MG 211

Profit = TR - TC =

( P - V )X - F

Calculate the Moving Average using this data: Week, Sales; 1, 415; 2, 389; 3,420; 4, 382; 5, 410; 6, 432; 7, 405; 8, 421

(382+410+432+405+421)/5 = 410

What is the forecast for May based on a weighted moving average applied to the following past demand data and using the weights: 4, 3, 2 (largest weight is for most recent data)? Nov. Dec. Jan. Feb. Mar. April 37 36 40 42 47 43

2 × 42 + 3 × 47 + 4 × 43 = 84 + 141 + 172 = 397; 397/9 = 44.1

If 1 million passengers pass through the St. Louis Airport with checked baggage each month, a successful Six Sigma program for baggage handling would result in how many passengers with misplaced luggage? a. 3.4 b. 6.0 c. 34 d. 2700 e. + 3σ

3.4

The Japanese method of organizing for product design features: a. Teams. b. Product managers (champions). c. Distinct departments with assigned tasks. d. A single organization without subdivision or individual teams. e. None of the above

A single organization without subdivision or individual teams

Quality "lies in the eyes of the beholder" is a. An unrealistic definition of quality b. A user-based definition of quality c. A manufacturing-based definition of quality d. A product-based definition of quality e. The definition proposed by the American Society for Quality

A user-based definition of quality

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

PDCA, developed by Shewhart, 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

To set x-bar chart upper and lower control limits, one must know the process central line, which is the: A) average of the sample means. B) total number of defects in the population. C) percent defects in the population. D) size of the population. E) average range.

A) average of the sample means.

A recent consumer survey conducted for a car dealership indicates that, when buying a car, customers are primarily concerned with the salesperson's ability to explain the car's features, the salesperson's friendliness, and the dealer's honesty. The dealership should be ESPECIALLY concerned with which determinants of service quality? A) communication, courtesy, and credibility B) competence, courtesy, and security C) competence, responsiveness, and reliability D) communication, responsiveness, and reliability E) understanding/knowing customer, responsiveness, and reliability

A) communication, courtesy, and credibility

Quality Function Deployment (QFD) a. Determines what will satisfy the customer. b. Translates customer desires into the target design. c. Is used early in the design process. d. Is used to determine where to deploy quality efforts. e. All of the above

All of the Above

When should product strategy focus on forecasting capacity requirements? a. At the introduction stage of the product life cycle b. At the growth stage of the product life cycle c. At the maturity stage of the product life cycle d. At the decline stage of the product life cycle e. At the saturation stage of the product life cycle

At the growth stage of the product life cycle

The local newspaper receives several complaints per day about typographic errors. Over a seven-day period, the publisher has received calls from readers reporting the following total daily number of errors: 4, 3, 2, 6, 7, 3, and 9. Based on these data alone, what type of control chart(s) should the publisher use? A) p-chart B) c-chart C) x-bar chart D) R-chart E) x-bar chart and R-chart

B) c-chart

The c-chart signals whether there has been a: A) gain or loss in uniformity. B) change in the number of defects per unit. C) change in the central tendency of the process output. D) change in the percent defective in a sample. E) change in the AOQ.

B) change in the number of defects per unit

A manufacturer uses statistical process control to control the quality of the firm's products. Samples of 50 of Product A are taken, and a defective/acceptable decision is made on each unit sampled. For Product B, the number of flaws per unit is counted. What type(s) of control charts should be used? A) p-charts for both A and B B) p-chart for A, c-chart for B C) c-charts for both A and B D) p-chart for A, mean and range charts for B E) c-chart for A, mean and range charts for B

B) p-chart for A, c-chart for B

Marketing issues such as advertising, image, and promotion are important to quality because: A) they define for consumers the tangible elements of a service. B) the intangible attributes of a product (including any accompanying service) may not be defined by the consumer. C) they educate consumers on how to use the product. D) they make the product seem more valuable than it really is. E) they raise expenses and therefore decrease profitability.

B) the intangible attributes of a product (including any accompanying service) may not be defined by the consumer.

Three broad categories of definitions of quality are: A) product quality, service quality, and organizational quality. B) user based, manufacturing based, and product based. C) internal, external, and prevention. D) low-cost, response, and differentiation. E) Pareto, Shewhart, and Deming.

B) user based, manufacturing based, and product based

BEP$ EX: Fixed costs = $10,000 Material = $.75/unit Direct labor = $1.50/unit Selling price = $4.00 per unit

BEP$ = (F / (1 - V/P)) = $10,000 / (1 - ((1.50 + .75)/(4.00)) = 10,000 / .4375 = $22,857.14

BEPX EX: Fixed costs = $10,000 Material = $.75/unit Direct labor = $1.50/unit Selling price = $4.00 per unit

BEPX = F / (P - V) = 10,000 / ((4.00) - (1.50 + .75)) = 5,714

________ selects a demonstrated standard of performance that represents the very best performance for a process or an activity

Benchmarking

Which of the following is not one of the four principles of bottleneck management? a. Release work orders to the system at the bottleneck's capacity pace. b. Lost time at the bottleneck is lost system capacity. c. creasing capacity at non-bottleneck stations is a mirage. d. Increased bottleneck capacity is increased system capacity. e. Bottlenecks should be moved to the end of the system process.

Bottlenecks should be moved to the end of the system process.

) A manager wishes to build a 3-sigma range chart for a process. The sample size is five, the mean of sample means is 16.01, and the average range is 5.3. From Table S6.1, the appropriate value of D3 is 0, and D4 is 2.115. What are the UCL and LCL, respectively, for this range chart? A) 33.9 and 11.2 B) 33.9 and 0 C) 11.2 and 0 D) 6.3 and 0 E) 31.91 and 0.11

C) 11.2 and 0

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

C) a manufacturing-based definition of quality

"Quality lies in the eyes of the beholder" is: A) an unrealistic definition of quality. B) a user-based definition of quality. C) a manufacturing-based definition of quality. D) a product-based definition of quality. E) the definition of quality proposed by the American Society for Quality.

C) a manufacturing-based definition of quality.

PDCA is most often applied with regard to which aspect of TQM? A) Six Sigma B) employee empowerment C) continuous improvement D) benchmarking E) JIT

C) continuous improvement

Which of the determinants of service quality involves having the customer's best interests at heart? A) access B) courtesy C) credibility D) responsiveness E) tangibles

C) credibility

The normal application of a p-chart is in: A) process sampling by variables. B) acceptance sampling by variables. C) process sampling by attributes. D) acceptance sampling by attributes. E) process capability ratio computations

C) process sampling by attributes.

According to the text, what is the most common choice of limits for control charts? A) ±1 standard deviation B) ±2 standard deviations C) ±3 standard deviations D) ±3 standard deviations for means and ± 2 standard deviations for ranges E) ±6 standard deviations

C) ±3 standard deviations

The purpose of an x-bar chart is to determine whether there has been a a. Change in the dispersion of the process output b. Change in the percent defective in a sample c. Change in the central tendency of the process output d. Change in the number of defects in a sample e. Change in the AOQ

Change in the central tendency of the process output

The philosophy of zero defects is a. The result of Deming's research b. Unrealistic c. Prohibitively costly d. An ultimate goal; in practice, 1 to 2% defects is acceptable e. Consistent with the commitment to continuous improvement

Consistent with the commitment to continuous improvement

PDCA is most often applied in regard to which aspect of TQM? a. Six Sigma b. Employee Empowerment c. Continuous Improvement d. Benchmarking e. JIT

Continuous Improvement

A Three Sigma program has how many defects per million? A) 34 B) 3 C) 3 times the standard deviation D) 2700 E) 1500

D) 2700

Companies with the highest levels of quality are how many times more productive than their competitors with the lowest quality levels? A) 2 B) 3 C) 4 D) 5 E) None of the above because quality has no impact on productivity (units/labor hr.).

D) 5

What is the statistical process chart used to control the number of defects per unit of output? A) x-bar chart B) R-chart C) p-chart D) AOQ chart E) c-chart

D) AOQ chart

Which of the following statements regarding Arnold Palmer Hospital is FALSE? A) The hospital uses a wide range of quality management techniques. B) The culture of quality at the hospital includes employees at all levels. C) The hospital scores very highly in national studies of patient satisfaction. D) The hospital's high quality is measured by low readmission rates, not patient satisfaction. E) The design of patient rooms, even wall colors, reflects the hospital's culture of quality.

D) The hospital's high quality is measured by low readmission rates, not patient satisfaction.

Which of the following is true of a p-chart? A) The lower control limit is found by subtracting a fraction from the average number of defects. B) The lower control limit indicates the minimum acceptable number of defects. C) The lower control limit equals D3 times p-bar. D) The lower control limit may be at zero. E) The lower control limit is the same as the lot tolerance percent defective

D) The lower control limit may be at zero.

According to the manufacturing-based definition of quality: A) quality is the degree of excellence at an acceptable price and the control of variability at an acceptable cost. B) quality depends on how well the product fits patterns of consumer preferences. C) although quality can't be defined, you know what it is. D) quality is the degree to which a specific product conforms to standards. E) quality lies in the eyes of the beholder.

D) quality is the degree to which a specific product conforms to standards.

Which of the determinants of service quality involves performing the service right the first time? A) access B) courtesy C) credibility D) reliability E) responsiveness

D) reliability

Example: Actual production last week = 148,000 rolls, Effective capacity = 175,000 rolls, Design capacity = 1,200 rolls per hour, Bakery operates 7 days/week, 3 - 8 hour shifts, Design Capacity? Utilization? Efficiency?

Design capacity = (7 x 3 x 8) x (1,200) = 201,600 rolls Utilization = 148,000/201,600 = 73.4% Efficiency = 148,000/175,000 = 84.6%

Step 2 of the Theory of Constraints

Develop a plan for overcoming the constraints

Which of the following is NOT one of the major categories of costs associated with quality? A) prevention costs B) appraisal costs C) internal failure costs D) external failure costs E) None of the above; they are all major categories of costs associated with quality.

E) None of the above; they are all major categories of costs associated with quality.

Arnold Palmer Hospital uses which of the following quality management techniques? A) Pareto charts B) flowcharts C) benchmarking D) just-in-time E) The hospital uses all of the above techniques

E) The hospital uses all of the above techniques

Plots of sample ranges indicate that the most recent value is below the lower control limit. What course of action would you recommend? A) Since there is no obvious pattern in the measurements, variability is in control. B) One value outside the control limits is insufficient to warrant any action. C) Lower than expected dispersion is a desirable condition; there is no reason to investigate. D) The process is out of control; reject the last units produced. E) Variation is not in control; investigate what created this condition.

E) Variation is not in control; investigate what created this condition.

All of the following costs are likely to decrease as a result of better quality EXCEPT: A) customer dissatisfaction costs. B) inspection costs. C) scrap costs. D) warranty and service costs. E) maintenance costs.

E) maintenance costs.

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

Enlarging employee jobs so that the added responsibility and authority is moved to the lowest level possible in the organization is called ________.

Employee empowerment

Example: Actual production last week = 148,000 rolls, Effective capacity = 175,000 rolls, Design capacity = 1,200 rolls per hour, Bakery operates 7 days/week, 3 - 8 hour shifts, Efficiency = 84.6% Efficiency of new line = 75% Expected Output?

Expected Output = (Effective Capacity)(Efficiency) = (175,000)(.75) = 131,250 rolls

BEP$ =

F / (1 - V/P)

BEPx =

F / P - V

An improvement in quality must necessarily increase costs.

False

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

False

Among the tools of TQM, the tool ordinarily used to aid in understanding the sequence of events through which a product travels is a a. Pareto chart b. Flowchart c. Check sheet d. Taguchi map e. poka-yoke

Flowchart

Step 3 of the Theory of Constraints

Focus resources on accomplishing step 2

TOC was popularized by a. Goldratt and Cox b. Ford c. Taguchi d. Deming e. Motorola and GE

Goldratt and Cox

Step 1 of the Theory of Constraints

Identify the constraints

________ is the Japanese word for the ongoing process of unending improvement

Kaizen

The last four weekly values of sales were 80, 100, 105, and 90 units, respectively. The last four forecasts (for the same four weeks) were 60, 80, 95, and 75 units, respectively. Calculate the MAD, MSE, and MAPE for these four weeks. Sales: 80, 100, 105, 90 Forecast: 60, 80, 95, 75 Error: 20, 20, 10, 15 Error sq'd: 400, 400, 100, 225 Pct. error: .25, .20, .095, .167

MAD = 65/4 = 16.25; MSE = 1125/4 = 281.25; MAPE = 0.712/4 = .178 or 17.8%

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. None of the above

Material, machinery/equipment, manpower, and methods

The causes of variation in statistical process control are a. Cycles, trends, seasonality, and random variations b. Producer's causes and consumer's causes c. Mean and range d. Natural causes and assignable causes

Natural causes and assignable causes

The number of late insurance claim payouts per 100 should be measured with a a. X-bar chart b. R-chart c. P-chart d. C-chart e. Either a p or c chart

P-Chart

What type of analysis focuses on the ways in which processes can be designed to optimize interaction between firms and their customers? a. PCN b. BOM c. OI d. DFMA e. PLM

PCN

The process time of a system is equivalent to the a. Process time of the bottleneck b. Sum of all workstation times c. shortest workstation time d. Mean workstation time e. Median workstation time

Process time of the bottleneck

The three major elements of the product decision are: a. Selection, definition, and design b. Goods, services, and hybrids c. Strategy, tactics, and operations d. Cost, differentiation, and speed of response e. Legislative, judicial, and executive

Selection, definition, and design

Basic break-even analysis typically assumes that: a. Revenues increase in direct proportion to the volume of production, while costs increase at a decreasing rate as production volume increases. b. Variable costs and revenues increase in direct proportion to the volume of production. c. Both costs and revenues are made up of fixed and variable portions. d. Costs increase in direct proportion to the volume of production, while revenues increase at a decreasing rate as production volume increases because of the need to give quantity discounts. e. All of the above are assumptions in the basic break-even model.

Variable costs and revenues increase in direct proportion to the volume of production.

Which of the following statements regarding fixed costs is TRUE? a. Fixed costs rise by a constant amount for every added unit of volume. b. While fixed costs are ordinarily constant with respect to volume, they can "step" upward if volume increases result in additional fixed costs. c. Fixed costs are those costs associated with direct labor and materials. d. Fixed costs equal variable costs at the break-even point. e. Fixed cost is the difference between selling price and variable cost.

While fixed costs are ordinarily constant with respect to volume, they can "step" upward if

Calculate the three-year moving averages for years 4-10: Year Demand 1 74 2 90 3 59 4 91 5 140 6 98 7 110 8 123 9 99

Year Demand 3-Yr Moving Ave. 1 74 2 90 3 59 4 91 74.33 5 140 80.00 6 98 96.67 7 110 109.67 8 123 116.00 9 99 110.33 10 110.67

Bottleneck

a limiting factor or constraint, has the lowest effective capacity in a system

Long-range planning

add facilities, add long lead time equipment

Intermediate-range planning

add personnel, build/use inventory, subcontract, add equipment, add shifts

Theory of Constraints

five-step process for recognizing and managing limitations

Critical Tool

for determining the capacity a facility must have to achieve profitability

Objective of Break-Even Analysis

objective is to find the point in dollars and units at which cost equals revenue, requires estimation of fixed costs, variable costs and revenue

Step 5 of the Theory of Constraints

once overcome, go back to step 1 and find new constraints

Utilization

percent of design capacity actually achieved = Actual Output/Design Capacity

Efficiency

percent of effective capacity actually achieved = Actual Output/Effective Capacity

Step 4 of the Theory of Constraints

reduce the effects of constraints by offloading work or expanding capability

Short-Range planning

schedule jobs, personnel, allocate machinery

Effective Capacity

the capacity a firm expects to achieve given current operating constraints, often lower than design capacity

Adding a complementary product to what is currently being produced is a demand management strategy used when a. demand exceeds capacity b. capacity exceeds demand for a product which has stable demand c. the existing product has seasonal or cyclical demand d. price increases have failed to bring about demand management e. efficiency exceeds 100 percent

the existing product has seasonal or cyclical demand

Design Capacity

the max theoretical output of a system, normally expressed as a rate

Capacity

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

Throughput Time

the time it takes a unit to go through production from start to end

Bottleneck Time

the time of the slowest work station in a production system = the one that takes the longest