Operations Strategy
Exam Review
Course Introduction
Operations Strategy explores the principles and frameworks that guide organizations in designing and executing operations to achieve long-term competitive advantage. This course examines the alignment of operations with overall business strategy, focusing on topics such as process design, capacity planning, supply chain management, technology integration, innovation, sustainability, and performance measurement. Students will analyze real-world cases and develop strategic thinking skills to make informed decisions that enhance operational effectiveness and support the organization's goals in a dynamic business environment.
Recommended Textbook
Operations Management Processes and Supply Chains 12th Edition by Lee J. Krajewski
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Chapter 1: Using Operations to Create Value
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Q1) Use the information provided in Table 1.2. What is the multifactor productivity of the new process?
A) less than or equal to 8.0
B) greater than 8.0 but less than or equal to 10.0
C) greater than 10.0 but less than or equal to 12.0
D) greater than 12.0
Answer: D
Q2) ________ are often responsible for key performance measures such as cost and quality.
Answer: Operations Managers
Q3) Use the information provided in Table 1.2. Based on your productivity calculations, what decision should you make?
A) implement the new process
B) stay with the current process
C) need more information to make a decision
D) Either process is acceptable (since the multi-factor productivities are the same).
Answer: A
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Chapter 2: Process Strategy and Analysis
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Q1) Customer involvement reflects the ways in which customers become part of the process and the extent of their participation.
A)True
B)False
Answer: True
Q2) Service providers with a line process tend to move customers, materials, or information in a fixed sequence from one operation to the next.
A)True
B)False
Answer: True
Q3) How can flowcharts and process charts be used to study and improve operations? Include descriptions of these two tools, the types of questions that can be addressed with them, and the extent to which teams can be used.
Answer: Flowcharts trace the flow of information, customers, employees, equipment, or material through a process. Process charts record all the activities performed by a person or a machine, at a workstation, with a customer, or on materials. Answers will vary.
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Chapter 3: Quality and Performance
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Q1) Which one of the following is a consequence of internal failures?
A) increased customer service
B) increased inventory costs
C) increased productivity
D) decreased lead time
Answer: B
Q2) A laser eye surgery process has tolerances of plus or minus .001 inches. What does the process standard deviation need to be in order for this process to have a capability ratio of 1.33?
A) 0.025 inches
B) 0.0015 inches
C) 0.015 inches
D) 0.00025 inches
Answer: D
Q3) ________ of employees to do their jobs with decision-making autonomy is required for the intersection between employee involvement and continuous improvement.
Answer: Empowerment
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Chapter 4: Capacity Planning
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Q1) Capacity is the maximum rate of output of a process.
A)True
B)False
Q2) Use the information in Scenario 4.5. What action, if any, should the King Company take?
A) Do nothing-neither alternative provides a positive net present value after five years.
B) Select Alternative #1.
C) Select alternative #2.
D) Either alternative may be selected, since the positive net present values are the same after five years.
Q3) Input measures of capacity are inherently more accurate than output measures of capacity.
A)True
B)False
Q4) A process's ________ is what its capacity should be for some future time period to meet the demand of its customers, allowing for the desired capacity cushion.
Q5) What is a waiting line model, and what information can it provide?
Q6) Discuss the relationship between setup time and utilization.
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Chapter 5: Constraint Management
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Q1) Use the information in Table 5.3. Using the bottleneck method, in what sequence should products be scheduled for production?
A) Z, Y, X, W
B) X, W, Z, Y
C) Z, Y, W, X
D) X, Y, Z, W
Q2) Regardless of the number of tasks or their lengths, a line balance efficiency of 100% is possible if the number of stations is ________.
Q3) A(n) ________ line is a product line that produces several items belonging to the same family.
Q4) Which of the following statements concerning line balancing is True?
A) The theoretical minimum number of stations must always be fewer than the actual number.
B) The largest number of followers rule assigns (as quickly as possible) those work elements most difficult to fit into a station.
C) Selecting the cycle time can never have an effect on line efficiency.
D) Increasing the output rate may increase the theoretical minimum number of stations.
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Chapter 6: Lean Systems
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Q1) Use Scenario 6.1 to determine the total processing time for carpincho wallets.
A) 14 days 585 seconds
B) 14 days
C) 14 days minus 585 seconds
D) 585 seconds
Q2) The rack at my assembly station that holds rear view mirrors is empty, so a runner wheels it away and replaces it with a new rack, fully populated with rear view mirrors. This production factoid illustrates which of the following principles of the Toyota Production System?
A) All work must be specified as to content.
B) Every customer-supplier connection must be direct and unambiguous.
C) The pathway for every service and product must be direct.
D) Any improvements to the system must be made in accordance with the scientific method.
Q3) What are the supply chain implications of the lean system emphasis on small lot sizes?
Q4) An item is used in Process B at a rate of 150 units per day. Process A works one shift per day (480 minutes) and supplies Process B's requirements. What takt time is required in Process A to meet Process B's demand?
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Chapter 7: Project Management
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Q1) What is the crashing cost per week for activity F in Table 7.7?
A) $2,000
B) $3,000
C) $4,000
D) This activity cannot be crashed.
Q2) Using the information shown in Table 7.1, what is the slack time for activity D?
A) 1
B) 4
C) 6
D) 7
Q3) What characteristics should be considered when selecting project team members? Briefly describe these characteristics for members of a project team assigned to improve a teller's job in a bank.
Q4) Using Table 7.5, every day the construction crew is on-site costs $1000. What activities would you consider crashing to reduce the project completion cost?
A) Activity E
B) Activity F
C) Activity G
D) All of these activities would be candidates for crashing.
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Chapter 8: Forecasting
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Q1) Use the information provided in Table 8.4. What is the estimated Weekly Gross Revenue if $7,000 is spent on Radio Advertising (X1) and $4,000 is spent on Newspaper Advertising (X2)?
A) $45,500
B) $15,000
C) $60,500
D) $81,000
Q2) A forecaster that uses a holdout set approach as a final test for forecast accuracy typically uses:
A) the entire data set available to develop the forecast.
B) the older observations in the data set to develop the forecast and more recent to check accuracy.
C) the newer observations in the data set to develop the forecast and older observations to check accuracy.
D) every other observation to develop the forecast and the remaining observations to check the accuracy.
Q3) ________ is a collection of data from traditional and digital sources and is characterized by volume, variety, and velocity.
Q4) What are reasonable criteria for selecting one time-series method over another?
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Chapter 9: Inventory Management
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Q1) The number of setups (or orders) per year is determined by the annual demand and ________.
Q2) ________ is the opportunity cost of investing in an asset relative to the expected return on assets of similar risk.
Q3) When looking at inventory management, the term "lot size" refers to the physical dimensions of the area where the inventory is stored.
A)True
B)False
Q4) Use the information in Scenario 9.8. What is the economic order quantity (EOQ) for this item?
A) less than or equal to 175 units
B) greater than 175 units but less than or equal to 200 units
C) greater than 200 units but less than or equal to 225 units
D) greater than 225 units
Q5) A Theory of Constraints (TOC) advocate visits your factory and seems bemused by your use of EOQ to set your batch sizes. You launch into a brilliant defense of the EOQ. The TOC advocate grabs a piece of chalk and proceeds to sketch two sets of inventory cost curves on your pristine shop floor. What will his two different sets of cost curves look like and why?
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Chapter 10: Operations Planning and Scheduling
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Q1) Backorders and stockouts are most likely to cause expenses for:
A) advertising costs.
B) lost productivity.
C) cost of capital.
D) lost sales.
Q2) Use the information in Table 10.4. How much total slack will be generated from the schedule?
A) fewer than six days
B) six days
C) seven days
D) greater than seven days
Q3) Which of the following is the best example of a physical constraint on the sales and operations plan?
A) inventory storage space
B) level of backorders
C) use of overtime
D) safety stock levels
Q4) A(n) ________ graphically displays the load on a productive resource of interest, i.e., when it is busy and when it is idle.
Q5) How can the workforce be aggregated?
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Chapter 11: Resource Planning
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Q1) Which of the following statements concerning MRP is True?
A) Dependent-demand items tend to experience relatively constant demand rates.
B) MRP systems use independent demands for each component item.
C) Capacity requirements planning (CRP) uses open orders (scheduled receipts) and planned order releases to estimate capacity requirements for critical workstations.
D) The most accurate way to forecast dependent demand is to examine past usage rates.
Q2) Management wishes to use an FOQ lot-sizing rule for an item based on the economic order quantity. If the annual demand is 1,200 units, the holding cost is $10 per unit per year, and the setup cost is $50 per lot, which one of the following fixed-order quantities is most appropriate?
A) 90 units
B) 110 units
C) 130 units
D) 150 units
Q3) What are the key inputs to an MRP system?
Q4) In MRP, a(n) ________ is any item manufactured from one or more components.
Q5) The sums of the quantities in the master production schedule must equal those in the ________.
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Chapter 12: Supply Chain Design
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Q1) Increasing the percentage of on-time deliveries to customers actually reduces the total revenue of a firm.
A)True B)False
Q2) Channel assembly is the process of using members of the distribution channel as if they were assembly stations in the factory.
A)True B)False
Q3) The average inventory at Hamilton Industries, comprising raw materials, work-in-process, and finished goods, was found to be $17.2 million last year. If the cost of goods sold per week averaged $1.32 million, what was the inventory turnover experienced by Hamilton Industries? Assume the company had 50 working weeks per year.
A) less than or equal to 3.50
B) greater than 3.50 but less than 3.75
C) greater than 3.75 but less than 4.00
D) greater than 4.00
Q4) One way to gain control over suppliers in a chain is to buy a controlling interest in them, known as ________.
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Chapter 13: Supply Chain Logistic Networks
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Q1) The load-distance model is used to minimize the total:
A) number of loads.
B) distance traveled.
C) cost of doing business.
D) profit of competitors.
Q2) Consider any two factors that a service operation assigns the greatest weight when making a location decision. Using those two factors, identify one local service operation that likely used one of those factors as their top priority and a different service operation that likely used the other of your two factors as their dominant criterion. Briefly describe the business and justify your assignment of each factor as the overriding concern.
Q3) Which of these is most likely to be classified as a "load" when using the load-distance model?
A) a process
B) a supplier
C) a shipment
D) a customer
Q4) ________ is a reduction in inventory and safety stock because of the merging of variable demands from customers.
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Chapter 14: Supply Chain Integration
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Q1) Which of the following changes would increase the likelihood of a supply chain experiencing the bullwhip effect?
A) engineering changes to the design of a product
B) instituting a more accurate materials management information system
C) closely coordinating promotions with the internal marketing department and suppliers
D) using a more reliable delivery company
Q2) Early supplier involvement is a program that allows suppliers to fill orders prior to the customer placing them.
A)True
B)False
Q3) Vendor-managed inventories are an example of the forward-placement tactic.
A)True
B)False
Q4) Additive manufacturing is a disruptive technology that should not be incorporated into supply chains.
A)True
B)False
Q5) The standard for supply chain security management is ________.
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Chapter 15: Supply Chain Sustainability
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Q1) According to SA8000:2008 working hours should be limited to no more than ________ hours per week.
Q2) ________ as measured in pounds per cubic foot, is one means of determining how energy efficient a firm is behaving.
Q3) What reason is cited by the authors for the difficulty with receiving approval for sustainability as a strategy?
A) Sustainability is not a classic strategy in the mold of quality, cost leadership, or flexibility.
B) Sustainability is too easily achieved and therefore does not provide a competitive advantage in the market.
C) In general, directors often need to see a demonstrable return on investment to justify the costs.
D) Sustainability is an inherently high-risk strategy and most boards are risk-averse.
Q4) A facility owned by the manufacturer or outsourced to a supplier that is proficient at disassembling products and wringing every last drop of value from them is a(n)
Q5) What are the primary disaster relief supply chain management challenges?
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Chapter 16: Supplement A Decision Making
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Q1) In the hipster-beekeeper's equation, 40 represents the:
A) variable cost.
B) fixed cost.
C) profit.
D) revenue.
Q2) A single factory produces two different products during each half of the year with equivalent fixed cost; from January through June they produce Product A and from July through December they produce Product B. Product A costs twice as much to produce and is sold at twice the price of Product B. Derive an expression relating the break-even quantity of Product A to that of Product B.
Q3) A(n) ________ is a schematic model of alternatives available to the decision maker, along with their possible consequences.
Q4) The decision rule ________ is also referred to as the optimist's criterion.
Q5) A preference matrix is a table that allows the manager to rate an alternative according to one performance criterion.
A)True
B)False
Q6) What assumptions are made when using break-even analysis?
Q7) The ________ nodes have probabilities associated with them in a decision tree.
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Chapter 17: Supplement J Operations Scheduling
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Q1) Stu applies the critical ratio method to scheduling his assignments. Which assignment is the fourth one in his sequence?
A) E
B) G
C) C
D) D
Q2) Using the information in Table J.7 and the slack per remaining operations (S/RO) rule, what is the job sequence?
A) A-B-C-D
B) A-C-D-B
C) C-D-B-A
D) D-C-B-A
Q3) Sequencing jobs does not affect tardiness, because processing times are unchanged with different sequences.
A)True
B)False
Q4) The shortest processing time rule tends to produce a large variance in ________.
Q5) The ________ priority sequencing rule is typically applied in a front-office customer service setting.
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Chapter 18: Supplement K Layout
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Q1) Describe the appearance and use of a closeness matrix.
Q2) Use the information from Figure K.5. What is the total weighted distance for the current layout?
A) 69
B) 73
C) 77
D) 81
Q3) Use the information in Figure K.4. Which pair of departments has the greatest weighted-distance score?
A) 1 & 2
B) 1 & 3
C) 1 & 4
D) 2 & 3
Q4) Use the information in Figure K.3. What is the Euclidean distance between offices B and D?
A) greater than 65 feet
B) greater than 45 but less than or equal to 65 feet
C) greater than 25 but less than or equal to 45 feet
D) less than or equal to 25 feet
Q5) Describe what is depicted in the visual representation of the detailed layout.
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Chapter 19: Supplement B Waiting Lines
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Q1) A(n) ________ is a single step in providing a service.
Q2) Customers are serviced at a rate of six customers per hour according to an exponential distribution. What is the probability that customer service will require fewer than 20 minutes?
A) less than or equal to 0.70
B) greater than 0.70 but less than or equal to 0.80
C) greater than 0.80 but less than or equal to 0.90
D) greater than 0.90
Q3) Customers arrive according to a Poisson distribution. The average number of customer arrivals per hour is six. The probability that four customers will arrive in the next three hours is:
A) less than or equal to 0.01.
B) greater than 0.01 but less than or equal to 0.02.
C) greater than 0.02 but less than or equal to 0.03.
D) greater than 0.03.
Q4) The ________ distribution specifies the probability that n customers will arrive in T time periods.
Q5) The mean of the Poisson distribution is equal to its standard deviation.
A)True B)False
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Chapter 20: Supplement C Special Inventory Models
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Q1) Use the information in Scenario C.2. What is the best order quantity?
A) 20 units
B) 40 units
C) 60 units
D) 80 units
Q2) Pick any three products that occupy both extremes and the midpoint of the one-period model continuum. Explain why the products occupy these positions and identify the ideal inventory model for determining the best order quantity or each.
Q3) Consider a manufacturer that uses the economic production lot size (ELS) model. What must the relationship be between production rate and demand rate for the producer to realize a maximum inventory that is exactly two-thirds of their lot size?
A) p = 2d
B) p = 0.5d
C) p = 0.33d
D) p = 3d
Q4) When faced with a quantity discount situation, the first EOQ should be calculated using the ________ price.
Q5) When do one-period decisions on inventory arise in practice?
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Chapter 21: Supplement D Linear Programming
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Q1) Referring to Scenario D.1, which of the following statements is best?
A) Making the cat food out of only eggs is optimal
B) Making the cat food out of only eggs is less expensive than making it out of only tomatoes.
C) Making the cat food out of only eggs means that the Vitamin B constraint would not be satisfied.
D) Making the cat food out of only chicken means the Vitamin B constraint would not be satisfied.
Q2) In a linear program, ________ represent choices the decision maker can control.
Q3) Use the information in Table D.1. Given the information in the optimal tableau, what is the overtime cost in dollars per unit?
A) less than $12
B) greater than $12 but less than or equal to $14
C) greater than $14 but less than or equal to $16
D) greater than $16
Q4) When plotting constraints, it is best to ignore the inequality aspect of the equation.
A)True
B)False
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Chapter 22: Supplement E Simulation
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Q1) The arrival of customers at a lemonade stand is modeled in SimQuick using a(n):
A) entrance block.
B) buffer block.
C) workstation block.
D) decision point.
Q2) Use the information in Scenario E.1. Approximately how many total customers arrived during the 2-hour period simulated?
A) 42
B) 38
C) 44
D) 48
Q3) Time compression is the feature of simulation that allows managers to obtain operating-characteristic estimates in much less time than is required to gather the same operating data from a real system.
A)True
B)False
Q4) ________ uses random numbers to generate simulation events.
Q5) ________ is the act of reproducing the behavior of a system using a model that describes the processes of the system.
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Chapter 23: Supplement F Financial Analysis
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Q1) Discounting is the process by which interest on an investment accumulates, and then earns interest itself for the remainder of the investment period.
A)True
B)False
Q2) ________ is an allowance for the consumption of capital.
Q3) Depreciation is not a legitimate cash flow.
A)True
B)False
Q4) Describe the basic techniques of financial analysis.
Q5) The value of an investment at the end of the period over which interest is compounded is called the future value of the investment.
A)True
B)False
Q6) The net present value (NPV) method evaluates an investment by calculating the present values of all after-tax total cash flows and then subtracting the original investment amount from their total.
A)True
B)False
Q7) ________ is the cash that will flow into and out of the organization.
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Chapter 24: Supplement G Acceptance Sampling Plans
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Q1) A double-sampling plan requires two sample sizes and two acceptance numbers.
A)True
B)False
Q2) Use Table G.1 for the following question. What is the acceptance number of a single-sampling plan if n = 300, LPTD = 0.02, and = 0.15?
A) c = 0
B) c = 1
C) c = 2
D) c = 3
Q3) A double-sampling plan has a lower ________ than a single-sampling plan.
Q4) Which of the following is an example of a type I error?
A) buying a carton of eggs at the store and discovering that one was broken
B) releasing a guilty defendant
C) returning your computer for warranty repair when the fault was caused by user error
D) passing defective materials from a supplier into your processes to keep your workers busy
Q5) Describe the process of a single-sampling plan.
Q6) What is the basic idea of incoming inspection? Why does a producer perform it?
Q7) ________ is the worst level of quality that the customer can tolerate.
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Chapter 25: Supplement H Measuring Output Rates
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Q1) The snap-back method of time study resets the stopwatch to zero on the completion of each work element.
A)True
B)False
Q2) An analyst using a time study approach:
A) observes the worker at random times, categorizing what he or she is doing at that time.
B) must rate the performance of the worker on each element of the total task.
C) divides the total task into micro-motions such as "reach" and "grasp" and then times the worker on each one.
D) should use all observations in determining the standard, regardless of how irregular they might be, to be fair to the worker.
Q3) What are the strengths and limitations of the time study method when compared to work sampling, and for which applications are each best suited?
Q4) Companies should utilize traditional work measurement techniques when faced with technological change and process automation.
A)True
B)False
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Chapter 26: Supplement I Learning Curve Analysis
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Q1) What are the three major assumptions of the learning curve?
Q2) The learning effect can be represented by a line called a learning curve.
A)True
B)False
Q3) The first two units took 28.5 days to finish and the subsequent two units took 24.8431 days to complete. What is the learning rate?
A) 80%
B) 85%
C) 90%
D) 95%
Q4) It took 100 hours to produce the first unit and the learning rate is 80 percent. How much time will it take to produce units 16 through 20?
A) fewer than or equal to 160 hours
B) greater than 160 but fewer than or equal to 170 hours
C) greater than 170 but fewer than or equal to 180 hours
D) greater than 180 hours
Q5) Once the learning curve has flattened, i.e., reached a mostly horizontal shape, the per-unit time could be described as ________.
Q6) The mathematical model that is used to generate a learning curve is ________.
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