Operations Strategy
Practice Exam
Course Introduction
Operations Strategy explores the long-term planning and decision-making processes that align an organizations operations with its overall business objectives. The course examines the role of operations in gaining a competitive advantage through strategic choices in areas such as product and process design, capacity planning, supply chain management, technology adoption, and quality improvement. Students will analyze case studies and real-world examples to understand how global trends, sustainability considerations, and innovation drive operations strategies. Through a combination of theory and practical tools, participants will learn to evaluate and develop strategies that enhance the efficiency, effectiveness, and adaptability of operations within various industries.
Recommended Textbook
OM 3rd Edition by David Alan Collier
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Chapter 1: Goods, Services, and Operations Management
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Q1) Taking a customer order at a quick service restaurant would generally be viewed as a support process.
A)True
B)False
Answer: False
Q2) 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
Q3) Which of the following would be the lowest in goods content and highest in service content?
A)fast food restaurant
B)attending a theater production
C)getting an oil change for your car
D)filling a medical prescription
Answer: B
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3
Chapter 2: Value Chains
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Sample Questions
Q1) Post-production services might include customer financing, customer benefit package design, and promotion/advertising.
A)True
B)False
Answer: False
Q2) The organization that outsources still retains ownership of the outsourced process or function.
A)True
B)False Answer: False
Q3) A value chain views an organization from an integrative perspective of goods and services, while a supply chain focuses mainly on the creation of physical goods.
A)True
B)False
Answer: True
Q4) A supply chain is more inclusive than a value chain.
A)True
B)False Answer: False
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Chapter 3: Measuring Performance in Operations
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Q1) 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
Q2) Design flexibility is the ability to respond quickly to changes in the volume and type of demand.
A)True
B)False
Answer: False
Q3) When Bill Gates stated that "Microsoft is always two years away from failure," he was emphasizing the importance of
A)innovation and learning
B)productivity
C)design flexibility
D)speed
Answer: A
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Page 5
Chapter 4: Operations Strategy
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Q1) With regard to the Lawn Care Company case study, explain how the (a) physical product (i.e., grass seed and fertilizer) and (b) lawn application service life cycles are related? What are the implications?
Q2) The ease by which one can create original music compositions using a software package such as Band in a Box or Apples' Garage Band would be an example of an experience attribute.
A)True
B)False
Q3) Customers generally perceive greater risk when buying goods than when buying services.
A)True
B)False
Q4) Because of the importance of supplying goods or services, operations strategy has historically received significant high-level management attention.
A)True
B)False
Q5) What do we mean by core competencies?
Q6) Explain the concept of search, experience, and credence attributes.
Q7) What is the difference between corporate, business and functional strategy?
Page 6
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Chapter 5: Technology and Operations Management
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Sample Questions
Q1) Enterprise Resource Planning systems are designed to build customer relationships and loyalty.
A)True
B)False
Q2) Filing your individual federal tax returns would best be described as what type of value chain?
A)B2B
B)C2G
C)C2C
D)G2G
Q3) During which stage of technology development and adoption is design and demand flexibility most critical?
A)Birth
B)Turbulence
C)Build-out
D)Decline
Q4) Computer chips and microprocessors are examples of hard technology.
A)True
B)False
Q5) Describe the three stages of the technology development and adoption process.
Page 7
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Chapter 6: Goods and Service Design
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Sample Questions
Q1) 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?
Q2) A kiosk at an airport that allows passengers to check their baggage would be an example of a lean servicescape environment.
A)True
B)False
Q3) A quality characteristic has a manufacturing specification (in cm) of 0.200 \(\pm\)
0.05. Historical data indicate that if the quality characteristic takes on values larger than 0.25 cm or smaller than 0.15 cm, the product fails and a cost of $75 is incurred. Based on this data, answer the questions below.
a.Determine the Taguchi Loss Function
b.Estimate the loss for a quality characteristic of 0.135 cm.
Q4) Customer contact requirements are either technical or behavioral in nature.
A)True
B)False
Q5) Define reliability. Include the four major elements.
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Chapter 7: Process Selection, Design, and Analysis
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Sample Questions
Q1) Which is the correct order of hierarchy?
A)Activity, task, process, value chain
B)Value chain, process, task, activity
C)Process, value chain, activity, task
D)Value chain, process, activity, task
Q2) A company is able to process 300 customer statements (bills) per day. The average processing time is six (6) days. What is the average number of statements (bills) the company has in process at any time?
Q3) Ships, weddings and estate planning are examples of ____ goods and services.
A)Make-to-order
B)Assemble-to-order
C)Make-to-stock
D)Continuous flow
Q4) Some argue that modern technology invalidates the application of the product-process matrix. Explain their logic.
Q5) 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%?
Q6) Explain why the product-process matrix does not transfer well to services.
Q7) What are some management strategies to improve process designs?
Page 9
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Chapter 8: Facility and Work Design
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Sample Questions
Q1) CRAFT is a process layout technique that tries to improve on a current solution by exchanging two or three departments at a time to determine if total materials handling costs have been reduced.
A)True
B)False
Q2) A Gallup study showed that workers who are allowed to personalize their workplaces were no more productive than those who are not allowed.
A)True
B)False
Q3) An assembly line is a type of product layout.
A)True
B)False
Q4) ____ set their own goals and inspect their own work, often hire their own replacements and prepare their own budgets.
A)Virtual teams
B)Enlarged teams
C)Socio-technical teams
D)Self-managed teams
Q5) Explain the role of ergonomics in job design.
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Chapter 9: Supply Chain Design
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Sample Questions
Q1) Explain the difference between a supply chain and a value chain.
Q2) Where in its supply chain does Dell, Inc. begin to use a pull system?
A)supplier
B)factory
C)distribution center
D)customer
Q3) 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
Q4) Which one of the following is not directly related to a supply chain?
A)Distribution center
B)Inventory
C)Promotion/Advertising
D)Supplier
Q5) A supply chain is broader in scope than the value chain, and encompasses all preand post-production activity.
A)True
B)False
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Chapter 10: Capacity Management
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Sample Questions
Q1) Short-term capacity decisions usually involve adjusting schedules or staffing levels.
A)True
B)False
Q2) Referring to a Revenue Management System (RMS), which of the following is not a component?
A)Marketing
B)Forecasting
C)Pricing
D)Allocating
Q3) A focused factory is least likely to focus on
A)A few key products
B)A specific technology
C)A certain process design and capability
D)A seasonal demand good
Q4) The Theory of Constraints is focused on eliminating all bottlenecks in a process.
A)True
B)False
Q5) 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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Q1) A major difference between MSE and MAD is that MAD is influenced much more by large forecast errors than by small errors.
A)True
B)False
Q2) What is a time series, and what types of characteristics typically make up time series?
Q3) Define regression analysis and explain how it is an approach to forecasting.
Q4) Which of the following is not one of the five characteristics of a time series?
A)Time bucket
B)Trend
C)Cyclical
D)Random variation
Q5) MAD, MSE, and MAPE forecast error metrics generally give similar numerical results so it doesn't matter which one is used.
A)True
B)False
Q6) A 7-month simple moving average would approximately equate with what alpha (\(\alpha\)) factor for simple exponential smoothing?
Q7) Define forecast error and describe ways that it is measured.
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Chapter 12: Managing Inventories
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Sample Questions
Q1) 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
Q2) Inventory position is computed using all the following except
A)On-hand
B)Scheduled receipts
C)Backorders
D)Lead time demand
Q3) Maintaining large stocks of inventory is a requirement in today's supply chains in order to improve profitability.
A)True
B)False
Q4) Discuss the concept of safety stock in a fixed order quantity system with uncertain demand.
Q5) Explain the difference between independent demand and dependent demand.
Q6) Define the EOQ model and explain its major assumptions.
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Chapter 13: Resource Management
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Sample Questions
Q1) What is capacity requirements planning (CRP)?
Q2) Describe the options that managers have for developing aggregate plans to respond to fluctuating demand.
Q3) A POQ for a one-week time period is equivalent to LFL lot sizing.
A)True
B)False
Q4) Define Material Requirements Planning (MRP) and how it can benefit an organization.
Q5) Setting order sizes and schedules for individual subassemblies and resources by week or day fits best with which level of the generic framework for resource planning?
A)Aggregate planning - Level 1
B)Disaggregation - Level 2
C)Execution - Level 3
D)Capacity requirements planning
Q6) Lot sizing rules on a parent item do not affect the gross requirements of all lower level component items.
A)True
B)False
Q7) What are the components of an MRP record?
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Chapter 14: Operations Scheduling and Sequencing
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Q1) For a single processor, a first-come, first-served (FCFS) rule minimizes the average flow time because customer waiting time will be minimized.
A)True
B)False
Q2) The sequencing rule that minimizes the maximum number of jobs that are past due from a given set of jobs is
A)Shortest processing time
B)Earliest due date
C)First come, first served
D)Least work remaining
Q3) The shortest processing time rule and earliest due date rule will always provide the same sequence.
A)True
B)False
Q4) Scheduling applies to all aspects of the value chain.
A)True
B)False
Q5) Short-term capacity fluctuations necessitate changes in schedules. List at least five factors affecting short-term capacity.
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Chapter 15: Quality Management
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Q1) In Six Sigma terminology, a defect is any mistake or error that is passed on to the customer.
A)True
B)False
Q2) Describe the rationale underlying ISO 9000:2000.
Q3) Which of the following describes the quality definition of fitness for use?
A)Perfection and consistency in goods and service quality
B)Doing it right the first time
C)Conforming to design specifications
D)The ability of a good or service to meet customer needs
Q4) The GAP model recognizes five ways to mis-specify and mismanage the creation and delivery of high levels of quality. Describe each of the five problem areas (GAPS).
Q5) Which of the following is not considered part of Total Quality?
A)A focus on the customers and stakeholders
B)A process focus
C)Participation and team work
D)Six Sigma
Q6) Define poka-yoke and provide some examples.
Q7) Define root cause and describe root cause analysis.
Page 17
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Chapter 16: Quality Control and Spc
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Q1) To account for the process centering, a two-sided capability index is often used.
A)True
B)False
Q2) Which is not related to a discrete metric?
A)Counting
B)Visual inspection
C)Good or bad
D)Time
Q3) Common cause variation is
A)Controllable at the sources
B)Called assignable cause
C)Can be reduced by statistical process control methods
D)The responsibility of management
Q4) As long as no points are outside of the control limits in a control chart, the process would be considered to be in control.
A)True
B)False
Q5) Explain and give the significance of the 1:10:100 Rule.
Q6) Define "quality at the source."
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Chapter 17: Lean Operating Systems
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Q1) Total Production Maintenance (TPM)
A)Puts total responsibility on maintenance workers
B)Puts total responsibility on equipment operators
C)Eliminates all down time
D)Employees preserve and protect their equipment
Q2) Quick setup or changeover of tooling and fixtures is associated with ____.
A)Visual controls
B)Single minute exchange of dies
C)5Ss
D)Six Sigma
Q3) According to the Toyota Motor Company, waiting time is a necessary evil in production and is not classified as waste.
A)True
B)False
Q4) How does Total Productive Maintenance (TPM) affect lean operating systems?
Q5) Lean Six Sigma is simply the union of lean approaches with quality improvement techniques, each of which has been used independently in other applications. A)True
B)False
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Chapter 18: Project Management
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Q1) Explain the stages of the project life cycle.
Q2) A Gantt chart is a useful tool for allocating limited resources among project activities.
A)True
B)False
Q3) Immediate predecessors are activities that must be completed immediately before an activity may start.
A)True
B)False
Q4) A slack of (-2) means the project is ahead of schedule by two time periods.
A)True
B)False
Q5) Which step in the project management process would involve determining time estimates for activities?
A)Project definition
B)Resource planning
C)Project scheduling
D)Project control
Q6) Describe the four major steps in the project-planning process.
Q7) Explain the purpose of Gantt charts.
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