Operations Strategy
Review Questions
Course Introduction
Operations Strategy explores how organizations develop and implement long-term plans to align their operations with overall business goals. This course examines the key decision areas involved in operations such as process design, capacity planning, supply chain management, technology adoption, and quality improvement and considers how these choices drive competitive advantage. Students will learn analytical frameworks and strategic tools to assess operations challenges and prioritize resources, understand the integration of operations with marketing, finance, and overall corporate strategy, and evaluate the impact of globalization, sustainability, and innovation on operations decision-making.
Recommended Textbook
OM 5 5th Edition by David Alan Collier
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Page 2
Chapter 1: Goods, Services, and Operations Management
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Sample Questions
Q1) Which of the following is lowest in goods content and highest in service content?
A) Dining at a fast-food restaurant
B) Attending a theater production
C) Getting an oil change for your car
D) Filling a medical prescription
Answer: B
Q2) In relating operations management and the customer benefit package (CBP), which is the correct timing sequence?
A) Operating system processes lead to customer needs and expectations, which lead to customer benefit package.
B) Customer benefit package leads to customer needs and expectations, which lead to operating system processes.
C) Customer needs and expectations lead to customer benefit package, which leads to operating system processes.
D) Customer needs and expectations lead to operating system processes, which lead to customer benefit package.
Answer: C
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Chapter 2: Value Chains
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Sample Questions
Q1) The control of Walmart's value chain is _____, while the control of General Electric's is _____.
A) postproduction focused; preproduction focused
B) horizontal; vertical
C) centralized; decentralized
D) backward integrated; forward integrated
Answer: C
Q2) A company has two alternatives for meeting a customer requirement for 6,000 units of a specialty molding. If done in-house, fixed cost would be $350,000, with variable cost at $30 per unit. If outsourced, the cost is $80 per unit. Determine the break-even point and determine if they should make the item in-house or outsource it.
A) break-even point = 7,000 units; outsource it
B) break-even point = 7,000 units; make it in-house
C) break-even point = 11,667 units; outsource it
D) break-even point = 11,667 units; make it in-house
Answer: A
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Chapter 3: Measuring Performance in Operations
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Sample Questions
Q1) The balanced scorecard model uses the same categories as the Baldrige Award.
A)True
B)False
Answer: False
Q2) Which of the following performance perspectives in the balanced scorecard model includes measures like productivity, flow time, and asset utilization?
A) Financial perspective
B) Customer perspective
C) Innovation and learning perspective
D) Internal perspective
Answer: D
Q3) Which of the following is a quality performance measure at an operational level?
A) Customer ratings of goods and services
B) Customer retention
C) Service representative courtesy
D) Product recalls
Answer: C
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Chapter 4: Operations Strategy
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Sample Questions
Q1) The infrastructure of an organization must support process choices and provide managers with timely and accurate information to make good decisions.
A)True
B)False
Q2) Formal marketing research, such as surveys and focus groups, is the only useful approach to learn about customer needs and expectations.
A)True B)False
Q3) A flexibility strategy requires a capacity for both design and demand flexibility. A)True B)False
Q4) Although it may be difficult to change the structure of a value chain, operations managers can make strategic choices about technology and human resources. A)True
B)False
Q5) Explain the difference between an order qualifier and an order winner. Provide some examples.
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Chapter 5: Technology and Operations Management
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Sample Questions
Q1) Customer relationship management (CRM) helps firms gain competitive advantage by all of the following EXCEPT:
A) by providing real-time transaction processing.
B) by segmenting markets based on demographic and behavioral characteristics
C) by tracking sales trends and advertising effectiveness.
D) by identifying which customers should be the focus of targeted marketing initiatives.
Q2) If the forecast annual production volume is 10,000 units, which technology alternative should you choose?
A) Manual
B) Semi-automatic
Q3) Discuss the components, hardware, and software of a computer-integrated manufacturing system (CIMS).
Q4) Information technology has been equally important to business to business, business to customer, and customer to customer interactions.
A)True
B)False
Q5) Explain the concept of industrial robots.
Q6) Explain the concept of enterprise resource planning (ERP) systems.
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Chapter 6: Goods and Service Design
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Sample Questions
Q1) Implicit service guarantees are always in writing.
A)True
B)False
Q2) A critical part has a manufacturing specification of 0.315 cm ± 0.010. If this measurement is larger than 0.325 or smaller than 0.305, the product fails at a cost of $130. Determine the Taguchi loss function.
Q3) Reliability does not apply to service processes.
A)True
B)False
Q4) Describe the market introduction/deployment step of an integrated framework for goods and service design.
Q5) Which of the following is NOT a principal issue in service-encounter design?
A) Process and job design
B) Customer-contact behavior and skills
C) Service-provider selection, development, and empowerment
D) Recognition and reward
Q6) The manufacture of a product requires five sequential steps. The reliability of each of the steps is 0.97, 0.88, 0.95, 0.92, and 0.98, respectively. What is the reliability of the manufacturing process (system)?
Page 8
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Chapter 7: Process Selection, Design, and Analysis
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Sample Questions
Q1) The product-process matrix works well for both goods and services.
A)True
B)False
Q2) The average number of hotel rooms occupied per day during the month of March is 275. Rooms are booked on average for 2.5 days. On average, how many new bookings occur each day?
Q3) For a Marriott hotel call center the expected service rate was 2.0 minutes per telephone call per customer service representative (CSR). With 3 telephone CSRs on duty during the 6:30 to 7:00 a.m. time period, and assuming a 90% target CSR labor utilization rate, how many telephone calls can these 3 CSRs handle during this time period?
Q4) Little's Law states that Throughput = Flow Time × Work-In-Process.
A)True
B)False
Q5) What are some management strategies to improve process designs?
Q6) Projects are often used for standardized products and not for custom goods and services.
A)True
B)False
Page 9
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Chapter 8: Facility and Work Designs
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Sample Questions
Q1) Self-managed teams perform entire jobs, rather than specialized, assembly-line work.
A)True
B)False
Q2) The typical layout of facilities in a legal office would be an example of a _____ layout.
A) product
B) process
C) cellular
D) fixed-position
Q3) All of the following are limitations of process layouts EXCEPT:
A) high material handling costs.
B) more complicated planning and control systems.
C) low equipment utilization.
D) diverse range of products.
Q4) All of the following are common objectives of layout studies EXCEPT to:
A) minimize delays in materials handling and customer movement.
B) minimize the number of workstations.
C) provide for good housekeeping and maintenance.
D) maintain flexibility.
Page 10
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Chapter 9: Supply Chain Design
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Sample Questions
Q1) Supply chains must be redesigned when a firm's product lines and markets change or expand.
A)True
B)False
Q2) Inventory turnover value tells managers how much of the firm's assets are tied up in inventory.
A)True
B)False
Q3) For General Motors' supply chain, the _____ is the push-pull boundary.
A) supplier
B) logistic provider
C) dealer
D) customer
Q4) The "weights (W<sub>i</sub>)" typically used in the numerator and denominator of the center-of-gravity computational method is:
A) based on service quality standards.
B) based on distances.
C) based on volumes.
D) based on times.
Q5) What are the key functions of a supply chain?
Page 11
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Chapter 10: Capacity Management
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Sample Questions
Q1) A machine in a job shop is used for only two parts, A and B. The time per setup (in minutes), processing time (in seconds), and order size (in units) is given below. Using the information, determine the total capacity required for this machine in minutes. \(\begin{array}{cccc}
\text { Part } & \text { Machine Setup Time (minutes) } & \text { Processing Time (seconds) } & \text { Order Size (units) } \\
A & 55 & 54 & 600 \\
\text { B } & 30 & 64 & 700 \end{array}\)
Q2) C&M Machining is developing plans for a dedicated production line and needs to determine how many drill presses will be needed. Engineering estimates are that one drill press will be able to process 120 parts per hour. Daily demand is 2,400 parts. C&M operates one 8-hour shift per day. How many drill presses are needed to meet the capacity requirements?
A) 2 drills
B) 3 drills
C) 4 drills
D) 5 drills
Q3) What is safety capacity? Discuss reasons for using it.
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Chapter 11: Forecasting and Demand Planning
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Sample Questions
Q1) Explain the difference between statistical forecasting and judgment forecasting.
Q2) A seven-month simple moving average would approximately equate with alpha ( ) factor _____ for simple exponential smoothing.
A) less than or equal to 0.10
B) more than 0.10 but less than or equal to 0.15
C) more than 0.15 but less than or equal to 0.20
D) more than 0.20 but less than or equal to 0.25
Q3) Explain judgmental forecasting, including grass roots forecasting and the Delphi Method.
Q4) An R<sup>2</sup> of 0.80 means:
A) 80% of the variability in the independent variable is explained by the dependent variable.
B) 80% of the variability in the dependent variable is explained by the independent variable.
C) 80% of the variability in the dependent variable is not explained by the independent Variable.
D) Multiple regression is used.
Q5) Define regression analysis and explain how it is an approach to forecasting.
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Chapter 12: Managing Inventories
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Sample Questions
Q1) Using the information in Table 1, calculate the economic order quantity (EOQ) for this item?
A) Less than or equal to 1200 units
B) Greater than 1200 but less than or equal to 1400 units
C) Greater than 1400 but less than or equal to 1600 units
D) Greater than 1600 units
Q2) _____ inventory acts as a buffer between workstations in flow shops or departments in job shops to enable the operating process to continue.
A) Raw materials
B) Work-in-process
C) Cycle stock
D) Safety stock
Q3) Many practical inventory situations include backorders and quantity discounts.
A)True
B)False
Q4) Backorders:
A) result from lost sales.
B) have little financial impact.
C) may occur as a result of a stockout.
D) force a customer to purchase elsewhere.
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Chapter 13: Resource Management
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Sample Questions
Q1) Determine the net requirement for E if the gross requirement for A is still 250, and current on-hand inventory balance for A is 40, D is 200, E is 300, and F is 600.
A) Less than or equal to 1,000 units
B) Greater than 1,000 but less than or equal to 1,500 units
C) Greater than 1,500 but less than or equal to 2,000 units
D) Greater than 2,000 but less than or equal to 2,500 units
Q2) A(n) _____ is a process of determining the amount of labor and machines required to accomplish the tasks of production on a more detailed level.
A) action schedule (AS)
B) master production schedule (MPS)
C) material requirements plan (MRP)
D) capacity requirements plan (CRP)
Q3) Resource management deals primarily with managing inventories in a value chain.
A)True B)False
Q4) A level production strategy maintains constant inventory levels over the planning horizon.
A)True B)False
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Chapter 14: Operations Scheduling and Sequencing
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Sample Questions
Q1) Appointments can be viewed as a reservation of service time and capacity.
A)True
B)False
Q2) Triage by nurses in an emergency room would be an example of:
A) scheduling.
B) sequencing.
C) appointments.
D) work shifts.
Q3) The shortest processing time (SPT) sequencing rule will maximize the average flow time.
A)True
B)False
Q4) Scheduling refers to specifying:
A) the sequence in which 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.
Q5) Explain why any sequence chosen in the single-machine scheduling problem will not change makespan time.
Page 16
Q6) Differentiate between scheduling and sequencing.
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Chapter 15: Appendix: Quality Management
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Sample Questions
Q1) Unavoidable delays should not be included in time studies.
A)True
B)False
Q2) Job and process analysis should follow work measurement.
A)True
B)False
Q3) Locksmith Inc. has an order from a bank for 50 specially designed safes, one for each branch. It is estimated that the first safe will require 75 hours of shop time and a 90 percent learning curve is expected. The labor rate is $15.00 per hour and the pricing policy of the company is to triple the labor cost of the order.
a. How many labor-hours should the 50th unit require?
b. How many labor-hours will the whole order require?
c. What is the customer's price for each safe?
Q4) Define and relate normal time and standard time.
Q5) A performance rating factor (PRF) of 130 percent means that a worker is slow and needs 30 percent more time.
A)True
B)False
Q6) Discuss the two different sides of the debate over work standards.
Page 17
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Chapter 15: Quality Management
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Sample Questions
Q1) A tool used to help determine how a process works and what it is supposed to do is a
A) run chart
B) cause-and-effect diagram
C) scatter diagram
D) flowchart
Q2) A flash drive that fits only one way into an e-device is an example of an application of the _____.
A) kaizen blitz
B) poka-yoke concept
C) Pareto analysis
D) Six Sigma concept
Q3) For a certain situation, if the dpmo is given to be 2,812.5, then what is the sigma level for this situation? (Access to Excel is required to answer this question).
A) Less than 2 sigma
B) More than or equal to 2 but less than 3 sigma
C) More than or equal to 3 but less than 4 sigma
D) More than 4 sigma or equal to 5 sigma
Q4) Define poka-yoke, and provide some examples.
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Chapter 16: Quality Control and Spc
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Sample Questions
Q1) Which of the following is NOT related to a continuous metric?
A) Length
B) x-bar and R-charts
C) p-chart
D) Time
Q2) Five samples are taken, with five observations each. The sample findings are listed below. The sample values represent service times in minutes. ObservationNumber
\(\begin{array}{|r|r|r|r|r|r|}
\hline \frac{\text { Sample }}{\text { Number }} & 1 &2&3&4&5\\
\hline 1 & 10.1 & 10.6 & 9.8 & 9.9 & 10.9 \\
\hline 2 & 9.7 & 9.5 & 10.3 & 9.9 & 10.5 \\
\hline 3 & 10.1 & 10.7 & 9.2 & 10.0 & 10.1 \\
\hline 4 & 9.9 & 9.8 & 10.5 & 10.4 & 10.1 \\
\hline 5 & 10.4 & 10.1 & 10.9 & 9.9 & 10.3 \\
\hline
\end{array}\)
a.Determine the control limits for the R-chart.
b.Can it be concluded that the R-chart is in statistical control and proceed to develop the x-bar chart?
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Chapter 16: Appendix: Queuing Analysis
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Sample Questions
Q1) 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.
Q2) _____ is the process of a customer evaluating the waiting line and server system and deciding not to join the queue.
A) Triage
B) Reneging
C) Balking
D) Preemption
Q3) Which of the following CANNOT be found by queuing formulas?
A) The average number of units waiting for service
B) The average time a unit spends in the system
C) The probability that the service system is idle
D) The maximum time a unit is in the system
Q4) What are the seven key assumptions for the multiple-server waiting line model?
Q5) List the seven operating characteristics of a single-channel waiting line (no formulas).
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Chapter 17: Appendix: Modeling Using Linear Programming
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Sample Questions
Q1) Explain the essence of a blending problem.
Q2) The Northwest Flower Company owns a greenhouse, which supplies roses and carnations to florists in Oregon, Washington, and Idaho. The greenhouse can grow any combination of the two flowers. They sell the flowers in "bunches" with 25 blooms to a bunch. They have 10,000 square feet available for planting this year. Each bunch of roses takes about 4 square feet and each bunch of carnations about 5 square feet. A special fertilizer is required for the flowers: roses need 5 pounds and carnations 2 pounds. The availability of the fertilizer is limited to 5000 pounds. Sales commitments require the company to grow at least 500 bunches of roses. Profit contributions are $6 per bunch of roses and $8 per bunch of carnations.
a. What is the objective function if the company wants to maximize its profits?
b. What is the constraint for the square footage assuming x<sub>1</sub> corresponds to roses?
c. What is the optimal solution point for this problem?
d. What is the optimal value of the objective function?
Q3) Explain the essence of a transportation problem.
Q4) Explain the steps necessary to solve a linear programming problem using Microsoft Excel's Solver.
Q5) Discuss the concept of optimization models with examples.
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Chapter 17: Lean Operating Systems
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Sample Questions
Q1) If the safety stock factor is changed to 0.1 and the number of parts per container is increased to 44, how many containers will be needed?
A) 1 container
B) 2 containers
C) 3 containers
D) 4 containers
Q2) The number of Kanban cards is directly proportional to the amount of work-in-process inventory.
A)True
B)False
Q3) Quality at the source requires _____.
A) starting with a plan
B) having reliable suppliers
C) doing it right the first time
D) having a good design
Q4) In a just-in-time (JIT) system, the computer inventory data is the interface and control point between customers and supply cycles.
A)True
B)False
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Chapter 18: Appendix: Simulation
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Sample Questions
Q1) All of the following are verification techniques EXCEPT:
A) developing logical flowcharts.
B) developing a model with high face validity.
C) conceptualizing a problem into smaller pieces or modules.
D) enabling people other than the programmer to check codes.
Q2) Face validity can be strengthened by maintaining good communication with the user during the model development stages.
A)True
B)False
Q3) Given the table below with information on lead time, followed by a set of six random numbers, determine the average lead time. \(\begin{array}{ll}\text { Lead Time (days) }&\text { Frequency }\\
3 & 20 \% \\
4 & 70 \% \\
5 & 10 \%
\end{array}\) RANDOM NUMBERS: 90, 52, 54, 47, 56, and 95
Q4) When would an analytical queuing model be used? When would a simulation model be used?
Q5) Discuss two advantages and three disadvantages of simulation models.
Q6) Define simulation and give some operations management examples.
Page 23
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Chapter 18: Project Management
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Sample Questions
Q1) The Critical path method (CPM) and Project Evaluation and Review Technique (PERT) are not likely to be used in marketing.
A)True
B)False
Q2) Using the table for the advertising and promotion project, which activity has the largest slack, and how large is that slack?
A) Activity C; 5 weeks
B) Activity A; 6 weeks
C) Activity B; 4 weeks
D) Activity E; 3 weeks
Q3) There are _____ possible paths in this project network.
A) one
B) two
C) three
D) four
Q4) To compute the critical path, all nodes in the network are assigned an earliest starting time of zero.
A)True
B)False
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Chapter 19: Appendix: Decision Analysis
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Q1) The decision criterion, for a one-time decision without event probabilities, which is neither aggressive nor conservative, is known as _____.
A) maximax
B) maximin
C) minimax regret
D) expected value
Q2) Which of the following statements is TRUE of expected value of perfect information (EVPI)?
A) EVPI mostly applies to situations that require one-time decisions.
B) EVPI is a numerical value associated with a decision coupled with some event.
C) EVPI is calculated by adding the expected payoff under perfect information to the expected payoff of the optimal decision without perfect information.
D) EVPI can be computed by determining the best decision and payoff if each event occurs.
Q3) Explain the concept of expected value of perfect information (EVPI). How does it help a decision maker?
Q4) Differentiate between uncertainty and risk.
Q5) Explain the structure and purpose of a decision tree.
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