OPS exam 3
Which one of the following is (*) a characteristic of a Model A or M/M/1 system? a. exponential service time pattern b. single number of channels c. single number of phases d. Poisson arrival rate pattern e. limited population size
e. limited population size
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
Demand for dishwasher water pumps is 8 per day. The standard deviation of demand is 3 per day, and the order lead time is four days. The service level is 95%. What should the reorder point be? a. about 18 b. about 24 c. about 32 d. about 38 e. more than 40
e. more than 40
Which category of inventory holding costs is much higher than average for rapid-change industries such as PCs and cell phones? a. housing costs b. material handling costs c. labor cost d. parts cost e. pilferage, scrap, and obsolescence
e. pilferage, scrap, and obsolescence
Aggregate planning for service firms that provide intangible output deals mainly with a. smoothing the production rate and finding the optimal size of the workforce b. yield management c. centralized purchasing d. centralized production e. planning for human resource requirements and managing demand
e. planning for human resource requirements and managing demand
Which of the following attempts to manipulate product or service demand? a. inventories b. part-time workers c. subcontracting d. overtime/idle time e. price cuts
e. price cuts
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
e. the safety stock
A bank office with five tellers, each with a separate line of customers, exhibits the characteristics of a multi-phase queuing system.
false
A finite population waiting line model has an average service time T of 100 minutes and an average time between service requirements U of 400 minutes; the service factor X is 0.25.
false
A hospital emergency room always follows a first-in, first-served queue discipline in the interest of fairness.
false
A waiting-line system has three parts: the size of the arrival population, the behavior of arrivals, and the statistical distribution of arrivals.
false
A waiting-line system with one waiting line and three sequential processing stages is a multi- channel single-phase system.
false
ABC analysis classifies inventoried items into three groups, usually based on annual units or quantities used.
false
ABC analysis is based on the presumption that carefully controlling all items is necessary to produce important inventory savings.
false
According to the global company profile, Amazon.com's advantage in inventory management comes from its almost fanatical use of economic order quantity and safety stock calculations.
false
Advertising and promotion are methods of manipulating product or service supply in aggregate planning.
false
As the average service rate grows larger, the slope of the distribution of service time probabilities grows larger and larger, eventually becoming positive.
false
At the economic order quantity, holding costs are equal to purchasing costs.
false
Balk and renege are elements of queue discipline
false
Because service firms do not inventory their output, pure chase strategy is not appropriate.
false
Cycle counting is an inventory control technique exclusively used for cyclical items.
false
Four of the most widely used waiting line models—M/M/1 or A, M/M/S or B, M/D/1 or C, and Limited population or D—all share three characteristics: Poisson arrivals, FIFO discipline, and exponential service times.
false
If the service time within a queuing system is constant, the service rate can be easily described by a negative exponential distribution.
false
In queuing problems, arrival rates are generally described by the normal probability distribution.
false
In the quantity discount model, the cost of acquiring goods (product cost) is not a factor in determining lot size.
false
In the simple EOQ model, if annual demand were to increase, the EOQ would increase proportionately.
false
In the simple EOQ model, if the carrying cost were to double, the EOQ would also double.
false
Insurance and taxes on inventory are part of the costs known as setup or ordering costs.
false
LIFS (last-in, first-served) is a common queue discipline, most often seen where people, not objects, form the waiting line.
false
One of the demand options of aggregate planning is to vary the workforce by hiring or firing.
false
Safety stock in inventory systems depends only on the average demand during the lead time.
false
The EOQ model is best suited for items whose demand is dependent on other products.
false
The aggregate planning process usually includes expediting and dispatching of individual products.
false
The greater the margin by which the arrival rate exceeds the service rate, the better the performance of the waiting line.
false
The level scheduling strategy allows lower inventories than the pure chase strategy.
false
The only objective of aggregate planning is to minimize the cost of matching capacity to demand over the planning period.
false
The study of waiting lines calculates the cost of providing good service but does not value the cost of customers' waiting time.
false
Which item to order and with which supplier the order should be placed are the two fundamental issues in inventory management.
false
Work-in-process inventory is devoted to maintenance, repair, and operations.
false
In the quantity discount model, it is possible to have a cost-minimizing solution where annual ordering costs do not equal annual carrying costs.
true
Mixed strategies in aggregate planning utilize inventory, work force, and production rate changes over the planning horizon.
true
One advantage of cycle counting is that it maintains accurate inventory records.
true
One function of inventory is to take advantage of quantity discounts.
true
One motive for using demand-influencing aggregate planning options is to create uses for excess capacity within an organization.
true
Retail inventory that is unaccounted for between receipt and time of sale is known as shrinkage.
true
Service level is the complement of the probability of a stockout.
true
The cost of waiting decreases as the service level increases
true
The demand for automobiles would be considered an independent demand.
true
The fixed-period inventory model can have a stockout during the review period as well as during the reorder period, which is why fixed-period models require more safety stock than fixed-quantity models.
true
The management coefficients model is a formal planning model built around a manager's experience and performance.
true
The reorder point is the inventory level at which action is taken to replenish the stocked item.
true
The strategies of aggregate planning are broadly divided into demand options and capacity options.
true
The transportation method of linear programming is an optimizing approach to aggregate planning.
true
The two characteristics of the waiting line itself are whether its length is limited or unlimited and the discipline of the people or items in it.
true
The use of part-time workers as an aggregate planning option may be less costly than using full- time workers, but may also reduce quality levels.
true
Units of safety stock are additions to the reorder point that allow for variability in the rate of demand, the length of lead time, or both.
true
Waiting-line models are useful to operations in such diverse settings as service systems, maintenance activities, and shop-floor control.
true
If the food service for the university operates a cafeteria with a single serving line, that system behaves most like a a. single channel, single phase system b. single channel, multi-phase system c. multi-channel, single phase system d. multi-channel, multi-phase system e. none of the above
b. single channel, multi-phase system
Aggregate planning in manufacturing ties organizational strategic goals to a production plan.
True
High levels of efficiency at Anheuser-Busch are the result of excellence in aggregate planning and in high facility utilization.
True
One of the four things needed for aggregate planning is a logical overall unit for measuring sales and output.
True
One question that operations managers must ask when generating an aggregate plan is what factors are likely to influence demand and by how much
True
"Women and children first!" declares the captain of a sinking ship. His directive employs which of the following queue disciplines in disembarking passengers? a. priority b. random c. FIFO or FIFS d. LIFO or LIFS e. none of the above
a. priority
Planning tasks associated with loading, sequencing, expediting, and dispatching typically fall under a. short-range plans b. intermediate-range plans c. long-range plans d. mission-related planning e. strategic planning
a. short-range plans
In a repetitive focus factory, the number of phases found in the system might refer to a. the number of successive operations that have to be performed on a part b. the number of machines doing the same necessary operations c. the number of parts waiting to be processed d. all of the above depending on the layout e. none of the above
a. the number of successive operations that have to be performed on a part
Which of the following actions is consistent with the use of pure level strategy? a. use inventory to meet demand requirements b. vary the amount of subcontracting to meet demand requirements c. vary production levels to meet demand requirements d. vary work force to meet demand requirements e. none of the above
a. use inventory to meet demand requirements
A product has demand of 4000 units per year. Ordering cost is $20 and holding cost is $4 per unit per year. The EOQ model is appropriate. The cost-minimizing solution for this product will cost _____ per year in total annual inventory costs. a. $400 b. $800 c. $1200 d. zero; this is a class C item e. cannot be determined because unit price is not known
b. $800
A waiting-line system that meets the assumptions of M/M/1 has = 1, = 4. For this system, the probability of more than two units in the system is approximately a. zero b. 0.015625 c. 0.0625 d. 0.25 e. 0.9375
b. 0.015625
A single-phase waiting-line system meets the assumptions of constant service time or M/D/1. Units arrive at this system every 10 minutes on average. Service takes a constant 4 minutes. The average length of the queue Lq is a. 0.4 b. 0.133 c. 4.167 d. 4.583 e. 6
b. 0.133
A waiting line model meeting the assumptions of M/M/1 has an arrival rate of 2 per hour and a service rate of 6 per hour; the utilization factor for the system is approximately a. 0.25 b. 0.33 c. 0.50 d. 0.67 e. 3.00
b. 0.33
A queuing model has lambda = 2 and = 8. The average number in the system Ls is ______ and the utilization of the system is _______. a. 3; 100 percent b. 0.33; 25 percent c. 4; 33 percent d. 6; 25 percent e. 4; 25 percent
b. 0.33; 25 percent
A finite population waiting line model has an average service time T of 200 minutes and an average time between service requirements U of 300 minutes; the service factor X is a. 0.20 b. 0.40 c. 0.60 d. 0.67 e. 2.5
b. 0.40
A queuing model which follows the M/M/1 assumptions has = 2 and = 3. The average waiting time in the system is a. 2/3 b. 1 c. 1.5 d. 2 e. 6
b. 1
A product has demand of 4000 units per year. Ordering cost is $20 and holding cost is $4 per unit per year. The cost-minimizing solution for this product is to order a. all 4000 units at one time b. 200 units per order c. every 20 days d. 10 times per year e. none of the above
b. 200 units per order
A production order quantity problem has daily demand rate = 10 and daily production rate = 50. The production order quantity for this problem is approximately 612 units. The average inventory for this problem is approximately a. 61 b. 245 c. 300 d. 306 e. 490
b. 245
A a. unchanged product whose EOQ is 400 experiences a 50% increase in demand. The new EOQ is b. increased by less than 50% c. increased by 50% d. increased by more than 50% e. cannot be determined
b. increased by less than 50%
The planning tasks associated with staffing, production, inventory, and sub-contracting levels typically fall under a. short-range plans b. intermediate-range plans c. long-range plans d. demand options e. strategic planning
b. intermediate-range plans
A concert hall, employing both ticket takers and ushers to seat patrons, behaves typically as a a. multi-channel, single phase system b. multi-channel, multi-phase system c. single channel, single phase system d. single channel, multi-phase system e. none of the above
b. multi-channel, multi-phase system
In the basic queuing model (M/M/1), service times are described by a. continuous probability distributions b. negative exponential probability distributions c. Poisson probability distributions d. normal probability distributions e. lognormal distributions
b. negative exponential probability distributions
A product whose EOQ is 40 experiences a decrease in ordering cost from $90 per order to $10. The revised EOQ is a. three times as large b. one-third as large c. nine times as large d. one-ninth as large e. cannot be determined
b. one-third as large
Cycle counting a. is a process by which inventory records are verified once a year b. provides a measure of inventory accuracy 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. provides a measure of inventory accuracy
The shopper who says to himself, "I've waited too long in this line. I don't really need to buy this product today," and leaves the store is an illustration of which element of arrival behavior? a. random arrival b. renege c. random departure d. balk e. none of the above
b. renege
Which one of the following is (*) a characteristic of a Model B or M/M/S system? a. unlimited population size b. single channel c. single queue d. single phase e. Poisson arrival rate pattern
b. single channel
For a certain item, the cost-minimizing order quantity obtained with the basic EOQ model was 200 units and the total annual inventory (carrying and setup) cost was $600. The inventory carrying cost per unit per year for this item is a. $1.50 b. $2.00 c. $3.00 d. $150.00 e. not enough data to determine
c. $3.00
A firm practices the pure 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 firing cost is $5 per unit. Over the next year, the sum of hiring and firing costs will be a. $500 b. $2,500 c. $7,500 d. $7,000 e. $12,500
c. $7,500
A waiting line meeting the assumptions of M/M/1 has average time between arrivals of 20 minutes and services items in an average of 10 minutes each; the utilization factor is approximately a. 0.25 b. 0.33 c. 0.50 d. 0.67 e. 3.00
c. 0.50
A certain type of computer costs $1,000, and the annual holding cost is 25%. Annual demand is 10,000 units, and the order cost is $150 per order. What is the approximate economic order quantity? a. 16 b. 70 c. 110 d. 183 e. 600
c. 110
If daily demand is normally distributed with a mean of 15 and standard deviation of 5, and lead time is constant at 4 days, 90 percent service level will require safety stock of approximately a. 7 units b. 10 units c. 13 units d. 16 units e. 26 units
c. 13 units
In the basic EOQ model, if D=6000 per year, S=$100, H=$5 per unit per month, the economic order quantity is approximately a. 24 b. 100 c. 141 d. 490 e. 600
c. 141
In a safety stock problem where both demand and lead time are variable, demand averages 150 units per day with a daily standard deviation of 16, and lead time averages 5 days with a standard deviation of 1 day. The standard deviation of demand during lead time is approximately a. 15 units b. 100 units c. 154 units d. 500 units e. 13,125 units
c. 154 units
The assumptions of the production order quantity model are met in a situation where annual demand is 3650 units, setup cost is $50, holding cost is $12 per unit per year, the daily demand rate is 10 and the daily production rate is 100. The production order quantity for this problem is approximately a. 139 b. 174 c. 184 d. 365 e. 548
c. 184
Students arrive randomly at the help desk of the computer lab. There is only one service agent, and the time required for inquiry varies from student to student. Arrival rates have been found to follow the Poisson distribution, and the service times follow the negative exponential distribution. The average arrival rate is 12 students per hour, and the average service rate is 20 students per hour. What is the average service time for this problem? a. 1 minute b. 2 minutes c. 3 minutes d. 5 minutes e. 20 minutes
c. 3 minutes
The typical time horizon for aggregate planning is a. less than a month b. up to 3 months c. 3 to 18 months d. over one year e. over 5 years
c. 3 to 18 months
If daily demand is constant at 10 units per day, and lead time averages 12 days with a standard deviation of 3 days, 95 percent service requires a safety stock of approximately a. 28 units b. 30 units c. 49 units d. 59 units e. 114 units
c. 49 units
Which of the following statements about aggregate planning is true? a. The development of mathematical models has allowed aggregate planners to discontinue use of trial-and-error methods. b. In aggregate planning, back orders are a means of manipulating supply while part-time workers are a way of manipulating product or service demand. c. A pure chase strategy allows lower inventories when compared to pure level scheduling. d. Disaggregation turns the master production schedule into an intermediate term master plan. e. All of the above are true.
c. A pure chase strategy allows lower inventories when compared to pure level scheduling.
Plans for new product development generally fall within the scope of aggregate planning.
False
A finite population waiting line model has an average service time T of 100 minutes and an average time between service requirements U of 400 minutes; the service factor X is a. 0.20 b. 0.25 c. 4 d. 5 e. 300 minutes
a. 0.20
A single-phase waiting-line system meets the assumptions of constant service time or M/D/1. Units arrive at this system every 12 minutes on average. Service takes a constant 8 minutes. The average length of the queue Lq is approximately a. 0.67 b. 2.5 c. 4.5 d. 5.0 e. 7.5
a. 0.67
A waiting-line system that meets the assumptions of M/M/1 has = 1, = 4. For this system, Po is ______ and utilization is ________. a. 0.75; 0.25 b. 0.80; .20 c. -3; -4 d. 3;4 e. none of these
a. 0.75; 0.25
Students arrive randomly at the help desk of the computer lab. There is only one service agent, and the time required for inquiry varies from student to student. Arrival rates have been found to follow the Poisson distribution, and the service times follow the negative exponential distribution. The average arrival rate is 12 students per hour, and the average service rate is 20 students per hour. How many students, on the average, will be waiting in line at any one time? a. 0.9 students b. 1.5 students c. 3 students d. 4 students e. 36 students
a. 0.9 students
A specific product has demand during lead time of 100 units, with a standard deviation of 25 units. What safety stock (approximately) provides a 95% service level? a. 41 b. 55 c. 133 d. 140 e. 165
a. 41
A system in which the customer receives service from only one station and then exits the system is a. a single-phase system b. a single channel system c. a multiple-channel system d. a multiple-phase system e. none of the above
a. a single-phase system
The fixed-period inventory model requires more safety stock than the fixed-quantity models because a. a stockout can occur during the review period as well as during the lead time b. this model is used for products that have large standard deviations of demand c. this model is used for products that require very high service levels d. replenishment is not instantaneous e. setup costs and holding costs are large
a. a stockout can occur during the review period as well as during the lead time
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
a. breaks the aggregate plan into greater detail
Which of the following aggregate planning strategies is a "demand option"? a. changing price b. subcontracting c. varying production levels d. changing inventory levels e. using part-time workers
a. changing price
The source population is considered to be either ________ in its size. a. finite or infinite b. fixed or variable c. known or unknown d. random or scheduled e. small or large
a. finite or infinite
A firm's demand in the next four quarters (its aggregate planning horizon) is forecast to be 80, 50, 40, and 90 units. Last quarter, the firm produced 60 units. If it uses level scheduling, the firm will. a. hire workers to permit production of 65 units per quarter for the next four quarters b. hire 20 workers c. have an increase in inventory of 20 units in the next quarter d. have a decrease in inventory of 5 units in the next quarter e. change its workforce each quarter so that inventory does not change
a. hire workers to permit production of 65 units per quarter for the next four quarters
In the basic EOQ model, if the cost of placing an order doubles, and all other values remain constant, the EOQ will a. increase by about 41% b. increase by 100% c. increase by 200% d. increase, but more data is needed to say by how much e. either increase or decrease
a. increase by about 41%
A waiting-line system that meets the assumptions of M/M/S has = 5, = 4, and M = 2. For these values, Po is approximately 0.23077 and Ls is approximately 2.05128. The average time a unit spends waiting in this system a. is approximately 0.1603 b. is approximately 0.2083 c. is approximately 0.4103 d. is approximately 0.8013 e. cannot be calculated because is larger than
a. is approximately 0.1603
Which of the following statements about aggregate planning is false? a. Hiring, layoffs, overtime, and subcontracting are methods of manipulating capacity. b. Aggregate planning produces a plan detailing which products are made and in what quantities. c. Yield management is a way of manipulating product or service demand. d. Aggregate planning uses the adjustable part of capacity to meet production requirements. e. The transportation method is an optimizing technique for aggregate planning.
b. Aggregate planning produces a plan detailing which products are made and in what quantities.
An inventory decision rule states "when the inventory level goes down to 14 gearboxes, 100 gearboxes will be ordered." Which of the following statements is true? a. One hundred is the reorder point, and 14 is the order quantity. b. Fourteen is the reorder point, and 100 is the order quantity. c. The number 100 is a function of demand during lead time. d. Fourteen is the safety stock, and 100 is the reorder point. e. None of the above is true.
b. Fourteen is the reorder point, and 100 is the order quantity.
Which of the following statements regarding the production order quantity model is true? a. It applies only to items produced in the firm's own production departments. b. It relaxes the assumption that all the order quantity is received at one time. c. It relaxes the assumption that the demand rate is constant. d. It minimizes the total production costs. e. It minimizes inventory.
b. It relaxes the assumption that all the order quantity is received at one time.
Four of the most widely used waiting line models—M/M/1 or A, M/M/S or B, M/D/1 or C, and Limited population or D—all share three characteristics, which are a. normal arrivals, FIFO discipline, and normal service times b. Poisson arrivals, FIFO discipline, and a single-service phase c. Poisson arrivals, FIFO discipline, and exponential service times d. Poisson arrivals, no queue discipline, and exponential service times e. none of these
b. Poisson arrivals, FIFO discipline, and a single-service phase
Which of the following statements regarding Amazon.com is false? a. The company was opened by Jeff Bezos in 1995. b. The company was founded as, and still is, a "virtual retailer" with no inventory. c. The company is now a world-class leader in warehouse management and automation. d. The company uses both United Parcel Service and the U.S. Postal Service as shippers. e. Amazon obtains its competitive advantage through inventory management.
b. The company was founded as, and still is, a "virtual retailer" with no inventory.
A university has only one technician in the repair station to care for the computers in the student labs. This system is most likely a. a single channel, limited queue system b. a single channel, limited population system c. a multi-channel, limited queue system d. a multi-channel, limited population system e. none of the above
b. a single channel, limited population system
The common measures of a queuing system's performance include a. probability that the service facility will be idle, average queue length, probability that the waiting time will exceed a specified duration b. average time each customer spends in the system, probability that the service system will be idle, average time each customer spends in the queue c. average queue length, maximum time a customer may spend in the queue, the utilization factor for the system d. average time each customer spends in the system, maximum queue length, probability of a specific number of customers in the system e. none of the above
b. average time each customer spends in the system, probability that the service system will be idle, average time each customer spends in the queue
Which of these is among the demand options of aggregate planning? a. subcontracting b. back-ordering during high-demand periods c. changing inventory levels d. varying workforce size e. All of the above are demand options.
b. back-ordering during high-demand periods
The potential restaurant customer who says to her husband, "The line looks too long; let's eat somewhere else," is an illustration of which element of queue discipline? a. first-in, first-out b. balk c. renege d. random departure e. none of the above
b. balk
Which choice below best describes the counterseasonal demand option? a. producing such products as lawnmowers and sunglasses during the winter b. developing a mix of products that smoothes out their demands c. lowering prices when demand is slack d. using subcontractors only when demand is excessive e. the breaking of the aggregate plan into finer levels of detail
b. developing a mix of products that smoothes out their demands
Dependence on an external source of supply is found in which of the following aggregate planning strategies? a. varying production rates through overtime or idle time b. subcontracting c. using part-time workers d. back ordering during high demand periods e. hiring and laying off
b. subcontracting
In aggregate planning, which one of the following is not a basic option for altering demand? a. promotion b. subcontracting c. back ordering d. pricing e. All are demand options.
b. subcontracting
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
b. subcontracting
Which of the following is most likely to be served in a last-in, first-served (LIFS) queue discipline? a. customers checking out at a grocery store b. the in-basket on a manager's desk c. patients entering a hospital emergency room d. patrons waiting to be seated in a casual-dining restaurant e. all of the above
b. the in-basket on a manager's desk
Aggregate planning is capacity planning for a. the long range b. the intermediate range c. the short range d. typically one to three months e. typically three or more years
b. the intermediate range
In a repetitive focus factory, the number of channels available for the processing of a certain part would likely refer to a. the number of successive operations that have to be performed on that part b. the number of machines doing the same necessary operations c. the number of parts waiting to be processed d. all of the above depending on the layout e. none of the above
b. the number of machines doing the same necessary operations
ABC analysis is based upon the principle that a. all items in inventory must be monitored very closely b. there are usually a few critical items, and many items which are less critical c. an item is critical if its usage is high d. more time should be spent on class "C" items because there are more of them e. an item is critical if its unit price is high
b. there are usually a few critical items, and many items which are less critical
An advantage of the fixed-period inventory system is that a. the supplier will be more cooperative 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 these aggregate planning strategies adjusts capacity to match demand? a. back ordering b. using part-time workers c. counterseasonal product mixing d. changing price e. None of the above is a capacity option.
b. using part-time workers
Which of the following statements regarding control of service inventories is true? a. Service inventory is a fictional concept, because services are intangible. 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 not setup costs. e. All of the above are true.
c. Effective control of all goods leaving the facility is one applicable technique.
Which of the following statements regarding aggregate planning is true? a. In a pure level strategy, production rates or work force levels are adjusted to match demand requirements over the planning horizon. b. A pure level strategy allows lower inventories when compared to pure chase and hybrid strategies. c. In a mixed strategy, there are changes in both inventory and in work force and production rate over the planning horizon. d. Because service firms have no inventory, the pure chase strategy does not apply. e. All of the above are true.
c. In a mixed strategy, there are changes in both inventory and in work force and production rate over the planning horizon.
In queuing problems, which of the following probability distributions is typically used to describe the number of arrivals per unit of time? a. binomial b. normal c. Poisson d. exponential e. lognormal
c. Poisson
Which of the following is not one of the four things needed for aggregate planning? a. a logical overall unit for measuring sales and output b. a method for determining costs, such as hiring, firing, and inventory costs, associated with production schedules c. a mathematical model that will minimize costs over the intermediate planning period d. an aggregate demand forecast for an intermediate planning period e. All of these are needed for aggregate planning.
c. a mathematical model that will minimize costs over the intermediate planning period
As the average service rate increases, the shape of the negative exponential distribution of service times a. grows steadily steeper without limit b. has an ever steeper slope that eventually turns positive c. becomes less gently curved as it moves ever closer to the graph origin d. takes on a more uniform slope over a wide range of service times e. changes in appearance from convex to concave
c. becomes less gently curved as it moves ever closer to the graph origin
Which of these is not a characteristic that makes yield management attractive? a. demand can be segmented b. service can be sold in advance of consumption c. capacity is easily changed d. variable costs are low and fixed costs are high e. demand fluctuates
c. capacity is easily changed
Which of the following is not an ingredient for controlling labor cost 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. contract overseas labor to obtain a lower wage scale 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
c. contract overseas labor to obtain a lower wage scale
A waiting-line system that meets the assumptions of M/M/S has = 5, = 4, and M = 2. For these values, Po is approximately 0.23077 and Ls is approximately 2.05128. The average number of units waiting in the queue a. is approximately 0.1603 b. is approximately 0.4103 c. is approximately 0.8013 d. is approximately 1.0417 e. cannot be calculated because is larger than
c. is approximately 0.8013
If the actual order quantity is the economic order quantity in a problem that meets the assumptions of the economic order quantity model shown below, the average amount of inventory on hand a. is smaller the smaller is the holding cost per unit b. is zero c. is one-half of the economic order quantity d. is affected by the amount of product cost e. All of the above are true.
c. is one-half of the economic order quantity
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 b. level production is approximately 1000 units per day c. level production of 420 units per day is below the January requirement d. level production is approximately 420 units per month e. the firm must hire workers between December and January
c. level production of 420 units per day is below the January requirement
Which of the following is not an advantage of level scheduling? a. stable employment b. lower absenteeism c. matching production exactly with sales d. lower turnover e. more employee commitment
c. matching production exactly with sales
An airline ticket counter, with several agents for one line of customers, is an example of a a. single channel, single phase system b. single channel, multi-phase system c. multi-channel, single phase system d. multi-channel, multi-phase system e. none of the above
c. multi-channel, single phase system
A large discount store and supermarket has a hair styling salon on its premises. The salon has several operators. Salon customers can shop in other parts of the store until their name is called for salon service, at which time the customer will be served by the next available stylist. This scenario provides an example of a a. multiple-channel, multi-phase, unlimited queue length b. single-channel, multi-phase, limited queue length c. multi-channel, unlimited queue length d. multiple single-channel systems, limited queue length e. none of the above
c. multi-channel, unlimited queue length
In level scheduling, what is kept uniform from month to month? a. product mix b. inventory levels c. production/workforce levels d. demand levels e. sub-contracting levels
c. production/workforce levels
Which of the following 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
c. subcontracting
Which of the following aggregate planning models is based primarily upon a manager's past experience? a. the linear decision rule b. simulation c. the management coefficients model d. the transportation method e. graphical methods
c. the management coefficients model
The two most basic inventory questions answered by the typical inventory model are a. timing and cost of orders b. quantity and cost of orders c. timing and quantity of orders d. order quantity and service level e. ordering cost and carrying cost
c. timing and quantity of orders
A waiting-line system that meets the assumptions of M/M/1 has = 1, = 4. For this system, the probability of 5%6%# than two units in the system is approximately a. 0.0625 b. 0.25 c. 0.75 d. 0.9375 e. certain
d. 0.9375
A single-phase waiting-line system meets the assumptions of constant service time or M/D/1. Units arrive at this system every 12 minutes on average. Service takes a constant 8 minutes. The average number in the system Ls is approximately a. 2.25 b. 2.5 c. 3.0 d. 1.33 e. 5.0
d. 1.33
A queuing model which follows the M/M/1 assumptions has = 2 and = 3. The average number in the system is a. 2/3 b. 1 c. 1.5 d. 2 e. 6
d. 2
A queuing model which follows the M/M/1 assumptions has = 10 and = 12. The average number in the system is a. 0.83 b. 2 c. 2.5 d. 5 e. 6
d. 5
Students arrive randomly at the help desk of the computer lab. There is only one service agent, and the time required for inquiry varies from student to student. Arrival rates have been found to follow the Poisson distribution, and the service times follow the negative exponential distribution. The average arrival rate is 12 students per hour, and the average service rate is 20 students per hour. A student has just entered the system. How long is she expected to stay in the system? a. 0.125 minute b. 0.9 minute c. 1.5 minutes d. 7.5 minutes e. 0.075 hour
d. 7.5 minutes
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 are tightly controlled, have accurate records, and receive regular review by major decision makers. c. In ABC analysis, "C" Items have minimal records, periodic review, and simple controls. d. ABC analysis is based on the presumption that all items must be tightly controlled to produce important cost savings. e. All of the above statements are true.
d. ABC analysis is based on the presumption that all items must be tightly controlled to produce important cost savings.
Which of the following statements about aggregate planning is true? a. Advertising/promotion is a way of manipulating product or service supply. b. Work station loading and job assignments are examples of aggregate planning. c. Overtime/idle time is a way of manipulating product or service demand. d. Aggregate planning uses the adjustable part of capacity to meet production requirements. e. All of the above are true.
d. Aggregate planning uses the adjustable part of capacity to meet production requirements.
Which of these statements about the production order quantity model is false? a. The production order quantity model is appropriate when the assumptions of the basic EOQ model are met, except that receipt is noninstantaneous. b. Because receipt is noninstantaneous, some units are used immediately, not stored in inventory. c. Average inventory is less than one-half of the production order quantity. d. All else equal, the smaller the ratio of demand rate to production rate, the larger is the production order quantity. e. None of the above is false.
d. All else equal, the smaller the ratio of demand rate to production rate, the larger is the production order quantity.
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 increase, the EOQ 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.
Which choice best describes level scheduling? a. Daily production is variable from period to period. b. Subcontracting, hiring, and firing manipulate supply. c. Price points are calculated to match demand to capacity. d. Inventory goes up or down to buffer the difference between demand and production. e. Seasonal demand fluctuations are matched without hirings or layoffs.
d. Inventory goes up or down to buffer the difference between demand and production.
Which of the following statements regarding Anheuser-Busch is false? a. Aggregate planning is a major part of its competitive edge. b. All four stages of beer production are integrated into the aggregate plan. c. High facility utilization complements its successful aggregate planning. d. Its aggregate planning focuses entirely on facilities, ignoring employee issues. e. Even with excellent aggregate planning, its plants need to have high utilization.
d. Its aggregate planning focuses entirely on facilities, ignoring employee issues.
In the basic queuing model (M/M/1), arrival rates are distributed by a. continuous probability distributions b. normal probability distributions c. negative exponential probability distributions d. Poisson distributions e. lognormal distributions
d. Poisson distributions
Which of the following is not an assumption of the economic order quantity model shown below? a. Demand is known, constant, and independent. b. Lead time is known and constant. c. Quantity discounts are not possible. d. Production and use can occur simultaneously. e. The only variable costs are setup cost and holding (or carrying) cost.
d. Production and use can occur simultaneously.
Which of the following statements about quantity discounts is false? a. The cost-minimizing solution may or may not be where annual holding costs equal annual ordering costs. b. In inventory management, item cost becomes relevant to inventory decisions only when a quantity discount is available. c. If carrying costs are expressed as a percentage of value, EOQ is larger at each lower price in the discount schedule. d. The larger annual demand, the less attractive a discount schedule will be. e. The smaller the ordering cost, the less attractive a discount schedule will be.
d. The larger annual demand, the less attractive a discount schedule will be.
If demand is not uniform and constant, then stockout risks can be controlled by a. increasing the EOQ b. placing an extra order c. raising the selling price to reduce demand d. adding safety stock e. reducing the reorder point
d. adding safety stock
Which of the following is the term used for medium range capacity planning with a time horizon of three to eighteen months? a. material requirements planning b. short-range planning c. strategic planning d. aggregate planning e. none of the above
d. aggregate planning
Among the advantages of cycle counting is that it a. makes the annual physical inventory more acceptable to management b. does not require the detailed records necessary when annual physical inventory is used c. does not require highly trained people d. allows more rapid identification of errors and consequent remedial action than is possible with annual physical inventory e. does not need to be performed for less expensive items
d. allows more rapid identification of errors and consequent remedial action than is possible with annual physical inventory
A waiting line, or queuing, system has three parts, which are a. distribution of arrival times, discipline while waiting, and distribution of service times b. arrival rate, service rate, and utilization rate c. arrival discipline, queue discipline, and service sequencing d. arrival or inputs, queue discipline or the waiting line itself, and the service facility e. sequencing policy, penalty for reneging, and expediting of arrivals
d. arrival or inputs, queue discipline or the waiting line itself, and the service facility
"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. capacity allocation to different classes of customers in order to maximize profits e. management's selection of a product mix yielding maximum profits
d. capacity allocation to different classes of customers in order to maximize profits
Which of the following aggregate planning strategies is a "capacity option"? a. influencing demand by changing price b. counterseasonal product mixing c. influencing demand by extending lead times d. changing inventory levels e. influencing demand by back ordering
d. changing inventory levels
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 the variability of demand during lead time e. protect the firm from a sudden decrease in demand
d. control the likelihood of a stockout due to the variability of demand during lead time
Which one of the following is (*) a characteristic of a Model C or M/D/1 system? a. single channel b. single phase c. Poisson arrival rate pattern d. exponential service time pattern e. unlimited population size
d. exponential service time pattern
A firm uses the pure chase strategy 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. In following the chase strategy, the firm will a. add 100 units to inventory in the next period b. add 200 units to inventory in the next period c. hire workers to make up the 100 unit difference d. fire workers to make up the 200 unit difference e. implement a lower price point to increase demand
d. fire workers to make up the 200 unit difference
The EOQ model with quantity discounts attempts to determine a. what is the lowest amount of inventory necessary to satisfy a certain service level b. what is the lowest purchasing price c. whether to use fixed-quantity or fixed-period order policy d. how many units should be ordered e. what is the shortest lead time
d. how many units should be ordered
All of the following statements about ABC analysis are true except a. inventory may be categorized by measures other than dollar volume b. it categorizes on-hand inventory into three groups based on annual dollar volume c. it is an application of the Pareto principle d. it states that all items require the same degree of control e. it states that there are the critical few and the trivial many inventory items
d. it states that all items require the same degree of control
Which of the following uses regression to incorporate historical managerial performance into aggregate planning? a. transportation method b. simulation c. linear decision rule d. management coefficients model e. keiretsu
d. management coefficients model
The sign at the bank that reads "Wait here for the first available teller" suggests the use of a _____ waiting line system. a. single phase b. multi-phase c. single channel d. multi-channel e. multiple line
d. multi-channel
A university has several technicians in the repair station to care for the computers in the student labs. This system is most likely a. single channel, limited queue system b. single channel, limited population system c. multi-channel, limited queue system d. multi-channel, limited population system e. none of the above
d. multi-channel, limited population system
A small hair styling salon has several operators. While customers, do not have appointments, each is waiting to be served by a specific operator. This scenario provides an example of a a. multiple-channel, multi-phase, limited queue length b. single-channel, multi-phase, limited queue length c. multi-channel, limited queue length d. multiple single-channel systems, limited queue length e. none of the above
d. multiple single-channel systems, limited queue length
In queuing problems, which of the following probability distributions is typically used to describe the time to perform the service? a. binomial b. normal c. Poisson d. negative exponential e. lognormal
d. negative exponential
Which of the following is (*) a common queuing situation? a. grocery shoppers being served by checkout clerks b. commuters slowing or stopping at toll plazas to pay highway tolls c. machinery waiting to be repaired or maintained d. parcel delivery truck following its computer-generated route e. patients in a health clinic waiting to see one of several doctors
d. parcel delivery truck following its computer-generated route
Which of the following is not one of the four main types of inventory? a. raw material inventory b. work-in-process inventory c. maintenance/repair/operating supply inventory d. safety stock inventory e. All of these are main types of inventory.
d. safety stock inventory
The proper quantity of safety stock is typically determined by a. minimizing an expected stockout cost b. carrying sufficient safety stock so as to eliminate all stockouts c. meeting 95% of all demands d. setting the level of safety stock so that a given stockout risk is not exceeded e. minimizing total costs
d. setting the level of safety stock so that a given stockout risk is not exceeded
A disadvantage of the fixed-period inventory system is that a. it involves higher ordering costs than the fixed quantity inventory system b. additional inventory records are required c. the average inventory level is decreased d. since there is no count of inventory during the review period, a stockout is possible e. orders usually are for larger quantities
d. since there is no count of inventory during the review period, a stockout is possible
"An optimal plan for minimizing the cost of allocating capacity to meet demand over several planning periods" best describes a. the linear decision rule b. simulation c. the management coefficients model d. the transportation method e. graphical methods
d. the transportation method
Which of the following aggregate planning methods does not work if hiring and layoffs are possible? a. the linear decision rule b. simulation c. the management coefficients model d. the transportation method e. graphical methods
d. the transportation method
Which of the following would not generally be a motive for a firm to hold inventories? a. to decouple or separate parts of the production process b. to provide a stock of goods that will provide a selection for customers c. to take advantage of quantity discounts d. to minimize holding costs e. All of the above are functions of inventory.
d. to minimize holding costs
The primary purpose of the basic economic order quantity model shown below is a. to calculate the reorder point, so that replenishments take place at the proper time b. to minimize the sum of carrying cost and holding cost c. to maximize the customer service level d. to minimize the sum of setup cost and holding cost e. to calculate the optimum safety stock
d. to minimize the sum of setup cost and holding cost
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
d. varying work force size by hiring or layoffs
Students arrive randomly at the help desk of the computer lab. There is only one service agent, and the time required for inquiry varies from student to student. Arrival rates have been found to follow the Poisson distribution, and the service times follow the negative exponential distribution. The average arrival rate is 12 students per hour, and the average service rate is 20 students per hour. What is the utilization factor? a. 20% b. 30% c. 40% d. 50% e. 60%
e. 60%
Which of the following is consistent with a pure chase strategy? a. vary production levels to meet demand requirements b. vary work force to meet demand requirements c. vary production levels and work force to meet demand requirements d. little or no use of inventory to meet demand requirements e. All of the above are consistent with a pure chase strategy.
e. All of the above are consistent with a pure chase strategy.
Which of the following are elements of inventory holding costs? a. housing costs b. material handling costs c. investment costs d. pilferage, scrap, and obsolescence e. All of the above are elements of inventory holding cost.
e. All of the above are elements of inventory holding cost.
Which of the following is a function of inventory? a. to decouple or separate parts of the production process b. to decouple the firm from fluctuations in demand and provide a stock of goods that will provide a selection for customers 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.
A queuing model which follows the M/M/1 assumptions has = 3 and = 2. The average number in the system is a. -3 b. 3 c. 0.667 d. 150 percent e. growing without limit, since is larger than .
e. growing without limit, since is larger than
Which of the following is not consistent with a pure level strategy? a. varying the use of subcontracting b. variable work force levels c. little or no use of inventory to meet demand requirements d. varying production levels and/or work force to meet demand requirements e. All of the above are inconsistent with the pure level strategy.
e. All of the above are inconsistent with the pure level strategy.
Which of the following statements regarding the reorder point is true? 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 x L if safety stock is present. d. The fixed-period model has no reorder point. e. All of the above are true.
e. All of the above are true.
Which of the following statements about the basic EOQ model is true? a. If the ordering cost were to double, the EOQ would rise. b. If annual demand were to double, the EOQ would increase. c. If the carrying cost were to increase, the EOQ would fall. d. If annual demand were to double, the number of orders per year would increase. e. All of the above statements are true.
e. All of the above statements are true.
Which of the following statements regarding aggregate planning in services is false? a. When outputs are intangible, aggregate planning deals mainly with human resources requirements and managing demand. b. Perishability of inventory is an important consideration of planning. c. Aggregate planning in some service industries can be simpler than in manufacturing. d. Labor is the primary aggregate planning vehicle. e. Level scheduling is far more common than chase.
e. Level scheduling is far more common than chase.
Which of the following is (*) an assumption of the M/M/1 model? a. The first customers to arrive are the first customers served. b. Each arrival comes independently of the arrival immediately before and after that arrival. c. The population from which the arrivals come is very large or infinite in size. d. Customers do not renege. e. Service times occur according to a normal curve.
e. Service times occur according to a normal curve.
Study of waiting-line models helps operations managers better understand a. service systems such as bank teller stations b. maintenance activities that might repair broken machinery c. shop-floor control activities d. service systems such as amusement park rides e. all of the above
e. all of the above
Which of the following is a measure of queue performance? a. utilization factor b. average queue length c. probability of a specific number of customers in the system d. average waiting time in the line e. all of the above
e. all of the above
Yield management is most likely to be used in which one of the following situations? a. a fast food restaurant with wide demand fluctuations during the day b. a dental clinic that wants to fill its appointment book c. a firm with a good counterseasonal product mix d. a shipping company that can change its fleet size easily e. an airline attempting to fill "perishable" seats at maximum revenue
e. an airline attempting to fill "perishable" seats at maximum revenue
ABC analysis divides on-hand inventory into three classes, generally based upon a. item quality b. unit price c. the number of units on hand d. annual demand e. annual dollar volume
e. annual dollar volume
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
e. cannot be determined without lead time data
A copy center has five machines that serve many customers throughout the day; the waiting-line system for copy service has an infinite population while the waiting-line system for copier maintenance has a finite population
true
A hotel room that goes unrented and an airline seat that goes unsold are both examples of perishability of services inventory.
true
A major challenge in inventory management is to maintain a balance between inventory investment and customer service.
true
Aggregate planning for fast food restaurants is very similar to aggregate planning in manufacturing, but with much smaller units of time.
true
Aggregate planning occurs over the medium or intermediate future of 3 to 18 months
true
An M/M/1 model and an M/D/1 model each have an arrival rate of 1 per minute and a service rate of 3 per minute; the average queue length of the M/M/1 will be twice that of the M/D/1.
true
Controlling the cost of labor in services involves quick response to consumer demand, on-call labor for unexpected demand, flexibility of labor for reallocation, and flexibility of hours or rate of output of individual workers.
true
Disaggregation is the process of breaking the aggregate plan into greater detail; one example of this detail is the Master Production Schedule.
true
Finding an ideal mixed strategy is complicated by the huge number of possible strategies.
true
Graphical techniques are easy to understand and use, but are not well-suited for generating optimal strategies.
true
If setup costs are reduced by substantial reductions in setup time, the production order quantity is also reduced
true
In ABC analysis, "A" Items are the most tightly controlled.
true
In aggregate planning, one of the adjustable elements of capacity is the extent of subcontracting.
true
In aggregate planning, the amount of overtime and the size of the work force are both adjustable elements of capacity
true
In cycle counting, the frequency of item counting and stock verification usually varies from item to item depending upon the item's classification.
true
In queuing problems, the term "renege" refers to the fact that some customers leave the queue before service is completed.
true
In the M/M/1 waiting line model with an arrival rate of 2 per hour and a service rate of 6 per hour, the utilization factor for the system is approximately 0.333.
true
In the analysis of queuing models, the Poisson distribution often describes arrival rates and service times are often described by the negative exponential distribution.
true
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 lot size than in an otherwise identical EOQ problem.
true
