Principles of Management Exam Questions
Course Introduction
Principles of Management introduces students to the foundational concepts and functions of management within organizations. The course covers essential topics such as planning, organizing, leading, and controlling, while examining the roles, skills, and challenges faced by managers in todays dynamic business environment. Emphasis is placed on effective decision-making, leadership styles, communication, motivation, and strategies for managing teams and resources. Through theoretical frameworks and real-world case studies, students develop a comprehensive understanding of how management principles are applied to achieve organizational goals and improve performance.
Recommended Textbook
OM 3rd Edition by David
Alan Collier
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Page 2
Chapter 1: Goods, Services, and Operations Management
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Q1) Relate a service encounter to a moment of truth. Do they have to be person-to-person? Explain.
Answer: A service encounter is an interaction between the customer and the service provider. Service encounters consist of one or more moments of truth any episodes, transactions or experiences in which a customer comes into contact with any aspect of the delivery system, however remote, and thereby has an opportunity to form an impression. Employees who interact directly with customers, such as airline flight attendants, nurses, lawyers, fast food counter employees, telephone customer service representatives, dentists and bank tellers, need to understand the importance of service encounters on their customers. However, human interaction, either face-to-face or through a contact technology such as a telephone line, is not required to establish a service encounter. A service encounter also includes the interaction the customer has with buildings, equipment, advertisements, brochures, etc. For example, while driving, a customer might see a large sign for a store (one moment of truth) but observe that the store's parking lot is poorly-lit (a second moment of truth); and so, believing the area is not safe, the customer decides to keep driving and not stop to shop at that store. Customers judge the value of a service and form perceptions through service encounters.
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Chapter 2: Value Chains
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Sample Questions
Q1) A company has two alternatives for meeting a customer requirement for 9,000 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 breakeven point and determine if they should make the item in-house or outsource it.
A)breakeven point = 7,000 units; outsource
B)breakeven point = 7,000 units; make in-house
C)breakeven point = 11,667 units; outsource
D)breakeven point = 11,667 units; make in-house
Answer: B
Q2) Backward integration refers to acquiring capabilities toward distribution.
A)True
B)False
Answer: False
Q3) In breakeven analysis, whenever the anticipated volume is greater than the breakeven quantity, the firm should not outsource.
A)True
B)False
Answer: True
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Chapter 3: Measuring Performance in Operations
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Sample Questions
Q1) Although the award from the Malcolm Baldrige National Quality Award Framework receives the most attention, the primary purpose of the program is to provide a framework for performance excellence through self-assessment to understand an organization's strengths and weaknesses, thereby setting priorities for improvement.
A)True
B)False
Answer: True
Q2) Customer satisfaction rating increases as time-on-hold waiting decreases is an example of
A)productivity index
B)interlinking
C)value of a loyal customer
D)operational definitions
Answer: B
Q3) Errors in service creation and delivery are sometimes called service upsets.
A)True
B)False
Answer: True
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Chapter 4: Operations Strategy
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Q1) 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
Q2) Quality improvement initiatives generally increase market share in the long term and also increase profitability in the short term.
A)True
B)False
Q3) Using the Four Key Decision Loops in Professor Terry Hill's Generic Strategy Framework, which statement is true?
A)The four loops are highly integrated and require improvement cycles.
B)The first loop ties strategy to operations.
C)Operations has no input loop into corporate strategy or marketing strategy.
D)Infrastructure decisions must come before marketing strategy decisions.
Q4) Improving design quality usually allows a firm to charge higher prices and thus increase revenue and profit.
A)True
B)False
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Chapter 5: Technology and Operations Management
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Q1) Return facilitators specialize to getting reusable packaging/shipping material (containers, crates, and pallets) back to manufacturers.
A)True
B)False
Q2) High scalability is the capability to serve additional customers at high incremental variable costs.
A)True
B)False
Q3) A key factor that affects technology decisions is scalability. Define scalability. Explain the difference between high scalability, infinite scalability, and low scalability.
Q4) Computer integrated manufacturing systems combine hardware, software, database management and communications to automate and control a broad range of production activities.
A)True
B)False
Q5) Bar code scanners are examples of soft technology.
A)True
B)False
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Chapter 6: Goods and Service Design
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Sample Questions
Q1) A quality characteristic has a specification (in cm.) of 0.400 \(\pm\)0.03. If the value of the quality characteristic exceeds 0.400 by the tolerance of 0.030 on either side, the product will require a $180.00 repair. What is the appropriate Taguchi loss function?
Q2) In designing a service delivery system, good job and process design can usually overcome a poor location.
A)True
B)False
Q3) 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 0.99, respectively. What is the reliability of the manufacturing process (system)?
Q4) The servicescape refers to the place where a service is located.
A)True B)False
Q5) Reliability is formally expressed as a probability between 0 and 1.
A)True B)False
Q6) Explain the concept of Design Failure-Mode-and-Effect analysis.
Q7) Discuss the concept of servicescape.
Page 8
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Chapter 7: Process Selection, Design, and Analysis
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Q1) Explain each axis of the product-process matrix. Where is the most appropriate match? Also, discuss the importance of the matrix to a company's life cycle.
Q2) Explain the concept of hierarchy of work. Why is it useful in process design activities?
Q3) Little's Law
A)Removes process bottlenecks
B)Is a form of simulation
C)Focuses on finished goods inventory
D)Evaluates average process performance
Q4) Job shop processes use flexible, general purpose equipment that is capable of customizing work for individual customers.
A)True
B)False
Q5) The service-positioning matrix suggests that services should try to position themselves off the diagonal in order to achieve superior performance.
A)True
B)False
Q6) What are some management strategies to improve process designs?
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Chapter 8: Facility and Work Design
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Sample Questions
Q1) A line balancing solution has been developed for the assembly line for fertilizer spreaders at Green Grass, Inc. The desired output rate of 30 spreaders per hour will be achieved. The sum of times for all tasks performed on the line is 1200 seconds for each spreader assembled. Which of the following statements must be true?
A)The cycle time is 30 seconds per spreader.
B)The theoretical minimum number of work stations is 10.
C)If the solution calls for 12 stations, the efficiency is 80%.
D)If the solution calls for 11 stations, the efficiency is 80%.
Q2) All of the following are true regarding assembly lines except
A)Lower cost
B)Only one model can be assembled on a line
C)Makes good affordable to mass markets
D)Used in services,
E)g., insurance policies and sorting mail
Q3) Which of the following is not a common reason for facility layout studies?
A)There is significant change in demand or throughput volume.
B)A new good or service is introduced to the customer benefit package.
C)A new material supplier is used.
D)Different process, equipment and/or technology are installed.
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Chapter 9: Supply Chain Design
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Q1) Supply chains often must be redesigned when a firm's product lines and markets change or expand.
A)True
B)False
Q2) Which one of the following statements is true about vendor-managed inventory (VMI)?
A)VMI is a form of outsourcing.
B)VMI often increases the bullwhip effect.
C)VMI is used only in responsive supply chains.
D)VMI is identical to contract manufacturing.
Q3) For General Motors' supply chain, the ____ is the push-pull boundary.
A)Supplier
B)Factory
C)Dealer
D)Custom
Q4) Explain the typical structure of a supply chain.
Q5) Wal-Mart uses a push supply chain.
A)True
B)False
Q6) Describe some common supply chain metrics used to evaluate performance.
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Chapter 10: Capacity Management
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Sample Questions
Q1) An organization that would typically use a revenue management system is
A)Computer manufacturer
B)Fast food restaurant
C)Car rental company
D)Package delivery service
Q2) Define capacity including the two ways it can be viewed. Provide an example of each way.
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) An assembly line normally operates two shifts a day, five days per week. The planned capacity of the assembly line is 380 units/shift. Determine the average safety capacity if 700 items are assembled a day, on average.
Q5) In calculating required capacity for a job shop, setup time is a significant factor.
A)True
B)False
Q6) What is safety capacity? Discuss reasons for using it.
Page 12
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Chapter 11: Forecasting and Demand Planning
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Q1) A group of international experts published a set of principles of forecasting that includes all of the following except
A)Use quantitative rather than qualitative methods.
B)Combine forecasts from approaches that are similar.
C)Ask experts to justify their forecasts in writing.
D)Use multiple measures of forecast accuracy.
Q2) A long-range forecast typically covers a planning horizon of 3 to 12 months.
A)True
B)False
Q3) Regular patterns in a data series that take place over long periods of time are called
A)Trends
B)Seasonal patterns
C)Cyclical patterns
D)Irregular variation
Q4) An exponential smoothing model can be found easily by applying the Excel Add Trendline option to a time series.
A)True
B)False
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Chapter 12: Managing Inventories
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Q1) When a customer is unwilling to wait for an item that is not in stock and purchases the item elsewhere, a backorder has occurred.
A)True
B)False
Q2) Two fundamental inventory decisions are when to order and how much to order. Which of the following statement is true with respect to Fixed Quantity (FQS) and Fixed Period (FPS) inventory systems?
A)A FPS orders a fixed period quantity when the inventory position reaches or drops below the reorder point (r).
B)A FPS must cover a time period of T + L to cover the risk of a stock out.
C)A FPS places an order for the economic order quantity every T time units.
D)A FQS places an order to replenish the inventory position up to a target level (M) when the inventory position reaches the reorder point (r).
Q3) An airline seat is an example of an asset held for future use or sale.
A)True
B)False
Q4) Explain the difference between a fixed quantity system and a fixed period system.
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Chapter 13: Resource Management
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Sample Questions
Q1) A company currently has no items in inventory. The demand for the next four months is 200, 400, 250 and 350 units. Assuming a level production rate of 250 units per month, determine the month in which a backorder will materialize.
Q2) A cement company is considering how to expand its capacity and they are examining the use of overtime or subcontracting on a quarterly basis as possible options. They have the following information about their operation:
Aggregate demand = 30,000; 25,000; 27,000; and 31,000
Maximum capacity = 25,000 units
Labor standard = 2.45 hours/unit
Cost of overtime = $10.50/hour
Cost of subcontracting = $25.00/unit
a.What is the cost of overtime in quarter 1?
b.What is the total cost of subcontracting over four quarters?
Q3) A scheduled receipt for an outside vendor is called a purchase order.
A)True
B)False
Q4) Define Material Requirements Planning (MRP) and how it can benefit an organization.
Q5) What are the components of an MRP record?
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Chapter 14: Operations Scheduling and Sequencing
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Sample Questions
Q1) ScheduleAnywhere.com on-line software helps clients do all the following except
A)Schedule employees from any computer with Internet access.
B)Decide how much to overbook for each day of the week.
C)See who's scheduled and who's available.
D)Avoid scheduling conflicts.
Q2) Triage by nurses in an emergency room would be an example of
A)Scheduling
B)Sequencing
C)Appointments
D)Shortest-processing-time rule
Q3) Give at least five examples of service organizations (and employee type) where, due to high variability in customer demand, staff scheduling problems are prevalent.
Q4) The time to rest and travel between games for baseball umpire crews is an important factor in developing their schedule.
A)True
B)False
Q5) Describe Johnson's sequencing rule for the two-resource sequencing problem.
Q6) Differentiate between scheduling and sequencing.
Q7) What four (4) decisions are considered in designing an appointment system?
Page 16
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Chapter 15: Quality Management
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Q1) Which one of the following statements is false?
A)Kaizen is the process of specifying design specifications for goods and services.
B)A cause-and-effect diagram is also called a fishbone diagram.
C)Scrap and rework costs are part of internal failure quality costs.
D)The Deming Cycle is named after a famous quality guru and consists of four steps-Plan, Do, Study, Act (PDSA).
Q2) 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).
Q3) At a gas station, a diesel pump nozzle that will not fit into a non-diesel automobile is an example of ____?
A)Kaizen blitz
B)dpmo
C)Poka-yoke
D)External failure
Q4) Costs of recalls and warranty claims are classified as internal failure costs.
A)True
B)False
Q5) Discuss Kaizen and how it differs from a Kaizen Blitz.
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Chapter 16: Quality Control and Spc
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Q1) Over-adjusting a process that is in control will usually increase the variation in the output.
A)True
B)False
Q2) With good management, all variability of output from any goods- or service-producing process can be eliminated.
A)True
B)False
Q3) The value of C<sub>pk</sub> is the average of the lower and upper capability indexes; that is, C<sub>pk</sub> = (C<sub>pl</sub> + C<sub>pu</sub>)/2.
A)True
B)False
Q4) Process capability quantifies the variation that results from common causes. A)True
B)False
Q5) Larger sample sizes allow smaller changes in process characteristics to be detected with higher probability.
A)True
B)False
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Chapter 17: Lean Operating Systems
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Q1) JIT systems are based on the concept associated with pull systems rather than push systems.
A)True
B)False
Q2) Hinge Manufacturing Company employs a Kanban system for a component part. The daily demand is 900 hinges. Each container has a wait time of 0.05/day, and a processing time of 0.37 days. The Container size is 60 hinges and the safety factor (\(\alpha\)) is 10%.
a.How many Kanban card sets should be authorized?
b.What is the maximum inventory of this hinge in the system?
Q3) Six Sigma addresses visible problems in processes; lean production is more concerned with less visible problems.
A)True
B)False
Q4) Lean production is focused on efficiency by reducing waste and improving process flow, while Six Sigma is focused on effectiveness by reducing errors and defects.
A)True
B)False
Q5) Discuss the differences between lean production and Six Sigma.
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Chapter 18: Project Management
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Q1) The critical path is the sequence of activities that takes the longest time.
A)True
B)False
Q2) Which statement is true regarding activities not on the critical path?
A)Usually cannot be delayed
B)Have less slack than activities on the critical path
C)Can delay a project if they are highly variable
D)Are used to crash project completion times
Q3) Explain the three time estimates used to characterize uncertainty of activity times in the Program Evaluation and Review Technique (PERT) procedure.
Q4) When finding the earliest finish (EF) time for an activity with two or more predecessor activities, the largest EF among the predecessor activities is used to calculate the EF for that activity.
A)True
B)False
Q5) Strong leadership is an impediment to project management success because of the team-based nature of most projects.
A)True
B)False
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