Operations Management
Final Test Solutions
Course Introduction
Operations Management is a course that examines the fundamental principles and techniques used to design, analyze, and improve the processes involved in the production of goods and delivery of services. Students learn to evaluate and optimize various operational activities such as supply chain management, inventory control, quality assurance, process design, and capacity planning. The course emphasizes both strategic and tactical decision-making, incorporating quantitative tools and real-world case studies to illustrate how effective operations management contributes to organizational competitiveness, efficiency, and customer satisfaction.
Recommended Textbook
Supply Chain Management Strategy Planning and Operation 6th Edition by Sunil Chopra
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17 Chapters
1295 Verified Questions
1295 Flashcards
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Page 2
Chapter 1: Understanding the Supply Chain
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Sample Questions
Q1) Which of the following statements about push processes is accurate?
A) They may also be referred to as speculative processes.
B) Execution is initiated in response to customer orders.
C) At the time of execution, demand is known with certainty.
D) They may also be referred to as reactive processes.
Answer: A
Q2) The objective of every supply chain is to maximize the overall value generated.
A)True
B)False
Answer: True
Q3) The profitability of a supply chain is impacted primarily by the A) design, planning and operation categories of decisions.
B) operation category of decisions.
C) design and planning categories of decisions.
D) planning and operation categories of decisions.
Answer: A
Q4) The manufacturing cycle occurs at the distributor/manufacturer interface.
A)True
B)False
Answer: True
Page 3
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Chapter 2: Supply Chain Performance: Achieving Strategic
Fit and Scope
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Sample Questions
Q1) The preferable supply chain strategy for a firm that sells multiple products and serves customer segments with very different needs is to
A) set up independent supply chains for each different product or customer segment.
B) set up a supply chain that meets the needs of the highest volume product or customer segment.
C) tailor the supply chain to best meet the needs of each product's demand.
D) set up a supply chain that meets the needs of the customer segment with the highest implied uncertainty.
Answer: C
Q2) A company's competitive strategy defines the set of customer needs that it seeks to satisfy through its products and services.
A)True
B)False
Answer: True
Q3) Intercompany scope is broader than intrafunctional scope.
A)True
B)False
Answer: True
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Chapter 3: Supply Chain Drivers and Metrics
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Sample Questions
Q1) In the textbook, it mentions that Walmart has mandated the use of a specific technology by its top 100 suppliers at the level of product cases. What is the technology?
A) RFID
B) ERP
C) SCM
D) EDI
Answer: A
Q2) Which of the following would result in an improvement in the C2C cycle for Katz if all other entries in their selected financial data were held constant?
A) An increase in accounts payable turnover
B) An increase weeks payable
C) An increase in weeks receivable
D) An increase in weeks in inventory
Answer: B
Q3) The two major types of facilities are production sites and storage sites.
A)True
B)False
Answer: True
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Chapter 4: Designing Distribution Networks and Applications to e-Business
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Sample Questions
Q1) Which of the following is an advantage of manufacturer/distributor storage with customer pickup?
A) Facility costs can be very high if new facilities have to be built.
B) Transportation cost is lower than the use of package carriers, especially if using an existing delivery network.
C) Order visibility is difficult but essential.
D) Product variety is similar to other manufacturer or distributor storage options.
Q2) Which distribution network design is being used when inventory is stored locally at retail stores and customers walk into the retail store or place an order online or on the phone and pick it up at the retail store?
A) Manufacturer storage with direct shipping
B) Distributor storage with package carrier delivery
C) Distributor storage with last mile delivery
D) Retail storage with customer pickup
Q3) It is more common for a manufacturer to not own the distribution network.
A)True
B)False
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Page 6
Chapter 5: Network Design in the Supply Chain
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Sample Questions
Q1) The objective of the second phase of network design is to
A) select a precise location and capacity allocation for each facility.
B) select a set of desirable sites within each region where facilities are to be located.
C) identify regions where facilities will be located, their potential roles, and their approximate capacity.
D) specify what capabilities the supply chain network must have to support a firm's competitive strategy.
Q2) Capacity allocation decisions have a significant impact on supply chain performance because they tend to stay in place for several years.
A)True
B)False
Q3) Firms focusing on cost leadership tend to find the lowest cost location for their manufacturing facilities, but only if that means locating very far from the markets they serve.
A)True
B)False
Q4) Explain the two situations in which managers use network design models.
Q5) Describe the factors that influence supply chain network design decisions.
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Chapter 6: Designing Global Supply Chain Networks
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Sample Questions
Q1) Uncertainty of demand and price
A) drives the value of building flexible production capacity at a plant.
B) eliminates the value of building flexible production capacity at a plant.
C) facilitates the value of building flexible production capacity at a plant.
D) has no effect on the value of building flexible production capacity at a plant.
Q2) A firm may choose to build a flexible global supply chain even in the presence of little demand or supply uncertainty if certainty exists in exchange rates or prices.
A)True
B)False
Q3) Among the sources of risk identified in global supply chains, the highest among these four is
A) shortage of skilled resources.
B) natural disasters.
C) inflexible supply chain technology.
D) customs delays.
Q4) The value of flexibility increases with an increase in uncertainty.
A)True
B)False
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8
Chapter 7: Demand Forecasting in a Supply Chain
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Sample Questions
Q1) What is the trend component of Holt's model for period 0?
A) -2.5
B) 10.3
C) 2.5
D) 6.4
Q2) Forecasting and the accompanying managerial decisions are extremely difficult when either the supply of raw materials or the demand for the finished product is highly variable.
A)True
B)False
Q3) The measure of how significantly a forecast method consistently over- or underestimates demand is
A) mean squared error (MSE).
B) mean absolute deviation (MAD).
C) bias.
D) the tracking signal.
Q4) The forecast of demand forms the basis for all strategic and planning decisions in a supply chain.
A)True
B)False
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Chapter 8: Aggregate Planning in a Supply Chain
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Sample Questions
Q1) The goal of aggregate planning is to satisfy demand in a way that minimizes profit.
A)True
B)False
Q2) What information does a master production schedule provide that an aggregate plan does not?
A) Expense information for the planning period
B) Revenue information for the planning period
C) Specific product family production information
D) A specific machine schedule for each order
Q3) Use the information from Scenario 8.1 to determine the number of decision variables in this scenario.
A) 10
B) 15
C) 20
D) 24
Q4) Discuss key issues to be considered when implementing aggregate planning.
Q5) Discuss the information required for aggregate planning.
Q6) Formulate the aggregate plan using linear programming.
Q7) Formulate the aggregate plan using linear programming and solve it using Solver.
Page 10
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Chapter 9: Sales and Operations Planning: Planning Supply and
Demand in a Supply
Chain
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Sample Questions
Q1) Determining how profits will be allocated to different members of the supply chain is a key to successful collaboration.
A)True
B)False
Q2) Which approach to capacity management would only be effective if the overall demand across all the products is relatively constant?
A) Use of seasonal workforce
B) Use of subcontracting
C) Use of dual facilities-dedicated and flexible
D) Designing product flexibility into the production processes
Q3) Companies typically divide the task of supply and demand so that
A) Marketing manages demand and Operations manages supply.
B) Marketing manages supply and Operations manages demand.
C) Marketing manages demand and supply.
D) Operations manages demand and supply.
Q4) Scheduling the workforce so that the available capacity better matches demand is using time flexibility from the workforce.
A)True
B)False
11
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Chapter 10: Coordination in a Supply Chain
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Sample Questions
Q1) Incentive obstacles refer to situations where incentives offered to different stages or participants in a supply chain lead to actions that increase variability and reduce total supply chain profits.
A)True
B)False
Q2) Trading partners collaborate on store-level POS forecasts in
A) store replenishment collaboration.
B) DC replenishment collaboration.
C) retail event collaboration.
D) collaborative assortment planning.
Q3) If demand is uncertain, a manufacturer can incentivize retailers to provide high levels of product availability by using
A) high fixed costs.
B) buyback contracts.
C) low fixed costs.
D) zero-cost contracts.
Q4) Describe the impact of forecasts based on orders rather than actual customer demand.
Q5) Describe the impact of behavioral obstacles on supply chain coordination.
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Chapter 11: Managing Economies of Scale in the Supply
Chain: Cycle Inventory
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Sample Questions
Q1) Which cost takes into account the return demanded on the firm's equity and the amount the firm must pay on its debt?
A) Cost of capital
B) Obsolescence (spoilage) cost
C) Handling cost
D) Occupancy cost
Q2) For products where the firm has market power, coordination in the supply chain can be achieved and supply chain profits maximized through the use of
A) two-part tariffs or volume based quantity discounts.
B) marginal unit quantity discounts.
C) all unit quantity discounts.
D) basic quantity discounts.
Q3) A key to reducing cycle inventory is
A) the reduction of holding cost.
B) the reduction of manufacturing cost.
C) the reduction of lot size.
D) the reduction of warehouse space.
Q4) Describe the impact of trade promotions on cycle inventory.
Q5) Discuss the role of cycle inventory in the supply chain.
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Chapter 12: Managing Uncertainty in a Supply Chain: Safety Inventory
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Sample Questions
Q1) In most supply chains, the key to reducing the underlying forecast uncertainty is to link all forecasts throughout the supply chain to customer demand data.
A)True
B)False
Q2) Product fill rate is the fraction of product demand that is satisfied from product in inventory.
A)True
B)False
Q3) What safety stock should be held to put the fill rate at 0.99?
A) 251 phones
B) 145 phones
C) 0 phones
D) 100 phones
Q4) As retailers decrease the level of safety inventory they carry, the distributor will have to
A) decrease his or her safety inventory.
B) increase his or her safety inventory.
C) keep his or her safety inventory at the same level.
D) increase his or her cycle inventory.
Page 14
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Chapter 13: Determining the Optimal Level of Product Availability
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Sample Questions
Q1) Describe managerial levers to increase profitability within a supply chain.
Q2) ________ allows a firm to increase profits and better match supply and demand if the firm produces a large variety of products whose demand is unpredictable, not positively correlated, and is of about the same size.
A) Shortened forecasting window
B) Quick response
C) Postponement
D) Tailored sourcing
Q3) As the ratio of the cost of overstocking to the cost of understocking gets smaller,
A) the optimal level of product availability becomes irrelevant.
B) the optimal level of product availability decreases.
C) the optimal level of product availability remains stable.
D) the optimal level of product availability increases.
Q4) The costs of overstocking and understocking have a direct impact on
A) the optimal cycle service level but not profitability.
B) profitability but not the optimal cycle service level.
C) both the optimal cycle service level and profitability.
D) neither the optimal cycle service level nor profitability.
Q5) Explain how tailored postponement can improve profitability.
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Chapter 14: Transportation in a Supply Chain
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Sample Questions
Q1) Serving a high density of customers at a short distance is best done using A) an LTL carrier.
B) a cross dock distribution center with milk runs.
C) a package carrier.
D) a private fleet with milk runs.
Q2) ________ typically move commodities over large distances at lower costs per unit shipped.
A) Air
B) Truck
C) Rail
D) Package carriers
Q3) ________ are the preferred mode of transport for online businesses such as Amazon.com and Dell, as well as for companies such as W.W. Grainger and McMaster-Carr that send small packages to customers.
A) Air
B) Package carriers
C) Rail
D) Water
Q4) Explain why transportation systems should be tailored.
Q5) Discuss the two key players involved in any transportation in the supply chain.
Page 16
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Chapter 15: Sourcing Decisions in a Supply Chain
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Sample Questions
Q1) If each Jerk Store location is acting independently, how many packets of seasoning should they stock?
A) 2840
B) 3069
C) 3233
D) 3678
Q2) The difference between the values of the buyer and seller is referred to as the A) value discrepancy. B) spread.
C) bargaining surplus.
D) negotiation gap.
Q3) The decision to have a third party perform a supply chain function is called A) insourcing. B) outsourcing.
C) offshoring.
D) onshoring.
Q4) Effective sourcing processes within a firm can improve profits for the firm and total supply chain surplus in a variety of ways.
A)True
B)False
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Chapter 16: Pricing and Revenue Management in a Supply Chain
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Sample Questions
Q1) How many rooms should be reserved for corporate clients?
A) 17
B) 14
C) 13
D) 10
Q2) The goal when making the overbooking decision is to maximize supply chain profits by
A) maximizing the value of wasted capacity and the cost of capacity shortage.
B) maximizing supply chain profits.
C) minimizing the cost of wasted capacity and the cost of capacity shortage.
D) minimizing the cost of wasted capacity and minimizing capacity shortages.
Q3) The tactic of overbooking or overselling the available asset is suitable in any situation where customers are able to cancel orders and the value of the asset drops significantly after a deadline.
A)True
B)False
Q4) The forecasting function is not necessary for most revenue management systems.
A)True
B)False
Q5) How do firms address the problems of spoilage and spill?
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Chapter 17: Sustainability and the Supply Chain
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Sample Questions
Q1) The sustainability damage from landfill additives comes in which form?
A) Potential energy lost
B) Materials lost
C) Terrible smell
D) Both A and B
Q2) In the textbook, a detailed analysis by Abbott indicated that their indirect emissions were about ________ times their direct emissions.
A) 1 to 5
B) 6 to 14
C) 15 to 19
D) 20 to 22
Q3) What are some metrics that can be used to measure sustainability for a supply chain?
Q4) A firm's new sustainability improvement initiative is best begun by focusing on resource reduction activities.
A)True
B)False
Q5) Discuss the role of sustainability supply chains.
Q6) Discuss the factors driving an increased focus on sustainability.
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