Quizzes 6-10

Which of the following questions does not typically belong to a value-engineering checklist?

Can the product quality be lowered in order to reach an even lower price?

In the long run, a firm must recover all costs or go out of business. In other words, facilities and machinery must be maintained, modernized, and replaced

True

One of the main external failure costs is the warranty cost.

True

Which of the following is/ are considered as common problems with the development of product specifications?

A), B) and C)

Which of the following is not one of the outlined and recognized quality dimensions?

Affordability (the quality of being affordable)

Which statement is most accurate when deciding how much and when to buy?

Balance price, volume, carrying cost, and the cost of stock-outs.

ISO 9000 Stands for International Supply Organization 9000

False

Operator action is not required when process output exceeds the upper control limit (UCL) or dips below the lower control limit (LCL).

False

Ordering raw material from a supplier in full truck loads only is an example of decoupling inventory.

False

The Delphi technique is a quantitative forecasting method.

False

The correct statement describing a general condition of economic competition is:

Monopoly is the condition when there is only one provider in the market, and he will be able to charge the price that will best fit his interest

A transportation strategy should include consideration of:

Should include all of the above

A contract that specifies FOB Destination, freight prepaid means that:

The seller owns the goods while in transit up to the destination point, and will fill any claims in case of lost or damaged freight

Holding extra inventory to protect against a supply disruption from a supplier strike is an example of buffer inventory.

True

Decoupling inventories are used to:

accommodate different rates of manufacturing or patterns of demand.

Capital assets:

are generally expensive.

The three main inputs of a material requirements planning (MRP) system are:

bill of material, a master production schedule, and the inventory record.

Examples of (quality) prevention costs include:

employee training and awareness costs, and costs of pre-certifying and qualifying suppliers.

Canceling a contract for a technicality when market prices are falling is considered an acceptable and ethical practice.

false

Governments typically play no role in establishing prices or regulating how buyers and sellers are allowed to behave in agreeing on prices.

false

Marine transport is best suited for products of low weight and high value; and items that are extremely perishable.

false

Items for which prices are comparatively low and the cost of price reduction efforts may exceed any price savings realized are:

maintenance, repair, and operating supplies.

The cost approach to pricing:

means prices are set to cover direct costs, indirect costs, and provide a profit.

A sampling technique in which every element in the population has an equal chance of being selected is called:

random sampling.

A corporate travel department determines that employees have been staying in 15 different hotel chains. The director of corporate travel mandates that travelers may only stay in four designated hotel chains. This action is an example of:

simplification

When a specification is widely known, commonly recognized and readily available to every buyer, it is called a:

standard specification.

Logistics costs can be divided into three categories: inventory carrying costs, administrative costs, and transportation (with transportation costs accounting for the bulk of the costs).

true

Logistics is responsible for the management of inventory in motion and at rest.

true

When price are established using the market approach, prices may not be directly related to costs.

true

The selection of the FOB point is important to the purchaser, because it determines:

who pays the carrier, when legal title to goods being shipped passes to the buyer, who is responsible for preparing and pursuing loss or damage claims and who routes the freight.

A company manufactures 240 cylinders per day, each requiring a pressure gauge. The purchase price of the pressure gauge is $3.20. The company controller estimated annual holding costs at 25 percent per year, while the cost of placing an order was estimated at $55.00. Assuming that the plant operates 45 weeks (5days/week) per year, the EOQ for the pressure gauge is:

2,725

Which of the following lists reflect the characteristics of services:

Inseparability, Intangibility, Variability, Perishability and Non-Ownership

The process capability index (Cp) combines process spread and tolerance into one index that indicates whether process variation is satisfactory; and in practice, a value lower than "1" is considered unsatisfactory.

True

The six sigma (6σ) approach to quality uses the five-step methodology of: define, measure, analyze, improve, and control (DMAIC).

True

Which of the following is not true about value?

Value is determined subjectively by design engineers.

When a commercial janitorial service company predicts demand for its services using commercial building permits issued, office leasing and vacancy rates, this is an example of:

a causal model.

The lowest price that ensures a continuous supply of the proper quality where and when needed and allows the supplier to make a reasonable profit, is commonly known as:

a fair price.

Process variation that are intrinsic to the process are:

common, non-assignable causes of variation.

Rail is the most flexible mode of transportation and accounts for approximately 80 percent of transportation expenditures by U.S. firms.

false

Compared to other modes of transportation, motor carriers provide the advantage of:

having the flexibility of delivering point-to-point service.

Cycle inventories are used to:

reduce the number of setups, as well as order costs .

An advantage of buying by performance or function over other specification methods is that it provides:

the opportunity for the potential supplier to establish how to make the most suitable product/service.

Anticipation inventories are carried:

to cover a future demand.

Organizations operating under a just-in-time system, prefer to ship by:

truck

Packaging is an easy category to buy because it has few disposal, environmental, and transportation implications.

False

If the delivery date is some months or years away and if there is substantial chance of price escalation, a supplier may feel that there is far too much risk of loss to agree to sell under a:

firm-fixed-price (FFP).

A six sigma (6σ) approach to quality:

focuses on preventing defects by using data to reduce variation and waste.

Lean is a management philosophy that focuses on:

maximizing customer value while eliminating waste.

There a two approaches for setting prices. Under the market approach, factors stemming from competition determine the exact price each firm will quote. That is, when faced with the realities of competition, the price any specific firm will quote will be governed largely by its need for business and by what it thinks its competitors will quote.

true

Two effective logistics cost reduction strategies are partnering agreements with logistics services providers and long-term contracts.

true