MGT 3900 Conceptual Final Review

What is the maximum utilization a resource can achieve?

1.00

Which of the following items would be considered resources in a restaurant?

Chefs

Which of the following actions does not relate to off-loading the bottleneck?

Increasing wages for production workers

Which of the following is NOT an assumption of the EOQ model?

It is possible to receive a purchase discount if the order quantity is sufficiently large.

Which of the following flow units is probably best to use if a process has flow-dependent processing times?

Minutes or hours of work

The fastest internet in the nation

Performance

A restaurant promising a meal in two minutes or less attempts to cater to which part of the customer utility function?

Timing

We match any price in town

price

The intuition behind the MSE metric to evaluate old forecasts is

to average the squared forecast errors.

Queuing system A has a utilization of 80 percent, and queuing system B has a utilization of 90 percent. Both have a single server. Say the utilization of both systems increases by 5 percent; that is, A increases from 80 percent to 85 percent while B increases from 90 percent to 95 percent. Which system is likely to experience the bigger change in the average time in queue?

System B

Which of the following is NOT a key process metric?

Flow unit

The EOQ minimizes the sum of the ordering cost and which of the following costs?

Holding Cost

Which of the following questions would be asked in a process analysis of a college admissions office?

How long does it take the office to process an application?

Which of the following statements about takt time and cycle time is true?

Takt time only depends on demand, not capacity. Cycle time does depend on capacity.

You are sitting in a restaurant and the waiter brings you the food you ordered a while ago. If you think about you being the flow unit in the process of the restaurant, which step of this process will be downstream relative to your current position in the process?

Paying the bill

A newsvendor orders the quantity that maximizes expected profit for two products, X and Y. The critical ratio for both products is 0.8. The demand forecast for both products is 9,000 units and both are normally distributed. Product X has more uncertain demand in the sense that it has the larger standard deviation. Of which of the two products does the newsvendor order more?

Product X because it has less certain demand

You observe a vehicle registration department at your local township. Assume that all employees are ready to work at 9 a.m. You arrive at 9 a.m. sharp and are the first customer. Is your time through the empty process longer or shorter than the flow time averaged across all customers that arrive over the course of the day?

Shorter than the average flow time

A process has low fixed costs and high variable costs. It is currently capacity-constrained. Will the impact of an efficiency improvement be small or large?

Small

Mary and Tom operate a lemonade stand. They are concerned that the lemonade does not taste fresh at the end of the day. Which of the following variables is an environmental variable in their operation?

The temperature of the air during the day

In the production of pizza, which of the following four variables is not an input variable?

The time that the customer leaves the pizza in the fridge

A company uses the newsvendor model to manage its inventories and faces normally distributed demand with a coefficient of variation of 0.75. The company decides to order a quantity that exactly equals the mean of its demand forecast. Which of the following is true regarding this company's performance measures?

There is a 0.50 probability that there is enough inventory to serve all demand.

A resource has an implied utilization of 150 percent. This is the highest implied utilization in the process. This means that the resource is the bottleneck.

True

Expanding product variety does not always result in an increase in profit

True

If a flow unit type j does not consume any time at a resource i, the corresponding cell in the workload table (row i and column j) is zero.

True

In a process with rework, we find the bottleneck as the resource with the highest implied utilization.

True

The total demand rate for a resource is the sum of the individual demand rates that need to be processed by the resource.

True

Leftover bread that is not sold at a bakery is an example of __________.

Waste

By making many burgers before customers ask for them, a fast-food restaurant is sacrificing the dimension of __________ and improving the dimension of __________ in the customers' utility function.

fit, timing

A firm evaluates its EOQ quantity to equal 180 cases, but it chooses an order quantity of 200 cases. Relative to the order quantity of 180 cases, the order quantity of 200 cases has

lower ordering cost and higher holding cost.

Over the course of a day, fans pour into a NASCAR venue at the rate of 8,000 people per hour. The average rate at which fans leave the venue ______.

must be exactly 8,000 people per hour

You observe a bank and notice that a customer leaves the bank about every five minutes. These five minutes between customers are

the cycle time

A flow unit is generally associated with the __________ of a process.

Outputs

Which of the following statements about resources of a process flow diagram is TRUE?

Outputs of some resources can be inputs to other resources.

Which of the following is an appropriate resource of a bakery?

Oven

How does the target manpower change as the demand rate increases?

The target manpower increases.

A summer camp that offers one-week programs faces the challenges of long queues as parents try to check in their children each Saturday morning. If they were to add more staff to assist with the check-in process, then which of the following will occur? The average time parents wait decreases. The maximum time the parents wait decreases. The average number of parents waiting to check in their child decreases.

(i), (ii) and (iii)

If a process has a six-sigma capability, what is the process capability index?

2

From the perspective of process analysis, which of the following could be appropriate flow units for a hardware store?

Number of customers

Which of the following statements about a process is TRUE?

A process can be measured.

Which of the following definitions describes a robust process?

A process is robust if it can tolerate variation in input and environmental variables without producing a defect.

Which of the following is an example of a system inhibitor?

An emergency room doctor has no patients at the moment.Correct

Which of the following changes in the in-stock probability increases the order quantity the most?

An increase in the in-stock probability from 80 Percent to 95 Percent.

A newsvendor faces normally distributed demand and the critical ratio is 0.8. If the profit-maximizing quantity is ordered, which of the following statements is true?

Expected sales are less than expected demand.

Which reason for holding inventory enables a firm to reduce the impact of large fixed costs that the firm incurs whenever it places an order to a supplier?

Batching

A retailer has two merchandizers, Sue and Bob, who are responsible for setting order quantities for the products they manage. For all of their products, the critical ratio is 0.7 and the coefficient of variation of their demand forecasts is 0.35. At the end of the season, Sue is proud to report that she has sold the entire inventory she purchased. Bob, on the other hand, sold only about a third of his products. Who is more likely to be choosing quantities that maximize expected profit?

Bob because he is probably ordering more than the mean of the demand forecast.

Which reason for holding inventory guards against a reduction in the flow rate when one assembly station is disrupted in a production line?

Buffers

Which of the following best reflects pooling capacity to reduce restroom queue lengths?

Convert the separate men's and women's rooms into a single unisex restroom (that both men and women can use).

A process is replicated in another country where wages are 50 percent lower. Staffing and processing times are identical. What would be the effect on the costs of direct labor?

Costs of direct labor would be 50 percent lower.

Which of the following is not a dimension or subdimension in a customer's utility function?

Customer Satisfaction

If the order quantity doubles, what happens to the frequency of orders (i.e., the number of orders submitted per unit of time)?

Decreases by 50 percent

Product X's demand is normally distributed with mean 150 and standard deviation 50. Product Y's demand is also normally distributed with a mean of 150 and a standard deviation of 50. The sum of demand for these two products is normally distributed with a mean of 300 and a standard deviation of 50. Which of the following results is most likely?

Demands for these products are negatively correlated.

Is the capacity of the bottleneck larger than, equal to, or smaller than the capacity of the process?

Equal to

Suppose the newsvendor model is used to manage inventory. Which of the following can happen when the order quantity is increased by one unit?

Expected leftover inventory increases by less than one unit.

A computer server experiences large fluctuations in the amount of data requests it receives throughout the day. Because of this variation, Little's Law does not apply.

False

A firm's ordering cost per year is independent of its order quantity decision.

False

Rework can increase the costs of an operation but has no impact on the capacity of the process.

False

The efficient frontier is given by the cheapest company in the industry.

False

The implied utilization can never be bigger than 100 percent.

False

The resource with the largest total demand rate is the bottleneck.

False

There can be no more than two firms on the efficient frontier.

False

Which of the following is NOT one of the three system inhibitors?

Fatigue

Below are a number of slogans used for advertisement. Which dimensions of customer utility do the slogans emphasize? A. We build lenses uniquely to the needs of your eyes

Fit

What is the difference between a process with rework and a process with scrap?

In a scrap process units do not visit a resource multiple times whereas that is possible in a rework process.

A sold-out concert that turns away music fans because it is not able to increase the number of seats is an example of __________.

Inflexibility

YourNurse (YN) Inc. uses certified nurses to answer medical queries from customers over the phone. When patients call into YN, they are first asked to provide their zip code, which then allows YN to route their call to the call center nearest to the patient (it operates 10 across the country). Which single suggestion in the following list (and explanation) is most likely to reduce the average time callers wait before speaking with a nurse?

Instead of using callers' zip codes, route calls to the call center with the fewest callers to help prevent situations in which

YourNurse (YN) Inc. uses certified nurses to answer medical queries from customers over the phone. When patients call into YN, they are first asked to provide their zip code, which then allows YN to route their call to the call center nearest to the patient (it operates 10 across the country). Which single suggestion in the following list (and explanation) is most likely to reduce the average time callers wait before speaking with a nurse?

Instead of using callers' zip codes, route calls to the call center with the fewest callers to help prevent situations in which there are idle nurses at the same time that there are callers on hold.

A process has high fixed costs and low variable costs. It is currently capacity-constrained. Will the impact of an efficiency improvement be small or large?

Large

Our dealership network provides service, wherever in the country you may be

Location

SmartPhones are made on a 40-step assembly process. All 40 steps are connected through a conveyor belt and all of the 40 steps must work at the same rate even if some of them have more capacity than others. Is this process a machine-paced process or a worker-paced process?

Machine-paced

You measure the exact size of 100 ping pong balls from manufacturer A and then another 100 balls from manufacturer B. The balls of manufacturer B have a much larger variation. Means and specification limits for the two manufacturers are identical. Which of the two manufacturers has a higher process capability index?

Manufacturer A

Which of the following is a consequence of economies of scale according to the economic order quantity model?

More product variety does not always result in higher profit.

Using the exponential smoothing forecast, is it possible to forecast a demand that is bigger than any previously observed demand?

No

C&A uses two steps to make a toy. Step 1 takes 20 seconds. Step 2 takes 15 seconds. Each step is staffed by one worker, for a total of two workers. Each worker is paid $15 per hour. Assume wages are a variable cost. Each toy is sold for $20. Material costs are $5 per toy and fixed costs are $500 per hour. Demand rate is 120 toys per hour. What will be the impact on C&A's profit per hour if the processing time of step 1 is reduced by 5 seconds?

No impact on profit

A nonbottleneck worker currently has an idle time of 20 seconds per unit. Because of the large demand, the company improves the process by adding more capacity to the bottleneck. How does this impact the idle time of the worker?

The idle time would decrease.

You and three of your friends run a car wash for a fund-raiser. Between interior and exterior cleaning, you spend about 40 minutes per vehicle. You are so successful that the next day you invite four more friends to help. How does this impact the labor content?

The labor content stays the same

Over the course of a month, which of the following is most likely to describe an appropriate flow unit for a process analysis of a hospital?

The number of patients

A change in which of the following does not result in a change in the mismatch costs incurred by a newsvendor?

The quality of the product.

Consider two products, X and Y, that have identical cost, retail price, and demand parameters and the same short selling season (the summer months from May through August). The newsvendor model is used to manage inventory for both products. Product X is to be discontinued at the end of the season this year and the leftover inventory will be salvaged at 75 percent of the cost. Product Y will be reoffered next summer, so any leftovers this year can be carried over to the next year while incurring a holding cost on each unit left over equal to 20 percent of the product's cost. The quantity of each product is selected to maximize expected profit. How do those quantities compare?

The quantity of product Y is higher.

Which of the following is TRUE regarding the source of economies of scale in inventory management according to the economic order quantity model?

The source of economies of scale is a fixed ordering cost.

How does the takt time change as the demand rate increases?

The takt time decreases

What happens to the target manpower if the labor content is doubled?

The target manpower doubles

What is the relationship between the processing time at a resource and its capacity?

They are reciprocals of each other

Vetox sells industrial chemicals. One of their inputs can be purchased in either jugs or barrels. A jug contains one gallon, while a barrel contains 55 gallons. The price per gallon is the same with either container. Vetox is charged a fixed amount per order whether it purchases jugs or barrels. The inventory holding cost per gallon per month is the same with either jugs or barrels. Vetox chooses an order quantity to minimize ordering and holding costs per year. Would Vetox purchase a greater number of gallons with each order if it purchased with jugs or with barrels?

They might order a greater number of gallons with jugs or with barrels, depending on various factors like the demand rate, ordering cost, and holding cost.

Get your burger in 1 minute or less—otherwise, you eat free

Timing

Two retailers compete on costs and the ambience of their retail stores. They are identical in all other dimensions of customer utility. Retailer A is cheaper than retailer B. Retailer A also has the better ambience. Does this mean that retailer A is on the efficient frontier?

Yes

Suppose the newsvendor model describes a firm's operations decision. Is it possible to have positive stockout probability and positive expected leftover inventory? Choose the best answer.

Yes. A firm does not stock out and have leftover inventory at the same time, but the stockout probability can be positive even though there is positive expected leftover inventory.

You observe a long line at the airport security. The process currently is

capacity-constrained.