Review all
39.A linear programming problem contains a restriction that reads "the quantity of X must be at least three times as large as the quantity of Y." Which of the following inequalities is the proper formulation of this constraint? a.3X ≥ Y b.X ≤ 3Y c.X + Y ≥ 3 d.X - 3Y ≥ 0 e.3X ≤ Y
d (Formulating linear programming problems, moderate) {AACSB: Analytic Skills}
26.The corner point solution method requires a.finding the value of the objective function at the origin b.moving the iso-profitline to the highest level that still touches some part of the feasible region c.moving the iso-profitline to the lowest level that still touches some part of the feasible region d.finding the coordinates at each corner of the feasible solution space e.none of the above
d (Graphical solution to a linear programming problem, moderate)
58.A synonym for shadow price is ______________.
dual value (Sensitivity analysis, moderate)
Constraints are needed to solve linear programming problems by hand, but not by computer.
false
In linear programming, if there are three constraints, each representing a resource that can be used up, the optimal solution must use up all of each of the three resources.
false
A(n) ________ is a concept that results in material being produced only when requested and moved to where it is needed just as it is needed.
pull system
1) Which of the following items is mostly likely managed using a single-period order model?
A) Christmas trees
Which of the following is specifically characterized by continuous and forced problem solving via a focus on throughput and reduced inventory? A) Just-in-time (JIT) B) Toyota Production System (TPS) C) Lean operations D) Material requirements planning (MRP) E) kanban
A) Just-in-time (JIT)
6) Q is to ________ systems as P is to ________ systems.
A) fixed quantity, fixed period
16) 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%.
4) Distribution management focuses on which of the following? A) the outbound flow of products B) incoming materials C) allocation of demand among suppliers D) setting dividend rates E) balancing an assembly line
Answer: A) the outbound flow of products
4) Which of the following is NOT one of the five parts of the Supply Chain Operations Reference (SCOR) model? A) Make B) Sell C) Plan D) Source E) Return
Answer: B) Sell
7) Which of the following methods best considers intangible costs related to a location decision? A) crossover methods B) locational cost-volume analysis C) factor-rating method D) the transportation method E) center-of-gravity method
Answer: C) factor-rating method
15) The Japanese concept of a company coalition of suppliers is: A) poka-yoke. B) kaizen. C) keiretsu. D) dim sum. E) illegal.
Answer: C) keiretsu.
11) Which of the following is most likely to affect the location decision of a service firm rather than a manufacturing firm? A) energy and utility costs B) attitude toward unions C) parking and access D) cost of shipping finished goods E) labor costs
Answer: C) parking and access
11) Among which of the following industries are purchasing costs the LOWEST percentage of sales? A) automobiles B) petroleum C) restaurants D) lumber E) chemicals
Answer: C) restaurants
10) Location analysis techniques typically employed by service organizations include: A) the factor rating method. B) the center-of-gravity method. C) purchasing power analysis of area. D) traffic counts. E) all of the above.
Answer: E) all of the above.
14) Which of the following is an advantage of the postponement technique? A) reduction in automation B) early customization of the product C) better quality of the product D) reduction in training costs E) reduction in inventory investment
Answer: E) reduction in inventory investment
3) Location decisions of goods-producing companies often assume that costs are relatively constant for a given area; therefore, the revenue function is critical.
Answer: FALSE
1) Benchmark firms have driven down costs of supply-chain performance.
Answer: TRUE
1) Service firms choose locations based, in part, on the revenue potential of a site.
Answer: TRUE
1) The graphic approach to locational cost-volume analysis displays the range of volume over which each location is preferable.
Answer: TRUE
8) Manufacturers may want to locate close to their customers if the transportation of finished goods is expensive or difficult.
Answer: TRUE
9) One reason for a firm locating near its competitors is the presence of a major resource it needs.
Answer: TRUE
Which of the following is specifically characterized by a focus on continuous improvement, respect for people, and standard work practices? A) Just-in-time (JIT) B) Toyota Production System (TPS) C) Lean operations D) Material requirements planning (MRP) E) kanban
B) Toyota Production System (TPS)
The cook in a fast-food restaurant knows that 2 hamburger patties and an order of fries should be started for each car that is waiting in line. This is best an example of: A) keiretsu. B) kanban. C) push production. D) kaizen. E) EOQ.
B) kanban.
What does the Japanese word "kanban" mean? A) low inventory B) employee empowerment C) card D) continuous improvement E) lot size of one
C) card
53.___________ are restrictions that limit the degree to which a manager can pursue an objective.
Constraints (Requirements of a linear programming problem, moderate)
6) A bakery wants to determine how many trays of doughnuts it should prepare each day. Demand is normal with a mean of 5 trays and standard deviation of 1 tray. If the owner wants a service level of at least 95%, how many trays should he prepare (rounded to the nearest whole tray)? Assume doughnuts have no salvage value after the day is complete.
D) 7
8) If demand is not uniform and constant, then stockout risks can be controlled by:
D) adding safety stock.
9) Which of the following is NOT one of the four main types of inventory?
D) safety stock inventory
7) The proper quantity of safety stock is typically determined by:
D) setting the level of safety stock so that a given stockout risk is not exceeded.
Which of the following is NOT a goal of JIT partnerships? A) removal of unnecessary activities B) removal of in-plant inventory C) removal of in-transit inventory D) obtain improved quality and reliability E) All of the above are goals of JIT partnerships.
E) All of the above are goals of JIT partnerships.
The 5Ss: A) have the "flavor" of a housekeeping list. B) are a checklist for lean operations. C) have become a list of seven items in American practice. D) can be used to assist with necessary changes in organizational culture. E) All of these are true.
E) All of these are true.
50.____________ is a mathematical technique designed to help operations managers plan and make decisions relative to the trade-offsnecessary to allocate resources.
Linear programming (Introduction, easy)
True or False: The Toyota Production System requires that activities have built-in, automatic tests to signal problems.
True
________ is any deviation from the optimum process that delivers perfect product on time, every time.
Variability
35.A maximizing linear programming problem has two constraints: 2X + 4Y < 100 and 3X + 10Y < 210, in addition to constraints stating that both X and Y must be nonnegative. The corner points of the feasible region of this problem are a.(0, 0), (50, 0), (0, 21), and (20, 15) b.(0, 0), (70, 0), (25, 0), and (15, 20) c.(20, 15) d.(0, 0), (0, 100), and (210, 0) e.none of the above
a (Graphical solution to a linear programming problem, moderate) {AACSB: Analytic Skills}
2) The main trait of a single-period model is that:
A) inventory has limited value after a certain period of time.
4) What is the difference between P and Q inventory systems?
A) order size B) order spacing E) A and B
5) Which of the following is a requirement of Q systems?
A) perpetual inventory system
How can a reduction of in-transit inventory be encouraged? A) supplier location near plants B) high setup costs C) low carrying costs D) use of trains, not trucks E) low-cost, global suppliers
A) supplier location near plants
8) Evaluating location alternatives by comparing their composite (weighted-average) scores involves which of the following? A) factor-rating analysis B) cost-volume analysis C) transportation model analysis D) linear regression analysis E) crossover analysis
Answer: A) factor-rating analysis
13) A jewelry store is more likely than a jewelry manufacturer to consider ________ in making a location decision. A) transportation costs B) cost of raw materials C) appearance/image of the location D) quality of life E) taxes
Answer: C) appearance/image of the location
10) Which of the following best describes vertical integration? A) sell products to a supplier or a distributor B) develop the ability to produce products that complement the original product C) produce goods or services previously purchased D) develop the ability to produce the specified good more efficiently than before E) build long-term partnerships with a few suppliers Answer: C
Answer: C) produce goods or services previously purchased
26) Intangible costs include which of the following? A) quality of prospective employees B) quality of education C) availability of public transportation D) all of the above E) none of the above
Answer: D) all of the above
9) Which of the following is NOT an opportunity for effective management in the supply chain? A) accurate "pull" data B) vendor-managed inventory C) postponement D) local optimization E) CPFR
Answer: D) local optimization
1) What describes a system that stores and displays information that can be linked to a geographic location? A) AIS B) LOC C) GLOC D) LIS E) GIS
Answer: E) GIS
3) Cross-sourcing describes the practice of having two suppliers provide every component.
Answer: FALSE
6) In location decisions, intangible costs are easier to measure than tangible costs.
Answer: FALSE
2) Drop shipping results in time and shipping cost savings.
Answer: TRUE
23) A product has a 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 (holding and setup) costs.
B) $800
27) Which of the following statements regarding the production order quantity model is TRUE?
B) It relaxes the assumption that all the order quantity is received at one time.
9) If daily demand is normally distributed with a mean of 15 and standard deviation of 5, and lead time is constant at 4 days, a 90 percent service level will require how much safety stock?
C) 13 units
29) 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. What is the production order quantity for this problem?
C) 184
Which one of the following scenarios represents the use of a kanban to reduce inventories? A) A supervisor tells the operators to stay busy and start producing parts for next month. B) A "supplier" work center signals the downstream workstation that a batch has been completed. C) A supervisor signals to several work centers that the production rate should be changed. D) A "customer" work center signals to the "supplier" workstation that more parts are needed. E) An operator asks the next station's operator to help him fix his machine.
D) A "customer" work center signals to the "supplier" workstation that more parts are needed.
8) Which of the following statements about ABC analysis is FALSE?
D) ABC analysis is based on the presumption that all items must be tightly controlled to produce important cost savings.
Which of the following is not a goal of JIT partnerships? A) removal of unnecessary activities B) removal of in-plant inventory C) removal of in-transit inventory D) inspect all incoming shipments to ensure zero defects E) All of the above are goals of JIT partnerships.
D) inspect all incoming shipments to ensure zero defects
3) 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?
E) Cannot be determined without lead time data.
True or False: A push system means providing the next station with exactly what is needed when it is needed.
False
True or False: Because most services cannot be inventoried, there is little place for JIT to help service organizations achieve competitive advantage.
False
True or False: Customer demand will always remain an unknown, so it is not considered a source of variability.
False
True or False: The quality management tool called poka-yoke is not relevant to JIT systems.
False
________ is the Japanese word for card that has come to mean "signal."
Kanban
56._______________ is an analysis that projects how much a solution might change if there were changes in the variables or input data.
Sensitivity analysis (Sensitivity analysis, moderate)
TPS stands for ________.
Toyota Production System
True or False: A common JIT layout tactic is to minimize distance.
True
True or False: TPS stands for Toyota Production System.
True
True or False: The 5Ss—sort/segregate, simplify/straighten, shine/sweep, standardize, and sustain/self discipline—are important to lean production because they act as a means to reduce waste.
True
True or False: The first step in reducing setup times is the separation of setup into preparation activities and actual setup, so that as much work as possible can be done while the machine or process is operating.
True
The requirements of linear programming problems include an objective function, the presence of constraints, objective and constraints expressed in linear equalities or inequalities, and _________.
alternative courses of action (Requirements of a linear programming problem, easy)
21.In linear programming, a statement such as "maximize contribution" becomes a(n) a.constraint b.slack variable c.objective function d.violation of linearity e.decision variable
c (Formulating linear programming problems, moderate)
The region that satisfies the constraint 4X + 15Z ≥ 1000 includes the origin of the graph.
false
The ________ is the time between the arrival of raw materials and the shipping of finished products.
manufacturing cycle time
A common form of the product-mixlinear programming seeks to find that combination of products and the quantity of each that maximizes profit in the presence of limited resources.
true
3) A local club is selling Christmas trees and deciding how many to stock for the month of December. If demand is normally distributed with a mean of 100 and standard deviation of 20, trees have no salvage value at the end of the month, trees cost $20, and trees sell for $50 what is the service level?
A) .60
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
18) 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. Answer: E
If a factory wants to cut its current lot size in half, by what proportion must setup cost change? A) Setup cost must be cut to one fourth its current value. B) Setup cost must also be cut in half from its current value. C) Setup cost must double from its current value. D) Cannot be determined. E) Setup cost must quadruple from its current value.
A) Setup cost must be cut to one fourth its current value.
25) 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 × L if safety stock is present. D) A shorter lead time implies a smaller reorder point. E) All of the above are true.
2) The fixed-period inventory system requires more safety stock than a fixed-quantity system because:
A) a stockout can occur during the review period as well as during the lead time.
Concerning relationships with suppliers, which of the following combinations is critical to the success of JIT? A) close relationships with trust B) close relationships with skepticism C) distant relationships with trust D) distant relationships with skepticism E) none of the above
A) close relationships with trust
3) Which of the following is an element 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 costs. Answer: E
The list of 5Ss, although it looks like a housekeeping directive, supports lean production by: A) identifying non-value items and removing them, in the "sort/segregate" category. B) reducing inventory, in the "standardize" category. C) increasing variability through standardized procedures, in the "standardize" category. D) eliminating wasted motion through ergonomic studies, in the "support" category. E) building good safety practices, in the "shine/sweep" category.
A) identifying non-value items and removing them, in the "sort/segregate" category.
7) 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.
17) A county wants to build one centrally-located processing facility to serve the county's four recycling drop-off locations. The four drop-offs have characteristics as given in the table below. What is the approximate center of gravity of these four locations? Location X-coordinate Y-coordinate Tonnage Drop-off point A 1 8 10 Drop-off point B 6 7 35 Drop-off point C 6 2 25 Drop-off point D 4 7 50 A) (4.75, 6.04) B) (17, 24) C) (33.5, 135.4) D) (6, 4.25) E) (570, 725)
Answer: A) (4.75, 6.04)
6) With cross-sourcing, how many suppliers provide each component on a regular basis (i.e., excluding backup suppliers)? A) 1 B) 2 C) 3 D) equal to the total number of components E) equal to the number of countries to which the final product is sold
Answer: A) 1
2) Consider a firm with an annual net income of $20 million, revenue of $60 million and cost of goods sold of $25 million. If the balance sheet amounts show $2 million of inventory and $500,000 of property, plant & equipment, what is the inventory turnover? A) 12.50 B) 10.00 C) 42.00 D) 4.16 E) 20.00
Answer: A) 12.50
5) Which of the following statements regarding the center-of-gravity method is FALSE? A) It is designed to minimize the maximum possible travel distance to any of the locations. B) The optimal x- and y-coordinates are calculated separately. C) The optimal solution is unconstrained, so it could suggest a location in the middle of a body of water. D) The weights used are the quantity of goods moved to or from each location. E) The origin of the coordinate system and the scale used are arbitrary, just as long as the relative distances are correctly represented.
Answer: A) It is designed to minimize the maximum possible travel distance to any of the locations.
13) A firm is considering two location alternatives. At location A, fixed costs would be $4,000,000 per year, and variable costs $0.30 per unit. At alternative B, fixed costs would be $3,600,000 per year, with variable costs of $0.35 per unit. If annual demand is expected to be 10 million units, which plant offers the lowest total cost? A) Plant A, because it is cheaper than Plant B for all volumes over 8,000,000 units. B) Plant B, because it is cheaper than Plant A for all volumes over 8,000,000 units. C) Plant A, because it is cheaper than Plant B for all volumes. D) Plant B, because it has the lower variable cost per unit. E) Neither Plant A nor Plant B, because the crossover point is at 10 million units.
Answer: A) Plant A, because it is cheaper than Plant B for all volumes over 8,000,000 units.
16) East Texas Seasonings is preparing to build one processing center to serve its four sources of seasonings. The four source locations are at coordinates shown below. Also, the volume from each source is provided. What is the center of gravity? X-coordinate Y-coordinate Volume Athens, Texas 30 30 150 Beaumont, Texas 20 10 350 Carthage, Texas 10 70 100 Denton, Texas 50 50 200 A) X = 28.125; Y = 31.25 B) X = 22000; Y = 24000 C) X = 27.5; Y = 40 D) center of gravity = 28 E) X = 25; Y = 40
Answer: A) X = 28.125; Y = 31.25
4) What term describes a supply chain that is designed to optimize both forward and reverse flows? A) closed-loop supply chain B) full-journey supply chain C) circular supply chain D) network supply chain E) recycled supply chain
Answer: A) closed-loop supply chain
5) A location decision for an appliance manufacturer would tend to have what type of focus? A) cost focus B) focus on finding very highly skilled technicians C) revenue focus D) environmental focus E) education focus
Answer: A) cost focus
4) What type of negotiating strategy requires the supplier to open its books to the purchasers? A) cost-based price model B) market-based price model C) competitive bidding D) price-based model E) transparent negotiations
Answer: A) cost-based price model
4) Industrial location analysis typically attempts to: A) minimize costs. B) maximize sales. C) focus more on human resources. D) avoid countries with strict environmental regulations. E) ignore exchange rates and currency risks.
Answer: A) minimize costs.
6) Local optimization is a supply-chain complication best described as: A) optimizing one's local area without full knowledge of supply chain needs. B) obtaining very high production efficiency in a decentralized supply chain. C) the prerequisite of global optimization. D) the result of supply chains built on suppliers with compatible corporate cultures. E) the opposite of the bullwhip effect.
Answer: A) optimizing one's local area without full knowledge of supply chain needs.
5) What is the practice of keeping a product generic as long as possible before customizing? A) postponement B) keiretsu C) vendor-managed inventory D) forward integration E) backward integration
Answer: A) postponement
12) Which of the following is a primary supplier selection criterion for a firm pursuing a differentiation strategy? A) product development skills B) cost C) capacity D) speed E) flexibility
Answer: A) product development skills
8) Warehouses sometimes perform certain other functions besides storing goods. Which of the following is NOT typically one of those functions? A) purchasing B) postponement C) break-bulk activities D) consolidation point E) cross-docking
Answer: A) purchasing
12) Which of the following is a location analysis technique typically employed by a service organization? A) purchasing power analysis B) linear programming C) queuing theory D) transportation method E) locational cost-volume analysis
Answer: A) purchasing power analysis
6) By which distribution system is more than 90 percent of U.S. coal shipped? A) railroads B) trucks C) waterways D) pipelines E) none of the above
Answer: A) railroads
7) What are the four stages of supplier selection? A) supplier evaluation, supplier development, negotiations, and contracting B) supplier evaluation, negotiations, supplier acquisition, and supplier development C) introduction, growth, maturity, and decline D) supplier evaluation, supplier development, negotiations, and centralized purchasing E) negotiations, contracting, centralized purchasing, and E-procurement
Answer: A) supplier evaluation, supplier development, negotiations, and contracting
14) Which of the following is a location analysis technique typically employed by a manufacturing organization? A) transportation method B) queuing theory C) correlation analysis and traffic counts D) simulation E) demographic analysis
Answer: A) transportation method
7) La Quinta Inns has a competitive edge over its rivals because it: A) uses regression analysis to determine which variables most influence profitability. B) has better television advertisements. C) picks larger locations than its rivals. D) builds only along interstate highways. E) consistently receives four-star ratings for its inns.
Answer: A) uses regression analysis to determine which variables most influence profitability.
5) Designing distribution networks to meet customer expectations suggests what three criteria? A) rapid response, service, and cost B) rapid response, product choice, and service C) product choice, cost, and service D) cost, process choice, and service E) rapid response, cost, and process choice
Answer: B
9) A clothing chain is considering two different locations for a new retail outlet. They have identified the four factors listed in the following table as the basis for evaluation, and have assigned weights as shown. The manager has rated each location on each factor, on a 100-point basis, as shown under the respective columns for Barclay and Chester. Factor Factor Description Weight Barclay Chester 1 Average community income .40 30 20 2 Community growth potential .25 40 30 3 Availability of public transportation .15 20 20 4 Labor cost .20 10 30 What is the score for Chester? A) 10.00 B) 24.50 C) 25.75 D) 27.00 E) 100.00
Answer: B) 24.50
28) Which of the following is the best example of the proximity rule that, for service firms, proximity to market is the most important location factor? A) Soft drinks are bottled in many local plants, where carbonated water is added to proprietary syrups that may have been shipped long distances. B) Few people will travel out-of state for a haircut. C) Patients will travel very long distances to have their hernia surgeries performed at Shouldice Hospital. D) Furniture makers choose to locate near the source of good hardwoods, even though it means locating near other furniture manufacturers. E) Metal refiners (smelters) locate near mines to accomplish significant weight reduction near the metal's source.
Answer: B) Few people will travel out-of state for a haircut.
16) Currency risk is based on what assumption? A) Firms that do not continuously innovate will lose market share. B) Values of foreign currencies continually rise and fall in most countries. C) Changing product lines by reacting to every current trend may alienate the customer base. D) The value of one dollar today is greater than the value of one dollar to be received one year from now. E) The U.S. stock market fluctuates daily.
Answer: B) Values of foreign currencies continually rise and fall in most countries.
12) Vertical integration appears particularly advantageous when the organization has: A) a very specialized product. B) a large market share. C) a very common, undifferentiated product. D) little experience operating an acquired vendor. E) purchases that are a relatively small percent of sales.
Answer: B) a large market share.
15) A furniture maker has delivered a dining set directly to the end consumer rather than to the furniture store. The furniture maker is practicing which of the following? A) postponement B) drop shipping C) channel assembly D) passing the buck E) float reduction
Answer: B) drop shipping
10) What is an approach to location analysis that includes both qualitative and quantitative considerations? A) locational cost-volume analysis B) factor-rating method C) transportation model D) center-of-gravity method E) make-or-buy analysis
Answer: B) factor-rating method
13) A rice mill in south Louisiana purchases the trucking firm that transports packaged rice to distributors. This is an example of which of the following? A) horizontal integration B) forward integration C) backward integration D) current transformation E) keiretsu
Answer: B) forward integration
18) Globalization of the location decision is the result of all EXCEPT which of the following? A) market economics B) higher quality of labor overseas C) ease of capital flow between countries D) high differences in labor costs E) more rapid, reliable travel and shipping
Answer: B) higher quality of labor overseas
5) E-procurement: A) works best in long-term contract situations but is not suited for auctions. B) is the same thing as Internet purchasing. C) has many benefits but requires a lot of paperwork. D) is illegal in all states except Nevada and New Jersey. E) All of the above are true of e-procurement.
Answer: B) is the same thing as Internet purchasing.
14) Japanese manufacturers often pursue a strategy that is part collaboration, part purchasing from a few suppliers, and part vertical integration. What is this approach called? A) kanban B) keiretsu C) samurai D) poka-yoke E) kaizen
Answer: B) keiretsu
15) The reason fast food restaurants often are found in close proximity to each other is: A) they enjoy competition. B) location clustering near high traffic flows. C) low cost. D) availability of skilled labor. E) all of the above.
Answer: B) location clustering near high traffic flows.
7) Which sourcing strategy is particularly common when the products being sourced are commodities? A) few suppliers B) many suppliers C) keiretsu D) vertical integration E) virtual companies
Answer: B) many suppliers
19) The transportation model, when applied to location analysis: A) minimizes total fixed costs. B) minimizes total production and transportation costs. C) minimizes total transportation costs. D) maximizes revenues. E) minimizes the movement of goods.
Answer: B) minimizes total production and transportation costs.
17) Governmental attitudes toward issues such as private property, intellectual property, zoning, pollution, and employment stability may change over time. What is the term associated with this phenomenon? A) bureaucratic risk B) political risk C) legislative risk D) judicial risk E) democratic risk
Answer: B) political risk
10) In most manufacturing industries, which of the following would likely represent the largest cost to the firm? A) transportation B) purchasing C) insurance D) financing E) advertising
Answer: B) purchasing
4) Which of the following is NOT among the eight determinants of revenue and volume for a service firm? A) quality of management B) shipment cost of finished goods C) purchasing power of the customer-drawing area D) uniqueness of the firm's and the competitors' locations E) competition in the area
Answer: B) shipment cost of finished goods
8) A restaurant runs a special promotion on lobster and plans to sell twice as many lobsters as usual. When this large order is sent to the distributor, the distributor assumes the large size is a trend, not a one-time event. The distributor therefore places an even larger order with the lobsterman. This behavior is the result of which of the following? A) double marginalization B) the bullwhip effect C) CPFR D) postponement E) vendor-managed inventory
Answer: B) the bullwhip effect
16) Which of the following is NOT an advantage of a virtual company? A) speed B) total control over every aspect of the organization C) specialized management expertise D) low capital investment E) flexibility
Answer: B) total control over every aspect of the organization
18) Production and transportation costs are always considered in which of the following location decision methods? A) traffic counts B) transportation model C) purchasing power D) proximity of markets E) clustering
Answer: B) transportation model
16) Which of the following is most likely to affect the location strategy of a manufacturing firm? A) appearance/image of the area B) utility costs C) purchasing power of drawing area D) competition in the area E) parking availability
Answer: B) utility costs
14) A employee produces 15 parts during a shift in which he made $90. What is the labor content of the product? A) $90 B) $5 C) $6 D) $0.167 E) $1,350
Answer: C) $6
10) In what type of auction does a buyer initiate the process by submitting a description of the desired product or service? A) traditional B) buyer C) Dutch D) French E) Mexican
Answer: C) Dutch
3) Which of the following statements regarding FedEx is TRUE? A) Its hub in Memphis, Tennessee, was selected because of its low cost. B) Memphis, Tennessee, is the only hub in the company's global flight network. C) FedEx believes the hub system helps reduce mishandling and delays due to better controls. D) FedEx uses a hub system in the United States, but a city-to-city network in other countries. E) Memphis is FedEx's only hub airport in the United States.
Answer: C) FedEx believes the hub system helps reduce mishandling and delays due to better controls.
15) Which of the following assumptions is NOT associated with strategies for goods-producing location decisions? A) Most major costs can be identified explicitly for each site. B) Focus on identifiable costs. C) High customer-contact issues are critical. D) Intangible costs can be evaluated. E) Location is a major determinant of cost.
Answer: C) High customer-contact issues are critical.
12) ________ and ________ are to key country success factors as ________ and ________ are to key region success factors. A) Cultural issues, location of markets; site size and cost, zoning restrictions B) Exchange rates, labor availability; site size and cost, environmental impact C) Labor cost, currency risk; land costs, proximity to customers D) Land costs, proximity to customers; labor cost, air and rail systems E) All of the above are accurate relationships.
Answer: C) Labor cost, currency risk; land costs, proximity to customers
14) Which of the following statements is true regarding the leverage of supply chain savings? A) Supply chain leverage is about the same for all industries. B) Supply chain savings exert more leverage as the firm's purchases are a smaller percent of sales. C) Supply chain savings exert more leverage as the firm's net profit margin decreases. D) Supply chain leverage depends only upon the percent of sales spent in the supply chain. E) None of the above is true.
Answer: C) Supply chain savings exert more leverage as the firm's net profit margin decreases.
6) Traffic counts and purchasing power analysis of drawing area are techniques associated with: A) locational cost-volume analysis. B) a manufacturing location decision. C) a retail or professional service location decision. D) the factor-rating method. E) the transportation model.
Answer: C) a retail or professional service location decision.
5) Which one of the following distribution systems offers speed and reliability when emergency supplies are needed overseas? A) trucking B) railroads C) airfreight D) waterways E) pipelines
Answer: C) airfreight
11) A fried chicken fast-food chain that acquired feed mills and poultry farms has performed which of the following? A) horizontal integration B) forward integration C) backward integration D) current transformation E) job expansion
Answer: C) backward integration
11) Among the following choices, an operations manager might best evaluate political risk of a country by looking at which type of country ranking? A) based on competitiveness B) based on cost of doing business C) based on corruption D) based on magnitude of government social programs E) based on average duration between presidential/prime minister elections
Answer: C) based on corruption
15) A regional bookstore chain wants to build a distribution center that is centrally located for its eight retail outlets. It will most likely employ which of the following tools of analysis? A) assembly line balancing B) load-distance analysis C) center-of-gravity method D) linear programming E) locational cost-volume analysis
Answer: C) center-of-gravity method
2) Geographic information systems can assist the location decision by: A) automating center-of-gravity problems. B) computerizing factor-rating analysis. C) combining geography with demographic analysis. D) updating transportation method solutions. E) providing good Internet placement for virtual storefronts.
Answer: C) combining geography with demographic analysis.
23) When making a location decision at the region/community level, which of these would be considered? A) government rules, attitudes, stability, incentives B) cultural and economic issues C) cost and availability of utilities D) zoning restrictions E) air, rail, highway, waterway systems
Answer: C) cost and availability of utilities
5) Which of the following describes using one supplier for a component and a second supplier for another component, where each supplier acts as a backup for the other? A) outsourcing B) dual-sourcing C) cross-sourcing D) backup-sourcing E) parallel-sourcing
Answer: C) cross-sourcing
14) The center-of-gravity method is used primarily to determine what type of locations? A) service locations B) manufacturing locations C) distribution center locations D) supplier locations E) call center locations
Answer: C) distribution center locations
6) What three logistics-related costs are relevant when analyzing the choice of number of facilities in a distribution network? A) inventory costs, production costs, and transportation costs B) inventory costs, production costs, and facility costs C) inventory costs, transportation costs, and facility costs D) facility costs, production costs, and transportation costs E) facility costs, inventory costs, and marketing costs
Answer: C) inventory costs, transportation costs, and facility costs
17) When Daimler and BMW pooled resources to develop standardized auto components, the sourcing strategy could best be described by which of the following? A) keiretsu B) virtual companies C) joint venture D) vertical integration E) few suppliers
Answer: C) joint venture
8) Which of the following is NOT an advantage of the "few suppliers" sourcing strategy? A) suppliers have a learning curve that yields lower transaction and production costs B) suppliers are more likely to understand the broad objectives of the end customer C) less vulnerable trade secrets D) creation of value by allowing suppliers to have economies of scale E) suppliers' willingness to provide technological expertise
Answer: C) less vulnerable trade secrets
10) Drop shipping: A) is equivalent to cross-docking. B) is the opposite of a blanket order. C) means the supplier will ship directly to the end consumer, rather than to the seller. D) is the same thing as keiretsu. E) is a good reason to find a new firm to ship your products.
Answer: C) means the supplier will ship directly to the end consumer, rather than to the seller.
2) The Institute for Supply Management: A) establishes laws and regulations for supply management. B) is an agency of the United Nations charged with promoting ethical conduct globally. C) publishes the principles and standards for ethical supply management conduct. D) prohibits backward integration into developing economies. E) grants Ph.D. degrees in purchasing.
Answer: C) publishes the principles and standards for ethical supply management conduct.
19) In location planning, environmental regulations, cost and availability of utilities, and taxes are: A) global factors. B) country factors. C) regional/community factors. D) site-related factors. E) none of the above.
Answer: C) regional/community factors.
6) A location decision for a traditional department store (e.g., Macy's) would tend to have what type of focus? A) cost focus B) labor focus C) revenue focus D) environmental focus E) education focus
Answer: C) revenue focus
9) Traffic counts and demographic analysis of drawing area are associated with: A) the center-of-gravity method. B) manufacturing location decisions. C) service location decisions. D) the transportation model. E) locational cost-volume analysis.
Answer: C) service location decisions.
25) Tangible costs include which of the following? A) climatic conditions B) availability of public transportation C) taxes D) quality and attitude of prospective employees E) zoning regulations
Answer: C) taxes
24) Which of these factors would be considered when making a location decision at the site level? A) government rules, attitudes, stability, incentives B) cultural and economic issues C) zoning regulations D) cost and availability of utilities E) proximity to raw materials and customers
Answer: C) zoning regulations
13) Which of the following workers is the most productive? A) $50 wages, 10 parts produced B) $10 wages, 1 part produced C) $30 wages, 5 parts produced D) $100 wages, 21 parts produced E) $500 wages, 100 parts produced
Answer: D) $100 wages, 21 parts produced
12) A full-service restaurant is considering opening a new facility in a specific city. The table below shows its ratings of four factors at each of two potential sites. Factor Weight Gary Mall Belt Line Affluence of local population .20 30 30 Traffic flow .40 50 20 Parking availability .20 30 40 Growth potential .20 10 30 The score for Gary Mall is ________ and the score for Belt Line is ________. A) 120; 120 B) 22; 24 C) 18; 120 D) 34; 28 E) none of the above
Answer: D) 34; 28
4) Outsourcing: A) transfers traditional internal activities to outside vendors. B) utilizes the efficiency that comes with specialization. C) allows the outsourcing firm to focus on its key success factors. D) All of the above are true of outsourcing. E) None of the above is true of outsourcing.
Answer: D) All of the above are true of outsourcing.
10) Why is Northern Mexico used as a cluster for electronics firms? A) high traffic flows B) venture capitalists located nearby C) natural resources of land and climate D) NAFTA E) high per capita GDP
Answer: D) NAFTA
5) Which of the following is NOT true about reverse logistics as compared to forward logistics? A) Inventory management is not consistent. B) Distribution costs are less directly visible. C) Pricing is dependent upon many factors. D) Speed is often very important. E) Forecasting is more uncertain.
Answer: D) Speed is often very important.
7) As the number of facilities increases, total logistics costs tend to follow a curve that first declines, then rises. Why? A) Transportation and inventory costs first decline steeply, then rise, while facility costs always rise. B) Transportation costs always decline, but eventually the rise in facility and inventory costs outweigh the declining transportation costs. C) Facility costs first decline steeply, then rise, while transportation and inventory costs always rise. D) Transportation costs first decline steeply, then rise, while facility and inventory costs always rise. E) Inventory costs first decline steeply, then rise, while transportation and facility costs always rise.
Answer: D) Transportation costs first decline steeply, then rise, while facility and inventory costs always rise.
6) What are the three classic types of negotiation strategies? A) supplier evaluation, supplier development, and supplier selection B) Theory X, Theory Y, and Theory Z C) many suppliers, few suppliers, and keiretsu D) cost-based price model, market-based price model, and competitive bidding E) traditional auctions, reverse auctions, and online exchanges
Answer: D) cost-based price model, market-based price model, and competitive bidding
11) A carpet manufacturer has delivered carpet directly to the end consumer rather than to the carpet dealer. The carpet manufacturer is practicing which of the following? A) postponement B) cross-docking C) channel assembly D) drop shipping E) float reduction
Answer: D) drop shipping
5) The transfer of some of what are traditional internal activities and resources of a firm to outside vendors is: A) a standard use of the make-or-buy decision. B) not allowed by the ethics code of the Supply Management Institute. C) offshoring. D) outsourcing. E) keiretsu.
Answer: D) outsourcing.
12) Hewlett-Packard withholds customization of its laser printers as long as possible. This is an example of which of the following? A) vendor-managed inventory B) standardization C) backward integration D) postponement E) timely customization
Answer: D) postponement
9) Which of the following is NOT a typical benefit of centralized purchasing? A) leverage purchase volume for better pricing B) develop specialized staff expertise C) reduce the duplication of tasks D) reduce lead times E) promote standardization
Answer: D) reduce lead times
8) Which of the following characteristics is NOT common to all four of Darden Restaurants' supply channels? A) supplier qualification B) product tracking C) independent audits D) refrigeration E) just-in-time delivery
Answer: D) refrigeration
7) Which of the following is NOT one of the risk mitigation tactics for the supply chain risk category of suppliers failing to deliver? A) use multiple suppliers B) effective contracts with penalties C) subcontractors on retainer D) require overnight delivery E) pre-planning
Answer: D) require overnight delivery
5) Which one of the following is NOT one of the six sourcing strategies? A) negotiation with many suppliers B) vertical integration C) keiretsu D) short-term relationships with few suppliers E) virtual companies
Answer: D) short-term relationships with few suppliers
9) Which of the following is NOT a condition that favors the success of vertical integration? A) availability of capital B) availability of managerial talent C) sufficiently high demand D) small market share E) All of the above favor the success of vertical integration.
Answer: D) small market share
7) While freight rates are often based on very complicated pricing systems, in general, the primary freight price factor is based on which of the following attributes? A) damage record B) on-time delivery C) door-to-door service D) speed of shipment E) consolidation capabilities
Answer: D) speed of shipment
6) A disadvantage of the "few suppliers" sourcing strategy is: A) the risk of not being ready for technological change. B) the lack of cost savings for customers and suppliers. C) possible violations of the Sherman Antitrust Act. D) the high cost of changing partners. E) the suppliers are less likely to understand the broad objectives of the procuring firm and the end customer.
Answer: D) the high cost of changing partners.
20) Which of the following is usually NOT one of the top considerations in choosing a country for a facility location? A) availability of labor and labor productivity B) exchange rates C) attitude of governmental units D) zoning regulations E) location of markets
Answer: D) zoning regulations
3) Consider a firm with an annual net income of $20 million, revenue of $60 million and cost of goods sold of $25 million. If the balance sheet amounts show $2 million of inventory and $500,000 of property, plant & equipment, how many weeks of supply does the firm hold? A) 12.50 B) 5.20 C) 2.60 D) 0.08 E) 4.16
Answer: E) 4.16
2) FedEx chose Memphis, Tennessee, as its U.S. hub because: A) the city is in the center of the United States, geographically. B) the airport has relatively few hours of bad weather closures. C) it needed a means to reach cities to which it did not have direct flights. D) the firm believed that a hub system was superior to traditional city-to-city flight scheduling. E) All of the above are true.
Answer: E) All of the above are true.
3) In supply chain management, ethical issues: A) are particularly important because of the enormous opportunities for abuse. B) may be guided by company rules and codes of conduct. C) become more complex the more global is the supply chain. D) may be guided by the principles and standards of the Institute for Supply Management. E) All of the above are true.
Answer: E) All of the above are true.
7) The bullwhip effect: A) occurs as orders are relayed from retailers to distributors to wholesalers to manufacturers. B) results in increasing fluctuations at each step of the sequence. C) increases the costs associated with inventory in the supply chain. D) occurs because of distortions in information in the supply chain. E) All of the above are true.
Answer: E) All of the above are true.
8) Which of the following would NOT be subject to negotiation between a buyer and supplier? A) price B) credit and delivery terms C) quality standards D) cooperative advertising agreements E) All of the above could be negotiated.
Answer: E) All of the above could be negotiated.
27) Which of the following statements regarding "proximity" in the location decision is FALSE? A) Service organizations find that proximity to market is the most critical primary location factor. B) Manufacturers want to be near customers when their product is bulky, heavy, or fragile. C) Perishability of raw materials is a good reason for manufacturers to locate near the supplier, not the customer. D) Reduction in bulk is a good reason for a manufacturer to locate near the supplier. E) Clustering among fast food chains occurs because they need to be near their labor supply.
Answer: E) Clustering among fast food chains occurs because they need to be near their labor supply.
7) As described in the book Aerotropolis, nowadays location decisions worldwide are often being based on what? A) rivers B) rail hubs C) interstate highways D) ports E) airports
Answer: E) airports
5) Which of the following is among the eight determinants of revenue and volume for a service firm? A) uniqueness of the firm's and the competitors' locations B) quality of the competition C) quality of management D) purchasing power of the customer-drawing area E) all of the above
Answer: E) all of the above
8) Which of the following devices represents an opportunity for technology to improve security of container shipments? A) devices that identify truck and container location B) devices that sense motion C) devices that measure radiation or temperature D) devices that can communicate the breaking of a container lock or seal E) all of the above
Answer: E) all of the above
6) Community attitudes, zoning restrictions, and quality of labor force are likely to be considered in which of the following location decision methods? A) transportation method B) locational cost-volume analysis C) center-of-gravity method D) simulation E) factor-rating method
Answer: E) factor-rating method
9) Which of the following would NOT typically be considered as part of a manufacturing firm's supply chain? A) suppliers B) distributors C) wholesalers D) retailers E) landscaping contractors
Answer: E) landscaping contractors
13) All EXCEPT which of the following are "opportunities" in managing the integrated supply chain? A) postponement B) drop shipping C) blanket orders D) standardization E) line balancing
Answer: E) line balancing
21) When making a location decision at the country level, which of these would be considered? A) corporate desires B) land/construction costs C) air, rail, highway, waterway systems D) zoning restrictions E) location of markets
Answer: E) location of markets
13) For which corporate strategy(ies) should supply chain inventory be minimized? A) low cost B) response C) differentiation D) low cost and response E) low cost and differentiation
Answer: E) low cost and differentiation
22) Which of these factors would be considered when making a location decision at the region/community level? A) government rules, attitudes, stability, incentives B) cultural and economic issues C) zoning restrictions D) environmental impact issues E) proximity to raw materials and customers
Answer: E) proximity to raw materials and customers
8) Which of the following statements does NOT accurately explain what occurs when the number of facilities in a distribution network increases? A) response time decreases B) profit first increases, then decreases C) total logistics costs first decrease, then increase D) inventory costs increase E) response time first decreases, then increases
Answer: E) response time first decreases, then increases
16) TAL Apparel's management of its supply chain for Stafford shirts sold in JCPenney in an example of which of the following? A) blanket orders B) standardization C) postponement D) lot size reduction E) single-stage control of replenishment
Answer: E) single-stage control of replenishment
8) Which of the following is NOT one of the predictive variables chosen by the profitability regression model used by La Quinta Inns? A) the price of the inn B) median income levels C) the state population per inn D) the location of nearby colleges E) the number of inns in a region
Answer: E) the number of inns in a region
4) What term is used to describe the outsourcing of logistics? A) e-logistics B) shipper-managed inventory (SMI) C) hollow logistics D) sub-logistics E) third-party logistics (3PL)
Answer: E) third-party logistics (3PL)
11) On the crossover chart where the costs of two or more location alternatives have been plotted, the quantity at which two cost curves cross is the quantity at which: A) fixed costs are equal for two alternative locations. B) variable costs are equal for two alternative locations. C) total costs are equal for all alternative locations. D) fixed costs equal variable costs for one location. E) total costs are equal for two alternative locations.
Answer: E) total costs are equal for two alternative locations.
18) Which of the following best describes Vizio's sourcing strategy? A) few suppliers B) keiretsu C) joint venture D) vertical integration E) virtual company
Answer: E) virtual company
1) ABC analysis classifies inventoried items into three groups, usually based on annual units or quantities used.
Answer: FALSE
1) 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.
Answer: FALSE
1) As the number of facilities increases, total logistics costs tend to follow a curve that first rises, then declines.
Answer: FALSE
1) Because the supply chain has become so electronic and automated, opportunities for unethical behavior have been greatly reduced.
Answer: FALSE
1) Even though a firm may have a low cost strategy, supply-chain strategy can select suppliers primarily on response or differentiation.
Answer: FALSE
1) FedEx chose Memphis, Tennessee, for its central location, or "hub," primarily because of the incentives offered by the city of Memphis and the state of Tennessee.
Answer: FALSE
1) With the "many suppliers" sourcing strategy, the order usually goes to the supplier that offers the highest quality.
Answer: FALSE
2) Designing distribution networks to meet customer expectations suggests three criteria: (1) rapid response, (2) cost, and (3) service.
Answer: FALSE
2) Insurance and taxes on inventory are part of the costs known as setup or ordering costs.
Answer: FALSE
2) Safety stock in inventory systems depends only on the average demand during the lead time.
Answer: FALSE
2) The EOQ model is best suited for items whose demand is dependent on other products.
Answer: FALSE
2) The location decisions of goods-producing firms will generally pay more attention to parking, access, and traffic counts than will service location decisions.
Answer: FALSE
2) The new model of a tight, fast, low-inventory supply chain, operating across political and cultural boundaries, has reduced the overall level of supply chain risk.
Answer: FALSE
2) The supply chain for a brewery would include raw ingredients such as hops and barley but not the manufactured goods such as bottles and cans.
Answer: FALSE
2) Vertical integration, whether forward or backward, requires the firm to become more specialized.
Answer: FALSE
2) Waterways are an attractive distribution system when speed is more important than shipping cost.
Answer: FALSE
3) ABC analysis is based on the presumption that carefully controlling all items is necessary to produce important inventory savings.
Answer: FALSE
3) For a location decision, labor productivity may be important in isolation, but low wage rates are a more important criterion.
Answer: FALSE
3) In the simple EOQ model, if annual demand were to increase, the EOQ would increase proportionately.
Answer: FALSE
3) Once revenue and total logistics costs are considered together, the optimal number of facilities in a distribution network may decrease compared to the optimal number of facilities based on total logistics costs only.
Answer: FALSE
3) The center-of-gravity method finds the location of a centralized facility, such as a distribution center, that will maximize the organization's revenue.
Answer: FALSE
3) The supply chain management opportunity called postponement involves delaying deliveries to avoid accumulation of inventory at the customer's site.
Answer: FALSE
3) When using the low-cost strategy for supply chain management, a firm should use buffer stocks to ensure speedy supply.
Answer: FALSE
3) Which item to order and with which supplier the order should be placed are the two fundamental issues in inventory management.
Answer: FALSE
4) At the economic order quantity, holding costs are equal to product costs.
Answer: FALSE
4) Cycle counting is an inventory control technique exclusively used for cyclical items.
Answer: FALSE
4) Improvements in security, especially regarding the millions of shipping containers that enter the U.S. each year, are being held back by the lack of technological advances.
Answer: FALSE
4) Keiretsu refers to a company coalition that is part collaboration, part purchasing from many suppliers, and part vertical integration.
Answer: FALSE
4) The transportation model calculates an optimal shipping system between a central facility and several outlying customers.
Answer: FALSE
5) A firm that employs a response strategy should minimize inventory throughout the supply chain.
Answer: FALSE
5) In the simple EOQ model, if the carrying cost were to double, the EOQ would also double.
Answer: FALSE
5) Work-in-process inventory is devoted to maintenance, repair, and operating materials.
Answer: FALSE
6) Supply chain decisions are not generally strategic in nature, because purchasing is not a large expense for most firms.
Answer: FALSE
7) Because service firms do not acquire goods and services externally, their supply chain management issues are insignificant.
Answer: FALSE
7) Location decisions are based on many things, including costs, revenues, incentives, attitudes, and intangibles, but not on ethical considerations.
Answer: FALSE
9) In the quantity discount model, the cost of acquiring goods (product cost) is not a factor in determining lot size.
Answer: FALSE
1) Channel assembly, which sends components and modules to be assembled by a distributor, treats these distributors as manufacturing partners.
Answer: TRUE
1) If setup costs are reduced by substantial reductions in setup time, the production order quantity is also reduced.
Answer: TRUE
1) Lists have been developed that rank countries on issues such as "competitiveness" and "corruption."
Answer: TRUE
1) Operations managers are finding online auctions a fertile area for disposing of discontinued inventory.
Answer: TRUE
1) Outsourcing refers to transferring a firm's activities that have traditionally been internal to external suppliers.
Answer: TRUE
1) Service level is the complement of the probability of a stockout.
Answer: TRUE
1) The bullwhip effect refers to the increasing fluctuations in orders that often occur as orders move through the supply chain.
Answer: TRUE
1) The demand for automobiles would be considered as independent demand.
Answer: TRUE
1) The fixed-period inventory model can have a stockout during the review period as well as during the lead time, which is why fixed-period systems require more safety stock than fixed-quantity systems.
Answer: TRUE
1) Use of a diversified supply base represents one of the most common supply chain risk reduction tactics for several different supply chain risk categories.
Answer: TRUE
2) A major challenge in inventory management is to maintain a balance between inventory investment and customer service.
Answer: TRUE
2) In ABC analysis, "A" items are the most tightly controlled.
Answer: TRUE
2) One classic type of negotiation strategy is the market-based price model.
Answer: TRUE
2) Outsourcing is a form of specialization that allows the outsourcing firm to focus on its key success factors.
Answer: TRUE
2) The factor-rating method can consider both tangible and intangible costs.
Answer: TRUE
2) The ratio of labor cost per day to productivity, in units per day, is the labor cost per unit.
Answer: TRUE
3) A fast-food retailer that acquired a spice manufacturer would be practicing backward integration.
Answer: TRUE
3) Logistics management can provide a competitive advantage through improved customer service.
Answer: TRUE
3) The objective of the make-or-buy decision is to help identify the products and services that can be obtained externally.
Answer: TRUE
3) While the prices that consumers pay are often inflexible, a significant number of final prices paid in business-to-business transactions are negotiated.
Answer: TRUE
4) A blanket order is a long-term purchase commitment to a supplier for items that are to be delivered against short-term releases to ship.
Answer: TRUE
4) One function of inventory is to take advantage of quantity discounts.
Answer: TRUE
4) Savings in the supply chain exert more leverage as the firm's net profit margin decreases.
Answer: TRUE
4) Unfavorable exchange rates can offset other savings in a location decision.
Answer: TRUE
5) An example of an intangible cost, as it relates to location decisions, is the quality of education.
Answer: TRUE
5) One advantage of cycle counting is that it maintains accurate inventory records.
Answer: TRUE
6) In cycle counting, the frequency of item counting and stock verification usually varies from item to item depending upon the item's classification.
Answer: TRUE
6) 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
7) Retail inventory that is unaccounted for between receipt and time of sale is known as shrinkage.
Answer: TRUE
7) The reorder point is the inventory level at which action is taken to replenish the stocked item.
Answer: TRUE
8) 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
A product has annual demand of 100,000 units. The plant manager wants production to follow a four-hour cycle. Based on the following data, what setup cost will enable the desired production cycle? d = 400 per day (250 days per year), p = 4000 units per day, H = $40 per unit per year, and Q = 200 (demand for four hours, half a day). A) $2.00 B) $7.20 C) $18.00 D) $64.00 E) $1,036.80
B) $7.20
24) A product has a 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:
B) 200 units per order.
30) A production order quantity problem has a daily demand rate = 10 and a daily production rate = 50. The production order quantity for this problem is approximately 612 units. What is the average inventory for this problem?
B) 245
26) 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?
B) Fourteen is the reorder point, and 100 is the order quantity.
If the goals of JIT partnerships are met, which of the following is a result? A) For incoming goods, receiving activity and inspection are outsourced. B) In-transit inventory falls as suppliers are located closer to facilities. C) Suppliers maintain a variety of customers to reduce risk. D) In-plant inventory replaces in-transit inventory. E) All of the above are consequences of meeting the JIT partnership goals.
B) In-transit inventory falls as suppliers are located closer to facilities.
Which one of the following statements is TRUE regarding JIT inventory? A) It exists just in case something goes wrong. B) It is the minimum inventory necessary to keep a perfect system running. C) It hides variability. D) It is minimized with large lot production. E) It increases if setup costs decrease.
B) It is the minimum inventory necessary to keep a perfect system running.
6) Which of the following statements regarding Amazon.com is FALSE?
B) The company was founded as, and still is, a "virtual" retailer with no inventory.
What does TPS stand for? A) Total Production Streamlining B) Toyota Production System C) Taguchi's Production S's D) Total Process Simplification E) Transparent Processing System
B) Toyota Production System
12) Cycle counting:
B) eliminates annual inventory adjustments.
Which one of the following is NOT a layout tactic in a JIT environment? A) work cells for families of products B) fixed equipment C) minimizing distance D) little space for inventory E) poka-yoke devices
B) fixed equipment
21) A product whose EOQ is 400 units experiences a 50% increase in demand. The new EOQ is:
B) increased by less than 50%.
Characteristics of just-in-time partnerships do NOT include: A) removal of in-transit inventory. B) large lot sizes to save on setup costs and to gain quantity discounts. C) long-term contracts. D) produce with zero defects. E) focus on core competencies.
B) large lot sizes to save on setup costs and to gain quantity discounts.
20) A product whose EOQ is 40 units experiences a decrease in ordering cost from $90 per order to $10 per order. The revised EOQ is:
B) one-third as large.
Great Lakes Barge and Baggage Company makes, among other things, battery-operated bilge pumps. Which of the following activities is NOT part of JIT? They: A) communicate their schedules to suppliers. B) produce in long production runs to reduce the impact of setup costs. C) use a pull system to move inventory. D) continuously work on reducing setup time. E) produce in small lots.
B) produce in long production runs to reduce the impact of setup costs.
Which of the following is not characteristic of a TPS employee? A) knowledgeable B) strict job classifications C) know more about their job than anyone else D) empowered E) All of the above characterize a TPS employee.
B) strict job classifications
5) Service level is:
B) the probability of not stocking out. D) calculated as the cost of a shortage divided by (the cost of shortage + the cost of overage) for single-period models. E) B and D Answer: E
The number of kanbans should be equal to which of the following? A) one B) the ratio of (demand during lead time + safety stock) to container size C) one-half of the EOQ D) one full day's production divided by the EOQ E) the ratio of demand during lead time to (container size + safety stock)
B) the ratio of (demand during lead time + safety stock) to container size
10) ABC analysis is based upon the principle that:
B) there are usually a few critical items, and many items that are less critical.
8) An advantage of the fixed-period inventory system is that:
B) there is no physical count of inventory items when an item is withdrawn.
Which one of the following is not a benefit of JIT implementation? A) cost reduction B) variability increase C) rapid throughput D) quality improvement E) rework reduction
B) variability increase
Which of the following is an illustration of employee empowerment? A) UPS drivers are trained to perform several motions smoothly and efficiently. B) Unionization of the work place brings better morale and therefore better quality. C) "No one knows the job better than those who do it." D) all of the above E) none of the above
C) "No one knows the job better than those who do it."
22) For a certain item, the cost-minimizing order quantity obtained with the basic EOQ model is 200 units, and the total annual inventory (carrying and setup) cost is $600. What is the inventory carrying cost per unit per year for this item?
C) $3.00
4) Suppose that papers for a newspaper stand cost $0.40 and sell for $0.80. They currently have no salvage value. If the stand owner is able to find an outlet that would provide a salvage value of $0.10, what would be the increase in service level?
C) .07
14) A certain type of computer costs $1,000, and the annual holding cost is 25% of the value of the item. Annual demand is 10,000 units, and the order cost is $150 per order. What is the approximate economic order quantity?
C) 110
17) In the basic EOQ model, if D = 6000 per year, S = $100, and holding cost = $5 per unit per month, what is the economic order quantity?
C) 141
11) 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. What is the standard deviation of demand during lead time?
C) 154 units
10) 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 how much safety stock?
C) 49 units
Lead time for computers is 7 days with daily demand of 5 computers and a safety stock of 1 day. Each kanban holds 8 computers. What is the correct number of kanbans? A) 4.5 B) 1 C) 5 D) 7 E) 8
C) 5
13) Which of the following statements regarding control of service inventories is TRUE?
C) Effective control of all goods leaving the facility is one applicable technique.
Which of the following is NOT a source of variability? A) Employees, machines, and suppliers produce units late. B) Customer demand is unknown. C) Employees, machines, and suppliers produce units that conform to standards. D) Engineering drawings are inaccurate. E) Drawings or specifications are incomplete.
C) Employees, machines, and suppliers produce units that conform to standards.
JIT makes quality cheaper because: A) the cost of low quality can be hidden as inventory cost. B) JIT adds more buffers to the system. C) JIT prevents long runs of defects. D) B and C E) A, B and C
C) JIT prevents long runs of defects.
Which of the following is specifically characterized by the elimination of waste through a focus on exactly what the customer wants? A) Just-in-time (JIT) B) Toyota Production System (TPS) C) Lean operations D) Material requirements planning (MRP) E) kanban
C) Lean operations
Which of the following is NOT one of the Seven Wastes? A) overproduction B) transportation C) assignment D) defective product E) motion
C) assignment
Which one of the following is a concern expressed by suppliers in JIT partnerships? A) having too many customers B) delivery to the point of use C) having limited ability to respond to changes in product and quality D) large lot sizes E) customers' infrequent engineering changes
C) having limited ability to respond to changes in product and quality
Which of the following is NOT an attribute of lean operations? A) eliminating almost all inventory through just-in-time techniques B) minimizing space requirements by reducing the distance a part travels C) pushing responsibility to the highest level possible through centralized decision making D) educating suppliers to accept responsibility for helping meet customer needs E) building worker flexibility through cross-training and reducing job classifications
C) pushing responsibility to the highest level possible through centralized decision making
10) The two most basic inventory questions answered by the typical inventory model are:
C) timing of orders and order quantity.
15) Most inventory models attempt to minimize:
C) total inventory-based costs.
9) All EXCEPT which of the following statements about ABC analysis are true?
D) ABC analysis suggests that all items require the same high degree of control.
28) Which of these statements about the production order quantity model is FALSE?
D) All else equal, the smaller the ratio of demand rate to production rate, the larger is the production order quantity.
19) Which of the following statements about the basic EOQ model is FALSE?
D) If annual demand were to double, the EOQ would also double.
A manufacturer took the following actions to reduce inventory. Which of these is generally not accepted as a JIT action? A) It used a pull system to move inventory. B) It produced in ever smaller lots. C) It required deliveries directly to the point of use. D) It picked the supplier that offered the lowest price based on quantity discounts. E) It worked to reduce the company's in-transit inventory.
D) It picked the supplier that offered the lowest price based on quantity discounts.
Which of the following statements regarding a pull system is TRUE? A) Large lots are pulled from upstream stations. B) Work is pulled to the downstream stations before it is actually needed. C) Manufacturing cycle time is increased. D) Problems become more obvious. E) None of the above is true of a pull system.
D) Problems become more obvious.
Who is credited with coining the phrase, "Inventory is evil"? A) Poka Yoke B) Pat "Keiretsu" Morita C) Kanban Polka D) Shigeo Shingo E) Taiichi Ohno
D) Shigeo Shingo
32) Which of the following statements about quantity discounts is FALSE?
D) The larger the annual demand, the less attractive a discount schedule will be.
A grocery store is attempting to implement a kanban system. Which of the following would not be an application of kanbans? A) An empty doughnut tray signaling the bakery to produce 2 dozen glazed doughnuts. B) A line of 5 people in the Chinese department signaling the department to heat 5 Crab Rangoon. C) A red light on top of the cashier's lane signals that the cashier needs additional change replenished. D) The meat department stocking up on turkeys before Thanksgiving. E) All of the above are kanban applications.
D) The meat department stocking up on turkeys before Thanksgiving.
14) Among the advantages of cycle counting is that it:
D) allows more rapid identification of errors and consequent remedial action than is possible with annual physical inventory.
6) The purpose of safety stock is to:
D) control the likelihood of a stockout due to variable demand and/or lead time.
Kanban is associated with all EXCEPT which of the following? A) small lot sizes B) signals, such as cards, lights, or flags C) moving inventory only as needed D) increased material handling E) reductions in inventory
D) increased material handling
Excess bags of basic commodities such as flour and sugar that are stored in a restaurant's kitchen represent which of the following wastes? A) overproduction B) queues C) transportation D) inventory E) defective product
D) inventory
Which of the following is characteristic of lean operations? A) inventory buffers between each workstation to minimize system downtime B) easy, mindless jobs C) specialty workers with no cross-training D) low space requirements E) no supplier partnerships
D) low space requirements
Which one of the following is a characteristic of a JIT partnership? A) third-party logistics never used B) maximal product specifications imposed on supplier C) active pursuit of vertical integration D) removal of incoming inspection E) frequent deliveries in large lot quantities
D) removal of incoming inspection
3) A disadvantage of the fixed-period inventory system is that:
D) since there is no count of inventory during the review period, a stockout is possible.
8) Which of the following would NOT generally be a motive for a firm to hold inventories?
D) to minimize holding costs
Lead time for computers is 5 days with daily demand of 25 and safety stock of 5 computers. If management wants to use 10 kanbans how many computers should each one hold? A) 25 B) 1 C) 5 D) 10 E) 13
E) 13
Lead time for cakes is 2 days with daily demand of 10 cakes and a safety stock of ½ a day. Each container (kanban) holds 1 cake. What is the correct number of kanbans? A) 4 B) 1 C) 5 D) 10 E) 25
E) 25
Lean operations are known for their: A) employee development. B) supplier education. C) supplier partnerships. D) challenging jobs. E) All of the above are attributes of lean operations.
E) All of the above are attributes of lean operations.
Which of the following is TRUE regarding the steps to reducing setup times? A) The first step involves performing as much setup preparation as possible while the process/machine is operating. B) The cycle of steps is repeated until setup time is reduced to under a minute. C) The standardization of both tooling and work procedures is advantageous to setup time reduction. D) Move material closer and improve material handling are done before operator training. E) All of the above are true.
E) All of the above are true.
Which of the following is NOT a concern of suppliers as they prepare to enter into JIT partnerships? A) Suppliers feel that they would be less at risk if they contracted with more than one customer. B) Suppliers are concerned that customers will present frequent engineering changes with inadequate lead time to deal with them. C) Suppliers feel that their processes are suited for larger lot sizes than the customer wants. D) Suppliers are concerned that frequent delivery of small quantities is economically prohibitive. E) All of the above represent JIT supplier concerns.
E) All of the above represent JIT supplier concerns.
Which of the following is FALSE regarding the links between JIT and quality? A) Inventory hides bad quality; JIT immediately exposes it. B) JIT reduces the number of potential sources of error by shrinking queues and lead times. C) As quality improves, fewer inventory buffers are needed; in turn, JIT performs better. D) If consistent quality exists, JIT allows firms to reduce all costs associated with inventory. E) JIT increases the cost of obtaining good quality.
E) JIT increases the cost of obtaining good quality.
Which one of the following statements is TRUE about the kanban system? A) The quantities in the containers are usually large to reduce setup costs. B) It is associated with a push system. C) It is useful to smooth operations when numerous quality problems occur. D) The supplier workstation signals the customer workstation as soon as a batch is completed. E) The customer workstation signals to the supplier workstation when production is needed.
E) The customer workstation signals to the supplier workstation when production is needed.
Just-in-time systems make demands on layouts, including the need for: A) distance reduction. B) increased flexibility. C) reduced space and inventory. D) cross-trained, flexible employees. E) all of the above
E) all of the above
11) ABC analysis divides on-hand inventory into three classes, generally based upon which of the following?
E) annual dollar volume
In JIT partnerships, suppliers have several concerns. Which of the following is NOT such a concern? A) desire for diversification B) poor customer scheduling C) small lot sizes D) producing high enough quality levels E) customers' infrequent engineering changes
E) customers' infrequent engineering changes
31) When quantity discounts are allowed, the cost-minimizing order quantity:
E) minimizes the sum of holding, ordering, and product costs.
5) 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?
E) more than 40
4) Which category of inventory holding costs has a much higher percentage than average for rapid-change industries such as PCs and cell phones?
E) pilferage, scrap, and obsolescence
Which of the following is generally found in most lean environments? A) a push or pull system, depending upon the rate of demand B) a push system for high margin items and a pull system for low margin items C) a push system for purchased parts and a pull system for manufactured parts D) push systems E) pull systems
E) pull systems
7) Which of the following should be higher in P systems than Q systems?
E) safety stock
Manufacturing cycle time is best defined as the: A) length of the work shift, expressed in minutes per day. B) time it takes a unit to move from one workstation to the next. C) time between the start of one unit and the start of the next unit. D) sum of all the task times to make one unit of a product. E) time from raw materials receipt to finished product exit.
E) time from raw materials receipt to finished product exit.
True or False: Employee empowerment is unnecessary in the Toyota Production System, because automation and powerful information systems reduce the need for employee creativity and decision making.
False
True or False: In a JIT system, product inspection adds value by identifying defective items.
False
True or False: Increasing inventory exposes variability in production processes.
False
True or False: JIT brings about competitive advantage by faster response to the customer regardless of cost.
False
True or False: JIT systems carry inventory just in case something goes wrong.
False
True or False: Level scheduling means producing at a constant rate, regardless of customer demands.
False
True or False: TPS stands for Total Production Streamlining.
False
True or False: The number of kanbans decreases as safety stock is increased.
False
True or False: With level schedules, a few large batches, rather than frequent small batches, are processed.
False
________ is the minimum inventory necessary to keep a perfect system running.
Just-in-time inventory
________ allows manufacturing work cells and offices to be easily rearranged.
Layout flexibility
________ involve scheduling products so that each day's production meets the demand for that day.
Level schedules
True or False: A kanban system requires that the process has little variability in lead time because shortages impact the entire production system.
True
True or False: A scheduler may find that freezing the portion of the schedule closest to the due dates allows the production system to function and the schedule to be met.
True
True or False: Cross-training is a common JIT layout tactic to improve flexibility.
True
True or False: Hidden problems are generally uncovered during the process of reducing inventory.
True
True or False: JIT suppliers have concerns that the JIT firm's demands for small lot sizes are simply a way of transferring holding cost from the JIT firm to the suppliers.
True
True or False: Many suppliers feel that having a variety of customers is better than being tied to long-term contracts with one customer.
True
True or False: One goal of JIT partnerships is the removal of in-plant inventory by delivery in small lots directly to the using department as needed.
True
True or False: Product storage is an example of waste in the sense that no value is added.
True
True or False: Variability in manufacturing can occur because engineering drawings or specifications are incomplete or inaccurate.
True
True or False: Waste is anything that does not add value from the consumer's perspective.
True
True or False: When implemented as a comprehensive operations strategy, JIT, TPS, and lean systems sustain competitive advantage and result in increased overall returns.
True
30.For the two constraints given below, which point is in the feasible region of this maximization problem? (1) 14x + 6y < 42 (2) x - y < 3 a. x = 2, y = 1 b. x = 1, y = 5 c. x = -1,y = 1 d. x = 4, y = 4 e. x = 2, y = 8
a (Graphical solution to a linear programming problem, moderate) {AACSB: Analytic Skills}
36.A linear programming problem has two constraints 2X + 4Y ≤ 100 and 1X + 8Y ≤ 100. Which of the following statements about its feasible region is true? a.There are four corner points including (50, 0) and (0, 12.5). b.The two corner points are (0, 0) and (50, 12.5). c.The graphical origin (0, 0) is not in the feasible region. d.The feasible region includes all points that satisfy one constraint, the other, or both. e.The feasible region cannot be determined without knowing whether the problem is to be minimized or maximized.
a (Graphical solution to a linear programming problem, moderate) {AACSB: Analytic Skills}
41.A linear programming problem contains a restriction that reads "the quantity of S must be no less than one-fourthas large as T and U combined." Formulate this as a constraint ready for use in problem solving software. a.S / (T + U) ≥ 4 b.S - .25T-.25U≥ 0 c.4S ≤ T + U d.S ≥ 4T / 4U e.none of the above
b (Formulating linear programming problems, moderate) {AACSB: Analytic Skills}
22.The feasible region in the diagram below is consistent with which one of the following constraints? a.8X1 + 4X2 ≤ 160 b.8X1 + 4X2 ≥ 160 c.4X1 + 8X2 ≤ 160 d.8X1 - 4X2 ≤ 160 e.4X1 - 8X2 ≤ 160
b (Graphical solution to a linear programming problem, difficult) {AACSB: Analytic Skills}
28.The region which satisfies all of the constraints in graphical linear programming is called the a.area of optimal solutions b.area of feasible solutions c.profit maximization space d.region of optimality e.region of non-negativity
b (Graphical solution to a linear programming problem, moderate)
29.Using the graphical solution method to solve a maximization problem requires that we a.find the value of the objective function at the origin b.move the iso-profitline to the highest level that still touches some part of the feasible region c.move the iso-costline to the lowest level that still touches some part of the feasible region d.apply the method of simultaneous equations to solve for the intersections of constraints e.none of the above
b (Graphical solution to a linear programming problem, moderate)
27.Which of the following sets of constraints results in an unbounded maximizing problem? a.X + Y > 100 and X + Y< 50 b.X + Y > 15 and X - Y< 10 c.X + Y < 10 and X> 5 d.X < 10 and Y< 20 e.All of the above have a bounded maximum.
b (Graphical solution to a linear programming problem, moderate) {AACSB: Analytic Skills}
32.What combination of x and y will yield the optimum for this problem? Maximize $3x + $15y, subject to (1) 2x + 4y < 12 and (2) 5x + 2y< 10. a.x = 2, y = 0 b.x = 0, y = 3 c.x = 0, y = 0 d.x = 1, y = 5 e.none of the above
b (Graphical solution to a linear programming problem, moderate) {AACSB: Analytic Skills}
46.A linear programming problem has three constraints: 2X + 10Y ≤ 100 4X + 6Y ≤ 120 6X + 3Y ≥ 90 What is the largest quantity of X that can be made without violating any of these constraints? a.50 b.30 c.20 d.15 e.10
b (Graphical solution to a linear programming problem, moderate) {AACSB: Analytic Skills}
47.A maximizing linear programming problem with variables X and Y and constraints C1, C2, and C3 has been solved. The dual values (not the solution quantities) associated with the problem are X = 0, Y = 0, C1 = $2, C2 = $0.50, and C3 = $0. Which statement below is false? a.One more unit of the resource in C1 would add $2 to the objective function value. b.One more unit of the resource in C2 would add one more unit each of X and Y. c.The resource in C3 has not been used up d.The resources in C1 and in C2, but not in C3, are scarce. e.All of the above are true.
b (Sensitivity analysis, difficult) {AACSB: Analytic Skills}
40.A linear programming problem contains a restriction that reads "the quantity of Q must be no larger than the sum of R, S, and T." Formulate this as a constraint ready for use in problem solving software. a.Q + R + S + T ≤ 4 b.Q ≥ R + S + T c.Q - R - S - T ≤ 0 d.Q / (R + S + T) ≤ 0 e.none of the above
c (Formulating linear programming problems, moderate) {AACSB: Analytic Skills}
42.A firm makes two products, Y and Z. Each unit of Y costs $10 and sells for $40. Each unit of Z costs $5 and sells for $25. If the firm's goal were to maximize sales revenue, the appropriate objective function would be a.maximize $40Y = $25Z b.maximize $40Y + $25Z c.maximize $30Y + $20Z d.maximize 0.25Y + 0.20Z e.none of the above
c (Formulating linear programming problems, moderate) {AACSB: Analytic Skills}
33.What combination of x and y will yield the optimum for this problem? Minimize $3x + $15y, subject to (1) 2x + 4y < 12 and (2) 5x + 2y< 10. a.x = 2, y = 0 b.x = 0, y = 3 c.x = 0, y = 0 d.x = 1, y = 5 e.none of the above
c (Graphical solution to a linear programming problem, moderate) {AACSB: Analytic Skills}
34.What combination of a and b will yield the optimum for this problem? Maximize $6a + $15b, subject to (1) 4a + 2b < 12 and (2) 5a + 2b< 20. a.a = 0, b = 0 b.a = 3, b = 3 c.a = 0, b = 6 d.a = 6, b = 0 e.cannot solve without values for a and b
c (Graphical solution to a linear programming problem, moderate) {AACSB: Analytic Skills}
Which of the following represents valid constraints in linear programming? a.2X ≥ 7X*Y b.2X * 7Y ≥ 500 c.2X + 7Y ≥ 100 d.2X2 + 7Y≥ 50 e.All of the above are valid linear programming constraints.
c (Requirements of a linear programming problem, moderate)
44.In sensitivity analysis, a zero shadow price (or dual value) for a resource ordinarily means that a.the resource is scarce b.the resource constraint was redundant c.the resource has not been used up d.something is wrong with the problem formulation e.none of the above
c (Sensitivity analysis, difficult)
45.A shadow price (or dual value) reflects which of the following in a maximization problem? a.the marginal gain in the objective realized by subtracting one unit of a resource b.the market price that must be paid to obtain additional resources c.the increase in profit that would accompany one added unit of a scarce resource d.the reduction in cost that would accompany a one unit decrease in the resource e.none of the above
c (Sensitivity analysis, moderate)
23.The feasible region in the diagram below is consistent with which one of the following constraints? a.8X1 + 4X2 ≥ 160 b.4X1 + 8X2 ≤ 160 c.8X1 - 4X2 ≤ 160 d.8X1 + 4X2 ≤ 160 e.4X1 - 8X2 ≤ 160
d (Graphical solution to a linear programming problem, moderate) {AACSB: Analytic Skills}
25.Which of the following combinations of constraints has no feasible region? a.X + Y > 15 and X - Y< 10 b.X + Y > 5 and X> 10 c.X > 10 and Y> 20 d.X + Y > 100 and X + Y< 50 e.All of the above have a feasible region.
d (Graphical solution to a linear programming problem, moderate) {AACSB: Analytic Skills}
31.For the two constraints given below, which point is in the feasible region of this minimization problem? (1) 14x + 6y > 42 (2) x - y > 3 a. x = -1,y = 1 b. x = 0, y = 4 c. x = 2, y = 1 d. x = 5, y = 1 e. x = 2, y = 0
d (Graphical solution to a linear programming problem, moderate) {AACSB: Analytic Skills}
37.A linear programming problem has two constraints 2X + 4Y ≥ 100 and 1X + 8Y ≤ 100. Which of the following statements about its feasible region is true? a.There are four corner points including (50, 0) and (0, 12.5). b.The two corner points are (0, 0) and (50, 12.5). c.The graphical origin (0, 0) is in the feasible region. d.The feasible region is triangular in shape, bounded by (50, 0), (33-1/3,8-1/3),and (100, 0). e.The feasible region cannot be determined without knowing whether the problem is to be minimized or maximized.
d (Graphical solution to a linear programming problem, moderate) {AACSB: Analytic Skills}
43.A linear programming problem has three constraints: 2X + 10Y ≤ 100 4X + 6Y ≤ 120 6X + 3Y ≤ 90 What is the largest quantity of X that can be made without violating any of these constraints? a.50 b.30 c.20 d.15 e.10
d (Graphical solution to a linear programming problem, moderate) {AACSB: Analytic Skills}
24.An iso-profitline a.can be used to help solve a profit maximizing linear programming problem b.is parallel to all other iso-profitlines in the same problem c.is a line with the same profit at all points d.none of the above e.all of the above
e (Graphical solution to a linear programming problem, moderate)
38.A linear programming problem has two constraints 2X + 4Y = 100 and 1X + 8Y ≤ 100, plus nonnegativity constraints on X and Y. Which of the following statements about its feasible region is true? a.The points (100, 0) and (0, 25) both lie outside the feasible region. b.The two corner points are (33-1/3,8-1/3)and (50, 0). c.The graphical origin (0, 0) is not in the feasible region. d.The feasible region is a straight line segment, not an area. e.All of the above are true.
e (Graphical solution to a linear programming problem, moderate) {AACSB: Analytic Skills}
20.Which of the following is not a requirement of a linear programming problem? a.an objective function, expressed in terms of linear equations b.constraint equations, expressed as linear equations c.an objective function, to be maximized or minimized d.alternative courses of action e.for each decision variable, there must be one constraint or resource limit
e (Requirements of a linear programming problem, moderate)
For a linear programming problem with the constraints 2X + 4Y ≤ 100 and 1X + 8Y ≤ 100, two of its corner points are (0, 0) and (0, 25).
false
In terms of linear programming, the fact that the solution is infeasible implies that the "profit" can increase without limit.
false
Linear programming is an appropriate problem-solvingtechnique for decisions that have no alternative courses of action.
false
Solving a linear programming problem with the iso-profitline solution method requires that we move theiso-profitline to each corner of the feasible region until the optimum is identified.
false
The graphical method of solving linear programming can handle only maximizing problems.
false
The optimal solution of a linear programming problem that consists of two variables and six constraints will probably not satisfy all six constraints precisely.
false
The region that satisfies all of the constraints in graphical linear programming is called the region of optimality.
false
54.The _____________ is the set of all feasible combinations of the decision variables.
feasible region (Graphical solution to a linear programming problem, moderate)
When suppliers are encouraged to locate near manufacturing plants, the goal of the JIT partnership is to reduce ________ inventory.
in-transit
55.Two methods of solving linear programming problems by hand include the corner point method and the_______________.
iso-profit(oriso-cost)line method (Sensitivity analysis, moderate)
52.The _______________ is a mathematical expression in linear programming that maximizes or minimizes some quantity.
objective function (Requirements of a linear programming problem, easy)
57.Two methods of conducting sensitivity analysis on solved linear programming problems are _______________ and ________________.
postoptimal analytical method, trial and error (Sensitivity analysis, moderate)
A __________ system dumps orders on the next downstream workstation, regardless of timeliness and resource availability. A __________ system uses signals to request production and delivery from upstream stations to the station that has production facilities available. In a pull system, materials or parts are pulled where they are needed when they are needed.
push; pull
The 5S category ________ includes analysis to improve workflow and reduce wasted motion.
simplify/straighten or simplify
49.A linear programming maximization problem has been solved. In the optimal solution, two resources are scarce. If an added amount could be found for only one of these resources, how would the optimal solution be changed? a.The shadow price of the added resource will rise. b.The solution stays the same
the extra resource can't be used without more of the other scarce resource. c.The extra resource will cause the value of the objective to fall. d.The optimal mix will be rearranged to use the added resource, and the value of the objective function will rise. e.none of the above ;d (Sensitivity analysis, moderate) {AACSB: Analytic Skills}
48.A maximizing linear programming problem with variables X and Y and constraints C1, C2, and C3 has been solved. The dual values (not the solution quantities) associated with the problem are X = 0, Y = $10, C1 = $2, C2 = $0.50, and C3 = $0. Which statement below is true? a.One more unit of the resource in C1 would reduce the objective function value by $2. b.One more unit of the resource in C2 would add one-halfunit each of X and Y. c.The resources in C1 and C2 have not been used up. d.The optimal solution makes only X
the quantity of Y must be zero. e.All of the above are true. ;d (Sensitivity analysis, difficult) {AACSB: Analytic Skills}
Handling material more than once is an example of the waste called ________.
transportation
In linear programming, a statement such as "maximize contribution" becomes an objective function when the problem is formulated.
true
In linear programming, statements such as "the blend must consist of at least 10% of ingredient A, at least 30% of ingredient B, and no more than 50% of ingredient C" can be made into valid constraints even though the percentages do not add up to 100 percent.
true
In sensitivity analysis, a zero shadow price (or dual value) for a resource ordinarily means that the resource has not been used up.
true
Linear programming helps operations managers make decisions necessary to make effective use of resources such as machinery, labor, money, time, and raw materials.
true
One requirement of a linear programming problem is that the objective function must be expressed as a linear equation.
true
Sensitivity analysis of linear programming solutions can use trial and error or the analytic postoptimality method.
true
The optimal solution to a linear programming problem is within the feasible region.
true
