Operations Management Midterm

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. $400 $800 $1200 Zero; this is a C item Cannot be determined because the unit price is not known

$800

Brimley Machining Company is trying to determine their break-even point (in units) based on a new manufacturing process. The total fixed costs is equal to $150,000. Also, the variable cost per unit is $25 with a selling price of $40 per unit. What is the BEP? 3750 units 10,000 units 6,000 units 15,000 units 2,307.69 units

10,000 units

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? 16 70 110 183 600

110

A foundry produces circular utility access hatches (manhole covers). If 120 covers are produced in a 10-hour shift, the productivity of the line is: 1.2 covers/hr 2 covers/hr 12 covers/hr 1200 covers/hr 120 covers/hr

12 covers/hr

A foundry produces circular utility access hatches (manhole covers). Currently, 120 covers are produced in a 10-hour shift. If labor productivity can be increased by 20%, it would then be: 14.4 covers/hr 24 covers/hr 240 covers/hr 1200 covers/hr 10 covers/hr

14.4 covers/hr

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? 24 100 141 490 600

141

In the basic EOQ model, if D = 6000 per year, ordering cost = $100, and holding cost = $60 per unit per year, what is the approximate economic order quantity? 24 100 141 490

141

Fabricators, Inc. wants to increase capacity by adding a new machine. The fixed costs for machine A are $90,000, and its variable cost is $15 per unit. The selling price is $21 per unit. What is the break-even point for machine A (in units)? 90,000 6,000 18,000 15,000 4,286

15,000

Walter Shewhart, in the ________, provided the foundations for ________ in operations management. 1920s; statistical sampling United Kingdom; mass production U.S. Army; logistics Nineteenth century; interchangeable parts 1900s; queuing theory

1920s; statistical sampling

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: All 4000 units at one time 200 units per order Every 20 days 10 times per year None of the above

200 units per order

Gibson Valves produces cast bronze valves on an assembly line. If 1600 valves are produced in an 8-hour shift, the productivity of the line is: 2 valves/hr 40 valves/hr 80 valves/hr 200 valves/hr 1600 valves/hr

200 valves/hr

Gibson Valves produces cast bronze valves on an assembly line, currently producing 1600 valves each 8-hour shift. If the productivity is increased by 10%, it would then be: 180 valves/hr 200 valves / hr 220 valves/hr 880 valves/hr 1760 valves/hr

220 valves/hr

A work system has four workstations that have process times of 6, 5, 9, and 8 minutes. What is the throughput time of the system? 5 minutes 9 minutes 28 minutes 31 minutes 7 minutes

28 minutes

A work system has five stations that have process times of 5, 9, 4, 9, and 8. What is the throughput time of the system? 4 9 18 35 7

35

Christopher's Cranks uses a machine that can produce 100 cranks per hour. The firm operates 12 hours per day, five days per week. Due to regularly scheduled preventive maintenance, the firm expects the machine to be running during approximately 95% of the available time. Based on experience with other products, the firm expects to achieve an efficiency level for the cranks of 85%. What is the expected weekly output of cranks for this company? 5100 5700 4845 969 6783

4845

A work system has four workstations that have process times of 6, 5, 9, and 8 minutes. What is the capacity of the system (in units per hour)? 10 units per hour 6.67 units per hour 12 units per hour 7.5 units per hour

6.67 units per hour

Due to material delays, employee absenteeism, and other issues, Brimley Manufacturing has an effective capacity of 425 sinks per day. If 350 sinks are made per day, what is the efficiency rate? 87.5% 60.0% 82.4% 94.1%

82.4%

The Academic Computing Center has five trainers available in its computer labs to provide training sessions to students. Assume that the design capacity of the system is 1900 students per semester and that effective capacity equals 90% of design capacity. If the number of students who actually got their orientation session is 1500, what is the efficiency of the system? 1350 students 1710 students 78.9% 87.7% 90%

87.7%

A work system has four workstations that have process times of 6, 5, 9, and 8 minutes. What is the bottleneck time in minutes of the system? 5 minutes 9 minutes 8 minutes 7 minutes

9 minutes

In a process flow diagram, triangles represent: A value added process A non-value added process Movement between processes Manufacturing activities

A non-value added process

Effective capacity × Efficiency equals: Efficient capacity Utilization Actual capacity Actual output Design capacity

Actual output

Which of the following statements regarding the reorder point is TRUE? The reorder point is that quantity that triggers an action to restock an item There is a reorder point even if lead time and demand during lead time are constant The reorder point is larger than d x l if safety stock is present A shorter lead time implies a smaller reorder point All of the above are true.

All of the above are true.

Operations strategy in the new economy is based on: Focus on knowledge-based assets Data as the new asset Globalization Distributed operations and outsourcing All the above

All the above

Which of the following statements about the basic EOQ model is TRUE? If the ordering cost were to double, the EOQ would rise If annual demand were to double, the EOQ would increase. If the carrying cost were to increase, the EOQ would fail If annual demand were to double, the number of orders per year would increase. All the above statements are true.

All the above statements are true.

A small metal shop operates 10 hours each day, producing 100 parts/hour. If productivity were increased 20%, how many hours would the plant have to work to produce 1000 parts? Less than 2 hours Between 9 and 10 hours Between 2 and 6 hours Between 6 and 8 hours Between 8 and 9 hours

Between 8 and 9 hours

The task or resource that limits the capacity of a process is the: Parallel process Blocked task Paralyzed task Bottleneck Starved task

Bottleneck

Effective capacity is the: Maximum output of a system in a given period Capacity a firm expects to achieve given the current operating constraints Average output that can be achieved under ideal conditions Minimum usable capacity of a particular facility Sum of all the organization's inputs

Capacity a firm expects to achieve given the current operating constraints

The per-unit marginal cost of carrying one extra unit in inventory than required to meet demand is the: Cost of underage Critical fractile Cost of overage Critical point

Cost of overage

The optimal in-stock rate for the single-period newsvendor problem is the Critical fractile Cycle stock Economic order quantity Buffer inventory

Critical fractile

Inventory serving as a buffer between interdependent operations is known as: Security inventory Decoupling inventory Duplicating inventory Unbundled inventory

Decoupling inventory

Productivity can be improved by: Increasing inputs while holding outputs steady Decreasing outputs while holding inputs steady Increasing inputs and outputs in the same proportion Decreasing inputs while holding outputs steady None of the above

Decreasing inputs while holding outputs steady

Which of the following is the best example of a pure service? Dental cleaning Oil change Heart transplant restaurant

Dental cleaning

Decreasing average costs as volume increases is known as: Economies of scale Directed curve Emergenet strategy Utilization matrix None of the above

Economies of scale

tilization will always be lower than efficiency because: Effective capacity is less than design capacity Effective capacity is greater than design capacity Effective capacity equals design capacity Expected output is less than actual output Expected output is less than rated capacity

Effective capacity is less than design capacity

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? One hundred is the reorder point, and 14 is the order quantity Fourteen is the reorder point, and 100 is the order quantity The number 100 is a function of demand during lead time Fourteen is the safety stock, and 100 is the reorder point None of the above is true.

Fourteen is the reorder point, and 100 is the order quantity

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

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

Which of the following is NOT one of the 10 strategic operations management decisions? Layout strategy Maintenance Process and capacity design Mass customization Supply chain management

Mass customization

An optimistic decision-making criterion is known as Maximax Equally likely Maximin Decision making under certainty

Maximax

A pessimistic decision-making criterion is known as Maximax Equally likely Maximin Decision making under certainty

Maximin

The total of all outputs produced by the transformation process divided by the total of the inputs is: Utilization Greater in manufacturing than in services Defined only for manufacturing firms Multifactor productivity Single factor productivity

Multifactor productivity

Three of the four types of processes are: Goods, services, and hybrids Manual, automated, and service Input, transformation and output Process focus, repetitive focus, and product focus Modular, continuous and technological

Process focus, repetitive focus, and product focus

If the probability is known and the outcome is unknown, this would be considered decision making with Risk Utility Certainty Probability uncertainty

Risk

Which of the following costs results from an inventory item being stolen or broken: Contraction Blockage Spoilage Shrinkage wastage

Shrinkage

Consider a production line with four stations. Station 1 can produce a unit in 11 minutes. Station 2 can produce a unit in 12 minutes. Station 3 has two identical machines, each of which can process a unit in 14 minutes (thus, each unit only needs to be processed on one of the two machines). Station 4 can produce a unit in 13 minutes. Which station is the bottleneck station? Station 1 Station 2 Station 3 Station 4

Station 4

System capacity is based on: The bottleneck Time of the fastest station Throughput plus the waiting time None of the above

The bottleneck

The two most basic inventory questions answered by the typical inventory model are: Timing of orders and cost of orders Order quantity and cost of orders Timing of orders and order quantity Order quantity and service level Ordering cost and carrying cost

Timing of orders and order quantity

Operations management is applicable: Mostly to the service sector To services exclusively Mostly to the manufacturing sector To all firms, whether manufacturing or service To the manufacturing sector exclusively.

To all firms, whether manufacturing or service

The percent of design capacity actually achieved is known as? Actual output Utilization Efficiency economy

Utilization

If the both the probability is unknown and the outcome is unknown, this would be considered decision making with Risk Utility certainty Probability uncertainty

uncertainty