OMGT 6213 MIDTERM QUIZ QUESTIONS

If the best operating level of a piece of equipment is at a rate of 400 units per hour and the actual output during an hour is 300 units, which of the following is the capacity utilization rate?

0.75 300/400

Assume a fixed cost for a process of $15,000. The variable cost to produce each unit of product is $10, and the selling price for the finished product is $25. Which of the following is the number of units that has to be produced and sold to break even?

1,000 units 25-10 = 15 15,000/15 = 1,000 units

Once an operations strategy is adopted and articulated, the primary emphasis becomes perfecting the system of activities that make up the strategy through detailed refinements over a long period of time.

False

The closer the customer is to the customer order decoupling point, the longer it takes the customer to receive the product.

False

The larger the capacity cushion, the better.

False

Throughput rate of a production process is the amount of time a unit spends actually being worked on.

False

Within a sustainability framework, the environmental dimension of the triple bottom line concept has to do with labor, the community, and the region in which a firm conducts its business.

False

A service system with a high degree of customer contact is less difficult to control than a low degree of customer contact service system.

False service systems with a high degree of customer contact are more difficult to control than those with a low degree

Capacity planning involving acquisition or disposal of fixed assets such as buildings, equipment or facilities is considered as which one of the following planning horizons? Intermediate range Long range Short range Current Upcoming

Long range

In the service-system design matrix, a face-to-face total customization service encounter is expected to have which of the following? Low sales opportunity Low production efficiency High production efficiency Low degree of customer/server contact None of these

Low production efficiency

At a decision point in a decision tree, which machine would you select when trying to maximize payoff when the anticipated benefit of selecting machine A is $45,000, with a probability of 90%; the expected benefit of selecting machine B is $80,000, with a probability of 50%; and the expected benefit of selecting machine C is $60,000, with a probability of 75%? Machine A Machine B Machine C Indifferent between A and C Indifferent between A and B

Machine C

Which of the following is not a major strategic operational competitive dimension that forms a company's competitive position? Cost or price Delivery speed Delivery reliability Management acumen Coping with changes in demand

Management acumen

If all you knew about a production system was that total daily output was 400 units and the total labor necessary to produce the 400 units was 350 hours, what kind of productivity measure could you use to compute productivity? Partial measure Multifactor measure Total measure Global measure All of these

Partial Measure

Which of the following is considered a high-contact service operation? On-line brokerage house Internet sales for a department store Physician practice Telephone life insurance sales and service Automobile repair

Physician practice Face-to-face total customization refers to service encounters whose specifications must be developed through some interaction between the customer and server. Legal and medical services are of this type. See also Exhibit 9.3

At some point, the size of a growing plant can become too large and diseconomies of scale become a capacity planning problem.

True

Buffering in a production process refers to a storage area between stages of production activity where output of a stage is placed prior to being used in a "downstream" stage.

True

If you want to reduce process flow time, it has been suggested that you can reduce interruptions in the production process.

True

Service guarantees can be used at the service design stage to focus the firm's delivery system on the things it must do well to satisfy the customer.

True

The "triple bottom line" relates to the economic, employee, and environmental impact of a firm's strategy

True

The central idea of supply chain management is to apply a total system approach to managing the flow of information, materials, and services from raw material suppliers through factories and warehouses to the end customer.

True

The essential issue in satisfying customers in the make-to-stock environment is to balance the level of finished inventory against the level of service to the customer.

True

The total output from a production system in one day is 500 units and the total labor necessary to produce the 500 units is 350 hours. Using the appropriate productivity measure, which of the following numbers represents the resulting productivity ratio?

1.428

If the best operating level of a piece of equipment is at a rate of 400 units per hour and the actual output during an hour is 300 units, which of the following is the capacity cushion?

100 units per hour 400-300

Compute the asset turnover ratio.

2.306

Output: Sales $300,000.......$330,000 Input: Labor $40,000........$43,000 Raw Materials $45,000.....$51,000 Energy $10,000......$9,000 Capital Employed $250,000....$262,000 Other $2,000.....$6,000 What is the percentage change in SunPath's total productivity measure between 2012 and 2013?

2.88%

Consider a three sequentially stepped process named as Process A, Process B and Process C. Input comes into Process A. Output form A goes into Process B. Output from B goes into Process C. Output of C is the final output. Suppose that it takes 2 minutes per unit in Process A, 3 minutes per unit in Process B and 1 minute per unit in Process C. What will be maximum steady state output from this system? 30 per hour 60 per hour 20 per hour 10 per hour cannot tell since it depends on the input rate.

20 per hour A: 60/2 = 30 units per hr B: 60/3= 20 per hr C: 60/1 = 60 per hr steady state output from this system is the smallest of the three, 20 per hr

Output: Sales $300,000.......$330,000 Input: Labor $40,000........$43,000 Raw Materials $45,000.....$51,000 Energy $10,000......$9,000 Capital Employed $250,000....$262,000 Other $2,000.....$6,000 What is the percentage change in the energy partial productivity measure for SunPath between 2012 and 2013?

22.2%

Compute the inventory turnover ratio.

4.383

Gross Income $25,240,000 Total Sales 24,324,000 Total Credit Sales 18,785,000 Net Income 2,975,000 Cost of Goods Sold 12,600,000 Total Assets 10,550,000 Average Inventory 2,875,000 Average Receivables 3,445,000 Compute the receivable turnover ratio.

5.453

Hoosier Manufacturing operates a production shop that is designed to have the lowest unit production cost at an output rate of 100 units per hour. In the month of July, the company operated the production line for a total of 175 hours and produced 16,900 units of output. What was its capacity utilization rate for the month?

96.57%

Inventory turnover is an operations efficiency measure and which of the following is the most appropriate answer. measures efficiency in turning inventory into sales purpose is to measure liquidity A or B but not both A and B Neither A nor B

A and B

In studying positioning of inventory in supply chains, which, if any, of the following is most appropriate? A. As order decoupling point moves towards source inventory investment goes down. B. As order decoupling point moves towards the source customer lead time gets longer. C. As order decoupling point moves towards the source inventory investment increases. D. As order decoupling point moves towards the source customer lead time is unchanged. E. A and B are true

A and B are True 7.1

In studying product-process matrix describing layout strategies, which of the following is most appropriate? A. As you move from project to manufacturing cell to continuous process, product volume increases while standardization increases. B. As you move from project to manufacturing cell to continuous process, product volume decreases while standardization decreases. C. As you move from project to manufacturing cell to continuous process, product volume increases while standardization decreases. D. As you move from project to manufacturing cell to continuous process, product volume decreases while standardization increases. E. A and B are true

A. As you move from project to manufacturing cell to continuous process, product volume increases while standardization increases.

An advantage of a make-to-stock process is which of the following? A. It features rapid delivery of a standard product. B. All units of output are unique. It responds directly to customer orders. C. It allows the firm to avoid inventory costs. D. It combines the best features of other processes.

A. It features rapid delivery of a standard product.

To reduce process flow time, you might try which of the following actions? Perform activities in parallel. Change the sequence of activities. Reduce interruptions. Acquire additional equipment. All of these

All of these

Dell Computers' primary consumer business takes orders from customers for specific configurations of desktop and laptop computers. Customers must select from a certain model line of computer, and choose from available parts, but within those constraints may customize the computer as they desire. Once the order is received, Dell assembles the computer as ordered and delivers it to the customer. What type of manufacturing process is described here? Make-to-stock Assemble-to-order Make-to-order Engineer-to-order

Assemble-to-order

Which of the following basic types of process structures is one in which equipment or work processes are arranged according to the progressive steps by which the product is made? Project Work center Manufacturing cell Assembly line Continuous process

Assembly Line

You are hired as a consultant to decide if your client should purchase a new, highly specialized piece of equipment. The product to be produced by this equipment is forecast to have a total worldwide demand of 15,000 units over the entire product life. The initial investment to acquire and install the equipment is $256,000. The variable cost to produce each unit will be $15, and the selling price for the finished product will be $30. Which of the following best describes the situation the firm is facing? A. The company will recover its initial investment B. The company's total margin will be less than its investment C. It is a good investment D. The break-even is lower than the 15,000 units that are expected to sell

B. The company's total margin will be less than its investment Margin = 30-15= 15 15 * 15,000 units = $225,000 225,000 < 256,000

In designing a general service facility, capacity should be such that the target rate of service utilization (ρ), in order to get the best general purpose design, should be A. less than 0.6 (or 60%), so that your system would be within the zone of service with maximum possible utilization within that. B. more than 0.6 (or 60%) so that your system would have a good utilization C. about 0.7 (70%) so that your system would be in the zone of service with maximum possible utilization within that. D. more than 1.0 (100%) so that the servers are fully utilized, even if the customers had to wait a little E. between 0.9 (90%) and 1.0 (100%) so that the utilization of the system is ideal.

C. about 0.7 (70%) so that your system would be in the zone of service with maximum possible utilization within that.

What is the term used to describe product attributes that attract certain customers and can be used to form the competitive position of a firm? strategic position order winners flexibility competitive dimensions order qualifiers

Competitive dimensions

A local restaurant is concerned about their ability to provide quality service as they continue to grow and attract more customers. They have collected data from Friday and Saturday nights, their busiest time of the week. During these time periods about 75 customers arrive per hour for service. Given the number of tables and chairs, and the typical time it takes to serve a customer, they figure they can serve on average about 100 customers per hour. During these nights, are they in the zone of service, the critical zone, or the zone of non-service?

Critical Zone

In designing service systems, as you go from mail contact to phone contact to face to face total customization, which of the following is most appropriate? A. sales opportunity decreases while degree of customer/server contact increases. B. sales opportunity decreases while degree of customer/server contact decreases. C. sales opportunity increases while degree of customer/server contact decreases. D. sales opportunity increases while degree of customer/server contact increases. E. None of the above

D. sales opportunity increases while degree of customer/server contact increases.

Compared with a service operation, a manufacturing operation's capacity is which of the following? A. More dependent on time and location B. Subject to more volatile demand fluctuations C. Utilization more directly impacts quality D. Demand can be smoothed by inventory policies E. More capable of reacting to demand fluctuations

Demand can be smoothed by inventory policies

A process flowchart uses which of the following symbols to represent a decision point in a flow diagram? Rectangle Arrow Inverted triangle Diamond A dashed line

Diamond

Because little or no inventory is carried in a service operation, it is easy to separate the operations management functions from marketing in services.

False

Which one of the following is not a major factor distinguishing service design and development from manufacturing design and development? A. The process and product must be developed at the same time. B. Many service organizations can change their service offerings virtually overnight. C. Many parts of the service package are often defined by the training that individuals receive before they become part of the service organization. D. The service package, rather than a definable good, is the output of the development process. E. Service operations can be protected by patents; manufacturing operations cannot.

E. Service operations can be protected by patents; manufacturing operations cannot.

The ability to rapidly and inexpensively switch production from one product to another enables what are sometimes referred to as: Economies of scale Economies of size Economies of shape Economies of scope Economies of shipping

Economies of scope

"Combine the pain" is an application of behavioral science to service encounters. It means that, when something is going wrong for a group of customers, it is better to totally enrage one or a very few customers rather than slightly annoying a large number of customers.

False

A continuous process indicates production of discrete parts moving from workstation to workstation at a controlled rate.

False

When a make-to-order production process is used, production is based on forecasts

False Make-to-order process is activated only in response to an actual order

Sustainability is the ability to maintain profits in a system

False ability to maintain balance in a system

The way to build in greater flexibility in your workers is to do which of the following? A. Pay higher wages to motivate a willingness to do a variety to tasks. B. Provide a broader range of training. C. Provide a wide variety of technology to augment workers skills. D. Institute a "pay for skills" program. E. Use part-time employees with specialized skills as needed.

Provide a broader range of training

The goods-services continuum consists of which set of the following categories? No goods, some goods, even mix, some service, no service Pure goods, core goods, core services, pure services No service, some service, good service, excellent service Self-service, help desk service, face-to-face service, service-with-a-smile None of these

Pure goods, core goods, core services, pure services

Which of the following is a measure of operations and supply management efficiency used by Wall Street? Dividend payout ratio Current ratio Receivable turnover Earnings per share growth Financial leverage

Receivable Turnover

Which of the following is not a way that operations and supply processes are categorized? Planning Return Delivery Selecting Making

Selecting

Which of the following is not a characteristic that distinguishes services from goods? Service jobs are unskilled A service is intangible Services are perishable Services are heterogeneous None of these

Service Jobs are unskilled

When a company seeks to match the benefits of a successful position while maintaining its existing position in offering customers a variety of differing services, what is this process called? Operations capability analysis Straddling Order qualifying Order winning Inter-functional analysis

Straddling

A general-purpose machine is less capable than a special-purpose machine in certain tasks but can perform a broader variety of tasks.

True

A process can be effective without being efficient.

True

"Operations" refers to manufacturing and service processes used to transform resources employed by a firm into products desired by customers.

True

A ride at an amusement park is an example of a service operation where there is direct contact between the customer and server, but little variation in the service process -- neither the customer nor server has much discretion in how the service will be provided. As shown on the Service System Design Matrix, which type of service is being delivered? face-to-face, total customization face-to-face, loose specs face-to-face, tight specs face-to-face, low contact

face-to-face tight specs

If the fixed cost increased, the variable cost and product price stay the same, the new break-even point would be ____________. the same higher lower

higher

A process is part of an organization that takes _________________, turns them into _______________, and adds ___________________ while doing so.

inputs, outputs, value

Flowcharts are a common process design and analysis tool used in both manufacturing and services. What is a key feature on flowcharts used in service operations that differentiates between the front-office and back-office aspects of the system? line of visibility line between customers and office line of interaction line between players

line of visibility

Which of the following about order winners and order qualifiers is true? A. two identical ways to define characteristics of a product or services B. order winner is a screening criterion C. order qualifier is a differentiating criterion D. both B and C are true

screening criterion

A manufacturing company has a small production line dedicated to the production of a particular product. The line has four stations in serial. Inputs arrive at station 1 and the output from station 1 becomes the input to station 2. The output from station 2 is the input to station 3 and so on. The output from station 4 is the finished product. Station 1 can process 2,700 units per month, station 2 can process 2,500/month, station 3 can process 2,300/month, and station 4 2,100/month. What station sets the maximum possible output from this system? What is that maximum output number? station 1, 2,700/month station 2, 2,500/month station 3, 2,100/month station 4, 2,100/month

station 4, 2,100/month the maximum output number is determined by the bottleneck (the station with the lowest output rate) in a process