Operations Management
Final Test Solutions
Course Introduction
Operations Management is a course that focuses on the design, analysis, and improvement of the processes that produce and deliver goods and services. Students learn techniques for managing resources efficiently, optimizing workflows, ensuring quality, and responding to customer demands. The course covers topics such as process analysis, capacity planning, supply chain management, inventory control, and project management, providing a comprehensive understanding of how organizations can achieve operational excellence in competitive environments.
Recommended Textbook
Decision Sciences and Operations Management Coursemate 4th Edition by David A. Collier
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Chapter 1: Goods, Services, and Operations Management
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Q1) A support process could be any of the following except
A)assembling automobiles
B)purchasing materials and supplies
C)managing inventory
D)installing a product
Answer: A
Q2) Which of the following is not a current challenge to OM?
A)globalization
B)technology
C)quality
D)mass production
Answer: D
Q3) Service management skills would include all of the following except
A)accounting and finance
B)knowledge and technical expertise about operations
C)marketing and cross-selling
D)human interaction
Answer: A
Q4) What are the four key current challenges in OM that managers need to understand?
Answer: 11ea89ff_22e5_c2ff_8b44_5b96df0726be_TB2054_00
Page 3
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Chapter 2: Value Chains
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Q1) The United States has experienced three waves of outsourcing. Which of the following is not one of the waves?
A)skilled knowledge work
B)mass customization
C)simple service work
D)goods-producing jobs
Answer: B
Q2) Contrast outsourcing with vertical integration. Also, contrast backward integration with forward integration.
Answer: Outsourcing is the process of having suppliers provide goods and services that were previously provided internally. Vertical integration refers to the process of acquiring and consolidating elements of a value chain to achieve more control.
Backward integration refers to acquiring capabilities at the front-end of the supply chain suppliers, for example), while forward integration refers to acquiring capabilities toward the back-end of the supply chain distribution or even customers, for example).
Backward integration provides more control over the production portion of the supply chain. Forward integration can provide better marketing advantages.
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4
Chapter 3: Measuring Performance in Operations
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Sample Questions
Q1) Why is measurement important?
Answer: Measurement provides an objective basis for making decisions. Good measures provide a "scorecard" of performance, help identify performance gaps, and make accomplishments visible to the work force, the stock market, and other stakeholders. Knowing that one is doing a good job -- or a better job than before -- is a powerful motivator for most workers.
Q2) Having intensive care nurses on call in case of a dramatic increase in patient demand is an example of design flexibility.
A)True
B)False
Answer: False
Q3) The "value of a loyal customer" links customer satisfaction and loyalty to a firm's profitability measures.
A)True
B)False
Answer: True
Q4) Briefly discuss the seven categories of the Malcolm Baldrige National Quality Award. Answer: 11ea89ff_22ee_4e89_8b44_2961b1fd8f46_TB2054_00
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Chapter 4: Operations Strategy
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Sample Questions
Q1) Which one of the following statements best represents McDonald's approach to global business?
A)One brand cannot be all things to all people.
B)Extensive use of outside trainers
C)Using alternative technologies to make French fries
D)Use of primarily manual information systems
Q2) While it is generally difficult to change the structure of a value chain, operations managers can make strategic choices about technology and human resources.
A)True
B)False
Q3) Explain the difference between an order qualifier and an order winner. Provide some examples.
Q4) What do managers need to understand in order to create a sustainable competitive advantage?
Q5) Core competencies are the strengths that are unique to an organization, such as a creative workforce or a strong supply chain.
A)True
B)False
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Chapter 5: Technology and Operations Management
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Sample Questions
Q1) According to the National Research Council, companies with computer-integrated manufacturing system experience have been able to
A)improve quality by a factor of ten
B)increase equipment utilization to 100 percent
C)decrease engineering design costs by up to 30 percent
D)reduce finished goods inventory by five percent
Q2) A company is considering two alternative technologies for manufacturing a product. The cost data are shown below.
\(\begin{array}{lcc}
& \text { A } & \text { B } \\
\text { Fixed Cost } & \$ 10,000 & \$ 25,000 \\
\text { Variable Cost } & \$ 30 / \text { unit } & \$ 5 / \text { unit }
\end{array}\) What is the breakeven volume, and under what circumstances should A be chosen?
Q3) Low scalability was one of the reasons for failure of many early Internet-based companies.
A)True
B)False
Q4) Discuss the role of technology on productivity.
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Chapter 6: Goods and Service Design
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Sample Questions
Q1) A company is developing a new rocket for NASA and is concerned about the reliability of the fuel pump system. The fuel pump system has four fuel pumps none are redundant), each with a failure probability of .001 over a two-hour period.
a. What is the reliability of an individual fuel pump?
b. What is the reliability of the fuel pump system for the rocket?
Q2) The design of a service cannot be done independently from the process by which the service is delivered.
A)True
B)False
Q3) Customer contact requirements are either technical or behavioral in nature.
A)True
B)False
Q4) Define reliability. Include the four major elements.
Q5) An ATM machine provides four sequential steps in processing a transaction. Over the last quarter, the reliability of each of these steps was 0.92, 0.97, 0.95 and 0.90. What is the overall reliability of the machine? How much can reliability be improved if the reliability of the fourth step is increased to 0.98?
Q6) Explain the concept of Design Failure-Mode-and-Effect analysis.
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Chapter 7: Process Selection, Design, and Analysis
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Sample Questions
Q1) Marketing Product Characteristics/Decisions for the Product-Process Matrix include all the following except
A)Demand volume
B)Degree of customization
C)Pathways
D)Type of good
Q2) An automobile emissions testing center has six (6) inspectors and tests 50 autos per hour. Each inspector can inspect twelve (12) autos per hour. What would the service rate need to be in order to achieve 90% utilization?
Q3) What is the implied service rate at a bank teller's window if demand is 26 customers per hour and the bank staffs 3 tellers with an average utilization of 80%?
Q4) An automobile emissions testing center has six (6) inspectors and tests 50 autos per hour. Each inspector can inspect twelve (12) autos per hour. What is the center's utilization?
Q5) A car rental company at a major airport has 70% of its fleet of 200 cars rented each day on average. Cars are rented for an average of 4 days. How many rentals are processed each day on average?
Q6) Explain Little's Law and how it can be used.
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Chapter 8: Facility and Work Design
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Sample Questions
Q1) Assembly line balancing problems involving many distinct products mixed-model line balancing) are generally easier to solve than single-model balancing problems because there are more alternatives available to assign tasks to workstations.
A)True
B)False
Q2) A ____ layout is an arrangement based on self-contained groups of equipment needed to produce a particular set of goods or services.
A)Product
B)Process
C)Cellular
D)Fixed position
Q3) Product layouts offer higher flexibility with low productivity and process layouts have limited flexibility with high productivity.
A)True
B)False
Q4) Explain the socio-technical approach to job design and some ways to implement it.
Q5) Describe approaches used for process layout design.
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Chapter 9: Supply Chain Design
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Sample Questions
Q1) Explain the importance of the bullwhip effect. What can managers do to reduce it?
Q2) An) ____ produces only what is needed at upstream stages in the supply chain in response to customer demand signals.
A)Responsive supply chain
B)Efficient supply chain
C)Push system
D)Pull system
Q3) Explain the concept of postponement and provide an example of it.
Q4) All of the following are considered non-economic factors in location decisions except
A)Availability of labor
B)Employee empowerment
C)Transportation services
D)Quality of life
Q5) The facility location decision must attempt to minimize the combined cost of producing the good or service and delivering them to customers.
A)True
B)False
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Chapter 10: Capacity Management
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Sample Questions
Q1) Define a Revenue Management System(RMS) and explain how it works. Give several examples of assets that can be managed using an RMS.
Q2) The Theory of Constraints is focused on eliminating all bottlenecks in a process.
A)True
B)False
Q3) Large capacity increases help to spread fixed costs of construction and operating system setup over one large project.
A)True
B)False
Q4) Long-term capacity planning must be closely tied to the strategic direction of the organization.
A)True
B)False
Q5) Reservations reduce risks for customers but provide little benefit for service providers.
A)True
B)False
Q6) What are complementary goods and services and why do firms have them?
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Chapter 11: Forecasting and Demand Planning
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Sample Questions
Q1) ____ forecasts are needed to plan for facility expansion.
A)Long-range
B)Intermediate-range
C)Short-range
D)Demand planning
Q2) If actual demand for a product is highly influenced by only random variation, the quantitative technique to use for forecasting demand is
A)Regression
B)Moving average
C)Mean Absolute Percentage Error MAPE)
D)Delphi
Q3) Aggregate forecasts are generally much easier to develop whereas detailed forecasts require more time and resources.
A)True
B)False
Q4) Irregular variation and random variation both refer to unexplainable deviation of a time series from a predictable pattern.
A)True
B)False
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Chapter 12: Managing Inventories
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Sample Questions
Q1) Because of demanding customers, organizations must always maintain a 100% service level.
A)True
B)False
Q2) Summarize the characteristics of the inventory environment that management considers when developing an inventory management system.
Q3) Costs associated with inspecting, unpacking and putting into storage incoming inventory are components of ____ cost.
A)Ordering or setup
B)Holding
C)Shortage
D)Unit
Q4) Using ABC analysis, continuous monitoring and accurate record keeping relates best to ____ items.
A)A
B)B
C)C
D)B and C
Q5) Discuss two types of stockouts.
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Chapter 13: Resource Management
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Sample Questions
Q1) An electronics company wants to develop an MRP schedule for one of its key components, a specialized chip. The lot size is 600, the lead time is 2 weeks, there are 900 units on hand with 300 of those as safety stock and 500 already allocated. There are gross requirements for 2000 units in week 3 and 1500 units in week 5. There are 600 units scheduled to be received in week 1.
a. What is the number of units available in week 3?
b. What is the planned order receipt for week 5?
Q2) A POQ for a one-week time period is equivalent to LFL lot sizing.
A)True
B)False
Q3) The Lot-for-Lot (LFL) rule
A)Minimizes purchase or setup costs
B)Allows the firm to take advantage of quantity discounts price (breaks) by suppliers
C)Is best applied when inventory carrying costs are high and setup/order costs are low
D)Masks the true nature of dependent demand
Q4) What is capacity requirements planning (CRP)?
Q5) Differentiate between a level production strategy and a chase demand strategy.
Q6) Define resource management and list its key objectives.
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Chapter 14: Operations Scheduling and Sequencing
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Sample Questions
Q1) Scheduling refers to specifying
A)The sequence that jobs must be completed
B)The due date for each job
C)The start and completion times of jobs
D)The makespan of each job
Q2) In sequencing jobs in a flow shop with two resources, Johnson's rule finds a sequence that has the smallest makespan.
A)True
B)False
Q3) The EDD rule minimizes the maximum of jobs past due but doesn't perform well on average flow-time, WIP inventory or resource utilization.
A)True
B)False
Q4) The chief disadvantage of the shortest processing time rule is:
A) average job completion times are excessive
B) average number of jobs in the system is excessive
C) long-duration jobs may have excessive completion times
D) average job lateness is excessive
Q5) Differentiate between scheduling and sequencing.
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Chapter 15: Quality Management
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Sample Questions
Q1) What are the 7 QC Tools and what value are they for quality improvement? Briefly explain how each tool is used.
Q2) In the define phase of the Six Sigma DMAIC problem-solving approach, teams identify critical to quality CTQs) characteristics considered by the customer to have the most impact on quality.
A)True
B)False
Q3) All of the following are components of the GAP model except
A)The discrepancy between delighting or pleasing customers and total customer service and satisfaction
B)The discrepancy between management's perceptions of what features constitute a target level of quality and the task of translating these perceptions into executable specifications
C)The discrepancy between quality specifications documented in operating and training manuals and plans and their implementation
D)The difference between the customer's expectations and perceptions
Q4) Performance standards in services are analogous to manufacturing specifications.
A)True
B)False
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Chapter 16: Quality Control and Spc
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Sample Questions
Q1) With good management, all variability of output from any goods- or service-producing process can be eliminated.
A)True
B)False
Q2) Indications in a control chart of an out-of-control situation include all of the following except
A)Six or seven consecutive points that increase or decrease in value
B)About the same number of points above and below the center line
C)There are points outside control limits
D)There are no more points near the center line than there are close to the control limits
Q3) c-charts
A)Are used for the fraction of non-conforming items
B)Count the number of nonconformances per unit
C)Use continuous metrics
D)Can have negative lower limits
Q4) Find the control limits for a c chart with \(\bar { C }\) = 7.
Q5) Define and give an example of the three components of any control system.
Q6) Describe the steps required to develop and use control charts.
Q7) Define "quality at the source."
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Chapter 17: Lean Operating Systems
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Q1) According to the Toyota Motor Company, waiting time is a necessary evil in production and is not classified as waste.
A)True
B)False
Q2) Discuss the differences between lean production and Six Sigma.
Q3) A withdrawal Kanban
A)Authorizes production
B)Authorizes suppliers to produce
C)Authorizes the transfer of an empty container
D)Authorizes shipping to customers
Q4) Total Productive Maintenance TPM) strives to relieve machine operators of routine maintenance so that they can focus entirely on being productive.
A)True
B)False
Q5) Discuss the seven major categories of waste as defined by Toyota.
Q6) Compare and contrast a push system vs. a pull system.
Q7) Explain the purpose of visual controls and give examples.
Q8) Define a Kanban. Describe how it helps execute a pull system.
Q9) Explain the concept of Single Minute Exchange of Die (SMED).
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Chapter 18: Project Management
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Q1) To compute the critical path, we assign all nodes in the network an earliest starting time of zero.
A)True
B)False
Q2) In a matrix organization, functional managers may be reluctant to provide the resources and employees, and the employees assigned to projects may relegate a project to a lower priority than their daily functional job.
A)True
B)False
Q3) A project has three paths. A-B-C has a length of 25 days. A-D-C has a length of 15 days. Finally, A-E-C has a length of 20 days. Which one of the following statements is true?
A)A-D-C is the critical path.
B)A-B-C has the most slack.
C)The expected duration of this project is 25 days.
D)The expected duration of this project is 25 + 15 + 20 = 60 days.
Q4) All activities on the critical path have a zero slack time.
A)True
B)False
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Chapter 19: Work Measurement, Learning Curves, and Standards
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Sample Questions
Q1) A company manufactures computer parts. They have received an order for 100 custom disc drives. It is estimated that the first drive will take 20 hours of shop time and an 80% learning curve is expected. The labor rate is $15.00 and the pricing policy is to charge 3 times the labor cost.
a. How many hours will the 100th disc drive take?
b. How many hours will the entire order take?
c. What is the price of the entire order?
d. What is the price per unit?
Q2) When timing a work activity with multiple tasks, the general rule is to take the largest sample size estimate and use it for all activities or tasks.
A)True
B)False
Q3) Regression analysis is used to predict times based on different attributes of work. A)True
B)False
Q4) Define and relate normal time and standard time.
Q5) Discuss the two different sides of the debate over work standards.
Page 21
Q6) Define time study and describe the basic procedures for conducting a time study.
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Chapter 20: Queuing Analysis
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Q1) Discuss the five key assumptions for the basic, single-channel waiting line model.
Q2) ____ is the use of a criterion that allows new arrivals to displace members of the current queue and become the first to receive service.
A)Shortest Processing Time SPT)
B)A random queue discipline
C)Preemption
D)A reservation
Q3) Discuss three categories of information necessary to analyze a waiting line.
Q4) Discuss the seven key assumptions for the multiple-server waiting line model.
Q5) Queuing models
A)Yield optimal solutions
B)Are generally deterministic
C)Cannot be used in manufacturing
D)Use formulas only when arrivals and service times follow certain distributions
Q6) Generally for queuing models, the slower the rate of arrivals, the shorter the time period chosen.
A)True
B)False
Q7) Contrast wait cost with server cost. Which is harder to estimate?
22
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Chapter 21: Modeling Using Linear Programming
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Q1) Excel solver can handle basic linear programming but not the special transportation problem.
A)True
B)False
Q2) The normal-time project cost does not depend on what crashing decisions are made. As a result, total crash costs can be minimized for a linear programming objective.
A)True
B)False
Q3) What characterizes a linear function?
Q4) Solutions to a linear programming model that satisfy all constraints are referred to as optimal.
A)True
B)False
Q5) (a month's production) + (beginning inventory) - (ending inventory) - (number of lost sales for the month) =
A)Overtime limits
B)Demand in the month
C)Increase in product
D)Decrease in production
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Chapter 22: Simulation
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Q1) Discuss three advantages and three disadvantages of simulation models.
Q2) It doesn't make sense to use simulation for waiting-line problems since queuing models give optimal solutions.
A)True
B)False
Q3) Discuss a simulator. How does it differ from simulation software such as ProcessModel?
Q4) The queuing model operating characteristics formula only characterizes short-term average results and, in many practical situations, managers are interested in understanding long-term dynamic behaviors of queuing systems
A)True
B)False
Q5) Which of the following is not correct regarding next-event simulation models?
A)Used more commonly in practice
B)Basis for most commercial simulation software
C)Waste computer time
D)More accurate than fixed-time-increment simulation
Q6) Define simulation and give some operations management examples.
Q7) Differentiate and explain the importance of verification and validation.
Page 24
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Chapter 23: Work Measurement, Learning Curves, and Standards
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Q1) In the following profit table, d<sub>i</sub> represents decision variables and S<sub>i</sub> represents states of nature.
\[\begin{array} { c | c c c c } & \mathbf { S } _ { 1 } & \mathbf { S } _ { \mathbf { 2 } } & \mathbf { S } _ { \mathbf { 3 } } & \mathbf { S } _ { \mathbf { 4 } } \\
\hline d _ { 1 } & 15.00 & 15.00 & 15.00 & 15.00 \\
d _ { 2 } & - 10.00 & - 5.00 & 25.00 & 25.00 \\
d _ { 3 } & - 35.00 & 0 & 40.00 & 60.00 \\
d _ { 4 } & - 60.00 & - 20.00 & 50.00 & 90.00 \end{array}\]
a. If management assigns probabilities as follows: S<sub>1</sub> = 0.15; S<sub>2</sub> = 0.25; S<sub>3</sub> = 0.40; and S<sub>4</sub> = 0.20, determine the expected value for d<sub>2</sub>.
b. Determine the expected value for d<sub>3</sub>.
c. Assuming the largest expected value for a decision variable is 24.00, determine the value of perfect information.
Q2) In what type of situation would the expected monetary value criterion be useful? In what type situation would it not be useful?
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