Operations Management Final

A firm practices a chase strategy. Production last quarter was 1000. Demand over the next four quarters is estimated to be 900, 700, 1000, and 1000. Hiring cost is $20 per unit, and layoff cost is $5 per unit. Over the next year, what will be the sum of hiring and layoff costs? A) $500 B) $2,500 C) $7,500 ( 1000-900= 1000 x 5= 500) + (900-700=200x 5= 1000) + (300 x20= 6000) = 500+1000+6000= 7500 D) $7,000 E) $12,500

$7,500 ( 1000-900= 1000 x 5= 500) + (900-700=200x 5= 1000) + (300 x20= 6000) = 500+1000+6000= 7500

4) What is the typical time horizon for aggregate planning? A) less than a month B) up to 3 months C) 3 to 18 months D) over one year E) over 5 years

3 to 18 months

A Six Sigma program has how many defects per million? A) 3.4 B) 34 C) 1000 D) 6 times the standard deviation E) 2700

3.4

A specific product has demand during lead time of 100 units, with a standard deviation during lead time of 25 units. What safety stock (approximately) provides a 95% service level? ◦ A) 41 ◦ B) 55 ◦ C) 133 ◦ D) 140 ◦ E) 165

41 ROP = (expected demand lead time + (Z * std dev) à safety stock) or 1.64 *25 Or calculator à InvNorm (.95, 100,25) = 141 - 100 = 41

Work-in-process inventory is devoted to maintenance, repair, and operating materials.

False

True or False? Insurance and taxes on inventory are part of the costs known as setup or order costs.

False; It's part of investment cost under holding costs

Dependent demand and independent demand items differ in that: A) for any product, all components are dependent-demand items. B) the need for independent-demand items is forecast. C) the need for dependent-demand items is calculated. D) All of the above are true. E) None of the above is true.

all of the above are true

ABC analysis divides on-hand inventory into three classes, generally based upon which of the following? A) item quality B) unit price C) the number of units on hand D) annual demand E) annual dollar volume

annual dollar volume

The number of defects after a hotel room cleaning (sheets not straight, smears on mirror, missed debris on carpet, etc.) should be measured using what type of control chart? A) x-bar chart B) R-chart C) p-chart D) c-chart E) either x-bar chart or R chart

c- chart

Which of the following items is mostly likely managed using a single-period order model? ◦ A) Christmas trees ◦ B) canned food at the grocery store ◦ C) automobiles at a dealership ◦ D) metal for a manufacturing process E) gas sold to a gas station

christmas trees

) Effective use of MRP and other dependent demand models does not require which of the following? A) master production schedule B) bill of materials C) inventory availability D) lead times E) cost of individual components

cost of individual components

One of Britain's largest children's hospitals working with a Ferrari racing team is an example of: A) internal benchmarking. B) external benchmarking. C) Taguchi concepts. D) employee empowerment. E) corporate responsibility.

external benchmarking

A p-chart is appropriate to plot the number of typographic errors per page of text.

false

When sample measurements falls inside the control limits, it means that: A) each unit manufactured is good enough to sell. B) the process limits cannot be determined statistically. C) the process output exceeds the requirements. D) if there is no other pattern in the samples, the process is in control. E) the process output does not fulfill the requirements.

if there is no other pattern in the samples, the process is in control.

"Quality lies in the eyes of the beholder" is: A) a user-based definition of quality. B) a manufacturing-based definition of quality. C) a product-based definition of quality. D) the definition of quality proposed by the American Society for Quality.

A) a user-based definition of quality.

) A manager wants to build 3-sigma x-bar control limits for a process. The target value for the mean of the process is 10 units, and the standard deviation of the process is 6. If samples of size 9 are to be taken, what will be the upper and lower control limits, respectively? A) -8 and 28 B) 16 and 4 C) 12 and 8 D) 4 and 16 E) 8 and 12

B - x ̿ = 10σ = 6 n=9 When sigma is known UCL = 𝑥 ̿+𝑧 𝜎/√𝑛 UCL = 10 ̿+3 * (6/√9) = 16 LCL = 𝑥 ̿−𝑧 𝜎/√𝑛 LCL = 10 -3 * (6/√9) = 4

Revenue (or yield) management is best described as: A) a situation where management yields to labor demands. B) a situation where the labor union yields to management demands. C) a process designed to increase the rate of output. D) allocation of scarce resources to customers at prices that will maximize revenue. E) management's selection of a product mix yielding maximum profits.

D) allocation of scarce resources to customers at prices that will maximize revenue.

A firm uses the chase strategy (ZERO INVENTORY, HIRING/ LAYOFF AS NEEDED) of aggregate planning. It produced 1000 units in the last period. Demand in the next period is estimated at 800, and demand over the next six periods (its aggregate planning horizon) is estimated to average 900 units. At the current time, which of the following tactics would be most representative of following a chase strategy? A) add 100 units to inventory in the next period B) add 200 units to inventory in the next period C) hire workers to match the 100-unit difference D) lay off workers to match the 200-unit difference E) implement a lower price point to increase demand

D) lay off workers to match the 200-unit difference

Techniques for building employee empowerment include: A) building communication networks that include employees. B) developing open, supportive supervisors. C) moving responsibility from both managers and staff to production employees. D) building high-morale organizations. E) All of the above are techniques for employee empowerment.

E) All of the above are techniques for employee empowerment.

If the standard deviation of demand is six per week, demand is 50 per week, and the desired service level is 95%, approximately what is the statistical safety stock? ◦ A) 8 units ◦ B) 10 units ◦ C) 16 units ◦ D) 64 units ◦ E) Cannot be determined without lead time data. Safety stock is abt demand lead time

E) Cannot be determined without lead time data. Safety stock is abt demand lead time

Which category of inventory holding costs has a much higher percentage than average for rapid-change industries such as PCs and cell phones? A) housing costs B) material handling costs C) labor cost D) investment costs E) pilferage, scrap, and obsolescence

E) pilferage, scrap, and obsolescence

Which of the following statements regarding control of service inventories is TRUE? A) Service inventory is a fictional concept, because services are intangible.- you still have inventory in service! B) Service inventory needs no safety stock, because there's no such thing as a service stockout. C) Effective control of all goods leaving the facility is one applicable technique. D) Service inventory has carrying costs but no setup costs. E) Good personnel selection, training, and discipline are easy.

Effective control of all goods leaving the facility is one applicable technique

A production manager at a pottery factory has noticed that about 70 percent of defects result from impurities in raw materials, 15 percent result from human error, 10 percent from machine malfunctions, and 5 percent from a variety of other causes. This manager is most likely using: A) a Pareto chart. B) a scatter diagram. C) a quality loss function. D) a cause-and-effect diagram. E) a flowchart.

a pareto chart

) Which of the following is not a typical inspection point? A) upon receipt of goods from your supplier B) when production or service is complete C) before the product is shipped to the customer D) at the supplier's plant while the supplier is producing E) after a costly process

after a costly process; before

Enterprise resource planning (ERP): ◦ A) seldom requires software upgrade or enhancement. X ◦ B) does not integrate well with functional areas other than operations. ◦ C) is inexpensive to implement. X ◦ D) automates and integrates the majority of business processes. ◦ E) all of the above X

automates and integrates the majority of business processes.

Disaggregation: A) breaks the aggregate plan into greater detail. B) transforms the master production schedule into an aggregate plan. C) calculates the optimal price points for yield management. D) converts product schedules and labor assignments to a facility-wide plan. E) is an assumption required for the use of the transportation model in aggregate planning.

breaks the aggregate plan into greater detail

The goal of inspection is to: A) detect a bad process immediately. B) add value to a product or service. C) correct deficiencies in products. D) correct system deficiencies. E) all of the above

detect a bad process immediately.

Which of the four major categories of quality costs is particularly hard to quantify? A) prevention costs B) appraisal costs C) internal failure costs D) external failure costs

external failure costs

An aggregate plan satisfies forecast demand by potentially adjusting all EXCEPT which of the following? A) production rates B) labor levels C) inventory levels D) overtime work E) facility capacity

facility capacity

If the process average is in control, then the process range must also be in control.

false

The purpose of process control is to detect when natural causes of variation are present.

false

) Poka-yoke is the Japanese term for: A) card. B) foolproof. C) continuous improvement. D) fishbone diagram. E) just-in-time production.

foolproof

Under which of the following do planning tasks associated with production planning and budgeting, as well as setting employment, inventory, and subcontracting levels, typically fall? A) short-range plans B) intermediate-range plans C) long-range plans D) demand options E) strategic planning

intermediate -range plans

To use revenue management strategies, a business should have which combination of costs? A) high variable and high fixed B) low variable and high fixed C) high variable and low fixed D) low variable and low fixed E) either A or B

low variable and high fixed

What directly results from disaggregation of an aggregate plan? A) a master production schedule B) priority scheduling C) a transportation matrix D) a capacity-demand matrix E) detailed work schedules

master production schedule

Which of the following is NOT an input to S&OP? A) capacity decisions B) supply-chain support C) workforce D) inventory on hand E) master production schedule

master production schedule

The objective of aggregate planning is to meet forecast demand while ________ over the planning period. A) minimizing cost B) maximizing service level C) minimizing stock out D) minimizing fixed cost E) all of the above

minimizing cost

1) Which lot-sizing technique orders the quantity needed during a predetermined time between orders? ◦ A) economic order quantity ◦ B) periodic order quantity ◦ C) lot-for-lot ◦ D) time fencing

periodic order quantity

Which of the following should be higher in P systems than Q systems? ◦ A) lead time ◦ B) demand ◦ C) order size ◦ D) order spacing ◦ E) safety stock

safety stock

What refers to training and empowering frontline workers to solve a problem immediately? A) just-in-time B) poka-yoke C) benchmarking D) kaizen E) service recovery

service recovery

Under which of the following do planning tasks associated with job assignments, ordering, job scheduling, and dispatching typically fall? A) short-range plans B) intermediate-range plans C) long-range plans D) mission-related planning E) strategic planning

short - range plans

Kaizen is similar to TQM in that both are focused on continuous improvement.

true

Mean charts and range charts complement one another, one detecting shifts in process average, the other detecting shifts in process dispersion.

true

Mistakes stemming from workers' inadequate training represent an assignable cause of variation.

true

Some degree of variability is present in almost all processes.

true

The quantity required of a dependent demand item is computed from the demand for the final products in which the item is used.

true

An advantage of the fixed-period inventory system is that: ◦ A) safety stock will be lower than it would be under a fixed-quantity inventory system. ◦ B) there is no physical count of inventory items when an item is withdrawn. ◦ C) no inventory records are required. ◦ D) orders usually are for smaller order quantities. E) the average inventory level is reduced.

◦ B) there is no physical count of inventory items when an item is withdrawn.

Which of the following is FALSE concerning enterprise resource planning (ERP)? ◦ A) It attempts to automate and integrate the majority of business processes. ◦ B) It shares common data and practices across the enterprise. ◦ C) It is inexpensive to implement. ◦ D) It provides and accesses information in a real-time environment. ◦ E) ERP software promises reduced transaction costs.

◦ C) It is inexpensive to implement.

Cycle counting: ◦A) is a process by which inventory records are verified once a year. ◦B) eliminates annual inventory adjustments. ◦C) provides a measure of inventory turnover. ◦D) assumes that all inventory records must be verified with the same frequency. ◦E) assumes that the most frequently used items must be counted more frequently.

◦B) eliminates annual inventory adjustments.

A major challenge in inventory management is to maintain a balance between inventory investment and customer service.

True

) Product X: It is week 1 and there are currently 20 units in stock. We need 300 units at the start of week 5. If there are scheduled receipts planned for week 3 and week 4 of 120 each. Product X has a lead time of 1 week. When and how large of an order should be placed to meet the requirement of 300? ◦ A) Week 1, 300 units ◦ B) Week 1, 40 units ◦ C) Week 5, 40 units ◦ D) Week 4, 40 units ◦ E) Week 4, 300 units

Week 4, 40 units

In the service sector, which of the following aggregate planning strategies might direct your client to a competitor? A) using part-time workers B) subcontracting C) changing inventory level D) varying production rates through overtime or idle time E) varying work force size by hiring or layoffs

subcontracting

Which of the following aggregate planning options is NOT associated with manipulation of product or service demand? A) price cuts or discounts B) promotion C) subcontracting D) counterseasonal products or services E) advertising

subcontracting

A manager tells her production employees, "It's no longer good enough that your work falls anywhere within the specification limits. I need your work to be as close to the target value as possible." Her thinking is reflective of: A) internal benchmarking. B) Six Sigma. C) ISO 9000. D) Taguchi concepts. E) process control charts.

taguchi concepts

1) The lot-for-lot lot-sizing technique is particularly appropriate when demand is not very smooth and set up cost is small compared to holding cost.

true

Averages of small samples, not individual measurements, are generally used in statistical process control.

true

Continuous improvement is based on the philosophy that any aspect of an operation can be improved.

true

Internal failure costs are associated with scrap, rework, and downtime.

true

True or False? Retail inventory that is unaccounted for between receipt and time of sale is known as shrinkage.

true

Which of the following aggregate planning strategies is known to lower employee morale? A) yield management B) counterseasonal product and service mixing C) changing inventory levels D) varying work force size by hiring or layoffs E) back ordering during high demand periods

varying work force size by hiring or layoffs

Which of the following statements regarding aggregate planning in services is FALSE? A) Approaches to aggregate planning differ by the type of service provided. B) Some service organizations conduct aggregate planning in exactly the same way as manufacturing firms, but with demand management taking a more active role. C) Aggregate planning in some service industries may be easier than in manufacturing. D) Labor is the primary aggregate planning vehicle. E) Level scheduling is far more common than using a chase strategy.

Level scheduling is far more common than using a chase strategy.

Which of the following would NOT generally be a motive for a firm to hold inventories? A) to decouple various parts of the production process B) to provide a selection of goods for anticipated customer demand and to separate the firm from fluctuations in that demand C) to take advantage of quantity discounts D) to minimize holding costs E) to hedge against inflation

Minimize holding costs

PDCA, developed by Shewhart, stands for which of the following? A) Plan-Do-Check-Act B) Plan-Develop-Check-Accept C) Problem-Develop Solution-Check-Act D) Problem-Do-Continue-Act E) Prepare-Develop-Create-Assess

Plan-Do-Check-Act

Which of the following statements is NOT true? A) Self-promotion is not a substitute for quality products. B) Inferior products harm a firm's profitability and a nation's balance of payments. C) Product liability transfers from the manufacturer to the retailer once the retailer accepts delivery of the product. D) Quality-be it good or bad-will show up in perceptions about a firm's new products, employment practices, and supplier relations. E) Legislation such as the Consumer Product Safety Act sets and enforces product standards by banning products that do not reach those standards.

Product liability transfers from the manufacturer to the retailer once the retailer accepts delivery of the product.

Lead time for a product is 4 days. Demand during this period averages 100 units per day. What would be an appropriate reorder point?

ROP = d x L = 100 x 4 = 400

What is a popular measurement scale for service quality that compares service expectations with service performance? A) COQ B) SPC C) KAIZEN D) SERVQUAL E) TQM

SERVQUAL

A firm uses graphical techniques in its aggregate planning efforts. Over the next twelve months (its intermediate period), it estimates the sum of demands to be 105,000 units. The firm has 250 production days per year. In January, which has 22 production days, demand is estimated to be 11,000 units. A graph of demand versus level production will show that: A) the January requirement is below level production of 420 units. X B) level production is approximately 1000 units per day. X C) level production of 420 units per day is below the January requirement. D) level production is approximately 420 units per month. X E) the firm must hire workers between December and January X X because 105000/250 = 420 11000/22 = 500 Should be day not month You dont know whether or not you need to hire or fire someone

level production of 420 units per day is below the January requirement.

If a sample of items is taken and the mean of the sample is outside the control limits, the process is: A) likely out of control and the cause should be investigated. B) in control, but not capable of producing within the established control limits. C) within the established control limits with only natural causes of variation. D) monitored closely to see if the next sample mean will also fall outside the control limits. E) producing high quality products.

likely out of control and the cause should be investigated.

Which of the following is NOT one of the successful techniques for controlling the cost of labor in services? A) accurate scheduling of labor-hours to assure quick response to customer demand B) an on-call labor resource that can be added or deleted to meet unexpected demand C) little flexibility in worker hours to decrease the burden on management D) flexibility of individual worker skills that permits reallocation of available labor E) flexibility in rate of output or hours of work to meet changing demand

little flexibility in worker hours to decrease the burden on management

Top executives tend to focus their attention on which type of forecasts? A) short-range B) intermediate-range C) long-range D) weather

long-range

The number of late insurance claim payouts per 100 should be measured with what type of control chart? A) x-bar chart B) R-chart C) p-chart D) c-chart E) either p-chart or c-chart

p-chart

1) Which of the following statements regarding the reorder point is TRUE? A) A) The reorder point is that quantity that triggers an action to restock an item. B) There is a reorder point even if lead time and demand during lead time are constant. C) The reorder point is larger than d × L if safety stock is present. D) A shorter lead time implies a smaller reorder point. E) All of the above are true.

All of the above

The "four Ms" of cause-and-effect diagrams are: A) material, machinery/equipment, manpower, and methods. B) material, methods, men, and mental attitude. C) named after four quality experts. D) material, management, manpower, and motivation. E) mentality, motivation, management, and manpower.

A) material, machinery/equipment, manpower, and methods.

Which of the following statements about ABC analysis is FALSE? A) ABC analysis is based on the presumption that controlling the few most important items produces the vast majority of inventory savings. B) In ABC analysis, "A" items should have tighter physical inventory control than "B" or "C" items have. C) In ABC analysis, forecasting methods for "C" items may be less sophisticated than for "A" items. D) ABC analysis is based on the presumption that all items must be tightly controlled to produce important cost savings. E) Criteria other than annual dollar volume, such as high holding cost or delivery problems, can determine item classification in ABC analysis.

ABC analysis is based on the presumption that all items must be tightly controlled to produce important cost savings.

"Making it right the first time" is: A) a user-based definition of quality. B) a manufacturing-based definition of quality. C) a product-based definition of quality. D) the definition of quality proposed by the American Society for Quality

B) a manufacturing-based definition of quality.

An x-bar control chart was examined and no data points fell outside of the limits. Can this process be considered in control? A) Not yet, there could be a pattern to the points. B) Not yet, the R-chart must be checked. C) Not yet, the number of samples must be known. D) Yes. E) Both A and B

Both A and B

"The employee cannot produce products that on average exceed the quality of what the process is capable of producing" expresses a basic philosophy in the writings of: A) Armand Feigenbaum. B) Joseph M. Juran. C) W. Edwards Deming. D) Philip B. Crosby.

C) W. Edwards Deming.

Jars of pickles are sampled and weighed. Sample measures are plotted on control charts. The ideal weight should be precisely 11 oz. Which type of chart(s) would you recommend? A) p-chart B) c-chart C) both an x-bar chart and an R-chart D) an x-bar chart, but not an R-chart E) both a p-chart and a c-chart

C) both an x-bar chart and an R-chart