Operations Management Final (Chp. 6,7,8,11,12,13,15)
A continuous review system is generally used for Class C items in the ABC system of classification. T/F
F
A disadvantage of yield management is that it cannot be implemented in real time. T/F
F
Lead-time inventories are stocks that have been ordered but not yet received. T/F
F
Level demand and chase capacity are the two generic strategies for capacity management. T/F
F
The choice of location criterion has little effect on the site selected. T/F
F
The net result of waiting, apart from the boredom and frustration experienced by the consumer and the associated loss of goodwill, is the reduced utilization of capacity of the service. T/F
F
The objective of Six Sigma is to eliminate variation in process performance. T/F
F
A process capability index of 2 centered on the mean just meets Six Sigma standards. T/F
T
A system is said to be in a transient state when the values of its governing parameters in this state are expected to change uncontrollably with time. T/F
T
ABC analysis is an application of the 80-20 rule. T/F
T
For a single channel queuing system with finite queue, the value of "lamda" may exceed "mue" because some potential customers are forced to balk. T/F
T
For a standard service system to operate over the long run, the servers must be idle part of the time. T/F
T
ISO 9002 does not apply to organizations that per design and service activities. T/F
T
In retailing, profit is a function of mark-up multiplied by turnover. T/F
T
Juran identified internal failure costs, external failure costs, detection costs, and prevention costs. T/F
T
Lean service is based upon the Toyota Production System. T/F
T
Locating a public service facility in an area that contains a large number of individuals for whom distance would be a strong barrier will maximize facility utilization. T/F
T
Multiple-queue configuration may deter balking behavior. T/F
T
One role of holding inventory is to hedge against anticipated increases in the cost of the inventoried items. T/F
T
Penalties for late delivery or nondelivery are part of shortage costs. T/F
T
Planning for service capacity involves prediction of consumer waiting associated with different levels of capacity. T/F
T
Point-of-sale scanning became feasible only when industry agreed upon a universal system of bar coding. T/F
T
Pooling of services is an approach toward achieving economies of scale in services through better utilization of services. T/F
T
A queuing system is described by all but one of the following: a. balking behavior b. calling population c. arrival process d. queue configuration
a
After selecting a line in a multiple queue system, a customer is ________ when she or he switches to a different line perceive it to be moving faster. a. jockeying b. balking c. reneging d. weaving
a
All of the following are examples of "detection costs" of quality except a. Quality planning. b. Periodic inspection. c. Process control. d. Collecting quality data.
a
Supermarkets can be described by which of the following facility arrangement? a. Self-serve followed by service in parallel b. Many service centers in parallel and series c. Servers in parallel d. Self-service
a
The following marketing phenomenon occurs when there exists within two city blocks the following hamburger outlets: McDonald's, Burger King, Sonic, and Wendys: a. competitive clustering. b. customized marketing. c. saturation marketing. d. relationship marketing.
a
The optimization criteria governing the location of a service facility is determined mainly by the a. ownership of the service, i.e., public or private. b. kind of service, e.g. food, banking, or postal. c. number of facilities to be located. d. average size of the facilities to be located.
a
The strategy of segmenting demand is feasible only when: a. demand is not from a homogeneous source. b. demand is cyclic and predictable. c. arrivals for service are random. d. making appointments is impossible.
a
Which of the following is a poka-yoke method? a. Adopting a checklist to help an employee avoid making a mistake b. Designing a service to reflect the customers' needs and requirements c. Designing a service in a robust manner that can withstand abuse by customers d. Comparing a firm's quality performance to the performance of others that are considered "best in class"
a
Which of the following is not an effective way to manage the psychology of waiting? a. Prominently display time with a large analog clock. b. Inform customers when long waits are anticipated. c. Use diversions to occupy customer waiting times. d. Employ a take-a-number system to ensure fairness.
a
Which of the following is not an element of Quality Improvement Program? a. Emphasizing subjective data over difficult-to-analyze objective data. b. Maintaining SOPs for routine and crisis situations c. Assuming employees are self-motivated and innovative d. Focusing on customer satisfaction
a
Which one of the following is not a characteristic of yield management? a. Capacity is relatively fixed. b. There is one homogeneous customer class. c. The service is considered a perishable inventory. d. Demand fluctuates yet is somewhat predictable.
a
Which one of the following is not a strategy to manage demand? a. cross-training employees b. offering price incentives c. developing reservation systems d. partitioning demand
a
________ is not a strategy for reduction of customer-induced variability. a. Adapt to customer skill levelsty b. Require reservations c. Limit service breadth d. Target customers based on capability
a
A good overbooking strategy should: a. minimize the expected opportunity cost of idle service capacity. b. balance the expected opportunity cost of idle service capacity and expected cost of turning away customers who have reservations. c. minimize the expected cost of turning away reservations. d. none of the above; services should try to avoid overbooking.
b
A strategy of locating sites in a number of states (or countries) can reduce the overall risk of financial crisis from a regional economic downturn. This strategic approach to facility location is known as a. competitive positioning. b. flexibility. c. demand management d. focus.
b
According to Maister's Second Law of Service: a. perceptions minus expectations equal the level of customer satisfaction. b. first impressions can influence the remainder of the service experience. c. quality in the service industry is essentially free. d. a waiting customer cannot be satisfied.
b
Competitive clustering is common to the ________ industry. a. healthcare b. lodging c. communications d. banking
b
In general, for infinite queues, the expected number of people in the system is equal to: a. the average arrival rate minus the average service rate. b. the expected number in the queue plus the expected number in service. c. the expected arrival rate times the expected waiting time. d. alternatives (a) and (b) above.
b
Inventory management costs include all but one of the following: a. ordering. b. purchase. c. receiving. d. shortage.
b
Pooling of servers results in reduced waiting time because: a. the mean service time for the pool as a whole is now constant. b. servers are utilized better. c. multiple queues are replaced by a single queue. d. alternatives (a) and (b) above.
b
The disadvantage of saturation marketing lies in which of the following areas? a. increased advertising costs b. Cannibalization c. Increased requirement for supervision d. Reduction in customer awareness
b
When a process appears to be functioning properly when, if fact, it is out of control, the type of error and injured party is identified as: a. Type I error, producer's risk b. Type II error, consumer's risk c. Type I error, consumer's risk d. Type II error, producer's risk
b
Which of the following statements is not part of Deming's 14-point philosophy? a. Create constancy of purpose for improvements of product and service. b. Promote numerical goals for the workforce. c. Constantly and forever improve the system of production and service. d. Cease dependence on mass inspection.
b
Which one of the following is not a guiding principle of lean philosophy? a. Satisfy the needs of customers by doing only value-added activities. b. Be flexible in response to customer demands. c. Define the value stream by flowcharting the process. d. Eliminate waste.
b
A gap in service quality is not the difference between: a. customer expectations and management's perceptions of customer expectations. b. the service delivery and the results that are communicated externally to the customer. c. customer expectations and management's perception of the delivered service. d. the perceptions of the delivered service that are translated into service quality specifications and the actual service delivery.
c
A strategy defying the curse of cannibalization is called a. competitive clustering. b. customized marketing. c. saturation marketing. d. relationship marketing.
c
A strategy that can be used by urban retailers to locate multiple sites close to each other in high-density areas despite the potential for cannibalization is called a. competitive clustering. b. marketing intermediaries. c. saturation marketing. d. saturation clustering.
c
According to Maister, one of the following statements is not true of waits. a. Unoccupied time feels longer than occupied time. b. Anxiety makes waits feel longer. c. In-process waits feel longer than preprocess waits. d. Unfair waits feel longer than fair waits.
c
Because customers participate directly in the service process, the success of technological innovation is dependent upon: a. he user-friendliness of the innovation. b. the ability of customers to pay for the service. c. customer acceptance d. market research
c
In the long run, if service capacity is inadequate for the arrival rate, one of the following will likely occur: a. servers will slow down. b. customers will demand less. c. reneging will occur. d. prices will be increased.
c
One advantage of the multiple queue compared to a single queue is that multiple queues a. minimize wait times. b. reduce the average service time. c. lead to a perceived shorter service time. d. lead to a perceived shorter wait time.
c
Taxes and insurance would fall under _____ costs. a. ordering b. receiving and inspection c. holding or carrying d. shortage
c
The costs of quality for services include all of the following except: a. failure costs b. prevention costs c. control costs d. detection costs
c
The total inventory for a retailer is comprised of in-transit inventory, safety stock, and __________ inventory. a. decoupling b. seasonal c. cyclical d. speculative
c
Which of the following dimensions of service quality is most important to customers? a. Empathy b. Assurance c. Reliability d. Tangibles
c
Which one of the following is most important for a continuous review system? a. constant lead time. b. fixed order quantity. c. POS scanning. d. normal demand distribution.
c
Which one of the following is not a principle of Deming's philosophy? a. Customer satisfaction b. Management by facts c. Employee loyalty d. Respect for people
c
Which one of the following is not a role that inventories play in a distribution system? a. decoupling b. speculative c. anticipative d. cyclical
c
With respect to service facility location, it is not prudent to open: a. a new facility next to one's competitors. b. multiple facilities within the same area, thus cannibalizing one's own business. c. an information-based service in a downtown area with high real estate prices. d. all of the above.
c
________ is not a strategy for accommodating of customer-induced variability. a. Provide generous staffing b. Cross-train employees c. Reward increased effort d. Do work for customers
c
A cruise line has the option of locating its dock in Miami or Pensacola because both cities have adequate port facilities. Which of the following considerations would seem to be the most germane? a. Adequate parking b. Location of competitors c. Freeway access to the port d. City served by major airport
d
All but one of the following are quality tools for analysis and problem solving. a. Run chart b. Control chart c. Flow chart d. Bar chart
d
For seasonal items a ______ system could be used to manage inventory. a. continuous review b. periodic review c. retail discounting d. single-period model
d
In the decision to locate a public health clinic, which one of the following criteria is not appropriate? a. Maximize utilization b. Minimize distance per capita c. Minimize distance per visit d. Minimize cost
d
In the design of an inventory system all but one of the following is considered: a. type of customer demand. b. relevant inventory costs. c. constraints. d. safety stocks.
d
Which of the following is not an essential feature of a queuing system? a. Calling population b. Queue configuration c. Service process d. Customer
d
Which of the following statements is not true concerning a service guarantee? a. A well designed and implemented service guarantee can help a firm gain control over its operation. b. Fear of customer cheating inhibits some mangers from adopting a service guarantee. c. Managers are likely to worry about the costs of a service guarantee, but for the wrong reasons. d. Managers who seek control over the financial consequences of a service guarantee should require customers to meet various conditions.
d
Which one of the following is not part of the queuing system features? a. calling population b. queue configuration c. queue discipline d. departure process
d
_________ variability is not one of the five sources of customer-induced variability. a. Arrival b. Capability c. Effort d. Demand
d
Obsolescence is part of shortage costs. T/F
F
The Deming wheel is a repetitive cycle where quality improvements result from continuous incremental turns of the wheel. T/F
T
The Walk-through Audit focuses on the effectiveness of each stage in the service delivery process T/F
T
The advantage of substituting communication for travel becomes possible when face-to-face interaction between server and customer is not necessary. T/F
T
The average time a customer should expect to wait can be calculated using just the mean arrival rate and the mean service rate. T/F
T
The critical fractile is a cumulative probability of demand. T/F
T
The first stage or rung of the service quality ladder is cost of quality. T/F
T
Which of the following is not an advantage of offering a service guarantee? a. It acts as a mechanism to differentiate the firm from its competitors b. It advertises the firm's commitment to quality c. It allows employees to interpret broadly the firm's service standards d. It acts as a means of receiving feedback from customers
c
Which of the following is not true of a Walk-through Audit? a. Focuses on five dimensions of service package. b. Emphasis is on evaluation of each stage of service delivery. c. Survey is completed at customer convenience. d. Survey usually conducted by operations personnel.
c
According to the SERVQUAL quality assessment instrument, responsiveness is the most important dimension of service quality. T/F
F
Analytical queuing models are classified mainly on the basis of the calling population characteristics and the queue discipline. T/F
F
Balking is the term used to describe the phenomenon of customers leaving a queue that they have joined before service is rendered. T/F
F
Capacity usually is measured in terms of outputs (e.g. guest nights) rather than inputs (e.g. number of hotel rooms) in service firms T/F
F
Concealment of the waiting line or at least part of it is a very effective deterrent against reneging. T/F
F
Continuous improvement is a valuable concept, but it lacks measurement techniques. T/F
F
Dependent demand is described by a probability distribution. T/F
F
For the planned shortage model, when the cost of backorders approaches zero, the order quantity becomes undefined. T/F
F
Forward buying is used to avoid expensive interruptions of service, as a stock out at any stage of the physical goods distribution system would have far-reaching consequences for the other stages. T/F
F
In analytical queuing models, the calling population mainly determines whether the queue will be finite or infinite. T/F
F
Inventory management is concerned with two basic questions: how much to order and when to place an order. T/F
F
Managing evidence of information is the key to closing the gap between customer perception and service delivery. T/F
F
Overbooking is a strategy that can be used to smooth demand. T/F
F
POS scanning is used to initiate a purchase order to a pre-approved vendor automatically when the stock levels are depleted (or reach a reorder point). T/F
F
Pareto chart is an arrangement of data where the causes of a problem are arranged in ascending frequency of occurrence in order to highlight the most likely cause. T/F
F
Process capability index measure the variability in a process. T/F
F
Reducing the variability either in service time or arrival time can reduce most of the waiting involved for the consumers. T/F
F
SABRE is the name for American Airlines' yield management system. T/F
F
Saturation clustering occurs when service firms locate their business near their competitors because they expect a high level of customer traffic. T/F
F
Serving complimentary drinks on a delayed flight is an example of empathy being shown by the service personnel to the irate customer. T/F
F
Severity of failure, speed of recovery, service guarantee and perceived service quality are all factors governing service recovery expectations. T/F
F
The Malcolm Baldrige Quality Award measures the quality of products manufactured or services delivered. T/F
F
The absence of quantifiable criteria considerably diminishes the importance of facility location methods in the public sector. T/F
F
The average business hears only from 10 percent of its dissatisfied customers. T/F
F
The graph depicting the economic trade-off in capacity planning has cost on the x-axis and the capacity to serve on the y-axis. T/F
F
The main advantage of the multiple queue configuration is that it guarantees fairness to all by ensuring that a first-come-first-served rule applies to all arrivals. T/F
F
The objective of lean service is a purposeful flow of satisfied customers. T/F
F
The strategy of maintaining a speculative inventory is known as forward hedging. T/F
F
The term "producer's risk" refers to the probability that a sample will indicate an acceptable quality incorrectly. T/F
F
The term interarrival time refers to the time elapsed between initiation of service and its completion. T/F
F
The use of a ski-resort hotel for business conventions during the summer is an example of using the complementary service strategy. T/F
F
Time perishability of service capacity is a challenge for service managers because customers demand immediate service. T/F
F
Waiting is often seen as psychological punishment because the consumer is aware of the opportunity cost of waiting time and the resulting loss of earnings. T/F
F
When peaks of activity are persistent and predictable such as meal times for restaurants, off-duty personnel can be placed on standby to supplement regular employees. T/F
F
Work shift scheduling attempts to deal with the service utilization problem by controlling the demand for the service and partitioning it so that utilization is uniform. T/F
F
A queue is said to be finite if there is an upper limit on the number of consumers who are allowed to be in it. Consumers who come after the queue is full, either balk or are refused entrance. T/F
T
An arrangement of servers in parallel is an insurance against breakdown of the service in case of absenteeism or equipment failure. It, thus, adds to flexibility at the expense of capacity utilization. T/F
T
Being meaningful and easy to invoke are important elements of a good unconditional service guarantee. T/F
T
Benchmarking measures a firm's quality performance by comparing it to the performance of other companies that are known for being "best in class." T/F
T
Capacity planning decisions deal implicitly with decisions on the cost of making consumers wait and the extent to which these costs can be borne. T/F
T
Demand smoothing is accomplished by the differential pricing policy of telephone companies. T/F
T
Excess capacity is required in a service system because variability in customer arrivals and service times creates idle capacity. T/F
T
Expected loss for an overbooking reservation strategy would be calculated by multiplying the loss for each no-show possibility and its probability of occurrence, and then adding the products. T/F
T
Fixing service-process problems before they affect the customer could be classified as another component to the systematic-response approach. T/F
T
Radio Frequency Identification (RFID) is replacing bar coding. T/F
T
Service capacity is defined in terms of an achievable level of output per unit time. T/F
T
Some restaurants use tables and chairs instead of booths to create more flexible capacity T/F
T
The most important function of SERVQUAL is to keep a record of service quality trends through periodic customer surveys. T/F
T
The strategy of segmenting demand to reduce variation makes use of the fact that demand for a service seldom is derived from a homogeneous source. T/F
T
The term queue configuration refers to the number of queues, their locations, their spatial requirements, and their effect on consumer behavior. T/F
T
The time a consumer will spend waiting is directly related to the amount of money he is paying for the service. The less the service costs him, the longer he is willing to wait. T/F
T
Using part-time personnel at fast-food restaurants allows capacity to vary with demand. T/F
T
When customer expectations are confirmed by perceptions, service quality is considered satisfactory. T/F
T
Yield management is a pricing and capacity allocation system that was developed by American Airlines. T/F
T
Yield management is a strategy that manages both demand and capacity. T/F
T
Yield management is the process of allocating a fixed perishable resource to several market segments in the most profitable manner. T/F
T
Car dealerships often are located near one another along a "motor mile" to allow customers to make comparisons. This location strategy is known as: a. competitive Clustering. b. saturation Marketing. c. marketing Intermediaries. d. competitive Positioning.
a
For the system to operate satisfactorily over the long run, a. the capacity to serve must be greater than the average demand. b. the expected waiting time for each customer must not exceed average service time. c. the arrival rate must be less than the service rate. d. the number of servers must equal the average number of arrivals per unit time.
a
In the ABC inventory classification, C items can best be described as: a. among the most numerous. b. having a high stockout cost. c. requiring close attention. d. expensive.
a
Service capacity decisions have all but one of the following strategic characteristics: a. the decision to invest in capacity will attract competitors. b. financial investment in capacity must be balanced against the costs of lost sales. c. inadequate short-term capacity needs can generate customers for the competition. d. hostile customers can result from inadequate capacity following a marketing campaign.
a
Service level influences _______ and ________. a. reorder point, safety stock b. reorder point, backorder quantity c. safety stock, backorder quantity d. backorder quantity, lead-time demand
a
The FCFS rule is most often used because: a. analytical models depend upon its use. b. it represents social justice. c. it is viewed as fair. d. most other rules are not as easily applied.
a
Which of the following is not a reason that a service guarantee works? a. Encourages individual employees to set their own standards. b. Generates reliable data on poor performance. c. Builds customer loyalty. d. Forces a firm to identify failure points.
a
Which of the following is not a strategy for managing capacity? a. Developing complementary services b. Using part-time employees c. Forecasting demand d. Scheduling shifts
a
Which of the following is not an advantage of a multiple-queue configuration? a. FCFS rule is guaranteed. b. Differentiation of service can be provided. c. Division of labor is possible. d. Customers have choice of server.
a
Which one of the following is not an example of detection costs? a. Rework b. Collecting quality data c. Process control d. Periodic inspection
a
Which one of the following is not true of multiple queue configurations? Correct a. Jockeying is eliminated. b. Division of labor is possible.. c. Service provided can be differentiated. d. The FCFS rule is not always followed.
a
Which queue configuration permits opportunities for division of labor and service differentiation? a. multiple queue b. single queue c. take a number d. self serve
a
The purpose of differential pricing is to: a. make peak period usage unattractive. b. make off-peak usage attractive. c. charge customers according to their ability to pay. d. adjust capacity to demand.
b
Which one of the following is not an example of the differential pricing policy? a. weekend and night rates for long-distance telephone calls b. difference in hospital fees for walk-in and scheduled services c. peak-load pricing by utility companies d. none of the above
b
In the "Newsvendor Problem", the underlying concept is that the newsvendor should continue increasing the stock until the expected loss on the last sale ______ the expected revenue on the last unit stocked. a. equals b. just exceeds c. is just lower than d. greatly exceeds
c
Which of the following is not a criterion for capacity planning? a. average customer waiting time b. probability of excessive waiting c. the rate of departure d. probability of sales lost because of inadequate waiting area
c
Which of the following strategies is inappropriate for managing capacity and demand? a. Smooth customer demand by offering price incentives. b. Scheduling staff to meet variations in forecasted customer demand. c. Decrease customer participation in the service process. d. Promoting off-peak use of facilities.
c
Which one of the following is not a characteristic of firms using yield management? a. ability to segment their market b. perishable inventory c. variable capacity d. product sold in advance
c
Which one of the following is not a characteristic of firms using yield management? a. ability to segment their market b. perishable inventory c. variable capacity d. product sold in advance
c
All but one of the following are advantages of using one large computer system to serve an entire university community: a. short turnaround time. b. large memory. c. economics of scale in services. d. short wait in queue.
d
All but one of the following are techniques to lessen the boredom of waiting customers: a. placement of mirrors in elevators. b. telling customers how long the wait is at different points in the queue. c. installing a television tuned to CNN. d. displaying time with a large analog clock.
d
Bars that offer happy hours in the afternoon are using the strategy of: a. creating adjustable capacity. b. developing complementary services. c. increasing customer participation. d. promoting off-peak demand.
d
Faced with variable demand and a perishable capacity, a service manager can smooth demand by: a. using part-time help during peak hours. b. scheduling workshifts to vary workforce needs according to demand. c. increasing the customer self-service content of the service. d. using reservations and appointments.
d
In the annual cost curve for the EOQ model, the ordering cost _________ with the order quantity a. increases linearly b. decreases linearly c. increases negative exponentially d. decreases negative exponentially
d
Queuing models can help explain all but one of the following: a. predicting results of adding servers to a multiple server system. b effect of reducing service time variation on waiting time. c. determining the size of a parking lot. d. mean arrival rate.
d
Several approaches to demand management exist, but only _______ seeks to maximize revenue. a. promoting off-peak demand b. reservation systems c. offering price incentives d. yield management
d
Site selection considerations include all but one of the following a. Access b. Environment c. Government d. Weather
d
The A/B/C notation classifies queuing systems on the basis of: a. arrival rates and queue discipline. b. queue discipline rates and service rates. d. arrival rates, service rates, and number of servers.
d
The concept of focus in location decisions considers all but one of the following issues: a. Cannibalization b. Multisite locations c. Formula facility d. Competitive changes
d
The following are all advantages of the single queue system, except: a. the arrangement guarantees fairness by ensuring that the FCFS rule applies. b. the anxiety of "Am I in the fastest line?" is eliminated.e.* c. the problem of line cutting is reduced. d. the customer has the option of selecting a particular server of preference.
d
There are five dimensions that customers use to judge service quality. The willingness to help customers and to provide prompt service is a. assurance b. empathy c. reliability d. responsiveness
d
Which feature below is not associated with the periodic review system? a. order consolidation. b. fixed order quantity. c. C items. d. small safety stocks.
d
Which of the following is not part of a good service guarantee? a. It is unconditional b. It is easy for the customer to understand c. It is meaningful to the customer d. It is difficult for the customer to invoke
d