Operations Midterm

Cycle

Production time per day/Required output per day (in units)

The basic notion of economies of scale is that as a plant gets larger and volume increases, the average cost per unit of output drops.

True

Using the assembly-line balancing procedure, which of the following is the theoretical minimum number of workstations if the task times for the six tasks that make up the job are 4, 6, 7, 2, 6, and 5 minutes, and the cycle time is 10 minutes?

(4 + 6 + 7 + 2 + 6 + 5) / 10 = 3.

Receivables Turnover Ratio

(Annual Credit Sales)/(Average Accounts Receivable).

Inventory Turnover Ratio

(Cost of Goods Sold)/(Average Inventory Value)

Asset Turnover Ratio

(Total Sales)/(Total Assets)

If the best operating level of a piece of equipment is at a rate of 400 units per hour and the actual output during an hour is 300 units, which of the following is the capacity utilization rate?

300 units of output divided by 400 units best operating level = 0.75

Using the assembly-line balancing procedure, which of the following is the required cycle time in minutes per unit if the daily production time is 480 minutes and the required daily output is 50 units?

480 minutes / 50 units = 9.6 minutes per unit.

Days of Supply

A measure of the number of days of supply of an item (the inverse of inventory turn scaled to days)

Make to Stock (MTS)

A production environment where the customer is served "on-demand" from finished goods inventory

What is an important difference between capacity planning in services as contrasted to capacity planning in manufacturing operations?

Although capacity planning in services is subject to many of the same issues as manufacturing capacity planning, and facility sizing can be done in much the same way, there are several important differences. Service capacity is more time and location dependent, it is subject to more volatile demand fluctuations, and utilization directly impacts service quality.

Inventory Turn

An efficiency measure where the cost of goods sold is divided by the total average value of inventory

Operations and supply chain __________ leverage(s) the vast amount of data in enterprise resource planning systems to make decisions related to managing resources.

Analytics

Primary Assignment

Assign tasks in order of the largest number of following tasks

Secondary Assignment (tie breaking)

Assign tasks in order of the longest operating time

Often, firms will work with their partners across the supply chain to develop forecasts and execute production and distribution between the partners. What technique does this describe?

Collaborative planning, forecasting, and replenishment

What is the term used to describe product attributes that attract certain customers and can be used to form the competitive position of a firm?

Competitive dimensions

A major competitive dimension that forms a company's strategic operational competitive position in their strategic planning is which of the following?

Cost or Price

Which of the following list contains only competitive dimensions of a firm discussed in the text?

Cost or price, delivery speed, delivery reliability, flexibility and new product introduction speed

Which qualitative forecasting technique was developed to ensure that the input from every participant in the process is weighted equally?

Delphi method

Which of the following is not a step in developing a manufacturing cell layout?

Disposing of left-over machinery and outsourcing ungrouped processes

At a decision point in a decision tree, which machine would you select when trying to maximize payoff when the anticipated benefit of selecting machine A is $45,000 with a probability of 90%; the expected benefit of selecting machine B is $80,000 with a probability of 50% and the expected benefit of selecting machine C is $60,000 with a probability of 75%?

EMV of Machine A = 0.9 x 45,000 = 40,500; EMV of Machine B = 0.5 x $80,000 = $40,000; and EMV of Machine C = 0.75 x 60,000 = $45,000. Since $45,000>$40,500>$40,000 you would select Machine C.

You have just determined the actual number of workstations that will be used on an assembly line to be 6 using the assembly-line balancing procedure. The cycle time of the line is 5 minutes and the sum of all that tasks required on the line is 25 minutes. Which of the following is the correct value for the resulting line's efficiency?

Efficiency=Sum of task times (T)/Actual number of workstations (Na) × Workstation cycle time (c); [25 / (6 x 5)] = 0.833

You have just determined the actual number of workstations that will be used on an assembly line to be 8 using the assembly-line balancing procedure. The cycle time of the line is 10 minutes and the sum of all that tasks required on the line is 60 minutes. Which of the following is the correct value for the resulting line's efficiency?

Efficiency=Sum of task times (T)/Actual number of workstations (Na) × Workstation cycle time (c);[60 / (8 x 10)] = 0.750

A central premise of exponential smoothing is that more recent data is less indicative of the future than data from the distant past.

False

A make-to-order firm will work with the customer to design the product, and then make it from purchased materials, parts, and components.

False

An order winner is a set of screening criteria that permits a firm's products to be considered as possible candidates for purchase.

False

Low rates of capacity utilization in service organizations are never appropriate.

False

The closer the customer is to the customer order decoupling point the longer it takes the customer to receive the product.

False

Work center layouts allocate dissimilar machines into cells to work on products that have dissimilar processing requirements.

False

Engineer to Order (ETO)

Firm works with the customer to design and then make the product

A company wants to generate a forecast for unit demand for year 2018 using exponential smoothing. The actual demand in year 2017 was 120. The forecast demand in year 2017 was 110. Using this data and a smoothing constant alpha of 0.1, which of the following is the resulting year 2018 forecast value?

Forecast = 110 + 0.1 x (120 − 110) = 111

A company wants to forecast demand using the simple moving average. If the company uses four prior yearly sales values (i.e., year 2014 = 100, year 2015 = 120, year 2016 = 140, and year 2017 = 210), which of the following is the simple moving average forecast for year 2018?

Forecast for 2018 = (100 + 120 + 140 + 210) / 4 = 570 / 4 = 142.5

Inventory

Inventory = Throughput Rate × Flow Time

A company has recently implemented an automated online billing and payment processing system for orders it ships to customers. As a result, it has reduced the average number of days between billing a customer and receiving payment by 10 days. How will this affect the receivables turnover ratio?

It will increase

Which major OSCM concept can be described as an integrated set of activities designed to achieve high-volume production using minimal inventories of parts that arrive at workstations exactly when they are needed?

Just-in-time (JIT) production

Which of the following is not a major strategic operational competitive dimension that forms a company's competitive position?

Management acumen

Choose the most accurate description in the context of operations and supply chain from the following list.

Order qualifier is a screening criteria while order winner is a differentiating criteria.

Which of the following is a partial measure of productivity?

Output / Materials

The capacity focus concept can be put into practice through a mechanism called which of the following?

Plant within a plant (PWP).

Assemble to Order (ATO)

Preassembled components, subassemblies, and modules are put together in response to a specific customer order

What are the three elements that require integration to be successful in operations and supply chain management?

Strategy, processes, and analytics

Efficiency

Sum of task times (T) / (Actual number of workstations (Na) × Workstation cycle time (c) )

Which historical development in OSCM relates to the ability of a firm to maintain balance in a system, considering the ongoing economic, employee, and environmental viability of the firm?

Sustainability

What is the term for forecasts used for making day-to-day decisions about meeting demand?

Tactical forecasts

Engineer-to-order firms will work with the customer to design the product, and then make it from purchased materials, parts, and components.

True

Make to Order (MTO)

The product is built directly from raw materials and components in response to a specific customer order

Total average value of inventory

The total investment in inventory at the firm, which includes raw material, work-in-process, and finished goods

A company has calculated its running sum of forecast errors to be 500 and its mean absolute deviation is exactly 35. Which of the following is the company's tracking signal?

The tracking signal is RSFE/MAD = 500 / 35 = 14.29.

A project layout is characterized by a relatively low number of units produced in comparison with process and product layout formats.

True

An order qualifier is a screening criterion that permits a firm's products to even be considered as possible candidates for purchase.

True

An order winner is a set of criterion that differentiates the products or services of one firm from another.

True

At some point, the size of a growing plant can become too large and diseconomies of scale becomes a capacity planning problem.

True

Capacity flexibility means having the ability to rapidly increase or decrease production levels, or to shift production capacity quickly from one product or service to another.

True

Cyclical influences on demand may come from occurrences such as political elections, war, or economic conditions.

True

If the sum of the task times required to produce a product is 45 minutes and the cycle time for the same product is 10 minutes. Thus, the theoretical minimum number of workstations is 5 using the assembly-line balancing procedure.

True

In designing a production layout a flexible line layout might have the shape of a "U".

True

One of the competitive dimensions that form the competitive position of a company when planning their strategies is cost.

True

One of the competitive dimensions that form the competitive position of a company when planning their strategies is delivery speed.

True

One trade-off illustrated by the product-process matrix is between flexibility and cost.

True

Operations and supply strategy can be viewed as part of a planning process that coordinates operational goals with those of the larger organization.

True

The frequency of adding to productive capacity should balance the costs of upgrading too frequently and the costs of upgrading too infrequently.

True

The term "assembly line" refers to progressive assembly linked by some material handling device.

True

Time series forecasting models make predictions about the future based on analysis of past data.

True

Which of the following is a basic type of process structure?

Workcenter

Lean manufacturing

a means of achieving high levels of customer service with minimal inventory investment

Capacity Utilization Rate

a measure of how close the firm is to its best possible operating level

Workstation Cycle Time

a uniform time interval in which a moving conveyor passes a series of workstations -Also the time between successive units coming off the line

Assembly-Line Balancing

assigning all tasks to a series of workstations so that the required cycle time is met and idle time is minimized

Diseconomies of Scale

at some point, the plant becomes too large and average cost per unit begins to increase

Flexibility

comes from the plants, processes, and workers as well as from strategies that use the capacity of other organizations

Capacity Flexibility

the ability to rapidly increase or decrease production levels, or the ability to shift rapidly from one product or service to another

Capacity Focus

the idea that a production facility works best when it is concentrated on a limited set of production objectives -Focused factory -Plant within a plant (PWP)

Economies of Scale

the idea that as a plant gets larger and volume increases, the average cost per unit drops

Best Operating Level

the level of capacity for which process was designed and defined as a volume of output at which average unit cost is minimized

Precedence Relationship

the order in which tasks must be performed in the assembly process

Lead Time

the time needed to respond to a customer order

Customer order decoupling point

where inventory is positioned to allow entities in the supply chain to operate independently