Operations Exam 2 Extension A

16) The EOQ model with quantity discounts attempts to determine A) what is the lowest purchasing price B) what is the shortest lead time C) how many units should be ordered D) whether to use fixed-quantity or fixed-period order policy E) what is the lowest amount of inventory necessary to satisfy a certain service level

C) how many units should be ordered

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

Answer: TRUE

28) One requirement of a good layout is determining the flows of information

Answer: TRUE

29) Most hospitals are process focused.

Answer: TRUE

6) Which of the following products is likely to be assembled on a repetitive process line? ALL OF THE ABOVE. A) automobiles B) custom personal computers C) custom cakes D) steel E) beer

A) automobiles

30) A big advantage of a process-oriented layout is: A) its flexibility B) its low cost. C) the simplified scheduling problem presented by this layout strategy. D) the ability to employ low-skilled labor. E) its high equipment utilization.

A) its flexibility

34) One essential ingredient of mass customization is modular design.

Answer: TRUE

4) Process focus and job shop refer to the same thing

Answer: TRUE

9) In the quantity discount model, it is possible to have a cost-minimizing solution where annual ordering costs do not equal annual carrying costs.

Answer: TRUE

12) Which item to order and with which supplier the order should be placed are the two fundamental issues in inventory management.

Answer: FALSE

14) ABC analysis is based on the presumption that carefully controlling all items is necessary to produce important inventory savings.

Answer: FALSE

19) Recently Louis Vuitton changed its layout from cell to process strategy to improve cycle time

Answer: FALSE

20) Heuristics are problem-solving procedures that mathematically optimize the solution.

Answer: FALSE

21) One of the biggest drawbacks of a product-oriented layout is its high cost per unit.

Answer: FALSE

23) The biggest advantage of a product layout is its flexibility to handle a varied product mix.

Answer: FALSE

35) The work cell layout, a special arrangement of machinery and personnel to focus on the production of a single product or group of related products, is for manufacturing applications and has no relevance to services.

Answer: FALSE

10) In the production order quantity (POQ) model, inventory does not arrive in a single moment but flows in at a steady rate, resulting in a larger production/order quantity than in an otherwise identical EOQ problem.

Answer: TRUE

17) If setup costs are reduced by substantial reductions in setup time, the production order quantity is also reduced.

Answer: TRUE

31) Which of the following is FALSE regarding repetitive processes? A) They use modules. B) They allow easy switching from one product to the other. C) They are the classic assembly lines. D) They have more structure and less flexibility than a job shop layout. E) They include the assembly of basically all automobiles

B) They allow easy switching from one product to the other.

13) In assembly-line balancing, cycle time (the ratio of available production time to scheduled production) is the: A) minimum time that a product is allowed at each workstation. B) maximum time that a product is allowed at each workstation. C) inverse of the minimum number of workstations needed. D) sum of all the task times divided by the maximum number of workstations. E) equivalent of the maximum task time among all tasks.

B) maximum time that a product is allowed at each workstation.

27) Which layout's main objective is to equalize the task time for each station? A) job shop B) work cell C) product oriented D) fixed position E) process oriented

C) product oriented

18) An adequate volume for high equipment utilization is an assumption for which of the following layout types? A) process-oriented layout B) warehouse layout C) product-oriented layout D) fixed-position layout E) retail layout

C) product-oriented layout

1) An assembly line is an example of a: A) product-focused process. B) process-focused process. C) repetitive process. D) line process. E) specialized process

C) repetitive process.

11) Most inventory models attempt to minimize: A) the likelihood of a stockout. B) the number of items ordered. C) total inventory-based costs. D) the number of orders placed. E) the safety stock.

C) total inventory-based costs.

32) 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.

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

7) Which of the following is true regarding the concept of flexibility? A) It is the ability to respond with little penalty in time, cost, or customer value. B) It may be accomplished with digitally controlled equipment. C) It may involve modular or movable equipment. D) All of the above are true. E) None of the above is true.

D) All of the above are true.

2) Which of the following statements about the basic EOQ model is FALSE? A) If the setup cost were to decrease, the EOQ would fall. B) If annual demand were to double, the number of orders per year would increase. C) If the ordering cost were to increase, the EOQ would rise. D) If annual demand were to double, the EOQ would also double. E) All of the above statements are true.

D) If annual demand were to double, the EOQ would also double.

24) The purpose of safety stock is to: A) replace failed units with good ones. B) eliminate the possibility of a stockout. C) eliminate the likelihood of a stockout due to erroneous inventory tally. D) control the likelihood of a stockout due to variable demand and/or lead time. E) protect the firm from a sudden decrease in demand

D) control the likelihood of a stockout due to variable demand and/or lead time.

26) A job shop is an example of a(n): A) repetitive process. B) continuous process. C) line process. D) intermittent process. E) specialized process.

D) intermittent process.

33) 17) In a product-oriented layout, what is the process of deciding how to assign tasks to workstations? A) station balancing B) process balancing C) task allocation D) line balancing E) work allocation

D) line balancing

25) The major problem addressed by the process-oriented layout strategy is: A) the movement of material to the limited storage areas around the site. B) how to design a continuous flow process. C) the provision of low-cost storage with low-cost material handling. D) minimizing difficulties caused by material flow varying with each product. E) balancing product flow from one work station to the next.

D) minimizing difficulties caused by material flow varying with each product.

8) Mass customization, when done correctly, A) Drives down inventories B) Helps eliminate the guesswork that comes with sales forecasting C) Increases pressure on supply chain performance D) Increases pressure on scheduling E) All of the above

E) All of the above

5) Which of the following is a function of inventory? 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 hedge against inflation E) All of the above are functions of inventory

E) All of the above are functions of inventory

15) A good layout requires determining: A) material handling equipment. B) capacity and space requirements. C) environment and aesthetics. D) cost of moving between various work areas. E) all of the above

E) all of the above

3) When quantity discounts are allowed, the cost-minimizing order quantity: A) is always an EOQ quantity. B) minimizes the sum of holding and ordering costs. C) minimizes the unit purchase price. D) may be a quantity below that at which one qualifies for that price. E) minimizes the sum of holding, ordering, and product costs.

E) minimizes the sum of holding, ordering, and product costs.