Operations Management Midterm 1

Which of the following statements about process efficiency is FALSE? a. A process is efficient if it is able to achieve a high flow rate with few resources. b. Cost of direct labor goes up if flow rate goes up. c. Revenue goes up if flow rate goes up. d. Cycle time goes up if flow rate goes down.

Cost of direct labor goes up if flow rate goes up.

"Firm A Pareto dominates firm B" means that firm A's product or service is inferior to that of firm B on all dimensions of the customer utility function. t or f

False

Which of the following statements about process analysis is TRUE? a. Process analysis is the backbone of a company's accounting system. b. Process analysis tracks an organization's revenue and costs. c. Process analysis enables a business to create demand. d. Process analysis is a framework to understand an organization's detailed operations.

Process analysis is a framework to understand an organization's detailed operations.

If __________ is the constraint, we should __________ the staffing level to raise capacity. a. demand, lower b. demand, raise c. capacity, raise d. capacity, lower

capacity, raise

A key process metric is __________. a. raw materials b. inputs c. inventory d. outputs

inventory

A batch size should be chosen for a process with setups to make a trade-off between capacity and inventory. t or f

true

A bottleneck is the resource with the lowest capacity in a multistep process. t or f

true

Automating some activities at a nonbottleneck resource increases the amount of idle time for that resource without making the process more efficient. t or f

true

C&A Bakery serves 200 customers in 10 hours. On average there are five customers in the bakery. This means each customer spends on average 15 minutes in the bakery. t or f

true

Revenue cannot be increased with an efficiency improvement on a demand-constrained process. t or f

true

Takt time matches cycle time if supply matches demand. t or f

true

The capacity of a resource with setups is dependent on the batch size. t or f

true

A flow unit is generally associated with the inputs of a process. t or f

false

A resource with a utilization of less than 100% cannot be the bottleneck. t or f

false

A resource with setups can achieve a flow rate that is equal to its capacity. t or f

false

Cost of direct labor goes up whenever labor content goes up. t or f

false

Cycle time is the time between when an order is placed and when it is completed. t or f

false

Setup involves different amounts of time depending on the actual number of units to be made. t or f

false

C&A Museum has three million visitors per year. Each visitor spends an average of 1 hour in the museum. What is the average number of visitors in the museum on a given day if the museum is open 300 days a year from 9 a.m. to 5 p.m.? a. 1250 b. 2400 c. 7500 d. 8000

1250

Utility is composed of the following components EXCEPT __________. a. customer loyalty b. price c. inconvenience d. consumption utility

customer loyalty