Operations Management Multiple Choice

What is the practice of keeping a product generic as long as possible before customizing? A) postponement B) keiretsu C) vendor-managed inventory D) forward integration E) backward integration

A) postponement

Which of the following is NOT an input to S&OP? A) capacity decisions B)supply-chain support C) workforce D) inventory on hand E) master production schedule

E) master production schedule

What refers to training and empowering frontline workers to solve a problem immediately? A) just-in-time B) poka-yoke C) benchmarking D) kaizen E) service recovery

E) service recovery

What term is used to describe the outsourcing of logistics? A) e-logistics B) shipper-managed inventory (SMI) C) hollow logistics D) sub-logistics E) third-party logistics (3PL)

E) third-party logistics (3PL)

With cross-sourcing, how many suppliers provide each component on a regular basis (i.e., excluding backup suppliers)? A) 1 B) 2 C) 3 D) equal to the total number of components E) equal to the number of countries to which the final product is sold

A) 1

The PDCA cycle stands for which of the following? A) Plan-Do-Check-Act B) Plan-Develop-Check-Accept C) Problem-Develop Solution-Check-Act D) Problem-Do-Continue-Act E) Prepare-Develop-Create-Assess

A) Plan-Do-Check-Act

A production manager at a pottery factory has noticed that about 70 percent of defects result from impurities in raw materials, 15 percent result from human error, 10 percent from machine malfunctions, and 5 percent from a variety of other causes. This manager is most likely using: A) a Pareto chart. B) a scatter diagram. C) a quality loss function. D) a cause-and-effect diagram. E) a flowchart.

A) a Pareto chart.

What directly results from disaggregation of an aggregate plan? A) a master production schedule B) priority scheduling C) a transportation matrix D) a capacity-demand matrix E) detailed work schedules

A) a master production schedule

Disaggregation:◦ A) breaks the aggregate plan in to greater detail. B) transforms the master production schedule in to an aggregate plan. C)calculates the optimal price points for yield management. D) converts product schedules and labor assignments to a facility-wide plan. E) is an assumption required for the use of the transportation model in aggregate planning.

A) breaks the aggregate plan in to greater detail.

The goal of inspection is to: A) detect a bad process immediately. B) add value to a product or service. C) correct deficiencies in products. D) correct system deficiencies. E) all of the above

A) detect a bad process immediately.

MRP II stands for: A) material resource planning. B) management requirements planning. C) management resource planning. D) material revenue planning. E) material risk planning

A) material resource planning.

Distribution management focuses on which of the following? A) the outbound flow of products B) incoming materials C) allocation of demand among suppliers D) setting dividend rates E) balancing an assembly line

A) the outbound flow of products

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? A) short-range plans B) intermediate-range plans C) long-range plans D) demand options E) strategic planning

B) intermediate-range plans

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? A) kanban B) keiretsu C) samurai D) poka-yoke E) kaizen

B) keiretsu

To use revenue management strategies, a business should have which combination of costs? A) high variable and high fixed B) low variable and high fixed C) high variable and low fixed D) low variable and low fixed E) either A or B

B) low variable and high fixed

Which sourcing strategy is particularly common when the products being sourced are commodities? A) few suppliers B) many suppliers C) keiretsu D) vertical integration E) virtual companies

B) many suppliers

Which lot-sizing technique orders the quantity needed during a predetermined time between orders? A) economic order quantity B) periodic order quantity C) lot-for-lot D) time fencing E) part-period balancing

B) periodic order quantity

In the service sector, which of the following aggregate planning strategies might direct your client to a competitor?A) using part-time workers B) subcontracting C) changing inventory level D) varying production rates through overtime or idle time E) varying work force size by hiring or layoffs

B) subcontracting

The objective of aggregate planning is to meet forecast demand while ________ over the planning period. A) minimizing cost B) maximizing service level C) minimizing stock out D) minimizing fixed cost E) all of the above

A) minimizing cost

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 B) 10.00 C) 42.00 D) 4.16 E) 20.00

A) 12.50

A Six Sigma program has how many defects per million? A) 3.4 B) 34 C) 1000 D) 6 times the standard deviation E) 2700

A) 3.4

What type of negotiating strategy requires the supplier to open its books to the purchasers? A) cost-based price model B) market-based price model C) competitive bidding D) price-based model E) transparent negotiations

A) cost-based price model

The "four Ms" of cause-and-effect diagrams are: A) material, machinery/equipment, manpower, and methods. B) material, methods, men, and mental attitude. C) named after four quality experts. D) material, management, manpower, and motivation. E) mentality, motivation, management, and manpower.

A) material, machinery/equipment, manpower, and methods.

What is the typical time horizon for aggregate planning? A) less than a month B) up to 3 months C) 3 to 18 months D) over one year E) over 5 years

C) 3 to 18 months

Warehouses sometimes perform certain other functions besides storing goods. Which of the following is NOT typically one of those functions? A) purchasing B) postponement C) break-bulk activities D) consolidation point E) cross-docking

A) purchasing

Under which of the following do planning tasks associated with job assignments, ordering, job scheduling, and dispatching typically fall? A) short-range plans B) intermediate-range plans C) long-range plans D) mission-related planning E) strategic planning

A) short-range plans

What are the four stages of supplier selection? A) supplier evaluation, supplier development, negotiations, and contracting B) supplier evaluation, negotiations, supplier acquisition, and supplier development C) introduction, growth, maturity, and decline D) supplier evaluation, supplier development, negotiations, and centralized purchasing E) negotiations, contracting, centralized purchasing, and E-procurement

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

"Making it right the first time" is: A) a user-based definition of quality. B) a manufacturing-based definition of quality. C) a product-based definition of quality. D) the definition of quality proposed by the American Society for Quality

B) a manufacturing-based definition of quality.

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: A) continuous improvement. B) benchmarking. C) Taguchi concepts. D) employee empowerment. E) corporate responsibility.

B) benchmarking.

A(n) ______ MRP system provides feedback information to the capacity plan, to the master production schedule, and ultimately to the production plan. A) dynamic B) closed-loop C) continuous D) retrospective E) introspective

B) closed-loop

Poka-yoke is the Japanese term for: A) card. B) foolproof. C) continuous improvement. D) fishbone diagram E) just-in-time production.

B) foolproof.

A firm practices a 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? A) $500 B) $2,500 C) $7,500 D)$7,000 E) $12,500

C) $7,500

Which of the following is FALSE concerning enterprise resource planning (ERP)? A) It attempts to automate and integrate the majority of business processes. B) It shares common data and practices across the enterprise. C) It is inexpensive to implement. D) It provides and accesses information in a real-time environment. E) ERP software promises reduced transaction costs.

C) It is inexpensive to implement.

Which one of the following shipping systems offers speed and reliability when emergency supplies are needed overseas? A) trucking B) railroads C) airfreight D) waterways E) pipelines

C) airfreight

When Daimler and BMW pooled resources to develop standardized auto components, the sourcing strategy could best be described by which of the following? A) keiretsu B) virtual companies C) joint venture D) vertical integration E) few suppliers

C) joint venture

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: A) the January requirement is below level production of 420 units. B) level production is approximately 1000 units per day. C) level production of 420 units per day is below the January requirement. D) level production is approximately 420 units per month. E) the firm must hire workers between December and January.

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? A) accurate scheduling of labor-hours to assure quick response to customer demand B)an on-call labor resource that can be added or deleted to meet unexpected demand C) little flexibility in worker hours to decrease the burden on management D) flexibility of individual worker skills that permits reallocation of available labor E) flexibility in rate of output or hours of work to meet changing demand

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

Top executives tend to focus their attention on which type of forecasts? A) short-range B) intermediate-range C) long-range D) weather E) the forecast for the next day's absentee levels

C) long-range

Drop shipping: A) is equivalent to cross-docking. B) is the opposite of a blanket order. C) means the supplier will ship directly to the end consumer, rather than to the seller. D) is the same thing as keiretsu. E) is a good reason to find a new firm to ship your products.

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

Which of the following aggregate planning options is NOT associated with manipulation of product or service demand? A)price cuts or discounts B)promotion C) subcontracting D) counter seasonal products or services E) advertising

C) subcontracting

Dependent demand and independent demand items differ in that: A) for any product, all components are dependent-demand items. B) the need for independent-demand items is forecast. C) the need for dependent-demand items is calculated. D) All of the above are true. E) None of the above is true.

D) All of the above are true.

What is a popular measurement scale for service quality that compares service expectations with service performance? A) COQ B) SPC C) KAIZEN D) SERVQUAL E) TQM

D) SERVQUAL

A manager tells her production employees, "It's no longer good enough that your work falls anywhere within the specification limits. I need your work to be as close to the target value as possible." Her thinking is reflective of: A) internal benchmarking. B) Six Sigma. C) ISO 9000. D) Taguchi concepts. E) process control charts.

D) Taguchi concepts.

Product X: It is week 1 and there are currently 20 units in stock. We need 300 units at the start of week 5. If there are scheduled receipts planned for week 3 and week 4 of 120 each. Product X has a lead time of 1 week. When and how large of an order should be placed to meet the requirement of 300? A) Week 1, 300 units B) Week 1, 40 units C) Week 5, 40 units D) Week 4, 40 units E) Week 4, 300 units

D) Week 4, 40 units

Revenue (or yield) management is best described as: A) a situation where management yields to labor demands. B) a situation where the labor union yields to management demands. C)a process designed to increase the rate of output. D)allocation of scarce resources to customers at prices that will maximize revenue. E) management's selection of a product mix yielding maximum profits.

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

Enterprise resource planning (ERP): A) seldom requires software upgrade or enhancement. B) does not integrate well with functional areas other than operations. C) is inexpensive to implement. D) automates and integrates the majority of business processes. E) all of the above

D) automates and integrates the majority of business processes.

Which of the four major categories of quality costs is particularly hard to quantify? A) prevention costs B) appraisal costs C) internal failure costs D) external failure costs

D) external failure costs

When sample measurements falls inside the control limits, it means that: A) each unit manufactured is good enough to sell. B) the process limits cannot be determined statistically. C) the process output exceeds the requirements. D) if there is no other pattern in the samples, the process is in control. E) the process output does not fulfill the requirements.

D) if there is no other pattern in the samples, the process is in control.

A firm uses the 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. At the current time, which of the following tactics would be most representative of following a chase strategy? A) add 100 units to inventory in the next period B) add 200 units to inventory in the next period C) hire workers to match the 100-unit difference D) layoff workers to match the 200-unit difference E) implement a lower price point to increase demand

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

Which of the following is NOT one of the risk mitigation tactics for the supply chain risk category of suppliers failing to deliver? A) use multiple suppliers B) effective contracts with penalties C) subcontractors on retainer D) require overnight delivery E) pre-planning

D) require overnight delivery

Which one of the following is NOT one of the six sourcing strategies? A) negotiation with many suppliers B) vertical integration C) keiretsu D) short-term relationships with few suppliers E) virtual companies

D) short-term relationships with few suppliers

Which of the following aggregate planning strategies is known to lower employee morale? A) yield management B) counterseasonal product and service mixing C) changing inventory levels D) varying work force size by hiring or layoffs E) back ordering during high demand periods

D) varying work force size by hiring or layoffs

Techniques for building employee empowerment include: A) building communication networks that include employees. B) developing open, supportive supervisors. C) moving responsibility from both managers and staff to production employees. D) building high-morale organizations. E) All of the above are techniques for employee empowerment.

E) All of the above are techniques for employee empowerment.

The bullwhip effect: A) occurs as orders are relayed from retailers to distributors to wholesalers to manufacturers. B) results in increasing fluctuations at each step of the sequence. C) increases the costs associated with inventory in the supply chain. D) occurs because of distortions in information in the supply chain. E) All of the above are true.

E) All of the above are true.

Which of the following is not a typical inspection point? A) upon receipt of goods from your supplier B) when production or service is complete C) before the product is shipped to the customer D) at the supplier's plant while the supplier is producing E) after a costly process

E) after a costly process

Effective use of MRP and other dependent demand models does not require which of the following? A) master production schedule B) bill of materials C) inventory availability◦ D) lead times E) cost of individual components

E) cost of individual components

An aggregate plan satisfies forecast demand by potentially adjusting all EXCEPT which of the following? A) production rates B) labor levels C) inventory levels D) overtime work E) facility capacity

E) facility capacity