ in services.

perishable inventory

The strategy for improving service productivity that customizes at delivery, rather than at production, is ________.

postponement

The process strategy that is organized around processes to facilitate low-volume, high-variety processes is called a(n) ________.

process focus

An organization's approach to transforming resources into goods and services is called its ________.

process strategy

A(n) ________ is a concept that results in material being produced only when requested and moved to where it is needed just as it is needed.

pull system

Costs of dissatisfaction, repair costs, and warranty costs are elements of cost in the

quality loss function

In a quantity discount problem, if the savings in annual product cost is smaller than the increase in the sum of annual setup cost and annual holding cost, the discount should be ________.

rejected or refused

A(n) ________ model gives satisfactory answers even with substantial variations in its parameters.

robust

In the sequence of decisions that affect scheduling, ________ is (are) the immediate follower(s) of the master schedule (or master production schedule).

short-term schedules

The 5S category ________ includes analysis to improve workflow and reduce wasted motion.

simplify/straighten or simplify

In the disaster risk decision tree model, a(n) ________ disrupts all suppliers simultaneously.

super-event

Of the four stages of supplier selection, the stage at which the factor weighting approach would be used is ________.

supplier evaluation

Among the mathematical approaches to aggregate planning, ________ is good at working with inventories, holding costs, overtime, and subcontracting, but not with hiring and layoffs.

the transportation method of linear programming

Based on his 14 points, Deming is a strong proponent of

training and knowledge

Handling material more than once is an example of the waste called ________.

transportation

A special form of time-function mapping, which goes beyond the organization into its supply chain, is ________.

value-stream mapping

Suppliers are also known as ________.

vendors

Amazon's original concept of operating without inventory has given way to a model in which Amazon is a world-class leader in ________.

warehouse automation and management