File: ch01, Chapter 1: Basics of Operations

Management

Multiple Choice

1. Every business is managed through what three major

functions?

a) accounting, finance, and marketing

b) engineering, finance, and operations management

c) accounting, purchasing, and human resources

d) accounting, engineering, and marketing

e) finance, marketing, and operations management

2. Which business function is responsible for managing

cash flow, current assets, and capital investments?

a) accounting

b) finance

c) marketing

d) operations management

e) purchasing

3. Which business function is responsible for managing

cash flow, current assets, and capital investments?

a) accounting

b) finance

c) marketing

d) operations management

e) purchasing

4. Which business function is responsible for sales,

generating customer demand, and understanding customer

wants and needs?

a) finance

b) human resources

c) marketing

d) operations management

e) purchasing

5. Which business function is responsible for planning,

coordinating, and controlling the resources needed to

produce a companys products and services? a) engineering

b) finance

c) human resources

d) marketing

e) operations management

6. Which of the following is not true for business process

reengineering?

a) It can increase efficiency.

b) It cannot be used to improve quality.

c) It can reduce costs.

d) It involves asking why things are done in a certain way.

e) It involves redesigning processes.

7. At the GAP, which function plans and coordinates all the

resources needed to design, produce, and deliver the

merchandise to its various retail locations?

a) engineering

b) human resources

c) marketing

d) operations management

e) purchasing

8. Operations Management is responsible for increasing the

organizations efficiency, which means the company will be able to __________.

a) add to the engineering process

b) take for granted current operations

c) increase the number of positions under the managers position

d) eliminate activities that do not add value

e) increasing purchasing opportunities

9. Which one of the following would not generally be

considered to be a transformation?

a) a haircut

b) a train ride

c) manufacturing a radio

d) waiting to see the doctor

e) a surgery

10. At a factory, the transformation process is a (an)

change of raw materials and components into products.

a) locational

b) imperceptible

c) hypothetical

d) irreversible

e) physical

11. Which of the following is not an input?

a) services

b) managers

c) buildings

d) technology

e) information

12. Operations management is responsible for orchestrating

all the resources needed to produce the final product. This

includes all of the following except

a) obtaining customer feedback

b) arranging schedules

c) managing inventory

d) controlling quality

e) designing work methods

13. Which second-tier computer company utilized a drastic

change in its operations function to become an industry

leader in the late 1990s?

a) Apple

b) Compaq

c) Dell

d) IBM

e) Kozmo

14. A company with a low customer contact that is capital

intensive is called:

a) a farm

b) manufacturing

c) quasi-manufacturing

d) service

e) Industrial era operations management

15. Which initially successful web-based home delivery

company had to shut down in 2001 due to inadequate

management of its operations?

a) Contact.com

b) Time Saver.com

c) Kozmo.com

d) Kramer.com

e) Neptune.com

16. In order to be successful with Web-based on-line

shopping, companies must do all except which of the

following?

a) manage distribution centers and warehouses

b) operate fleets of trucks

c) maintain adequate inventories of products

d) promise same-day delivery

e) schedule deliveries

17. What outsourcing functions does UPS provide for

clients?

a) accounting and inventories

b) inventories and deliveries

c) accounting and deliveries

d) accounting and maintenance

e) deliveries and maintenance

18. An example of an operation that does not add value is

a) removing iron ore from the ground and shipping it to a

steel mill

b) filling the underground gasoline tanks at a service station

c) making a wedding cake

d) moving components to a warehouse for storage until

the factory needs them

e) moving luggage from a cab to the airport ticket counter

19. Which famous economist once suggested that, The production problem has been solved.? a) John Nash

b) Irving Fisher

c) John Kenneth Galbraith

d) Adam Smith

e) John Maynard Keynes

20. What was the primary reason why American firms lost

market dominance in many industries in the 1970s and

1980s?

a) OPEC oil embargoes

b) the Vietnam war had drained the economy of resources

c) after Richard Nixon was President, foreign consumers

began to mistrust American firms

d) they had become lax with a lack of competition in the

1950s and 1960s

e) foreign government subsidies for business

21. In what area does General Motors earn its highest

return on capital?

a) selling cars

b) selling logo merchandise

c) financing

d) selling racing engines

e) post-sales parts and service

22. Which of the following is an example of a back room operation for an airline company?

a) serving food and drinks to passengers

b) collecting tickets and checking passengers in at the gate

c) loading luggage onto the airplane

d) demonstrating use of the seat belt and other safety

features of the airplane

e) assisting passengers in getting off of the plane

23. What are companies that have low customer contact

and are capital intensive, yet provide a service, called?

a) pseudo-manufacturing organizations

b) quasi-manufacturing organizations

c) hierarchical manufacturing organizations

d) service factories

e) servifacturing organizations

24. What percentage of total non-farm jobs in the U.S.

economy come from service-producing industries?

a) 20%

b) 50%

c) 60%

d) 80%

e) 95%

25. What are long-term decisions that set the direction for

the entire organization called?

a) tactical

b) operational

c) directional

d) distant

e) strategic

26. Which of the following is not true with respect to

strategic and tactical decisions?

a) tactical decisions focus on more specific day-to-day

decisions

b) tactical decisions determine the direction for

strategic decisions

c) tactical decisions provide feedback to strategic decisions

d) tactical decisions are made more frequently and

routinely

e) tactical decisions must be aligned with strategic

decisions

27. Which of the following is not primarily performed by

the operation management function?

a) job design and work measurement

b) advertising strategy

c) location analysis

d) quality management

e) facility layout

28. When did operations management emerge as a formal

field of study?

a) during the late 1950s and early 1960s

b) during the late 1970s and early 1980s

c) during World War II

d) during the nineteenth century

e) during the early 1900s

29. Managing the transformation of inputs into goods and

services is:

a) a post industrial era process.

b) a direct contributor to the curved earth syndrome.

c) as old as time.

d) a twenty-first century developed process.

e) a design of Frederick Taylor.

30. Who invented the steam engine?

a) James Watt

b) Adam Smith

c) Eli Whitney

d) Henry Ford

e) Frederick Taylor

31. What concept involves breaking down the production

of a product into a series of small, elementary tasks, each of

which is performed by a different worker?

a) division of labor

b) interchangeable parts

c) scientific management

d) the Hawthorne effect

e) operations research

32. Who wrote The Wealth of Nations in 1776, describing

division of labor?

a) James Watt

b) Adam Smith

c) Eli Whitney

d) Henry Ford

e) Frederick Taylor

33. The concept of interchangeable parts was introduced by

a) Adam Smith

b) Frederick Taylor

c) Eli Whitney

d) Henry Ford

e) W. Edwards Deming

34. Who created scientific management? a) James Watt

b) Adam Smith

c) Eli Whitney

d) Frederick W. Taylor

e) Henry Ford

35. What was Frederick W. Taylors background? a) physics

b) human resources management

c) operations research

d) psychology

e) engineering

36. A key feature of scientific management is that workers

are motivated only by __________________.

a) love

b) power

c) challenging work

d) money

e) fame

37. A key feature of scientific management is that workers

are limited only by

a) machinery

b) co-workers

c) their job description

d) their tools

e) their physical ability

38. The creator of scientific management believed that

a) worker productivity is governed by scientific laws

b) the worker should have a lot of control over his or her

job

c) efficiency is overrated

d) worker pay should primarily be based on seniority

e) mathematical models are the basis for management of

production

39. Which of the following operations management

concepts did not evolve from scientific management?

a) moving assembly lines

b) interchangeable parts

c) stopwatch time studies

d) piece rate incentives

e) setting time standards for task performance

40. Who popularized the moving assembly line?

a) James Watt

b) Adam Smith

c) Eli Whitney

d) Frederick W. Taylor

e) Henry Ford

41. Under scientific management, information from what is

used to set time standards for task performance?

a) stopwatch time studies

b) observance of similar tasks

c) computer simulation

d) negotiations with unions

e) arbitration

42. What movement started with the publication of the

results of the Hawthorne studies?

a) scientific management

b) human relations

c) management science

d) marketing research

e) operations management

43. What is the Hawthorne effect?

a) workers responding to the attention they are given

b) stopwatch time studies leading to time standards

c) the use of quantitative methods for solving management

problems

d) the use of interchangeable parts

e) more lighting increases productivity

44. Increasing the level of responsibility of a job by adding

planning and coordination tasks is ___________.

a) job enlargement

b) job rotation

c) job involvement

d) job enrichment

e) job backward integration

45. The first military use of management science was

solving complex problems of logistics control, weapons

system design, and deployment of missiles during

_____________________.

a) World War I

b) World War II

c) The Korean War

d) The Vietnam War

e) Operation Desert Storm

46. What term describes the approach of giving workers a

larger portion of the total task to do?

a) job enlargement

b) job rotation

c) job involvement

d) job enrichment

e) job backward integration

47. When were the Hawthorne Studies conducted?

a) 1770s

b) 1830s

c) 1930s

d) 1960s

e) 1980s

48. In what company were the Hawthorne Studies

conducted?

a) Westinghouse

b) General Electric

c) Hawthorne Incorporated

d) General Motors

e) Western Electric

49. Management science is focused on:

a) profit margin

b) qualitative systems analysis

c) management promotion metrics

d) quantitative techniques for solving personnel issues

e) quantitative techniques for solving operations

problems

50. When was the first mathematical model for inventory

management developed?

a) 1770

b) 1865

c) 1900

d) 1913

e) 1930

51. Where was the just-in-time philosophy developed?

a) Germany

b) United States

c) Canada

d) Japan

e) Italy

52. Just-in-time philosophy is applicable in:

a) Service organizations

b) Manufacturing organizations

c) Assembly line operations

d) A, B, and C

e) A and C only

53. When was the just-in-time philosophy developed?

a) 1980s

b) 1930s

c) 1800s

d) 1700s

e) 1990s

54. What is a philosophy that aggressively seeks to improve

product quality by eliminating causes of product defects

and making quality an all-encompassing organizational

philosophy?

a) CQI

b) TQM

c) SPC

d) JIT

e) BPR

55. Which of the following is considered a quality guru? a) Elton Mayo

b) W. Edwards Deming

c) Alex Gamble

d) F.W. Harris

e) Frederick W. Taylor

56. Supply chain management involves managing:

a) the flow of internal information only.

b) the flow of materials and information from suppliers

and buyers to the final customer.

c) the flow of raw materials to inventory only.

d) managing the stock room supply only.

57. Many companies require their suppliers to meet what

standards as a condition for obtaining contracts?

a) RFO 6000

b) PUR 8000

c) ISO 9000

d) MACH 5000

e) SUP 2000

58. One of the two most important features of time-based

competition involves ________________________.

a) advertising on the Internet

b) stopwatch time studies

c) setting time standards for task performance

d) instantaneous access to inventory information

e) developing new products and services faster than the

competition

59. ISO 14000 standards provide guidelines for what?

a) business ethics

b) environmentally responsible actions

c) supplier certification

d) quality control

e) web site development

60. NAFTA and the EU are

_________________________.

a) certification groups

b) regional trade agreements

c) quality control methods

d) logistics providers

e) U.S. government agencies

61. What type of commerce makes up the highest

percentage of electronic transactions?

a) B2C

b) C2C

c) B4B

d) B2B

e) B4C

62. The Internet developed from a government network

called ARPANET, which was created in 1969 by

_____.

a) Japanese scientists

b) the EPA

c) the U.S. Defense Department

d) NSF

e) ISO

63. Todays business must think in terms of: a) regional trade zones

b) the EPA

c) the U.S. Defense Department

d) the global market place

e) the curved world

64. General Electrics Trading Process Network primarily handles transactions between _________________.

a) individual customers

b) companies and individual customers

c) companies and their shipping firms

d) companies and their distributors

e) companies and their suppliers

65. What is a concept that takes a total system approach to

creating efficient operations?

a) lean systems

b) enterprise resource planning

c) customer relationship management

d) management science

e) management information systems

66. What are software solutions that allow the firm to

collect customer-specific data?

a) MRP

b) CRM

c) ERP

d) JIT

e) ISO

67. Entry-level positions for operations management

graduates include all of the following except _________.

a) quality specialist

b) inventory analyst

c) plant manager

d) production analyst

e) production supervisor

68. Operations management personnel perform a variety of

functions, including all of the following except

___________________.

a) analyzing production problems

b) analyzing potential mergers

c) developing forecasts

d) developing employee schedules

e) monitoring inventory

69. Which of the following concepts is linked the least with

Henry Ford?

a) scientific management

b) mass production

c) mass customization

d) technology

e) interchangeable parts

70. Todays operations management is characterized by: a) its use of the internet.

b) its reliance on the intranet.

c) its increased use of cross-functional decision making.

d) its use of cross-functional job sharing.

e) its use of interchangeable parts.

71. Which of the following historical figures would

probably have the most different management style from

the others?

a) Elton Mayo

b) Henry Ford

c) Eli Whitney

d) Frederick W. Taylor

e) Adam Smith

72. Operations management interacts with which of the

following:

a) Marketing

b) Information systems

c) Finance

d) Engineering

e) all the above

True/False

1. Operations management is the business function that plans, coordinates, and controls the resources needed to produce a

companys products and services. T 2. Marketing is the central core function of every company. F

3. Operations management is the central core function of every company. T

4. An example of a transformation is waiting to see the doctor. F

5. At a factory, the transformation process is the physical change of raw materials and components into products. T

6. An example of an operation that does not add value is making a wedding cake. F

7. Efficiency means being able to perform most activities. F

8. An example of a back room operation for an airline company is loading luggage onto the airplane. T 9. Companies that have low customer contact and are capital intensive, yet provide a service, are called service factories. F

10. The Industrial Revolution started in the 1770s with the development of a number of inventions that relied on machine power

instead of human power. T

11. Division of labor involves breaking down the production of a product into a series of small, elementary tasks, each of which

is performed by a different worker. T

12. A key feature of scientific management is that workers are limited only by their tools. F

13. The creator of scientific management believed that worker productivity was governed by scientific laws. T

14. Operations management is a result of a single event, the industrial revolution. F

15. Worker participation in decision making is a key feature of scientific management. F

16. Job enrichment is an approach in which workers are given a larger portion of the total task to do. F 17. The first mathematical model for inventory management was developed by Elton Mayo. F

18. Operations research started with the publication of the results of the Hawthorne studies. F

19. Sustainability was an early 1950s management function and focus. F 20. The Hawthorne effect is that workers are motivated by the attention they are given. T

21. Increasing the level of responsibility of a job by adding planning and coordination tasks is called job enrichment. T

22. Outsourcing is providing goods or services to an outside provider. F

23. Management science focuses on developing quantitative techniques for solving operations problems. T

24. The advent of the computer age paved the way for the development of MRP for inventory control and scheduling. T

25. The objective of supply chain management is to have every member of the chain compete against each other to enhance

competitive abilities. F

26. The need to offer a greater variety of product choices to customers of a traditionally standardized product is the challenge of

flexibility. T

27. One of the most important trends in companies today is competition based on time. T

28. The highest percentage of transactions on the internet occur between businesses and their customers (B2C). F

29. Today many corporate CEOs have come through the ranks of operations. T

30. Marketing can always meet the customers needs. F

Essay

1. Define operations management.

Ans: The business function responsible for planning, coordinating, and controlling the resources needed to produce a companys products and services.

2. What must companies focus on in order to survive in todays business environment? Ans: quality, time-based competition, efficiency, international perspectives, and customer relationships

3. What are the three major functions through which every business is managed?

Ans: finance, marketing, and operations management

4. What is the role of operations management? Ans: To transform organizational inputs into outputs

5. List at least seven different possible inputs to a transformation process.

Ans: workers, managers, buildings, equipment, materials, technology, and information

6. What must companies do in order to be successful with Web-based on-line shopping?

Ans: Manage distribution centers and warehouses, operate fleets of trucks, forecast what customers want and maintain adequate

inventories of products, and schedule deliveries while keeping costs low and customers happy.

7. In what ways do service organizations differ from manufacturing organizations?

Ans: Manufacturing organizations produce a physical, tangible product that can be stored in inventory before it is needed, while

service organizations produce an intangible product that cannot be produced ahead of time; and for manufacturing

organizations most customers have no direct contact with the operation, while for service organizations customers are

typically present during creation of the service. Also, service organizations tend to have a shorter response time and are

more labor intensive.

8. List some typical operations management decisions that are made, along with their associated operations management term.

Ans: What are the unique features of the business that will make it competitive? (Operations strategy)

What are the unique features of the product? (Product design)

What are the unique features of the process that give the product its unique characteristics? (Process selection)

How do we manage our sources of supply? (Supply chain management)

How will managers ensure the quality of the product, measure quality, and identify quality problems? (Quality

management)

What is the expected demand for the product? (Forecasting)

Where will the facility be located? (Location analysis)

How large should the facility be? (Capacity planning)

How should the facility be laid out? (Facility layout)

What jobs will be needed in the facility, who should do what task, and how will their performance be measured? (Job

design and work measurement)

How will the inventory of raw materials be monitored? When will orders be placed? (Inventory mgt.)

Who will work on what schedule? (Scheduling)

9. Why are operations management decisions typically more complex for large companies than for small companies?

Ans: Because of the size and scope of large companies: they typically produce a greater variety of products, have multiple

location sites, and often use both domestic and international suppliers.

10. What operations management approaches came out of the scientific management movement?

Ans: moving assembly lines, stopwatch time studies, piece rate incentives, and setting time standards for task performance

Section Ref: Historical Development

Level: hard

11. Tactical decisions can be distinguished from strategic decisions by what set of characteristics?

Ans: Focus on specific day-to-day issues, tactical decisions are made after strategic decisions, tactical decisions must be aligned

with strategic decisions, tactical decisions provide feedback to strategic decision

12. What are the two key features of scientific management?

Ans: First, it is assumed that workers are motivated only by money and are limited only by their physical ability. Second,

management should perform planning separately from the workers who perform the doing.

13. What were the major impacts on operations management that resulted from the widespread use of computers in the 1970s?

Ans: using quantitative models on a larger scale; development of material requirements planning; and data processing was made

easier, with advances in forecasting, scheduling, and inventory management

14. What is the basic approach for business process reengineering and what are its major impacts?

Ans: It involves asking why things are done in a certain way, questioning assumptions, and then redesigning the processes. It

can increase efficiency, improve quality, and reduce costs.

15. How have information technology tools helped with supply chain management?

Ans: They enable collaborative planning and scheduling. They allow synchronized supply chain execution and design

collaboration, and they allow companies to respond better and faster to changing market needs.

16. What are environmental issues faced by business?

Ans: air pollution, water pollution, global warming, and waste disposal

17. Operations Management is:

Ans: the business function that plans, organizes, coordinates, and controls resources an organization transforms into goods and

services.

18. Why is todays Operations Management environment described as very different from what it was just a few years ago? Ans: Customers demand better quality, greater speed, and lower costs.

19. While customers and service organizations interact directly, customers and manufacturers interact

Ans: through service organizations like distributors, wholesalers, and retailers.

20. Manufacturers often provide services like

Ans: Shipping, helping customers use products, repairs, replacement parts, warranty service, and credit.

21. Service providers may also transform inputs into

Ans: goods that support their service, like restaurant food preparation, hair and skin care products, and final assembly of bicycles,

tricycles, wagons, furniture, and other products.

22. Service providers back room activities, like ________________________, often have manufacturing characteristics like ________________________.

Ans: check and credit card transaction processing, credit analysis, cleaning and repairing clothing and other products; physical

products that can be inventoried, low customer contact, capital intense, and long response times.

23. While service and manufacturing firms contribute more to the economy and offer more jobs at all levels,

________________________ are also important to our lives and the economy.

Ans: Agriculture, fishing, and forestry; construction, and extraction (mining, oil and natural gas, industrial gases).

24. All business functions need ______________from operations management while operations managers are highly dependent

on______ from _____ _______ to perform their jobs.

Ans: Information, input, all others

25. While Operations Management focuses on privatelyowned firms, governments provide many services and some goods, like:.

Ans: postal service; family, social, and aged assistance and care, health care, transportation, safety and security, transportation

facility maintenance, education and libraries, real estate title and ownership recording, professional licensing, skill testing,

recreation and related licensing (fishing and hunting), historic preservation.

26. The history of Operations Management reflects.

Ans: the accumulation of experience and ideas over time.

27. Applying the best practices to operations management is not enough to give a competitive advantage because:

Ans: Best practices are quickly passed to competitors.

28. Scientific Management, Management Science, JustinTime, Total Quality Management, Business Process Reengineering, and other developments reflect the application of ________________________ and ________________________ to the

transformation of inputs into goods and services.

Ans: the Computer Age or computers or information processing or quantitative methods and philosophies that emphasize human

relations, questioning existing practices, accepting change.

File: ch02, Chapter 2: Strategy and Productivity

Multiple Choice

1. What are the two key components of the operations

strategy of Federal Express?

a) they own their own fleet of tractor trailers, and they use a

sophisticated bar code technology

b) they own their own fleet of tractor trailers, and they have

a large warehouse in every state

c) they own their own fleet of airplanes, and they have a

large warehouse in every state

d) they use a sophisticated bar code technology, and they

have a large warehouse in every state

e) they own their own fleet of airplanes, and they use a

sophisticated bar code technology

2. Operational efficiency is:

a) driving the business strategy

b) ensuring the right tasks are performed

c) decreasing the firms input requirements d) increasing the firms output e) performing operations tasks well

3. During the 1970s and 1980s, firms from which country

provided the most serious competitive threat to U.S.

companies?

a) Germany

b) Canada

c) Mexico

d) Japan

e) United Kingdom

4. The process of monitoring the external environment is

called what?

a) environmental examination

b) environmental inspection

c) environmental scrutiny

d) environmental perusal

e) environmental scanning

5. Which of the following would not be considered a core

competency that a company might have?

a) a highly trained workforce

b) an inefficient distribution system

c) skills in attracting and raising capital

d) use of information technology

e) quality control techniques

6. .Environmental scanning would not provide information

on:

a) sources of highly trained workers

b) the firms internal inefficient distribution system c) opportunities and threats

d) changes in information technology

e) changes in global competition

7. Which of the following is not typically considered to be

a core competency?

a) workforce

b) mission

c) market understanding

d) technology

e) facilities

8. What term describes the process of obtaining goods or

services from an outside provider?

a) outproviding

b) transferization

c) outsourcing

d) subsourcing

e) supersourcing

9. Once a business strategy has been developed:

a) service prices are established

b) competition must be identified

c) an operations strategy must be formulated

d) contracting with external sources must begin

e) insourcing will be conducted

10. Which of the following is not considered one of the

four broad categories of competitive priorities?

a) technology

b) cost

c) quality

d) flexibility

e) time

11. Which of the following competitive priorities typically

requires the use of more general-purpose equipment?

a) technology

b) cost

c) quality

d) flexibility

e) time

12. Highly-skilled hourly workers would be most needed

by companies employing which of the following

competitive priorities?

a) location

b) cost

c) flexibility

d) development speed

e) time

13. How does Federal Express maintain its ability to

compete on time during peak demand periods?

a) it subcontracts overload to other firms

b) it purchases more planes

c) overtime

d) it uses a very flexible part-time workforce

e) it purchases more vans

14. When making competitive priority decisions the firm:

a) must select the correct supply chain

b) must ensure the PWP is correctly established

c) must focus on the one competitive priority at the

exclusion of all others

d) must make trade-off decisions

e) must isolate the competing internal departments

15. Empire West displays what by specializing in making a

wide variety of products?

a) outsourcing

b) SCM

c) quality

d) flexibility

e) efficiency

16. Order winners and qualifiers:

a) are consistent between manufacturing and service

organizations

b) only matter when responding to formal competitive bid

requests

c) remain constant over time

d) change over time

e) only apply to quasi-manufacturing firms

17. Decisions regarding which of the following are not part

of the production process infrastructure?

a) organization of workers

b) facilities

c) worker pay

d) quality control measures

e) management policies

18. Decisions regarding which of the following are not part

of the production process structure?

a) management policies

b) facilities

c) robots

d) flow of goods and services through the facility

e) flexible manufacturing system (FMS) machines

19. What are the three primary types of technology?

a) product technology, process technology, and

information technology

b) product technology, process technology, and

environmental technology

c) product technology, process technology, and safety

technology

d) information technology, environmental technology, and

safety technology

e) environmental technology, information technology, and

process technology

20. Teflon is an example of what?

a) process technology

b) information technology

c) environmental technology

d) safety technology

e) product technology

21. Technology should be acquired because:

a) the new technology is fun

b) the new technology keeps the employees happy

c) the new technology doesnt cost very much d) the new technology always improves productivity

e) the new technology supports the companys chosen competitive priorities

22. Computer-aided manufacturing is an example of what?

a) process technology

b) information technology

c) environmental technology

d) safety technology

e) product technology

23. Which type of technology has had the greatest impact

on business?

a) process technology

b) information technology

c) environmental technology

d) safety technology

e) product technology

24. When does productivity increase?

a) inputs increase while outputs remain the same

b) inputs decrease while outputs remain the same

c) outputs decrease while inputs remain the same

d) inputs and outputs increase proportionally

e) none of the above

25. Which of the following is a valid type of productivity measure?

a) multi-output productivity measure

b) partial productivity measure

c) multi-part productivity measure

d) multi-component productivity measure

e) imperfect productivity measure

26. Consider a pizza parlor. Which of the following would

not be a valid productivity measure?

a) pizzas produced / number of workers used

b) pizzas produced / number of ovens

c) pizzas produced / cost of workers and ingredients

d) pizzas produced / cost of all inputs used

e) labor hours / pizzas produced

27. If inputs increase by 30% and outputs decrease by 15%,

what is the percentage change in productivity?

a) 100% decrease

b) 11.54% increase

c) 34.62% decrease

d) 15% increase

e) 15% decrease

28. If inputs increase by 6% and outputs increase by 24%,

what is the percentage productivity increase?

a) 400.00%

b) 16.98%

c) 0.25%

d) 4.00%

e) 18.00%

29. An airline has determined that its baggage handlers

handle 12,000 bags when 3 baggage handlers are on

shift. What is the baggage handler productivity?

a) 4,000 bags/shift

b) 4,000 bags/handler

c) 14,000 bags/shift

d) 12,000 bags/shift

e) 2,000 bags/handler

30. If inputs increase by 10% and outputs increase by 4%,

what is the percentage productivity increase?

a) 5.45%

b) 250.00%

c) - 5.45%

d) 5.77%

e) - 5.77%

31. If inputs increase by 10% and outputs increase by 5%,

what is the percentage change in productivity?

a) 4.545% decrease

b) 4.545% increase

c) 4.762% increase

d) 4.762% decrease

e) 50.000% increase

32. If Joes Diner serves 150 meals in one day using 3 kitchen staff, what is the kitchen staff daily

productivity?

a) 40 meals/staff

b) 45 meals/staff

c) 50 meals/staff

d) 55 meals/staff

e) 60 meals/staff

33. If inputs increase by 30% and outputs increase by 15%,

what is the percentage change in productivity?

a) 50.00% decrease

b) 88.46% increase

c) 88.46% decrease

d) 11.54% increase

e) 11.54% decrease

34. Suppose that on Monday the cost of inputs sums to

$1000, and the value of outputs sums to $4000. For which

of the following values on Tuesday would productivity

increase?

a) inputs = $1100, outputs = $4000

b) inputs = $1100, outputs = $4200

c) inputs = $850, outputs = $3600

d) inputs = $1000, outputs = $3900

e) inputs = $2000, outputs = $8000

35. Suppose that a plant has a daily productivity of 200

parts per employee? What can we conclude?

a) the daily productivity is excellent

b) the plant can hire more workers and still earn profits

c) the plant is not earning profits

d) the plant must be highly automated

e) nothing

36. Suppose that a plant has a daily productivity of 0.85

parts per employee? What can we conclude?

a) the plant must be very labor-intensive

b) the plant is not earning profits

c) the plant must be highly automated

d) the plant should lay off workers

e) nothing

37. Suppose that a plant has a total productivity measure of

0.85. What can we conclude?

a) the plant is not earning profits

b) nothing

c) the plant should lay off workers

d) the plant is highly automated

e) the daily productivity is excellent

38. Suppose that last month the cost of inputs summed to

$100,000, and the value of outputs summed to $800,000.

For which of the following values this month would

productivity increase?

a) inputs = $110,000, outputs = $800,000

b) inputs = $50,000, outputs = $400,000

c) inputs = $200,000, outputs = $1,600,000

d) inputs = $100,000, outputs = $820,000

e) inputs = $300,000, outputs = $1,600,000

39. Suppose that in week 1 a company produced 1000 units

using 60 labor hours. For which of the following values in

week 2 would labor productivity decrease?

a) units = 2000, hours = 120

b) units = 1500, hours = 95

c) units = 1000, hours = 58

d) units = 500, hours = 30

e) units = 2000, hours = 100

40. Suppose that on Wednesday the cost of inputs summed

to $4000, and the value of outputs summed to $10,000. For

which of the following values on Thursday will

productivity stay the same?

a) inputs = $2000, outputs = $5000

b) inputs = $5000, outputs = $10,000

c) inputs = $4000, outputs = $8000

d) inputs = $10,000, outputs = $4000

e) inputs = $12,000, outputs = $40,000

41. Vericol, Inc. manufactures drugs using workers and

automated machines. The firm has decided to replace two

workers with a new machine, while the output per day is

not expected to change. Which of the following cannot be

true?

a) labor productivity will increase

b) machine productivity will decrease

c) labor productivity will decrease

d) multifactor productivity will increase

e) multifactor productivity will decrease

42. A manager has just replaced three workers with a

machine that is cheaper to operate than the cost of the

three replaced workers. Output is expected to remain

the same. Which of the following is true?

a) labor productivity will decrease

b) machine productivity will increase

c) multifactor productivity will decrease

d) multifactor productivity will increase

e) the value of output will decrease

43. Suppose that in January a company produced 5000

units using 1000 labor hours. For which of the following

values in February would labor productivity decrease?

a) units = 5000, hours = 900

b) units = 10,000, hours = 1500

c) units = 10,000, hours = 2000

d) units = 2500, hours = 500

e) units = 5000, hours = 1100

44. Suppose that in year 1 a company produced $100

Million worth of outputs while inputs totaled $50 Million.

For which of the following values in year 2 would

productivity decrease?

a) outputs = $90 Million, inputs = $50 Million

b) outputs = $400 Million, inputs = $200 Million

c) outputs = $250 Million, inputs = $100 Million

d) outputs = $50 Million, inputs = $25 Million

e) outputs = $60 Million, inputs = $25 Million

45. If the telecommunication company sold $10,000,000 of

internet service using $50,000 of labor, $25,000 of leased

bandwidth, $45,000 service fees, and $80,000 or

replacement parts, what is the telecommunication

multifactor productivity?

a) 35

b) 40

c) 45

d) 50

e) 55

46. Suppose that on Thursday a company produced 80 units

using 160 labor hours. For which of the following values

on Friday would daily labor productivity increase?

a) units = 70, hours = 160

b) units = 80, hours = 180

c) units = 240, hours = 500

d) units = 160, hours = 300

e) units = 40, hours = 100

47. A firm produces 100 units using 800 labor hours. What

is its labor productivity?

a) 0.125 units/hour

b) 8 units/hour

c) 100 units/hour

d) 800 units/hour

e) -0.125 units/hour

48 A firm produces 2000 products using 10 workers on an

eight-hour shift. What is the labor productivity per

worker?

a) 200 units/hour

b) 25 units/hour

c) 250 units/hour

d) 20 units/hour

e) 0.04 units/hour

49. A machine shop produces metal frames on two different

machines. The average daily production on machine 1

is 300 frames, and the average daily production on

machine 2 is 180 frames. What is the daily machine

productivity?

a) 480 frames/machine

b) 330 frames/machine

c) 240 frames/machine

d) 160 frames/machine

e) 300 frames/machine

50. A machine shop produces metal brackets on two

different machines. Machine 1 can produce a bracket every

10 minutes. Machine 2 can produce a bracket every 4

minutes. What is the average productivity per machine?

a) 4.3 brackets/hour

b) 8.6 brackets/hour

c) 10.5 brackets/hour

d) 21.0 brackets/hour

e) 7.0 brackets/hour

51. A firm produces handbags using three workers. On

Tuesday, Jane completed 60 bags in 6 hours, Ron

completed 50 bags in 7 hours, and Mary completed 80

bags in 5 hours. What was the overall productivity of

the firm?

a) 7.92 bags/hour

b) 11.05 bags/hour

c) 10.00 bags/hour

d) 10.56 bags/hour

e) 61.67 bags/hour

52. Suppose that output is worth $400, and labor and

materials costs are $200 and $100, respectively. What

is the materials productivity?

a) 2.00

b) 1.33

c) 0.25

d) 0.75

e) 4.00

53. A firm produces 500 units per day using five workers

on a five-hour shift. On average, 15% of the units

produced are defective and must be scrapped. What is

the labor productivity for non-defective units?

a) 17 units/hour

b) 3 units/hour

c) 20 units/hour

d) 85 units/hour

e) 15 units/hour

54. Suppose that weekly output is worth $1000, and labor

and materials costs are $300 and $200, respectively.

What is the multifactor productivity ratio?

a) 1000

b) 8

c) 2

d) 3

e) 0.5

55. Each day a firm produces 50 products worth $40 each.

Raw materials cost per unit are $12. The firm uses 4

workers on an eight-hour shift earning $10 per hour

each. What is the multifactor productivity ratio?

a) 1.82

b) 0.77

c) 3.16

d) 0.12

e) 2.17

56. A bakery bakes bread in two different ovens. Oven 1

can bake a loaf every 30 minutes. Oven 2 can bake a loaf

every 15 minutes. What is the average productivity per

oven?

a) 6.00 loaves/hour

b) 3.00 loaves/hour

c) 2.67 loaves/hour

d) 1.33 loaves/hour

e) 0.38 loaves/hour

57. Johnny employs five painters. He collected the

following data from last week.

Painter Hours Walls Completed

Julius 40 60

Margaret 32 68

Dave 50 78

Suzy 36 70

Fawn 44 74

Which painter was least productive last week?

a) Julius

b) Margaret

c) Dave

d) Suzy

e) Fawn

58. A bakery uses five ovens to bake muffins. Yesterdays data are provided below.

Oven Hours Muffins Baked

Oven 1 5 600

Oven 2 10 1500

Oven 3 8 1280

Oven 4 8 800

Oven 5 6 780

Which oven was the most productive?

a) Oven 1

b) Oven 2

c) Oven 3

d) Oven 4

e) Oven 5

59. The state government utilizes five workers to stamp

license plates. Last months data are provided below. Worker Days Worked Units

Stamped

Pete 30 1440

Tommy 20 1600

Laura 24 2000

Julie 28 2100

Susan 29 1200

Which worker was the least productive?

a) Pete

b) Tommy

c) Laura

d) Julie

e) Susan

60. A firm uses five plants to produce its products. Each

final product has a value of $100. The following table

provides last weeks output, labor hours used (at $15 per hour), and materials cost per unit.

Plant Output Labor Hours

Materials Cost per Unit

Plant 1 2000 400

$20

Plant 2 5000 900

$18

Plant 3 9000 2000

$20

Plant 4 1000 150

$30

Plant 5 2000 440

$18

Which plant was most productive last week?

a) plant 1

b) plant 2

c) plant 3

d) plant 4

e) plant 5

61. A firm uses five plants to produce its products. Output

value and total input cost for last week are provided

below.

Plant 1 Output Value Total Cost

Plant 1 $20,000 $25,000

Plant 2 $50,000 $60,000

Plant 3 $40,000 $42,000

Plant 4 $80,000 $99,000

Plant 5 $25,000 $29,000

Which plant was least productive last week?

a) plant 1

b) plant 2

c) plant 3

d) plant 4

e) plant 5

62. Last week Jason painted 11 houses in 4 days. This

week he painted 14 houses in 5 days. What was his

percent productivity increase?

a) 1.82%

b) 1.79%

c) 27.27%

d) 25.00%

e) 5.00%

63. Last month a plant produced 10,000 units using 2000

labor hours. This month it produced 12,000 units using

3000 labor hours. What is the percent productivity

decrease?

a) 200%

b) 100%

c) 50%

d) 25%

e) 20%

64. On Tuesday George produced 100 units in 8 hours. On

Wednesday he produced 120 units in 10 hours. What was

his percent productivity change?

a) 0.50%

b) 4.17% c) 4.17%

d) 4.00% e) 4.00%

65. Last month Stacy sold 10 houses while working 20

days. This month she sold the same number of houses

in 22 days. What is her percent productivity change?

a) 10.00%

b) 9.09% c) 9.09%

d) 10.00%

e) 4.55%

66. Yesterday, John produced 100 units in 8 hours. Today

he produced the same amount in 6 hours. What is his

percent productivity change?

a) 33.33%

b) 0.00%

c) 25.55%

d) 25.00% e) 4.67%

66. A company used to produce 500 units every 2 days, but

10% of the units were defective. After installing a new

process, defects have been eliminated while output has

remained the same. What is the percent increase in

productivity due to installing the new process?

a) 10.00%

b) 25.00%

c) 11.11%

d) 0.00%

e) 5.56%

67. A company used to produce 500 units every 2 days, but

10% of the units were defective. After installing a new

process, defects have been eliminated while output has

remained the same. What is the percent increase in

productivity due to installing the new process?

a) 10.00%

b) 25.00%

c) 11.11%

d) 0.00%

e) 5.56%

68. A company used to produce 300 units every day, but

20% of the units were defective. After installing a new

process, the defect rate has been reduced to 5%, while

output has remained the same. What is the percent

increase in productivity due to installing the new

process?

a) 15.79%

b) 0.00%

c) 15.00%

d) 18.75%

e) 75.00%

69. Last month a plant produced 1200 units using 150 labor

hours. This month it produced 1500 units using 300

labor hours. What is the percent productivity decrease?

a) 37.50%

b) 60.00%

c) 100.00%

d) 300.00%

e) 200.00%

70. Which of the following has used the Internet to conduct

a fashion show in order to boost sales?

a) The Gap

b) Eddie Bauer

c) Fruit of the Loom

d) Victorias Secret e) Sears

71. Which of the following is not described in the chapter

as one of the major environmental trends that firms should

monitor?

a) marketplace trends

b) global climate trends

c) economic trends

d) political trends

e) social trends

72. Suppose that a plant manager is only evaluated based

on the partial productivity measure: output/(number of

employees). If she replaces 10% of the workforce with

robots (one robot per replaced worker), and output

remains the same, what will be the percent change in

this measure of productivity?

Ans: 11.1% increase

73. Productivity is essentially:

a) something to fill out managers reports b) measure of resource effectiveness

c) a scorecard of how efficiently resources are used

d) a balance scorecard metric

e) the current business fad

True/False

1. An operations strategy covers a relatively short time horizon, whereas a business strategy covers a relatively long time horizon. F

2. To provide speed of delivery, Federal Express invested in a sophisticated bar code technology. F

3. To provide dependability of delivery, Federal Express acquired its own fleet of airplanes. F

4. Operations Strategy is developed before the business strategy so the company knows what it will be producing before

establishing a long range business strategy. F

5. Victorias Secret has used the Internet to conduct a fashion show in order to boost sales. T 6. Market research represents a type of environmental scanning. T

7. Companies that compete based on cost generally also allow a lot of product customization. F

8. Firms that focus on quality as their primary competitive priority usually implement either product design quality or process

quality, but not both. F

9. Federal Express subcontracts its work overload to other firms during peak demand periods. F

10. As long as the firm always meets the order qualifier classification it will be always be competitive and win competitive bid

opportunities F

11. Companies that compete based on flexibility often cannot compete based on cost. T

12. Facilities decisions are part of the production process infrastructure. F

13. Decisions regarding flow of goods and services through the facility are part of the production process structure. T

14. Worker pay decisions are part of the production process structure. F

15. Quality control approaches are part of the production process infrastructure. T

16. Studies have shown that companies that invest in new technologies tend to improve their financial position over those that do

not. T

17. Operations management is only concerned with information technology applications within the firm. F

18. Process technology is the technology that has grown the most rapidly and has had the greatest impact on business. F

19. A measure of how efficiently inputs are being converted into outputs is called utilization. F

20. Productivity = input/output. F

21. Output/(all inputs used) is called total productivity. T

22. An operations strategy should not impact the firms supply chain design. F 23. Output/(labor + capital) is an example of a partial productivity measure. F

24. Productivity gains in the service sector have been much lower than that of manufacturing. T

Essay

1. Describe the difference between operational effectiveness and strategy.

Ans: Operational effectiveness is the ability to perform operations more efficiently than competitors. Strategy, on the other

hand, is a plan for competing in the marketplace.

2. Define environmental scanning.

Ans: Monitoring the external environment for changes and trends in the market, in the economic and political environment, and

in society in order to determine business opportunities and threats.

3. A mission statement answers what three overriding questions?

Ans: (1) What business is the organization in?, (2) Who are the customers?, (3) How will the companys core beliefs shape its business?

4. What are some general technological trends in the marketplace?

Ans: point-of-sale scanners, automation, computer-assisted processing, electronic purchasing, electronic order tracking, and e-

commerce

5. How have U.S. tobacco companies responded to public awareness of the dangers of smoking?

Ans: Many have changed their strategy to focus on customers overseas where smoking is still socially acceptable, or have

diversified into other product lines.

6. Discuss how the operation strategy categories of structure and infrastructure determine the nature of the companys operations function.

Ans: Structure is the operations decisions related to the design of the production process while infrastructure is operations

decisions related to the planning and control systems of the operations. Together they define how the firm will pursue its

long range plan.

7. Suggest some core competencies that companies may have.

Ans: highly trained workforce, responsive in meeting customer needs, flexible in performing a variety of tasks, strong technical

capability, creative in product design, flexible in producing a variety of products, technologically advanced, an efficient

distribution system, skilled in understanding customer wants and predicting market trends, skilled in attracting and raising

capital, use of latest production technology, use of information technology, and quality control techniques.

8. What is management guru Tom Peters famous quote regarding outsourcing? What is his main point? Ans: Do what you do best and outsource the rest. The point is to outsource non-core activities so that the firm can focus on

its core competencies.

9. What outsourcing activities does Total Logistics Control perform for Meijer?

Ans: all deliveries, route scheduling, and all activities involved in maintaining a fleet of trucks

10. At the national level why is it important to measure productivity?

Ans: The economic success of a nation and the quality of life of its citizens are related to the competitiveness in the global

marketplace. Understanding the nations productivity helps to define how the nation is performing as a whole/

11. Describe how Southwest Airlines competes on cost.

Ans: Facilities are streamlined: only one type of aircraft is used, and flight routes are generally short. This serves to minimize

costs of scheduling crew changes, maintenance, inventories of parts, and many administrative costs. Unnecessary costs are

completely eliminated: there are no meals, printed boarding passes, or seat assignments.

12. For what entities can productivity be measured?

Ans: individuals, departments, organizations, industries, or even countries

Problems

1. Suppose that a plant manager is only evaluated based on the partial productivity measure: output/(number of employees). If

she replaces 10% of the workforce with robots (one robot per replaced worker), and output remains the same, what will be the

percent change in this measure of productivity?

Ans: 11.1% increase

2. If a companys inputs for producing a certain product increase by 10% and the output increases by 25%, what is the percentage productivity increase for that product?

Ans: 13.6%

3. If a companys inputs for producing a certain product increase by 50% and the output increases by 90%, what is the percentage productivity increase for that product?

Ans: 26.7%

4. The schools cafeteria has three service lines (pizza, salads, and sandwiches). The pizza line has one server and serves 90 pizzas per hour. The salad line has two servers and they handle 140 customers in 70 minutes. The sandwich line has three

servers and they supply 360 sandwiches in 90 minutes. Which service line has the highest hourly productivity?

Ans: Pizza line at 90 pizzas/server/hour

5. A new milling machine can process 2000 jobs in 8 hours. What is the productivity of the machine?

Ans: 250 jobs/hour

6. A firm produces 6000 products using 12 workers on a nine-hour shift. What is the labor productivity per worker?

Ans: 55.6 units/hour

7. A machine shop produces hangers on two different machines. Machine 1 can produce a hanger every 15 minutes. Machine 2

can produce a hanger every 10 minutes. What is the average productivity per machine?

Ans: 5 units/hour

8. A firm produces shirts using three workers. On Wednesday, Madeline completed 110 shirts in 6 hours, Federico completed 90

shirts in 7 hours, and Susan completed 130 shirts in 9 hours. What was the overall productivity of the firm?

Ans: 15 units/hour

9. A firm produces 1500 units per day using four workers on a five-hour shift. On average, 12% of the units produced are

defective and must be scrapped. What is the labor productivity for non-defective units?

Ans: 66 units/hour

10. Last week George mowed 6 lawns in two days. This week he mowed 8 lawns in three days. In which week was George

more productive?

Ans: last week

11. During week one, on average, the aircraft cleaning staff was able to totally clean an airplane in 45 minutes using 3 cleaners.

During week two the average time to clean an aircraft went to 40 minutes with one of the cleaning staff off sick. Week two

productivity changed in which direction and by how much?

Ans: Week two productivity is 20 minutes/staff, productivity decreased

12. A company uses two plants to produce motorcycles. Plant A produces 200 per week using 20 workers and 4 machines. Plant

B produces 250 per week using 10 workers and 10 machines. Which plant is more productive?

Ans: unknownPlant A has a higher machine productivity but a lower labor productivity. The cost of labor and machines is needed.

Short Answer

1. Firms measure productivity to learn how ________________________ they are.

2. Rapid technological change includes the risk of ________________________ .

3. The operations function must place emphasis on those priorities that directly support the __________ ________. Therefore, it

needs to make _________ between different priorities.

4. Estimating productivity requires measurements of ________________________ and ________________________.

5. Operations strategy is a long range plan for the design and use of resources in support of ________________________

6. Mass produced standard products were the main manufacturing concern until ________________________.

7. Restaurants that offer pizza to go have different ________________________ than those that do not.

8. __________________ is used to improve the process of creating goods and services.

9. Environmental scanning helps organizations recognize ________________________.

10. Firms use ____________________ to concentrate on their________________________.

11. A business strategy is like an explorer's ________________________.

12. Saying that an organization is qualified to be in its marker means it has the right__________.

File: ch03, Chapter 3: Product and Process Design

Multiple Choice

1. The ease with which the product can be made is its

a) manufacturability

b) repeatability

c) readiness for manufacturing

d) reliability

e) accountability

2. Service design differs from product design by including

__________________________.

a) customer needs

b) marketing personnel in the decision making process

c) speed

d) quality

e) the esthetic and psychological benefits of the product

3. A companys product design supports it business strategies by

a) designing products that appeal to its customers

b) designing as many products as possible

c) including the companys mission somewhere in the product

d) designing products that aid strategic planning activities

e) designing the companys strategy

4. Which of the following is not a step in product design?

a) final design

b) preliminary design and testing

c) idea development

d) conceptual design

e) product screening

5. ___________ is a vital link between customers and

product design.

a) Engineering

b) Accounting

c) The Internet

d) Operations

e) Marketing

6. All product designs begin with

____________________________.

a) a blueprint

b) a cost analysis

c) an idea

d) a feasibility study

e) a focus group

7. Which of the following is true regarding the relative

predictability of the cycle of new product introductions?

a) new car models are predictable, but new fashion and new

skin care products are not

b) new car models and new fashion are predictable, but

new skin care products are not

c) new car models, new fashion, and new skin care

products are all predictable

d) new car models, new fashion, and new skin care

products are all unpredictable

e) new fashion and new skin care products are predictable,

but new car models are not

8. Lands End is a well known benchmarking target because of its _________________________.

a) catalog business

b) supply chain management

c) success at resolving complaints

d) labor relations

e) environmental policies

9. In 1997, who performed a large benchmarking study for

IBM?

a) Boston Consulting Group

b) Anderson Consulting

c) i2 Technologies

d) Mercer Management Consultants

e) Manugistics

10. When designing the Taurus model, what did Ford

Motor Company do with regard to BMW and Toyota?

a) benchmarking

b) hired some of their employees

c) reverse engineering

d) copied their quality management techniques

e) bought some of their dealerships

11. Reverse engineering is:

a) altering the basic design based on user input.

b) reengineering a failing product.

c) acquiring a competitors product and relabeling it for sale.

d) acquire a competitors product and studying its design features.

e) changing your mind on the previous design.

12. Studying the practices of companies considered best in class and comparing the performance of our company against their performance is

a) competition

b) copying

c) frustration

d) benchmarking

e) notching

13. Involving suppliers early in the design process is called:

a) reengineering

b) disaggregation

c) redesign

d) benchmarking

e) supplier involvement

14. Evaluating a product idea to determine its likelihood of

success is

a) product screening

b) estimating

c) technological forecasting

d) product windowing

e) product evolution

15. In product screening, issues such as Will we need new facilities and equipment? and Can material for production be readily obtained? are addressed by a) marketing

b) finance

c) engineering

d) operations

e) accounting

16. In product screening, issues such as, What is the market size? and What is the long term-product potential? are addressed by:

a) marketing

b) finance

c) engineering

d) operations

e) accounting

17. Approximately what percentage of ideas do not make it

past the screening stage?

a) 30%

b) 50%

c) 60%

d) 80%

e) 90%

18. What technique is based on computing the quantity of

goods a company needs to sell to just cover its costs?

a) net present value

b) break-even analysis

c) internal rate of return

d) activity based costing

e) variable costing

19. Costs that are proportional to the amount of units

produced, such as materials and labor, are

a) fixed costs

b) marginal revenue

c) sunk costs

d) cost drivers

e) variable costs

20. Which of the following is not a fixed cost?

a) land rent

b) materials

c) overhead

d) taxes

e) insurance

21. In break-even analysis, what is the break-even point?

a) the quantity where revenue equals total cost

b) the quantity where revenue equals fixed cost

c) the quantity where revenue equals variable cost

d) the quantity beyond which the firm starts to lose money

e) the quantity where variable cost equals fixed cost

22. In break-even analysis, in order to make a profit the

company must

a) sell above the break-even point

b) sell below the break-even point

c) sell at a loss

d) sell at the break-even point

e) sell on consignment

23. For which of the following is break-even analysis not

appropriate?

a) deciding how much of a product must be sold to make a

profit

b) evaluating different processes

c) deciding whether it is better to make or buy a product

d) deciding between different products

e) deciding how to allocate overhead

24. Which of the following is not included in the

preliminary design and testing stage?

a) the product design idea is evaluated according to the

needs of the major business functions

b) design engineers translate general performance

specifications into technical specifications

c) bugs are worked out d) revising the design based on test results

e) prototypes are built and tested

25. During the final design and testing stage:

a) the product design idea is evaluated according to the

needs of the major business functions.

b) design engineers hand the product over to the final

design engineers.

c) the product specifications are drawn up.

d) marketing becomes involved for the first time.

e) the product achieves full production.

26. Which one of these refers to reducing the number of

parts and features of the product whenever possible?

a) design automation

b) design specification

c) design reduction

d) design standardization

e) design simplification

27. What refers to the use of common and interchangeable

parts?

a) design automation

b) design specification

c) design reduction

d) design standardization

e) design simplification

28. Which of the following is not a guideline for design for

manufacture?

a) use modular design

b) design parts for different products

c) minimize parts

d) rely on automated equipment

e) simplify operations

29. Maturity and decline are also referred to as:

a) the early stages

b) the life cycle

c) the later stages

d) design for manufacture stages

e) re-engineering stages

30. Which type of operation is used to produce many

different products with varying process requirements in

lower volumes?

a) intermittent

b) repetitive

c) continuous

d) downstream

e) gateway

31. Which of the following is not characteristic of

intermittent operations?

a) produce many different products with varying processing

requirements

b) capital intensive

c) workers need to be able to perform different tasks

depending on the processing needs of the product

d) general purpose equipment

e) volume of goods produced directly tied to number of

customer orders

32. Building a bridge over the Mississippi River for a new

highway uses a

a) project process

b) batch process

c) line process

d) continuous process

e) recycle process

33. The classes that you are taking at the university use a

_______________ process.

a) project

b) batch

c) line

d) continuous

e) recycle

34. What type of process is designed to produce a large

volume of a standardized product for mass production, such

as automobiles?

a) project processes

b) batch processes

c) line processes

d) continuous processes

e) recycle processes

35. Which type of process would be least likely to produce

goods for inventory rather than for a specific customer

request?

a) project

b) batch

c) line

d) continuous

e) remanufacturing

36. Which of the following is a tool for evaluating an

operation in terms of the sequence of steps from inputs to

outputs with the goal of improving its design.

a) operations analysis

b) operations sequencing

c) process flow analysis

d) input/output analysis

e) sequencing analysis

37. If the third stage of a repetitive line process cannot

complete its activities as fast as stage one or two it has

become a:

a) key work location

b) bottle neck

c) place not to work

d) project process location

e) none of these

38. Which of the following is correct sequence for relating

product design, process selection, and arrangement of

equipment in the factory?

a) product design determines arrangement of equipment

which determines process selection

b) product design determines process selection which

determines arrangement of equipment

c) process selection determines product design which

determines arrangement of equipment

d) process selection determines arrangement of equipment

which determines product design

e) arrangement of equipment determines process selection

which determines product design

39. What type of operations focus on products in the early

stage of the life cycle?

a) repetitive

b) downstream

c) gateway

d) intermittent

e) recycle

40. With respect to competitive priorities, intermittent

operations compete more on _______________ compared

to repetitive operations.

a) cost and features

b) durability and cost

c) availability and reliability

d) flexibility and delivery

e) durability and features

41. Intermittent operations group their resources based on

a) requirements of the product

b) similar operations or functions

c) shape of the shop floor

d) abilities of the labor force

e) the number of machines

42. Compared to intermittent operations, repetitive

operations

a) have higher material handling costs

b) have greater efficiency

c) have slower processing rates

d) have more flexibility

e) are less specialized

43. Which product and service strategy is used to produce

standard components that can be combined to customer

specifications?

a) assemble-to-deliver

b) make-to-stock

c) assemble-to-order

d) make-to-order

e) make-to-package

44. Which product and service strategy has the longest

delivery lead time?

a) assemble-to-deliver

b) make-to-stock

c) assemble-to-order

d) make-to-order

e) make-to-package

45. Pre-fabricated furniture with choices of fabric colors is

an example of which product and service strategy?

a) assemble-to-deliver

b) make-to-stock

c) assemble-to-order

d) make-to-order

e) make-to-package

46. Which product and service strategy is typically seen in

repetitive operations?

a) assemble-to-deliver

b) make-to-stock

c) assemble-to-order

d) make-to-order

e) make-to-package

47. If a firms facility layout is not correct it will create: a) project processes

b) optimum outputs

c) equal number of products

d) inefficiency

e) job satisfaction

48. Information Technology does NOT assist the firm in:

a) information storage

b) information processing

c) information creation

d) intra firm information communication

e) inter firm information communication

49. Vertical integration is a good strategic option for a

manufacturing company when

a) it needs several different parts and subassemblies

b) it makes many different products

c) its facilities are obsolete

d) it uses distributed processing

e) it needs one input material in large volumes

50. Which of the following is a disadvantage of

automation?

a) inflexibility for product and process changes

b) inconsistency of products

c) inefficiency for producing large volumes

d) harder to monitor quality

e) frequent interruptions of production

51. What is a small battery-driven truck that is not operated

by a human and moves material from location to location?

a) CAD

b) AGV

c) AS/RS

d) FMS

e) CAM

52. A technology which uses sensor tags to monitor

perishable products is:

a) FMS

b) CAD

c) RFID

d) CAM

e) RF

53. What is an automated material handling system that

basically is an automated warehouse?

a) CAD

b) AGV

c) AS/RS

d) FMS

e) CAM

54. What is CAD short for?

a) conceptually appropriate design

b) computer aided design

c) commercial applications design

d) competitive advantage design

e) completely automated design

55. What is a type of automation system that provides the

flexibility of intermittent operations with the efficiency of

repetitive operations?

a) CAD

b) AGV

c) AS/RS

d) FMS

e) CAM

56. In manufacturing, a robot typically:

a) resembles a human in appearance

b) has a mechanical arm

c) is mobile

d) has legs

e) is very small

57. What type of machine is controlled by a computer and

can do a variety of tasks, such as drilling, boring, or turning

parts of different sizes and shapes?

a) numerically controlled

b) variable turning

c) flexible driven

d) noncalculating

e) next component

58. What term is used to describe the integration of product

design, process planning, and manufacturing using an

integrated computer system?

a) CAD/CAM

b) AGV

c) AS/RS

d) FMS

e) CIM

59. Since services are intangible, the design of the service

needs _________________________.

a) to be intangible

b) to be very specific

c) to be in the mind of the customer

d) to be explained to the customer prior to delivery of the

service

e) to specify exactly what the customer is supposed to

experience.

60. Services with low customer contact are called

___________________________.

a) quasi-manufacturing

b) quasi-services

c) mixed services

d) pure services

e) mixed manufacturing

61. Highly labor intensive services are called

___________________________.

a) quasi-manufacturing

b) quasi-services

c) mixed services

d) pure services

e) mixed manufacturing

62. Firms that have areas that have little customer contact

and others with high customer contact are classified as

_________ services.

a) pure services

b) quasi-manufacturing

c) quasi-services

d) mixed services

e) manufacturing

63. What are the three elements of the service package?

a) physical goods, sensual benefits, and psychological

benefits

b) sales, return policy, and warranty

c) customer service, return policy, and warranty

d) kindness, information provision, and speed

e) physiological benefits, sensual benefits, and

psychological benefits

64. What are the three different service designs that are

described in the chapter?

a) substitute people for technology, get the customer

involved, high customer attention approach

b) customer-based market research, high customer attention

approach, substitute technology for people

c) customer-based market research, high customer attention

approach, get the customer involved

d) substitute people for technology, customer-based market

research, high customer attention approach

e) substitute technology for people, get the customer

involved, high customer attention approach

65. Product design decisions are:

a) purely tactical decisions.

b) mixed tactical and strategic decisions.

c) strategic in nature.

d) only made by the OM department.

e) rarely made.

True/False

1. Product design and process selection decisions are typically made separately. F

2. One source of new product ideas is a product manager. T

3. To remain competitive, companies must be innovative and bring out new products regularly. T

4. Analyzing customer preferences is an ongoing process. T

5. There is a pure mathematical formula to making the decision to pursue a specific idea. F

6. Benchmarking should only be performed against firms in similar lines of business with our own. F

7. Buying a competitors new product and studying its design features by disassembling it and analyzing its parts and features is reverse engineering. T

8. Net present value is based on computing the quantity of goods a company needs to sell to just cover its costs. F

9. At the preliminary design and testing stage of new product design, design engineers translate technical specifications into

general performance specifications. F

10. Understanding the stages of the life cycle is NOT important for product design purposes. F

11. Design standardization refers to the use of common and interchangeable parts. T

12. One issue that design for manufacture focuses on is material durability. F

13. When product and process design work together, much of the work is done in sequence rather than in parallel. F

14. Remanufacturing is the concept of using components of old products in the production of new ones. T

15. Repetitive operations are used to produce many different products with varying process requirements in lower volumes. F

16. A common difference between intermittent and repetitive operations is degree of product standardization. T

17. Intermittent operations group their resources based on similar operations or functions. T

18. The make-to-stock product and service strategy has the shortest delivery lead time among the possible strategies, but the

customer has no involvement in product design. T

19. Process velocity is computed as a ratio of throughput time to output. F

20. Outsourcing instead of pursuing vertical integration is often a good strategic option for a firm using an intermittent operation.

T

21. The psychological benefits of the service package involve the sights, smells, and sounds of the experience. F

Essay

1. Define product design.

Ans: The process of deciding on the unique characteristics and features of the companys products.

2. Name some sources for ideas for new products.

Ans: customers, competitors, R&D departments, suppliers, employees, and new technological developments

3. In the product screening stage of new product development, what are some questions that may need to be explored by the

operations function? By marketing? By finance?

Ans: Operations: What are the production needs of the proposed new product and how do they match our existing resources?

Will we need new facilities and equipment? Do we have the labor skills to make the product? Can the materials for

production be readily obtained? Marketing: What is the potential size of the market for the proposed new product? How

much effort will be needed to develop a market for the product and what is the long-term product potential? Finance:

What is the proposed new products financial potential, cost, and return on investment?

4. Describe what process flow analysis is.

Ans: A technique used for evaluating a process in terms of the sequence of steps from inputs to outputs with the goal of

improving its design.

5. For what types of decisions is break-even analysis appropriate?

Ans: deciding how much of a product must be sold to make a profit, evaluating different processes, deciding whether it is

better to make or buy a product, and deciding between different products

6. What is included in the preliminary design and testing stage of product design?

Ans: design engineers translate general performance specifications into technical specifications, bugs are worked out, revising the design based on test results, and prototypes are built and tested

7. What are the guidelines for design for manufacture?

Ans: Use modular design, design parts for different products, minimize parts, simplify operations, and avoid tools

8. What are the characteristics of intermittent operations?

Ans: Produce many different products with varying processing requirements, different products have different processing

needs and there is no standard route that all products take through the facility, resources are grouped by function, labor

intensive, often there are skilled and semiskilled workers with a fair amount of discretion in performing their jobs, workers

need to be flexible and to be able to perform different tasks depending on the processing needs of the product, general

purpose equipment, and the volume of goods produced is directly tied to the number of customer orders

9. What are the characteristics of repetitive operations?

Ans: Produce one or a few standardized products in high volumes, resources are organized in a line flow efficiently

accommodate production of the product, capital intensive, often rely on automation and technology to improve efficiency

and increase output, specialized equipment, and the volume of goods produced is based on a forecast of future demands

10. Describe three different types of service designs.

Ans: (1) substituting technology for peoplethis provides product consistency and takes the guesswork away from employees; (2) get the customer involvedthis can speed delivery, reduce costs, and empower customers; (3) high customer attention approachthis customizes the service needs unique to each customer and has them be passive and pampered recipients of the service

11. Describe why marketing should be involved in the product design process.

Ans: Marketing i