SCMG 332
If a firm has the opportunity to invest money at a 10% annual rate of return, then having $100 invested in inventory for a whole year has what opportunity cost of capital?
$10
A shipping company charges two fees for delivery: (1) $5 to do the delivery, and then (2) $.50 per pound delivered. What is the order cost?
$5
Suppose a faucet adds water at a rate of 1 gallon per minute. For which drain flushing rate will inventory accumulate the fastest?
.6 gallon per minute
If 100 customers arrive per hour and Pm = 10%, then _________ customers are denied service per hour because all the servers are occupied.
10
If a patient waits 15 minutes before spending 30 minutes with a doctor, then the processing time is ______ minutes.
30
Consider a two-step process where the first step produces at a rate of 2 units per minute and the second step produces at a rate of 1 unit per minute. Assuming the beginning inventory in a buffer before step 2 is equal to zero, the inventory in that buffer after 30 minutes will be _______.
30 units
Suppose you are using a statistical table to determine Q, and the critical ratio is .612. If F(300) = .598 and F(350) = .615, then the round-up rule states that you should choose Q = ________.
350
Imagine a process that produces four different products with a machine that requires a setup before each product change-over. To remove the need for any setups would require ______ machines.
4
550 gallons of soup is produced in a production cycle, 360 out of every 480 gallons produced must be chicken noodle soup and 120 out of every 480 gallons must be tomato soup. Thus, of the 550 gallons, how many gallons should be chicken?
412.5 (550 x 360)/480
Suppose a firm calculates that the EOQ for a product is 5,500 units. However, its supplier offers a volume discount on the purchase price if 5,000 units or more are ordered. What should be the order quantity?
5,500 units
With three trauma bays and spots for four waiting customers, there can be at most how many customers in the system?
7
If the demand rate for a process is 80 units per hour and the rate of the bottleneck in a process is 90 units per hour, then the target capacity is _________ units per hour.
80
If 10 customers arrive per day and the denial-of-service probability is 5%, then how many customers are served per day, on average?
9.5
Suppose a manufacturer assembles a product from component parts only after a customer has placed an order. However, the firm makes the component parts in advance, based on forecasts. This manufacturer is operating what type of system?
A hybrid of make-to-order and make-to-stock
The supply chain for goods and services consists of:
A network of firms and locations that begins with raw materials and ends with final users
The estimate of the standard deviation of the output unit is based on _blank_ the output units.
A sample of
To calculate maximum profit, you assume that the order quantity is determined ________ the actual demand is observed.
After
When a business operates on a make-to-order basis, a product is made _______.
After demand for that unit is known
Which assumption of the EOQ model (partially) enables it to ignore the purchasing cost per unit of time?
All orders met from inventory
Which example suggests expanded product variety could lead to an increase in profitability?
An auto customer who only wants a hybrid vehicle buys a newly introduced hybrid sedan.
What term describes the capability to make good decisions regarding inventory quantities and placement based on data?
Analytic Skills
To calculate inventory holding costs as a % of COGS, you divide the annual holding cost percentage by ________.
Annual turns
In the framework for statistical process control which type of variation is investigated and eliminated?
Assignable
To calculate the center line of a control chart you compute the _blank_ of the mean for every period.
Average
A ________ process is one where products are made in collections
Batch
The key advantage of a pallet is that they enable the movement of a large quantity of goods, _______.
Both quickly and safely
___________ refers to inventory with a process that helps to mitigate the consequences of variability.
Buffer
_____________ of inventory can absorb variations in flow rates by acting as a source of supply for a downstream step.
Buffers
Due to the phenomenon of the ____________ effect, variability in demand within the supply chain can be substantially greater than consumer demand variability.
Bullwhip
The process __________ index tells us how many standard deviations we can move away from the statistical mean before causing a defect.
Capability
To understand how much improvement potential there is one must first measure what percentage of a machine's or a worker's _________ is used productively.
Capacity
The opportunity cost of _____________ is the income not earned on the amount invested in inventory.
Capital
The _______ of variation is the ratio of the standard deviation to the average.
Co-efficient
Genchi genbutsu emphasizes solving problems by ________.
Collection and analysis of data by front-line workers
Another name for natural variation is _________ variation.
Common cause
Two apples grown on the same tree are rarely the exact same size and shape. This is what type of variation?
Common cause
Make-to-order means _________.
Completion of products only occurs after customers announce their demand
Knowing a second order can be placed helps an organization be more _______ with its first order.
Conservative
In the saw-toothed inventory pattern, inventory decreases at the ______ rate of demand.
Constant
The cost to hold an item for a year is estimated by multiplying the holding cost percentage by its _______.
Cost
The newsvendor chooses an order quantity by comparing the expected _______ of the Qth unit with the expected benefit.
Cost
Which of the following are inputs to the newsvendor model?
Cost of ordering too little Cost of ordering too much
Which of the following is usually an extra cost associated with an online retailer versus a traditional retailer?
Cost of shipping goods from the retailer to the customer
If the probability demand is less than or equal to Q*, the quantity that maximizes expected profit is equal to the _______ ratio.
Critical
Non-value-added work is those movements that must be done to complete a unit but do not add value in the eyes of the ___________.
Customer
The single server queuing model assumes that _______.
Customers will wait until the service is completed
With mass ________, each customer can receive a unique product.
Customization
A production ________ is a repeating sequence of produced units.
Cycle
______________ is the average amount of time (in days) it takes a unit to flow through the system.
Days-of-supply
____________ marginal returns refer to when the incremental benefit of an activity decreases as the amount of the activity increases.
Declining
As processing time increases, the output rate when producing _______.
Decreases
When there are declining marginal returns, the incremental benefit of an activity __________ as the amount of the activity increases.
Decreases
Information turnaround time refers to the time between creating a ________ at an upstream resource and detecting it at a downstream resource.
Defect
The process capability index tells us how many standard deviations we can move away from the statistical mean before causing a ___________.
Defect
Which is the best definition of delayed differentiation?
Delaying completion of a product as late as possible
Heijunka refers to producing as close as possible to the true rate of ________
Demand
Capacity grows at a _______ rate as batch size increases.
Diminishing
Capacity grows at a _________ rate as batch size increases.
Diminishing
The role of a _______ center is to receive product from suppliers, store inventory, and ship products to retail stores.
Distribution
_______ is the practice of sending demand away from a system when the system cannot serve it.
Diversion
The defect probability is the likelihood a randomly chosen flow unit ________ meet specifications.
Does not
The assumption in the economic order quantity model is that the order cost _________ the size of the order.
Does not depend on
Variability in demand ________ the fraction of time a server is working
Does not influence
Two events are independent when the occurrence of one event _______.
Does not influence whether the other event also occurs
When an organization has multiple flow units, inventory is often measured in _______.
Dollars
The multi-server queuing model assumes that _______.
Each customer has to be seen by only one agent
Processes with setup times are said to exhibit _______ of scale.
Economies
Inventory is controlled in a Kanban system because production occurs at an upstream resource only when it has an _________ container.
Empty
Defects are caused by variation in _blank_ variables.
Environmental Input
To compute expected sales for a given order quantity you need to know or compute which of the following:
Expected inventory The order quantity
The order quantity prescribed by the newsvendor model optimizes which performance metric?
Expected profit
As the order quantity decreases, which performance metric that affects expected profit also decreases?
Expected sales
Which of the following are ways for supply chain partners to increase the variability in demand?
Failure to deliver the quality needed Failure to deliver the quantity needed
True or false: All demand uncertainty can be eliminated with the use of better forecasting methods.
False
True or false: Calculating the average time spent serving each customer requires measuring how long each customer spends waiting and being served.
False
True or false: Calculating the critical ratio is the final step in determining the optimal order quantity.
False
True or false: In a Kanban system, there is no limit on how much inventory can accumulate.
False
True or false: In a make-to-stock system, an item is produced when its eventual owner is known.
False
True or false: Setup activities can be deferred until after production is done for the day.
False
True or false: The newsvendor model is appropriate for a setting where a customer will wait for the next shipment to show up, in cases where a store runs out of inventory.
False
True or false: Two processes with the same standard deviation will always have the same coefficient of variation.
False
True or false: You can make capacity as large as you want by making the batch size higher.
False
True/False: Taylor viewed the factory floor worker as an asset who could assist with the design of efficient work and promises.
False
Because ____________ time cannot be zero, Little's Law tells us there is always inventory in a process.
Flow
Imagine a process with four steps and one individual working at each step. Which workforce would be preferable based on the TPS philosophy toward pace?
Four novice workers
If the z value for an order quantity Q is positive, then Q must be ________ the mean of the demand distribution.
Greater than
When inventory follows a saw-toothed pattern, the average inventory is simply _______ of the maximum inventory.
Half
The basic philosophy of TPS is that the production process should _________ production when a quality problem is discovered.
Halt
Technology products like smartphones likely have ______ obsolescence costs.
High
The higher the firm anticipates its opportunity cost of capital will be the _____ it will estimate its holding cost percentage to be.
Higher
The higher the in-stock probability, the _______ the likelihood that all demand is satisfied from inventory.
Higher
The lower the demand, the _______ the percentage of purchase costs required for ordering and holding.
Higher
The higher the standard deviation of an arrival process with average interarrival time of 6 minutes, the _blank_.
Higher the coefficient of variation
The lower the average processing time for a service process with standard deviation of two minutes, the ________.
Higher the coefficient of variation
The _______ cost per unit represents all of the costs associated with keeping a unit of inventory for a period of time.
Holding
The EOQ model seeks to minimize the sum of which costs per unit of time?
Holding cost Ordering cost
Which costs are actually impacted by the ordering decision?
Holding cost per unit of time Order cost per unit of time
The time when a process is doing nothing is known as ________ time.
Idle
A failure to deliver a product on time can _________________- the variability in demand.
Increase
If a process improvement effort decreases the amount of time spent on non-value-added activities, then the value-added percentage will _blank_.
Increase
If an individual works 8 hours a day and after a process improvement his time spent on value added activities increases, then his OEE will _________.
Increase
If the annual holding cost percentage increases, then the inventory holding cost as a % of COGS will _______.
Increase
At a resource with a setup, increasing the batch size _______ the capacity of the resource.
Increases
If the standard deviation of the demand distribution increases—and everything else remains the same—then the expected inventory ______.
Increases
Increasing the batch size at a step that has a setup, but is not the bottleneck, and holding everything else constant, _______ the maximum inventory level.
Increases
The average waiting time grows at a(n) _________.
Increasing rate as utilization grows
The EOQ model assumes that associated with each order, aside from the cost of purchasing the actual items, is an additional cost due to factors such as stocking the product on the shelf. This order cost is ____________ the amount ordered.
Independent of
Little's Law enables one to calculate flow time, while flow rate is constant, indirectly by examining _______.
Inventory
The "just right" batch size makes a smart trade-off between capacity and __________.
Inventory
The expected number of units not sold at the end of the season is called expected _______.
Inventory
The inventory turns of a process is the number of times the average ____________ flows through a process in a designated interval of time
Inventory
Which of the following are major cost categories associated with a supply chain?
Inventory Transportation
What term is used to describe the number of times the average inventory flows through a process during a certain period?
Inventory Turns
The economic order quantity is the order quantity where the order cost per unit of time ________ the holding cost per unit of time.
Is equal to
The EOQ model assumes that the per-unit purchase cost ________.
Is independent of the number of items ordered
Inventory builds up when producing a batch at a rate that _______ the flow rate of the item through the process
Is more than
Time spent doing a setup _____ classified as idle time.
Is not
When processing time increases, what happens to capacity?
It decreases
What is true of lead time?
It is the time between when the order is made and when it arrives.
In a _____________ system, production instructions are communicated to an upstream step when there is consumption at a downstream step.
Kanban
_________ is the process control system wherein an upstream resource replenishes what demand has withdrawn from the downstream.
Kanban
When analyzing why flow unit time is wasted, one compares _______ content with flow time.
Labor
The disadvantage of a pallet is that one pallet's worth of goods is typically a ______ quantity.
Large
The looser the design specifications (e.g. the larger the quantity USL-LSL) the _______ the target variation.
Larger
The round-up rule states that when you are looking up a probability in a statistical table and the probability falls between two entries, you should choose the entry with the ________ probability.
Larger
The larger the critical ratio, the ________ that maximizes expected profit.
Larger the order quantity
The ____________ time for an order is the number of periods between when the order is made, and it arrives.
Lead
If the expected benefit of having a 200th unit in inventory is less than the expected cost, then the Newsvendor will prescribe an order quantity that is _______ 200 units.
Less than
The capacity of a step with a setup is ________ its output rate when producing.
Less than
The months-of-supply for an item in inventory will always be _blank_ the days-of-supply for the identical item.
Less than
If the critical ratio is .6, there is a 60% chance that demand is ________ the optimal order quantity Q*:
Less than or equal to
Inventory management is the practice of deciding on the quantity, _______________ and type of inventory in a process.
Location
The larger the variability in the arrival process, the Blank______ the average waiting time.
Longer
Functional products generally have _________.
Low demand forecast uncertainty
Which of the following is a condition making it best to not outsource a product?
Low labor content Costly to transport
Assume the purchase price is higher in the second order than in the first. When determining the best first order quantity, the critical ratio is _blank_ when there is an opportunity to make a second order than when there isn't.
Lower
Seasonality creates inventory when capacity is ______________ than what is needed to handle peak demand.
Lower
Custom business cards produced by a local print shop are created as a result of a __________ production system.
Made-to-order
For which type of system does success depend on customers being willing to wait?
Make-to-order
Mass customization is an example of which type of system?
Make-to-order
A gallon of milk that you buy from a grocery store is produced in a _______ system.
Make-to-stock
What term is used to describe production that occurs before the demand for that item has been identified?
Make-to-stock
Which firm in a supply chain is likely to be most recognizable to the public?
Manufacturer
123-Flowers is a ___________ supply chain because it guarantees next-day delivery of floral arrangements in the lower-48 states.
Market-responsive
The probability of a unit falling below the LSL and the probability of a unit being above the USL is the same when the __________ of the distribution is in the middle of the tolerance interval.
Mean
The more leftover inventory costs, the _blank_.
More likely a make-to-order system is best
For the same implied utilization, a system with _blank_ will serve a greater proportion of demand.
More servers
________ is a Japanese word that refers to an overburdening of workers or equipment.
Muri
Which correlation leads to a reduced coefficient of variation for pooled demand?
Negative
Resources that are ___________ to each other in the process flow diagram should also be co-located in physical space.
Next
To determine a staffing level that achieves a threshold denial of service probability, you must first calculate the _____________.
Offered load
Io is the amount of inventory ___________.
On-order
The Erlang loss model assumes that the coefficient of variation of the interarrival times is ________.
One
Make-to- __________ is the process control system wherein work is released into the system only after a customer order has occurred.
Order
Specifications are acceptable values for ________ variables that indicate whether the output of a process is defective.
Outcome
________ variables measure the quality of the outcome of a process
Outcome
For an investment portfolio, its rate of return would be an example of what kind of variable?
Outcome Variable
When calculating the utilization of a step with a setup, what information is used in the denominator?
Output rate when producing
Designing a process so that it will be robust even under the most exceptional conditions is known as ________.
Overengineering
A pre-processing strategy seeks to reduce the amount of work needed to process a customer during the ________ period.
Peak
________-load pricing refers to charging more during the times that you know you are busiest.
Peak
Which principle of operational excellence refers to respectful interactions with employees that emphasize skill development and growth?
People and partners
Which principle of operational excellence refers to a long-term approach that favors quality and capabilities over short-term financial goals?
Philosophy
Demand for high-definition televisions and cables for connecting those televisions to other components is likely _______.
Positively correlated
Seasonality is _____________ variation in demand.
Predictable
Which reason for holding inventory is exemplified when a firm builds up stock because they anticipate rising profit levels in the future?
Price fluctuation
The output rate when producing equals, one divided by the _______ time
Processing
For the queuing model, utilization can be calculated as _____ time divided by _____ time.
Processing, interarrival
When all steps have to be performed correctly for a unit to be good the probability of a good unit is the _______ of the probability of each step being performed correctly.
Product
RFID tags are used to support which inventory management capability?
Product and demand tracking
Which of the following are types of variability associated with demand in a supply chain?
Product variety Level of demand Location
The purpose of peak-load pricing and off-peak discounts is to reduce demand during a peak period without reducing ________.
Profit
Upon discovering a defect, which of the following actions would represent the TPS philosophy of quality?
Pull a cord that stops the production line immediately. Thoroughly analyze the root cause of the problem.
Product substitution occurs when customers find their preferred product unavailable and do which of the following?
Purchase another, similar product
In a _____ system, flow units are allowed to enter the process independent of the current amount of inventory in process and the demand rate.
Push
Defect probability is the likelihood with which a _________ chosen flow unit does not meet specifications.
Randomly
Which type of inventory has not undergone any transformation in the process?
Raw Material
_________ capacity and ________ response enable firms to reduce both types of mismatch costs.
Reactive, quick
Make-to-order is effective when production is _______.
Reasonably quick
Setups of small duration (e.g., 9 minutes or less) enable _______.
Reduced inventory Smaller batch sizes Frequent changeovers
The need to perform a setup at a step ________ its capacity.
Reduces
A production cycle is a _________ sequence of produced flow units
Repeating
________________ provide an assortment of products for consumers.
Retailers
A ________ process is one where variation in input or environmental variables does not lead to large variation in outcome variables.
Robust
The __________ factor determines the in-stock probability.
Safety
______________ stock is held just in case demand turns out to be higher than predicted.
Safety
The expected number of units sold during the season at regular price is called expected ________.
Sales
Expected sales from first order + Expected sales from _______ order = Expected demand (assuming that you have perfect information regarding demand when placing the second order).
Second
A small batch size at a step with a setup leads to low capacity because the step spends much of its time in what mode?
Setup
For heijunka to be effective, _________ times must be reduced to where they are nearly inconsequential.
Setup
Shorter ______ allow the operation to switch between models more frequently, thereby helping synchronize the process with demand and making the operation lean.
Setups
What term is used to describe the loss of items from inventory due to theft?
Shrinkage
A small batch size at a step with a setup will lead to a _______ amount of inventory.
Small
Few defects will be produced when the actual process variation is _blank_ than the target variation.
Smaller
The narrower the design specification (e.g. the smaller the quantity USL - LSL) the __________ the process capability index.
Smaller
The larger the expected sales in the first order, the _blank_ in the second order.
Smaller the expected sales
Assignable cause variation occurs because of a ________ change in input or environmental variables
Specific
A financial services firm tells its financial advisers that portfolios with returns that are 1% less than a benchmark portfolio are "underperforming." This 1% figure is an example of a lower limit.
Specification
What term is used to describe damage that causes items such as produce to become unsalable?
Spoilage
Capability analysis helps one infer that one process is better than another by measuring the process ________.
Spread
Capability analysis helps one infer that one process is better than another by measuring the process ___________.
Spread
To find the optimal order quantity using the standard normal distribution, you first find the optimal order quantity for the _______ distribution.
Standard normal
Safety stock is used to accommodate which type of variation?
Stochastic
Which of the following are a function of distributors?
Storage of inventory Reducing delivery lead times
A ___________ decision has an impact on long-term performance
Strategic
The defect probability is the ________ of the probability that a unit falls below the LSL and the probability that a unit falls above the USL.
Sum
A(n) ___________ decision impacts short term performance
Tactical
For __________, workers were animals who needed to be trained to perform work in the manner designed by engineers.
Taylor
In the context of baking cupcakes for sale later, which activities are setups
The baking of the batch of cupcakes Pre-heating the oven Cleaning the baking tins between batches
The longer the inter-arrival time, _______ to ensure that demand is less than capacity.
The fewer the servers required
The flow rate used to calculate the average number of customers waiting is ________ the flow rate used to calculate the average number of customers being served.
The same as
The implied utilization of a pooled system is ________ the implied utilization of the corresponding independent systems.
The same as
Which best describes the bullwhip effect?
The tendency for demand to become more variable the further you are from the source of demand
For a process that has variability in the arrival process but none in the service process, ________.
There will be some waiting time
Under the principles of genchi genbutsu and kaizen, who should collect data how work is performed in order to improve the process?
Those performing the work
What term describes a supplier who produces complex assemblies that are used by a manufacturer?
Tier 1 Supplier
The x-axis of a control chart depicts the ______ periods at which samples from the process are taken.
Time
One way to determine where a flow unit's time is wasted is to take the perspective of the flow unit and create a ________.
Timeline
A pre-processing strategy tries to move the work done to process a customer _______.
To an off-peak time
True or false: The basic idea of the "Five Whys" is to continually question whether a potential cause is the ROOT cause or merely a symptom of the root cause.
True
True or false: The bottleneck step in a process can change depending upon the batch size set at a step with a setup.
True
If interarrival times are two minutes and processing times are three minutes, then what is the minimum number of servers required to ensure the queue does not steadily (and indefinitely) grow?
Two
When determining the best first order quantity, which input changes because of the opportunity to place a second order later?
Underage
Which terms are different in the single and multi-server queue formulas?
Utilization Capacity
Which drivers of waiting time in a queue depend on the average amount of time needed to serve a customer?
Variability Capacity Utilization
Assuming that capacity exceeding demand is enough to ensure queues don't form, ignores ________.
Variation
By creating "baton passing zones," a process can absorb __________ in worker speeds and starting times.
Variation
Demand variability is often divided into three components: level, _____________, and location.
Variety
The choice of control limits ensures that 99.7% of the sample points are expected to fall ________ the LCL and the UCL.
Within
Ideas for fool-proofing an activity in order to prevent a previously detected defect from recurring often involve a new ______ standard.
Work
Which type of inventory is used within the process to complete a product?
Work-in-process
A process where every customer arrives five minutes apart and takes exactly three minutes to serve will have average wait time equal to _______.
Zero
______________ inventory helps detect-stop-alert as it makes quality problems more immediately apparent.
Zero
For a p-chart the lower control limit is __________ standard deviations below the center line.
three
