OM Final Quiz Questions

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In an A-B-C system, the typical percentage of the number of items in inventory for A items is about: 10 30 50 70 90

10

In the basic EOQ model, if D = 60 per month, S = $12, and H = $10 per unit per month, EOQ is: 10 12 24 72 144

12

Scheduling in intermediate-volume systems has three basic issues: run size, timing, and sequence. True False

true

Setup time and its associated cost can often be reduced by the use of group technology. True False

true

Slack time is equal to LS-ES or LF-EF.

true

Some firms have structured their procurement function to include both centralized and decentralized purchasing.

true

Some organizations use a matrix organization to integrate the activities of specialists within a functional framework.

true

Successful lean implementation requires much more than slogans and idealistic goals such as zero inventories and zero defects. True False

true

The SPT priority rule always results in the lowest average completion time. True False

true

The computing algorithm requires both a forward and backward pass. True False

true

The costs associated with risk events tend to be lower near the beginning of a project, and higher near the end of the project.

true

The goal of lean operations is to produce output using fewer resources than traditional planning systems. True False

true

The importance of purchasing is the cost of goods purchased, the quality of goods and services, and the timing of delivery of goods and services.

true

The latest starting time for an activity is equal to the latest finish time minus the activity time.

true

The network diagram describes sequential relationships among major activities on a project.

true

The optimum project length in crashing occurs where the cumulative cost of crashing equals savings in the indirect costs.

true

The output of the system cannot exceed the output of the bottleneck operation(s). True False

true

The overall objective of inventory management is to achieve satisfactory levels of customer service while keeping inventory costs reasonable. True False

true

The small lot-sizing policy works well in a situation where both holding costs and setup costs are high. True False

true

When carrying costs are stated as a percentage of unit price, the minimum points on the total cost curves: Line up Equal zero Do not line up Cannot be calculated Depend on the percentage assigned

do not line up

The sum of times of the longest path in a network indicates expected project completion time, and the activities represent the critical activities.

true

The task of identifying risks should involve everyone associated with the project.

true

The theory of constraints has a goal of maximizing flow through the entire system. True False

true

The two main concerns of inventory control relate to the costs and the level of customer service. True False

true

To provide satisfactory levels of customer service while keeping inventory costs within reasonable bounds, two fundamental decisions must be made about inventory: the timing and size of orders. True False

true

Variations create uncertainty, thereby causing inefficiencies in a supply chain.

true

Vendor analysis is the process that evaluates the source of supply in terms of price, quality, reputation, and service.

true

Returned goods are part of reverse logistics.

true

In business, forecasts are the basis for: - capacity planning - budgeting - sales planning - production planning - all of the above

all of the above

In the A-B-C classification system, items which account for fifteen percent of the total dollar-volume for a majority of the inventory items would be classified as: A items B items C items A items plus B items B items plus C items

C items

Scheduling and maintaining equipment are operational decisions.

true

(T/F) A moving average forecast tends to be more responsive to changes in the data series when more data points are included in the average.

False

Which is an application for RFID tags? Monitoring the temperature of fruit during shipment Measuring the urine output of hospital patients Adjusting medications for diabetics Assessing audience response to a new movie Estimating the results of a political election

Monitoring the temperature of fruit during shipment

In a two-bin inventory system, the amount contained in the second bin is equal to the: ROP EOQ amount in the first bin optimum stocking level safety stock

ROP

(T/F) An advantage of a weighted moving average is that recent actual results can be given more importance than what occurred a while ago.

True

(T/F) The Delphi approach involves the use of a series of questionnaires to achieve a consensus forecast.

True

Using the latest observation in a sequence of data to forecast the next period is: - a moving average forecast - a naive forecast - an exponentially smoothed forecast - an associative forecast - regression analysis

a naive forecast

Which of the following is not an example of a high-volume system? aircraft manufacturing magazine printing petroleum refining waste treatment commercial donut baking

aircraft manufacturing

The EOQ model is most relevant for which one of the following? ordering items with dependent demand determination of safety stock ordering perishable items determining fixed interval order quantities determining fixed order quantities

determining fixed order quantities

The standard deviation of the critical path is equal to the sum of the standard deviations of all of the activities on the critical path.

false

"Preventive maintenance" is additional maintenance done immediately after a breakdown has occurred to help prevent any further breakdowns. True False

false

A benefit of lean systems is that lead times are increased allowing more time for processing. True False

false

A functioning MRP system is required prior to adopting lean planning and control systems. True False

false

A hierarchical (vertical) listing of what must be done during a project is called matrix.

false

A schedule chart depicts the loading and idle times for a group of machines or departments. True False

false

Although inventories are maintained, the goal of lean operations is to minimize safety stock. True False

false

An advantage of Gantt charts in project management is that they identify which activities can be delayed without delaying the overall project.

false

Because price isn't a factor in the EOQ formula, quantity discounts won't affect EOQ calculations. True False

false

Centralized or decentralized purchasing is directly related to the size of an organization.

false

Distribution requirements planning (DRP) is an expanded concept of MRP which incorporates multinational inventory management.

false

Event management is the advanced planning required for major performances such as concerts or conferences.

false

Global standards allow RFID technology to be identical worldwide. True False

false

Global supply chains make purchasing easier because of ore options.

false

If optimal sequencing through three work centers is desired, Johnson's Rule II is used rather than Johnson's Rule. TRUE FALSE

false

If the expected length of a path is more than 2.5 standard deviations less than a desired project completion time, the path would not be a factor in assessing the probability of finishing the project on time.

false

Inventory velocity refers to the average speed (in miles/hour) of material handling equipment in a warehouse.

false

Kanban is the Japanese term for autonomation. True False

false

Lean systems typically require that suppliers be able to provide large lots at periodic intervals. True False

false

Line balancing is a major factor in the design and scheduling of low volume systems because of batch processing. True False

false

Many activities have slack time; if we add these slack times together, this represents the potential improvement in early completion for the project.

false

Matrix organizations transfer control of workers to project managers for the duration of the project.

false

On disadvantage of RFID is that they may require a "line of sight" for reading.

false

Priority rules are used in low-volume systems to identify an optimal processing sequence. True False

false

Priority rules are widely used to sequence jobs in high-volume systems. True False

false

Starting with the final customer and moving backward through the supply chain, batch sizes and the level of safety stock tend to decrease.

false

Supplier certification is the first step required in a supplier audit program.

false

The A-B-C approach involves classifying inventory items by unit cost, with expensive items classified as 'A' items and low cost items classified as 'C' items. True False

false

The assignment method is limited to a maximum of two jobs per resource. True False

false

The elimination of idle time on both bottleneck and non-bottleneck operations must be accomplished to optimize output. True False

false

The objective of inventory management is to minimize the cost of holding inventory. True False

false

The path in a network with the average length of time to completion is called the critical path.

false

The probability of occurrence of risk events is lower near the beginning of a project and higher near the end of the project since very few activities remain.

false

The purchasing cycle ends when the purchasing department is notified that the supplier has shipped the items.

false

The quantity sent to a bottleneck operation could be split into two or more process batches to better utilize a bottleneck resource rather than process the entire batch. True False

false

A non-linear cost related to order size is the cost of: interest insurance taxes receiving space

recieving

Which of the following is the last step in the capacity/scheduling chain? product planning process planning capacity planning aggregate planning scheduling

scheduling

Gradual, long term movement in time series data is called: - seasonal variation - cycles - irregular variation - trend - random variation

trend

A benefit of the lean philosophy is the flexibility to respond quickly to changing customer requirements. True False

true

An advantage of decentralized purchasing is the attention given to local needs.

true

Bottlenecks may shift with the passage of time, so that different operations become bottleneck operations at different times. True False

true

DVD recorders would be an example of independent demand items. True False

true

Disintermediation refers to the phenomenon that the traditional retailer or service provider is reduced or eliminated in a supply chain.

true

In a "pull system," a quantity of inventory in front of a workstation indicates problems at that workstation. True False

true

In a balanced system cycle time is equal to Takt time. True False

true

In a lean environment, anything not essential to the product or process is viewed as waste. True False

true

In the decision-making hierarchy, scheduling decisions are the final step in the transformation process before actual output occurs. True False

true

In the lean approach, inventories are reduced gradually, instead of eliminating inventories as rapidly as possible. True False

true

Information technology is the key to success of global supply chains.

true

JIT delivery, i.e. frequent deliveries of small shipments, actually result sin an increase in the transportation cost per unit.

true

Johnson's rule is a technique used to sequence jobs through a two-step work sequence. True False

true

Kanban focuses on specific part numbers; CONWIP does not. True False

true

Lean systems often use layouts that are based on group technology product requirements. True False

true

Loading is the determination of which work centers should perform which jobs. True False

true

One important use of inventories in manufacturing is to decouple operations through the use of work in process inventories. True False

true

One major difference between the use of kanban and MRP II in scheduling the products to be built is that kanban is primarily a manual system while MRP II uses computers. True False

true

One of the major reasons for a company to adopt third party logistics is to concentrate on one's core business.

true

One problem with lean operations is that they can lead to much frustration and disappointment of people on the shop floor due to the need for continuously monitoring and expediting resource availability. True False

true

One way that project management differs from management of more traditional activities is because of the limited life-time of projects.

true

Project managers are sometimes able to reduce indirect project costs by increasing direct costs.

true

Organizations with fixed capacity can benefit from ? Yield Management Price increases Constraints Sub-optimization Waiting lines

yield management


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