Operations Management Test #1

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

False, Special-purpose technology typically reduces costs through standardization.

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

False, Technology also refers to the technology involved in resource transformations

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

False, the operations manager plays a role in these decisions but is not primarily responsible for them.

Which of the following statements regarding PERT times is true?

The expected time estimate is calculated as t=(a+4m +b)/6

Which of the following statements concerning CPM activities is false?

The late finish of an activity is the earliest late start of all preceding activities.

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

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

Which of the following is a recent trend in business?

Supply chain management involves a broader systemic view of operations.

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

False

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

False

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

False

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

False

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

False, Operations management and marketing are supported by these functions.

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

False, Operations, marketing and finance are naturally dependent upon one another.

Which of the following statements regarding PERT times is true?

The optimistic time estimate is an estimate of the minimum time an activity will require.

Activity R on a CPM network has predecessors M and N, and has successor S. R has duration 5. N's late finish is 18, while M's is 20. S's late start is 14. Which of the following is definitely true?

The set of times cannot all be possible.

A sequence of activities that leads from the starting node to the finishing node.

Path

Doing nothing would yield how much profit if favorable market conditions prevail according to the following profit decision table? Alternative: Do nothing, Favorable market $20,000, Unfavorable Market -$10,000

$20,000

What is the EMV for Option 2 in the following decision table? S1 10,000 P(.3) S2 30,000 P(.7)

(.3)(10,000)+(.7)(30,000)=3,000+21,000=24,000

What is the EMV for Option 1 in the following decision table? S1 15,000 P (.3) S2 20,000 P(.7)

(.3)15,000+(.7)(20,000)=4,500+14,000=18,500

There are three equally likely states of nature (High, Medium, and Low demand). If the large factory will post profits of $50,000, $25,000, and -$10,000 under these states of nature, respectively, what is the EMV of the factory?

(.33333333)(50,000)=16,666.67 (.33333333)(25,000)=8333.33 (.33333333)(-10,000)=-3333.33 =(16,666.67+8,333.33-3333.33)=21,666.67

What is the EMV for Option 1 in the following decision table? S1 10,000 P(.4) S2 30,000 P(.6)

(.4)(10,000)+(.6)(30,000)=4,000+18,000=22,000

What is the EMV for Option 1 in the following decision table? S1 200 P(.6) S2 300 P (.4)

(.6)(200)+(.4)(300)=120+120=240

What is the EMV for Option 2 in the following decision table? S1 50 P(.6) S2 350 P(.4)

(.6)(50)+(.4)(350)=30+140=170

The critical path for the network activities shown below is ___ with duration ___. Activity Duration Immediate predecessors A 4 ---- B 2 A C 7 -- D 4 A E 5 B,C,D

A-D-E; 13

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

False

Which of the following statements regarding CPM is true?

All activities on the critical path have their LS equal to the maximum EF of all immediate predecessors.

Which of the following is essential to consider with respect to managing a process to meet demand? A)strategy, B)demand forecasts, C)capacity, D)random variability, E)all the above

All of these play a role in determining whether a process can meet demand.

The 10 strategic operations management decisions include: A)layout strategy, B)All of these, C)Process and capacity design, D)maintenance, E)managing quality

B) All of these

The first step, and a key element, in the decision-making process is to: A)monitor the results, B)clearly define the problem, C)select the best alternative, D)develop objectives, E)consult a specialist

B) Clearly define the problem

The __ distribution is used by PERT analysis to calculate expected activity times and variances.

Beta

The control of projects involves close monitoring of which of the following? A)resources, B)budgets, C)All of these, D)costs, E)quality

C) All of these

A business's stakeholders, whose conflicting perspectives cause ethical and social dilemmas, include: A)owners, B)lenders, C)All of these, D)employees, E)suppliers

C) All of these.

A decision maker who uses the maximin criterion when solving a problem under conditions of uncertainty is: A)an optimist., B)making a serious mistake; maximin is not appropriate for conditions of uncertainty, C)a pessimist, D)an optometrist, E)an economist

C) a pessimist

What term is given to those individuals with a vested interest in an organization, including customers, distributors, suppliers, owners, lenders, employees, and community members? A)vestors, B)alumni, C)stakeholders, D)investors, E)stockholders

C) stakeholders

Which of the following is NOT among the ethical and social challenges facing operations managers? A)providing a safe workplace, B)efficiently developing and producing safe high-quality green products, C)honoring stakeholder commitments, D)increasing executive pay, E)training, retaining, and motivating employees

D) Increasing executive pay

Manufacturing now constitutes the largest economic sector in postindustrial societies.

False

Which of the following is a similarity between goods and services? A)automation, B)mass production, C)Consistency, D)Both can usually be kept in inventory, E)Both have quality standards

E) Both have quality standards

Which of the following attributes is most typical of a service? A)mass production, B)easy to automate, C)tangible, D)consistency, E)production and consumption occur simultaneously

E) production and consumption occur simultaneously

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

False

An example of expected monetary value would be a payoff from selecting a particular alternative when a particular state of nature occurs.

False

Decisions trees and decision tables can both solve problems requiring a single decision, but decision tables are the preferred method when a sequence of decisions is involved.

False

If a decision maker can assign probabilities of occurrences to the states of nature, then the decision-making environment is Decision Making under Uncertainty.

False

If a decision maker has to make a particular decision only once, expected monetary value is a good indication of the payoff associated with the decision.

False

In a decision tree, a square symbol represents a state of nature node.

False

A plant manager wants to know how much he should be willing to pay for perfect market research. Currently there are two states of nature facing his decision to expand or do nothing. Under favorable market conditions the manager would make $100,000 for the large plant and $5,000 for the small plant. Under unfavorable market conditions the large plant would lose $50,000 and the small plant would make $0. If the two states of nature are equally likely, how much should he pay for perfect information?

Favorable: Large=(.5)(100,000)=50,000 small=(.5)(5,000)=2,500 Unfavorable: Large=(.5)(-50,000)=-25,000 small=(.5)(0)=0 50,000-25,000= 25,000

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

Feedback is used to monitor and improve processes.

Which of the following statements regarding Gantt charts is true?

Gantt charts are visual devices that show the duration of activities in a project.

Which is NOT true regarding differences between goods and services?

Goods tend to have higher customer interaction than services.

Which of the following statements regarding CPM networks is true?

If a specific project has multiple critical paths, all of them will have the same duration.

Match the following steps in Microsoft's development of Windows 8 to their respective WBS level. Step Level Develop Windows 8 Operating System ? System Testing ? Compatible with Windows 7 ? Develop GUI's ? Module Testing ?

Level 1, Level 2, Level 4, Level 3, Level 3

Which of the following statements regarding critical paths is true?

On a specific project, there can be multiple critical paths, all with exactly the same duration.

The main difference between PERT and CPM is that:

PERT employs three time estimates for each activity.

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

Pareto phenomenon, direct our attention to the difference between the "important few" and the "trivial many"

A simple CPM network has five activities, A, B, C, D, and E. A is an immediate predecessor of C and of D. B is also an immediate predecessor of C and of D. C and D are both immediate predecessors of E. Which of the following statements is true?

There are four paths in this network. 1)A-C-E 2)A-D-E 3)B-C-E 4)B-D-E

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

True

Although the number of people employed in manufacturing in the United States has decreased since 1950, each person is now producing almost 20 times more than in 1950.

True

An accounting firm that provides tax services for a company would be considered to be part of that company's supply chain.

True

Analytic decision making is based on logic and considers all available data and possible alternatives.

True

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

True

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

True

If a decision maker knows for sure which state of nature will occur, he/she is making a decision under certainty.

True

In a decision tree, the expected monetary values are computed by working from right to left.

True

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

True

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

True

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

True

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

True

The expected monetary value of a decision alternative is the sum of all possible payoffs from the alternative, each weighted by the probability of that payoff occurring.

True

The maximin criterion is pessimistic, while the maximax criterion is optimistic.

True

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

True

The state of nature is an occurrence or a situation over which the decision maker has little or no control.

True

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

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

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

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

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

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

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

True, Quantitative techniques have limitations that must be considered.

Which of the following would NOT be an operations function in a commercial bank?

auditing

In a PERT network, non-critical activities that have little slack need to be monitored closely:

because near-critical paths could become critical paths with small delays in these activities.

Used to describe the inherent variability in activity time estimates

beta distribution

Which of the following is NOT one of the phases of project management?

budgeting

A primary advantage of decision trees compared to decision tables is that decision trees:

can be used for sequential problems

Shortening activity durations is called:

crashing

Which of the following tasks within an airline company are related to operations?

crew scheduling

Time estimates that are fairly certain

deterministic

The marketing function is concerned with:

generating the demand for the organization's products or services.

A decision tree is a(n):

graphical representation of alternatives and states of nature.

Which of the following are the primary functions of all organizations?

marketing, production/operations, and finance/accounting

A project being analyzed by PERT has 60 activities, 13 of which are on the critical path. If the estimated time along the critical path is 214 days with a project variance of 100, what is the probability that the project will take 224 days or more to complete?

mean= 214 days, variance= 100, standard deviation= 10, z=(224-214)/10=10/10 z=1, z=.84134 1-.84134= .15866

What is a tabular presentation that shows the outcome for each decision alternative under the various possible states of nature called?

payoff table

The phases of project management are:

planning, scheduling, and controlling

The purchasing function is concerned with:

procuring materials, supplies, and equipment.

When solving decision trees, what phrase represents the act of dropping an alternative from consideration because it is less favorable than another available option?

prune the branch

The finance function is concerned with:

securing monetary resources

Allowable slippage for a path; the difference between the length of a path and the length of the critical path

slack

What is a global network of organizations and activities that supply a firm with goods and services?

supply chain

The time an activity will take assuming very unfavorable conditions is :

the pessimistic time

The expected activity time in PERT analysis is calculated as:

the weighted average of a, m, and b, with m weighted 4 times as heavily as a and b.

Operations management is applicable:

to all firms, whether manufacturing or service

Expected monetary value is most appropriate for problem solving that takes place:

under conditions of risk

Projects such as road building and plane building are:

well-defined

WBS stands for which of the following project management tools?

work breakdown structure

An activity on a PERT network has these time estimates: optimistic=2, most likely=5, and pessimistic=10. What is its expected activity time?

z=(2+4*5+10)/6=5.33