SCMG 332

If a firm has the opportunity to invest money at a 10% annual rate of return, then having $100 invested in inventory for a whole year has what opportunity cost of capital?

$10

A shipping company charges two fees for delivery: (1) $5 to do the delivery, and then (2) $.50 per pound delivered. What is the order cost?

$5

Suppose a faucet adds water at a rate of 1 gallon per minute. For which drain flushing rate will inventory accumulate the fastest?

.6 gallon per minute

If 100 customers arrive per hour and Pm = 10%, then _________ customers are denied service per hour because all the servers are occupied.

10

If a patient waits 15 minutes before spending 30 minutes with a doctor, then the processing time is ______ minutes.

30

Consider a two-step process where the first step produces at a rate of 2 units per minute and the second step produces at a rate of 1 unit per minute. Assuming the beginning inventory in a buffer before step 2 is equal to zero, the inventory in that buffer after 30 minutes will be _______.

30 units

Suppose you are using a statistical table to determine Q, and the critical ratio is .612. If F(300) = .598 and F(350) = .615, then the round-up rule states that you should choose Q = _______​_.

350

Imagine a process that produces four different products with a machine that requires a setup before each product change-over. To remove the need for any setups would require ______ machines.

4

550 gallons of soup is produced in a production cycle, 360 out of every 480 gallons produced must be chicken noodle soup and 120 out of every 480 gallons must be tomato soup. Thus, of the 550 gallons, how many gallons should be chicken?

412.5 (550 x 360)/480

Suppose a firm calculates that the EOQ for a product is 5,500 units. However, its supplier offers a volume discount on the purchase price if 5,000 units or more are ordered. What should be the order quantity?

5,500 units

With three trauma bays and spots for four waiting customers, there can be at most how many customers in the system?

7

If the demand rate for a process is 80 units per hour and the rate of the bottleneck in a process is 90 units per hour, then the target capacity is _________ units per hour.

80

If 10 customers arrive per day and the denial-of-service probability is 5%, then how many customers are served per day, on average?

9.5

Suppose a manufacturer assembles a product from component parts only after a customer has placed an order. However, the firm makes the component parts in advance, based on forecasts. This manufacturer is operating what type of system?

A hybrid of make-to-order and make-to-stock

The supply chain for goods and services consists of:

A network of firms and locations that begins with raw materials and ends with final users

The estimate of the standard deviation of the output unit is based on _blank​_ the output units.

A sample of

To calculate maximum profit, you assume that the order quantity is determined _______​_ the actual demand is observed.

After

When a business operates on a make-to-order basis, a product is made _______.

After demand for that unit is known

Which assumption of the EOQ model (partially) enables it to ignore the purchasing cost per unit of time?

All orders met from inventory

Which example suggests expanded product variety could lead to an increase in profitability?

An auto customer who only wants a hybrid vehicle buys a newly introduced hybrid sedan.

What term describes the capability to make good decisions regarding inventory quantities and placement based on data?

Analytic Skills

To calculate inventory holding costs as a % of COGS, you divide the annual holding cost percentage by ________.

Annual turns

In the framework for statistical process control which type of variation is investigated and eliminated?

Assignable

To calculate the center line of a control chart you compute the _blank​_ of the mean for every period.

Average

A ________ process is one where products are made in collections

Batch

The key advantage of a pallet is that they enable the movement of a large quantity of goods, ______​_.

Both quickly and safely

___________ refers to inventory with a process that helps to mitigate the consequences of variability.

Buffer

_____________ of inventory can absorb variations in flow rates by acting as a source of supply for a downstream step.

Buffers

Due to the phenomenon of the ____________ effect, variability in demand within the supply chain can be substantially greater than consumer demand variability.

Bullwhip

The process __________ index tells us how many standard deviations we can move away from the statistical mean before causing a defect.

Capability

To understand how much improvement potential there is one must first measure what percentage of a machine's or a worker's _________ is used productively.

Capacity

The opportunity cost of _____________ is the income not earned on the amount invested in inventory.

Capital

The _______ of variation is the ratio of the standard deviation to the average.

Co-efficient

Genchi genbutsu emphasizes solving problems by ________.

Collection and analysis of data by front-line workers

Another name for natural variation is _________ variation.

Common cause

Two apples grown on the same tree are rarely the exact same size and shape. This is what type of variation?

Common cause

Make-to-order means ________​_.

Completion of products only occurs after customers announce their demand

Knowing a second order can be placed helps an organization be more ______​_ with its first order.

Conservative

In the saw-toothed inventory pattern, inventory decreases at the _____​_ rate of demand.

Constant

The cost to hold an item for a year is estimated by multiplying the holding cost percentage by its _______.

Cost

The newsvendor chooses an order quantity by comparing the expected _______ of the Qth unit with the expected benefit.

Cost

Which of the following are inputs to the newsvendor model?

Cost of ordering too little Cost of ordering too much

Which of the following is usually an extra cost associated with an online retailer versus a traditional retailer?

Cost of shipping goods from the retailer to the customer

If the probability demand is less than or equal to Q*, the quantity that maximizes expected profit is equal to the _______ ratio.

Critical

Non-value-added work is those movements that must be done to complete a unit but do not add value in the eyes of the ___________.

Customer

The single server queuing model assumes that ______​_.

Customers will wait until the service is completed

With mass ________, each customer can receive a unique product.

Customization

A production ________ is a repeating sequence of produced units.

Cycle

______________ is the average amount of time (in days) it takes a unit to flow through the system.

Days-of-supply

____________ marginal returns refer to when the incremental benefit of an activity decreases as the amount of the activity increases.

Declining

As processing time increases, the output rate when producing _______.

Decreases

When there are declining marginal returns, the incremental benefit of an activity _________​_ as the amount of the activity increases.

Decreases

Information turnaround time refers to the time between creating a ________ at an upstream resource and detecting it at a downstream resource.

Defect

The process capability index tells us how many standard deviations we can move away from the statistical mean before causing a ___________.

Defect

Which is the best definition of delayed differentiation?

Delaying completion of a product as late as possible

Heijunka refers to producing as close as possible to the true rate of ________

Demand

Capacity grows at a _______ rate as batch size increases.

Diminishing

Capacity grows at a ________​_ rate as batch size increases.

Diminishing

The role of a _______ center is to receive product from suppliers, store inventory, and ship products to retail stores.

Distribution

_______ is the practice of sending demand away from a system when the system cannot serve it.

Diversion

The defect probability is the likelihood a randomly chosen flow unit ________ meet specifications.

Does not

The assumption in the economic order quantity model is that the order cost ________​_ the size of the order.

Does not depend on

Variability in demand _______​_ the fraction of time a server is working

Does not influence

Two events are independent when the occurrence of one event ______​_.

Does not influence whether the other event also occurs

When an organization has multiple flow units, inventory is often measured in _______.

Dollars

The multi-server queuing model assumes that ______​_.

Each customer has to be seen by only one agent

Processes with setup times are said to exhibit _______ of scale.

Economies

Inventory is controlled in a Kanban system because production occurs at an upstream resource only when it has an _________ container.

Empty

Defects are caused by variation in _blank​_ variables.

Environmental Input

To compute expected sales for a given order quantity you need to know or compute which of the following:

Expected inventory The order quantity

The order quantity prescribed by the newsvendor model optimizes which performance metric?

Expected profit

As the order quantity decreases, which performance metric that affects expected profit also decreases?

Expected sales

Which of the following are ways for supply chain partners to increase the variability in demand?

Failure to deliver the quality needed Failure to deliver the quantity needed

True or false: All demand uncertainty can be eliminated with the use of better forecasting methods.

False

True or false: Calculating the average time spent serving each customer requires measuring how long each customer spends waiting and being served.

False

True or false: Calculating the critical ratio is the final step in determining the optimal order quantity.

False

True or false: In a Kanban system, there is no limit on how much inventory can accumulate.

False

True or false: In a make-to-stock system, an item is produced when its eventual owner is known.

False

True or false: Setup activities can be deferred until after production is done for the day.

False

True or false: The newsvendor model is appropriate for a setting where a customer will wait for the next shipment to show up, in cases where a store runs out of inventory.

False

True or false: Two processes with the same standard deviation will always have the same coefficient of variation.

False

True or false: You can make capacity as large as you want by making the batch size higher.

False

True/False: Taylor viewed the factory floor worker as an asset who could assist with the design of efficient work and promises.

False

Because ____________ time cannot be zero, Little's Law tells us there is always inventory in a process.

Flow

Imagine a process with four steps and one individual working at each step. Which workforce would be preferable based on the TPS philosophy toward pace?

Four novice workers

If the z value for an order quantity Q is positive, then Q must be _______​_ the mean of the demand distribution.

Greater than

When inventory follows a saw-toothed pattern, the average inventory is simply _______ of the maximum inventory.

Half

The basic philosophy of TPS is that the production process should ________​_ production when a quality problem is discovered.

Halt

Technology products like smartphones likely have ______ obsolescence costs.

High

The higher the firm anticipates its opportunity cost of capital will be the _____ it will estimate its holding cost percentage to be.

Higher

The higher the in-stock probability, the _______ the likelihood that all demand is satisfied from inventory.

Higher

The lower the demand, the ______​_ the percentage of purchase costs required for ordering and holding.

Higher

The higher the standard deviation of an arrival process with average interarrival time of 6 minutes, the _blank​_.

Higher the coefficient of variation

The lower the average processing time for a service process with standard deviation of two minutes, the _______​_.

Higher the coefficient of variation

The _______ cost per unit represents all of the costs associated with keeping a unit of inventory for a period of time.

Holding

The EOQ model seeks to minimize the sum of which costs per unit of time?

Holding cost Ordering cost

Which costs are actually impacted by the ordering decision?

Holding cost per unit of time Order cost per unit of time

The time when a process is doing nothing is known as ________ time.

Idle

A failure to deliver a product on time can _________________- the variability in demand.

Increase

If a process improvement effort decreases the amount of time spent on non-value-added activities, then the value-added percentage will _blank​_.

Increase

If an individual works 8 hours a day and after a process improvement his time spent on value added activities increases, then his OEE will ________​_.

Increase

If the annual holding cost percentage increases, then the inventory holding cost as a % of COGS will _______.

Increase

At a resource with a setup, increasing the batch size _______ the capacity of the resource.

Increases

If the standard deviation of the demand distribution increases—and everything else remains the same—then the expected inventory ______.

Increases

Increasing the batch size at a step that has a setup, but is not the bottleneck, and holding everything else constant, ______​_ the maximum inventory level.

Increases

The average waiting time grows at a(n) ________​_.

Increasing rate as utilization grows

The EOQ model assumes that associated with each order, aside from the cost of purchasing the actual items, is an additional cost due to factors such as stocking the product on the shelf. This order cost is ____________ the amount ordered.

Independent of

Little's Law enables one to calculate flow time, while flow rate is constant, indirectly by examining _______.

Inventory

The "just right" batch size makes a smart trade-off between capacity and __________.

Inventory

The expected number of units not sold at the end of the season is called expected _______.

Inventory

The inventory turns of a process is the number of times the average ____________ flows through a process in a designated interval of time

Inventory

Which of the following are major cost categories associated with a supply chain?

Inventory Transportation

What term is used to describe the number of times the average inventory flows through a process during a certain period?

Inventory Turns

The economic order quantity is the order quantity where the order cost per unit of time ________ the holding cost per unit of time.

Is equal to

The EOQ model assumes that the per-unit purchase cost _______​_.

Is independent of the number of items ordered

Inventory builds up when producing a batch at a rate that ______​_ the flow rate of the item through the process

Is more than

Time spent doing a setup _____ classified as idle time.

Is not

When processing time increases, what happens to capacity?

It decreases

What is true of lead time?

It is the time between when the order is made and when it arrives.

In a _____________ system, production instructions are communicated to an upstream step when there is consumption at a downstream step.

Kanban

________​_ is the process control system wherein an upstream resource replenishes what demand has withdrawn from the downstream.

Kanban

When analyzing why flow unit time is wasted, one compares _______ content with flow time.

Labor

The disadvantage of a pallet is that one pallet's worth of goods is typically a _____​_ quantity.

Large

The looser the design specifications (e.g. the larger the quantity USL-LSL) the ______​_ the target variation.

Larger

The round-up rule states that when you are looking up a probability in a statistical table and the probability falls between two entries, you should choose the entry with the _______​_ probability.

Larger

The larger the critical ratio, the _______​_ that maximizes expected profit.

Larger the order quantity

The ____________ time for an order is the number of periods between when the order is made, and it arrives.

Lead

If the expected benefit of having a 200th unit in inventory is less than the expected cost, then the Newsvendor will prescribe an order quantity that is ______​_ 200 units.

Less than

The capacity of a step with a setup is ________ its output rate when producing.

Less than

The months-of-supply for an item in inventory will always be _blank​_ the days-of-supply for the identical item.

Less than

If the critical ratio is .6, there is a 60% chance that demand is ________ the optimal order quantity Q*:

Less than or equal to

Inventory management is the practice of deciding on the quantity, _______________ and type of inventory in a process.

Location

The larger the variability in the arrival process, the Blank______ the average waiting time.

Longer

Functional products generally have _________.

Low demand forecast uncertainty

Which of the following is a condition making it best to not outsource a product?

Low labor content Costly to transport

Assume the purchase price is higher in the second order than in the first. When determining the best first order quantity, the critical ratio is _blank​_ when there is an opportunity to make a second order than when there isn't.

Lower

Seasonality creates inventory when capacity is ______________ than what is needed to handle peak demand.

Lower

Custom business cards produced by a local print shop are created as a result of a _________​_ production system.

Made-to-order

For which type of system does success depend on customers being willing to wait?

Make-to-order

Mass customization is an example of which type of system?

Make-to-order

A gallon of milk that you buy from a grocery store is produced in a _______ system.

Make-to-stock

What term is used to describe production that occurs before the demand for that item has been identified?

Make-to-stock

Which firm in a supply chain is likely to be most recognizable to the public?

Manufacturer

123-Flowers is a ___________ supply chain because it guarantees next-day delivery of floral arrangements in the lower-48 states.

Market-responsive

The probability of a unit falling below the LSL and the probability of a unit being above the USL is the same when the __________ of the distribution is in the middle of the tolerance interval.

Mean

The more leftover inventory costs, the _blank​_.

More likely a make-to-order system is best

For the same implied utilization, a system with _blank​_ will serve a greater proportion of demand.

More servers

________ is a Japanese word that refers to an overburdening of workers or equipment.

Muri

Which correlation leads to a reduced coefficient of variation for pooled demand?

Negative

Resources that are ___________ to each other in the process flow diagram should also be co-located in physical space.

Next

To determine a staffing level that achieves a threshold denial of service probability, you must first calculate the _____________.

Offered load

Io is the amount of inventory ___________.

On-order

The Erlang loss model assumes that the coefficient of variation of the interarrival times is _______​_.

One

Make-to- __________ is the process control system wherein work is released into the system only after a customer order has occurred.

Order

Specifications are acceptable values for ________ variables that indicate whether the output of a process is defective.

Outcome

________ variables measure the quality of the outcome of a process

Outcome

For an investment portfolio, its rate of return would be an example of what kind of variable?

Outcome Variable

When calculating the utilization of a step with a setup, what information is used in the denominator?

Output rate when producing

Designing a process so that it will be robust even under the most exceptional conditions is known as ________.

Overengineering

A pre-processing strategy seeks to reduce the amount of work needed to process a customer during the ________ period.

Peak

________-load pricing refers to charging more during the times that you know you are busiest.

Peak

Which principle of operational excellence refers to respectful interactions with employees that emphasize skill development and growth?

People and partners

Which principle of operational excellence refers to a long-term approach that favors quality and capabilities over short-term financial goals?

Philosophy

Demand for high-definition televisions and cables for connecting those televisions to other components is likely _______.

Positively correlated

Seasonality is _____________ variation in demand.

Predictable

Which reason for holding inventory is exemplified when a firm builds up stock because they anticipate rising profit levels in the future?

Price fluctuation

The output rate when producing equals, one divided by the ______​_ time

Processing

For the queuing model, utilization can be calculated as _____ time divided by _____ time.

Processing, interarrival

When all steps have to be performed correctly for a unit to be good the probability of a good unit is the ______​_ of the probability of each step being performed correctly.

Product

RFID tags are used to support which inventory management capability?

Product and demand tracking

Which of the following are types of variability associated with demand in a supply chain?

Product variety Level of demand Location

The purpose of peak-load pricing and off-peak discounts is to reduce demand during a peak period without reducing ________.

Profit

Upon discovering a defect, which of the following actions would represent the TPS philosophy of quality?

Pull a cord that stops the production line immediately. Thoroughly analyze the root cause of the problem.

Product substitution occurs when customers find their preferred product unavailable and do which of the following?

Purchase another, similar product

In a _____ system, flow units are allowed to enter the process independent of the current amount of inventory in process and the demand rate.

Push

Defect probability is the likelihood with which a ________​_ chosen flow unit does not meet specifications.

Randomly

Which type of inventory has not undergone any transformation in the process?

Raw Material

_________ capacity and ________ response enable firms to reduce both types of mismatch costs.

Reactive, quick

Make-to-order is effective when production is _______.

Reasonably quick

Setups of small duration (e.g., 9 minutes or less) enable ______​_.

Reduced inventory Smaller batch sizes Frequent changeovers

The need to perform a setup at a step ________ its capacity.

Reduces

A production cycle is a _________ sequence of produced flow units

Repeating

________________ provide an assortment of products for consumers.

Retailers

A ________ process is one where variation in input or environmental variables does not lead to large variation in outcome variables.

Robust

The __________ factor determines the in-stock probability.

Safety

______________ stock is held just in case demand turns out to be higher than predicted.

Safety

The expected number of units sold during the season at regular price is called expected ________.

Sales

Expected sales from first order + Expected sales from _______ order = Expected demand (assuming that you have perfect information regarding demand when placing the second order).

Second

A small batch size at a step with a setup leads to low capacity because the step spends much of its time in what mode?

Setup

For heijunka to be effective, _________ times must be reduced to where they are nearly inconsequential.

Setup

Shorter ______ allow the operation to switch between models more frequently, thereby helping synchronize the process with demand and making the operation lean.

Setups

What term is used to describe the loss of items from inventory due to theft?

Shrinkage

A small batch size at a step with a setup will lead to a ______​_ amount of inventory.

Small

Few defects will be produced when the actual process variation is _blank​_ than the target variation.

Smaller

The narrower the design specification (e.g. the smaller the quantity USL - LSL) the _________​_ the process capability index.

Smaller

The larger the expected sales in the first order, the _blank​_ in the second order.

Smaller the expected sales

Assignable cause variation occurs because of a ________ change in input or environmental variables

Specific

A financial services firm tells its financial advisers that portfolios with returns that are 1% less than a benchmark portfolio are "underperforming." This 1% figure is an example of a lower limit.

Specification

What term is used to describe damage that causes items such as produce to become unsalable?

Spoilage

Capability analysis helps one infer that one process is better than another by measuring the process ________.

Spread

Capability analysis helps one infer that one process is better than another by measuring the process ___________.

Spread

To find the optimal order quantity using the standard normal distribution, you first find the optimal order quantity for the ______​_ distribution.

Standard normal

Safety stock is used to accommodate which type of variation?

Stochastic

Which of the following are a function of distributors?

Storage of inventory Reducing delivery lead times

A ___________ decision has an impact on long-term performance

Strategic

The defect probability is the ________ of the probability that a unit falls below the LSL and the probability that a unit falls above the USL.

Sum

A(n) ___________ decision impacts short term performance

Tactical

For __________, workers were animals who needed to be trained to perform work in the manner designed by engineers.

Taylor

In the context of baking cupcakes for sale later, which activities are setups

The baking of the batch of cupcakes Pre-heating the oven Cleaning the baking tins between batches

The longer the inter-arrival time, ______​_ to ensure that demand is less than capacity.

The fewer the servers required

The flow rate used to calculate the average number of customers waiting is _______​_ the flow rate used to calculate the average number of customers being served.

The same as

The implied utilization of a pooled system is _______​_ the implied utilization of the corresponding independent systems.

The same as

Which best describes the bullwhip effect?

The tendency for demand to become more variable the further you are from the source of demand

For a process that has variability in the arrival process but none in the service process, ________.

There will be some waiting time

Under the principles of genchi genbutsu and kaizen, who should collect data how work is performed in order to improve the process?

Those performing the work

What term describes a supplier who produces complex assemblies that are used by a manufacturer?

Tier 1 Supplier

The x-axis of a control chart depicts the ______ periods at which samples from the process are taken.

Time

One way to determine where a flow unit's time is wasted is to take the perspective of the flow unit and create a ________.

Timeline

A pre-processing strategy tries to move the work done to process a customer ______​_.

To an off-peak time

True or false: The basic idea of the "Five Whys" is to continually question whether a potential cause is the ROOT cause or merely a symptom of the root cause.

True

True or false: The bottleneck step in a process can change depending upon the batch size set at a step with a setup.

True

If interarrival times are two minutes and processing times are three minutes, then what is the minimum number of servers required to ensure the queue does not steadily (and indefinitely) grow?

Two

When determining the best first order quantity, which input changes because of the opportunity to place a second order later?

Underage

Which terms are different in the single and multi-server queue formulas?

Utilization Capacity

Which drivers of waiting time in a queue depend on the average amount of time needed to serve a customer?

Variability Capacity Utilization

Assuming that capacity exceeding demand is enough to ensure queues don't form, ignores ________.

Variation

By creating "baton passing zones," a process can absorb __________ in worker speeds and starting times.

Variation

Demand variability is often divided into three components: level, _____________, and location.

Variety

The choice of control limits ensures that 99.7% of the sample points are expected to fall _______​_ the LCL and the UCL.

Within

Ideas for fool-proofing an activity in order to prevent a previously detected defect from recurring often involve a new ______ standard.

Work

Which type of inventory is used within the process to complete a product?

Work-in-process

A process where every customer arrives five minutes apart and takes exactly three minutes to serve will have average wait time equal to _______.

Zero

______________ inventory helps detect-stop-alert as it makes quality problems more immediately apparent.

Zero

For a p-chart the lower control limit is __________ standard deviations below the center line.

three