BA 339 Exam 1 Midterm W 2022

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

Service innovations can be patented.

False

Which of the following considerations is not a factor in deciding which forecasting model a firm should choose?

Product Which forecasting model a firm should choose depends on: (1) Time horizon to forecast; (2) Data availability; (3) Accuracy required; (4) Size of forecasting budget; (5) Availability of qualified personnel.

Capacity can be defined as the ability to hold, receive, store, or accommodate.

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

In general, which forecasting time frame is best to detect general trends?

Long range forecasts

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?

0.750 Efficiency = , [60 / (8 × 10)] = 0.750.

Sustainability means meeting a firm's current needs without excessively compromising the ability of future generations to meet their own needs.

False

A company wants to forecast demand using the weighted moving average. If the company uses three prior yearly sales values (i.e., year 2015 = 160, year 2016 = 140 and year 2017 = 170), and we want to weight year 2014 at 30%, year 2015 at 30% and year 2016 at 40%, which of the following is the weighted moving average forecast for year 2018?

158 Forecast for 2018 = (160x0.3) + (140x0.3) + (170x0.4) = 158

A company has actual unit demand for three consecutive years of 124, 126, and 135. The respective forecasts for the same three years are 120, 120, and 130. Which of the following is the resulting MAD value that can be computed from this data?

5 MAD = ABS((124 − 120) + (126 − 120) + (135 − 130)) / 3 = 15 / 3 =5

Planning service capacity involves consideration of the mean arrival rate and the mean service rate. When the mean arrival rate exceeds or gets too close to the mean service rate the quality of the service declines. The operating point is the ratio of mean service rate to mean arrival rate. According to the text, what is the best operating point for the typical service operation?

70% The best operating point is near 70 percent of the maximum capacity. This is enough to keep servers busy but allows enough time to serve customers individually and keep enough capacity in reserve so as not to create too many managerial headaches

A company hires you to develop a linear regression forecasting model. Based on the company's historical sales information, you determine the intercept value of the model to be 1,200. You also find the slope value is minus 50. If after developing the model you are given a value of X = 10, which of the following is the resulting forecast value using this model?

700 The linear regression line is of the form Y = a + bX , where Y is the value of the dependent variable that we are solving for, a is the Y intercept, b is the slope, and X is the independent variable. Hence, Y = 1,200 + (-50) x 10 = 700.

You are using an exponential smoothing model for forecasting. The running sum of the forecast error statistics (RSFE) are calculated each time a forecast is generated. You find the last RSFE to be 34. Originally the forecasting model used was selected because it's relatively low MAD of 0.4. To determine when it is time to reevaluate the usefulness of the exponential smoothing model you compute tracking signals. Which of the following is the resulting tracking signal?

85

As a consultant you have been asked to generate a unit demand forecast for a product for year 2018 using exponential smoothing. The actual demand in year 2017 was 750. The forecast demand in year 2017 was 960. Using this data and a smoothing constant alpha of 0.3, which of the following is the resulting year 2018 forecast value?

897 Forecast = 960 + 0.3 x (750 − 960) = 897

The optimal utilization rate of a service operation is context specific. Planning for low utilization rates is appropriate when both the degree of uncertainty and the stakes are high as in emergency response services. Which of the following services should plan for a high utilization rate?

A stage performance All sports teams like sellouts, not only because of the virtually 100 percent contribution margin of each customer, but because a full house creates an atmosphere that pleases customers, motivates the home team to perform better, and boosts future ticket sales. Stage performances share this phenomenon.

Which one of the following are among the major reasons that exponential smoothing has become well accepted as a forecasting technique?

Accurate and easy to use

Precise capacity design or the rate of service utilization (ρ), is application specific.

All of the above choices are correct.

In studying positioning of inventory in supply chains, which, if any, of the following is most appropriate? (Select all that apply.)

As order decoupling point moves towards source, inventory investment goes down As order decoupling point moves towards the source, customer lead time gets longer.

In studying product-process matrix describing layout strategies, which of the following is most appropriate? (Select all that apply.)

As you move from project to manufacturing cell to continuous process, product volume increases while standardization increases. Follows from C = Production Time per day / Req output per day

Which of the following is a multifactor measure of productivity?

Choice B Output / (Labor + Capital + Energy)

Regarding the measures of inventory managing efficiency, identify the most appropriate answer. (Select all that apply.)

Days of supply is the inverse of inventory turns × 365. Inventory turn is the annual cost of goods sold divided by average inventory.

All other things remaining the same, if the revenue or sales decreases, asset turnover ratio will

Decrease Asset turnover = , sales or revenue is in the numerator and hence the value will go down as the numerator decreases. Logically, if sales

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

Disposing of left-over machinery and outsourcing ungrouped processes

The placement of which of the following is not determined by production process organization decisions?

Emergency exits Emergency exits are determined by safety concerns, not by production process organization decisions.

A continuous process indicates production of discrete parts moving from workstation to workstation at a controlled rate.

False

A process map shows the physical location of the various processes within a supply chain.

False

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

False

The objective of strategic capacity planning is to provide an approach for determining the overall capacity level of labor-intensive resources.

False

The probability of each occurrence at a decision tree chance node is the reciprocal of the number of possibilities at the chance node.

False

The time needed to respond to a customer's order is called the customer response time.

False

The capacity cushion is the ratio of capacity used to the best capacity level.

False A capacity cushion is an amount of capacity in excess of expected demand.

In the weighted moving average forecasting model the weights must add up to one times the number of data points.

False A weighted moving average (model) allows any weights to be placed on each element, providing, of course, that the sum of all weights equals 1 (one).

Cyclical influences on demand are often expressed graphically as a linear function that is either upward or downward sloping.

False By their nature, cyclical influences are non-linear.

In a decision tree, the only time probabilities are applied to a decision node is when the decision is being made by someone else such as you customer or your competitor.

False Decision trees are composed of decision nodes with branches to and from them. Usually squares represent decision points and circles represent chance events. Branches from decision points show the choices available to the decision maker; branches from chance events show the probabilities for their occurrence.

In decision tree analysis the time value of money is ignored because you are only concerned with cash costs.

False In solving decision tree problems, we work from the end of the tree backward to the start of the tree. As we work back, we calculate the expected values at each step. In calculation of the expected value, the time value of money is important if the planning horizon is long.

Multiple regression analysis uses several regression models to generate a forecast.

False Multiple regression analysis, (is where) a number of variables are considered, together with the effects of each on the item of interest.

If the sum of the task times required to produce a product is 80 minutes and the cycle time for the same product is 15 minutes, the theoretical minimum number of workstations is 8 using the assembly-line balancing procedure.

False Nt = : 80 minutes / 15 minutes = 5.3, round up to 6.

In causal relationship forecasting leading indicators are used to forecast occurrences.

False Often leading indicators are not causal relationships, but in some indirect way, they may suggest that some other things might happen

RSFE in forecasting stands for "reliable safety function error."

False RSFE (stands for) running sum of forecast errors.

An operations strategy must resist change because of the long term nature of equipment and personnel investments.

False Since the goals of the larger organization change over time, the operations strategy must be designed to anticipate future needs.

The process when a company seeks to match the benefits of a successful position while maintaining its existing position by adding new features, services, and technologies into its current portfolio it is called straddling.

False Straddling occurs when a company seeks to match the benefits of a successful position while maintaining its existing position.

The objective of strategic capacity planning is to determine the overall capacity level of capital intensive resources (including facilities, equipment, and overall labor force size) that best supports the company's short-range competitive strategy.

False The objective of strategic capacity planning is to provide an approach for determining the overall capacity level of capital-intensive resources—facilities, equipment, and overall labor force size—that best supports the company's long-range competitive strategy.

Which of the following is a measure of operations and supply management efficiency used by Wall Street?

Financial Leverage

Current issues in OSCM do not include:

Increasing global supply chain employment

Decisions that relate to the design of the processes and the infrastructure needed to support these processes relate to which OSCM concept?

Integrating operations and supply chain strategy with a firm's operations capabilities involves decisions that relate to the design of the processes and infrastructure needed to support these processes.

Capacity planning that involves hiring, layoffs, some new tooling, minor equipment purchases, and subcontracting is considered as which one of the following planning horizons?

Intermediate range Intermediate range: monthly or quarterly plans for the next 6 to 18 months. Here, capacity may be varied by such alternatives as hiring, layoffs, new tools, minor equipment purchases, and subcontracting.

Which of the following forecasting methodologies is considered a causal forecasting technique?

Linear regression Causal forecasting, which we discuss using the linear regression technique, assumes that demand is related to some underlying factor or factors in the environment.

Which of the following are used to describe the degree of error?

Mean absolute deviation Several common terms used to describe the degree of error are standard error, mean squared error (or variance), and mean absolute deviation.

In general, which forecasting time frame compensates most effectively for random variation and short term changes?

Short-term forecasts In general, the short-term models compensate best for random variation and adjust for short-term changes (such as consumers' responses to a new product).

When balancing an assembly line, which of the following is not a way to reduce the longest task time below the required workstation cycle time?

Speed up the assembly line transfer mechanism

The central idea of supply chain management is to apply a total system approach to managing the flow of information, materials, and services from raw material suppliers through factories and warehouses to the end customer.

TRUE

When developing an operations and supply chain strategy, which of the following is an important product-specific criterion to consider?

Technical liaison Technical liaison and support. A supplier may be expected to provide technical assistance for product development, particularly during the early stages of design and manufacturing.

A difference between project and continuous flow categories of process flow structures is which two of the following?

The size and bulk of the product

In business forecasting, what is usually considered a medium-term time period?

Three months to two years

"Product-service bundling" refers to a company building service activities into its product offerings for its customers.

True

An example of an assemble-to-order firm is Dell Computer.

True

An operations and supply chain strategy must be integrated with the organization's corporate strategy.

True

Because services cannot be stored for later use, service managers consider time as one of their supplies or resources.

True

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

True

In solving a decision tree problem, calculations start at the ends of the "branches" of the tree and work backwards to the base of the tree.

True

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

True

Process selection refers to the strategic decision of selecting which kind of production processes to use to produce a product or provide a service.

True

The first step in balancing an assembly line is to specify the precedence relationships among tasks to be performed on the line.

True

The focus in the make-to-stock environment is on providing finished goods where and when the customers want them.

True

When evaluating capacity, managers need to consider both resource inputs and product outputs.

True

Within a sustainability framework, the economic dimension of the triple bottom line concept goes beyond just profit for the firm but also provides lasting economic benefit to society.

True

Best operating level is the volume of output at which average unit cost is minimized.

True (Best operating level) is the level of capacity for which the process was designed and thus is the volume of output at which average unit cost is minimized.

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

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

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

True At some point, the size of a plant becomes too large and diseconomies of scale becomes a problem.

Capacity can be defined as the amount of available resource inputs relative to requirements for output over a particular period of time.

True Capacity is a relative term; in an operations management context, it may be defined as the amount of resource inputs available relative to output requirements over a particular period of time.

The Baldrige National Quality Award was started under the direction of the National Institute of Standards and Technology.

True Helping the quality movement along is the Baldrige National Quality Award, which was started in 1987 under the direction of the National Institute of Standards and Technology.

"Operations" refers to manufacturing and service processes used to transform resources employed by a firm into products desired by customers.

True Operations refers to manufacturing, service, and health care processes that are used to transform the resources employed by a firm into products desired by customers.

Random errors can be defined as those that cannot be explained by the forecast model being used.

True Random errors can be defined as those that cannot be explained by the forecast model being used.

Exponential smoothing forecasts always lag behind the actual occurrence but can be corrected somewhat with a trend adjustment.

True The forecast lags during an increase or decrease but overshoots when a change in direction occurs. To more closely track actual demand, a trend factor may be added.

Services are intangible processes that cannot be weighed or measured.

True There are five essential differences between services and goods. The first is that a service is an intangible process that cannot be weighed or measured, whereas a good is a tangible output of a process that has physical dimensions.

"Supply Chain" refers to processes that move information and material to and from the manufacturing and service processes of the firm.

True Supply chain refers to processes that move information and material to and from the manufacturing and service processes of the firm.

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

Workcenter

The least squares method refers to

a computation in linear regression. The least squares method tries to fit the line to the data that minimizes the sum of the squares of the vertical distance between each data point and its corresponding point on the line which becomes the result of the linear regression computation.

In designing a general service facility, capacity should be such that the target rate of service utilization (ρ), in order to get the best general-purpose design, should be

about 0.7 (70%) so that your system would be in the zone of service with maximum possible utilization within that. For most general service operations, rate of service utilization (ρ) should be about 0.7 for maximum utilization without sacrificing customer service. Above 0.7, congestion builds up. Above 1.0 there will be infinite queue. O.6 or less may be less than ideal. Exhibit 4.6.

The ability to rapidly and inexpensively switch production from one product to another enables what are sometimes referred to as:

economies of scope. Flexible manufacturing systems and simple easily set-up equipment permit rapid low-cost switching from one product to another, enabling what are sometimes referred to as economies of scope.