

Production and Operations Management Exam Preparation Guide
Course Introduction
Production and Operations Management focuses on the efficient transformation of inputs into outputs through effective processes in manufacturing and service organizations. The course explores core topics such as process design, capacity planning, scheduling, inventory management, quality control, supply chain management, and the application of quantitative tools to solve operational challenges. Emphasis is placed on strategic decision-making to enhance productivity, reduce costs, maintain quality, and achieve a competitive advantage. Real-world case studies and examples illustrate how successful organizations manage their operations to deliver value to customers while optimizing resource utilization.
Recommended Textbook
OM 5 5th Edition by David Alan Collier
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23 Chapters
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Page 2

Chapter 1: Goods, Services, and Operations Management
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Sample Questions
Q1) A network of processes that creates value for customers is known as a _____.
A) process network
B) value network
C) customer value
D) value chain
Answer: D
Q2) Which of the following statements about goods and services is FALSE?
A) Service encounters are interactions between customers and service providers.
B) Services can be stored as physical inventory for future sale.
C) Goods are tangible, while services are intangible.
D) The demand for service is more difficult to predict than the demand for goods.
Answer: B
Q3) Service management skills include all of the following EXCEPT _____.
A) accounting and finance
B) knowledge and technical expertise about operations
C) marketing and cross-selling skills
D) human interaction skills
Answer: A
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3

Chapter 2: Value Chains
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Sample Questions
Q1) _____ is defined as the perception of the benefits associated with a good, service, or bundle of goods and services in relation to what buyers are willing to pay for them.
A) Proportionality
B) Competitiveness
C) Value
D) Equity
Answer: C
Q2) Which of the following statements in the perspective of a value chain is TRUE?
A) Pre- and postproduction services complete the ownership cycle for a good or service.
B) Offshoring is the process of having suppliers provide goods and services that were previously provided internally.
C) Value chain integration includes improving external processes for the client, and not the internal processes.
D) A value chain is a narrower concept than a supply chain that focuses more on the physical movement of goods, not services.
Answer: A
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Chapter 3: Measuring Performance in Operations
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Sample Questions
Q1) The primary purpose of the Malcolm Baldrige National Quality Award 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) Explain the concepts underlying the Service-Profit Chain model.
Answer: The model is based on a set of cause-and-effect linkages between internal and external performance, and in this fashion, defines the key performance measurements on which service-based firms should focus. Because much of the value created in service processes is at the service-encounter level, the Service-Profit Chain focuses on employees or service-providers. Healthy, motivated, well-trained, and loyal employees demonstrate higher levels of satisfaction that result in higher retention and productivity. This leads to higher levels of external service value to customers. External service value is created by service providers mainly at the service-encounter level. Buyers of services focus on outcomes, results, and experiences. Ultimately, good value creates higher customer satisfaction and loyalty, which in turn leads to higher revenue growth and profitability.
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Page 5

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) With regard to ways customers evaluate services compared to goods, which of the following is NOT true?
A) For services, customers seek and rely more on personal sources of information.
B) Customers normally adopt innovations in services faster.
C) Customers perceive greater results when buying services.
D) Dissatisfaction with services is often the result of a customer's inability to properly perform or co-produce their part of the service.
Q3) Sustainability is best described as _____.
A) design flexibility
B) mass customization
C) an organizational strategy
D) a competitive priority
Q4) Explain core competencies with examples.
Q5) Explain the concepts of search, experience, and credence attributes.
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Chapter 5: Technology and Operations Management
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Sample Questions
Q1) Apple computer would best be described as what type of company?
A) Business to business (B2B)
B) Business to customer (B2C)
C) Customer to customer (C2C)
D) Government to customer (G2C)
Q2) Which one of the following statements concerning the Bracket International-The RFID Decision case study is TRUE?
A) Bracket International won back the Wolf Furniture work using RFID systems.
B) Misreads are zero for RFID technology.
C) The maturity phase of the product/firm/technology life cycle is where a "fast follower" executes their adoption of technology.
D) Bar coding took 10 seconds to scan per item, while RFID took zero seconds to scan per item.
Q3) Return facilitators specialize to getting reusable packaging/shipping material (containers, crates, and pallets) back to manufacturers.
A)True
B)False
Q4) List some of the key issues that organizations face in using technology.
Q5) What are the benefits and challenges of technology?
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Chapter 6: Goods and Service Design
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Sample Questions
Q1) Customer contact, for the purpose of classifying a system as being high-contact or low-contact, is measured by:
A) the percentage of a service provider's workday spent with customers.
B) the percentage of time a customer must be in the system relative to the total time it takes to provide a service.
C) the number of service encounters occurring in a given span of time.
D) the number of different service providers required to serve one customer.
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) In a two-component parallel system, the overall reliability is 0.9994. If the reliability of the first component is 0.9890, determine the reliability of the second component.
A) Equal to or greater than 0.60 but less than 0.70
B) Equal to or greater than 0.70 but less than 0.80
C) Equal to or greater than 0.80 but less than 0.90
D) Greater than 0.90
Q4) Describe the Taguchi loss function. Contrast it to the goal-post model.
Q5) Explain the importance of service recovery.
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Chapter 7: Process Selection, Design, and Analysis
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Sample Questions
Q1) Make-to-stock goods and services are made according to a fixed design, and the customer has no options from which to choose.
A)True
B)False
Q2) Explain how a product's life cycle has important implications in terms of process design and choice.
Q3) In designing processes, one often starts at the detail level and moves progressively toward the aggregate.
A)True
B)False
Q4) 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
Q5) Automobile factories and hospital laboratory work are examples of: A) projects.
B) job shop processes.
C) flow shop processes.
D) continuous flow processes.
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Chapter 8: Facility and Work Designs
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Sample Questions
Q1) The twelve tasks necessary to assemble a food blender are listed below. The time to perform each task and the tasks that must immediately precede are also listed. 200 blenders are needed per hour and 50 minutes per hour are productive: \(\begin{array}{ccc|ccc}\text { Task }&\text {Time (in minutes)}&\text { Predecessors }&\text { Task }&\text {Time (in minutes)}&\text { Predecessors }\\ \hline\text { A } & 0.20 & \text { none } & \text { G } & 0.08 & \text { E, F } \\
\text { B } & 0.05 & \text { none } & \text { H } & 0.12 & \text { none } \\
\text { C } & 0.15 & \text { none } & \text { I } & 0.05 & \text { none } \\
\text { D } & 0.06 & \text { none } & \text { J } & 0.12 & \text { H, I, G } \\
\text { E } & 0.03 & \text { A, B } & \text { K } & 0.15 & \text { J } \\
\text { F } & 0.16 & \text { C, D } & \text { L } & 0.08 & \text { K } \end{array}\)
a.Compute the cycle time per unit in minutes.
b.Compute the minimum number of workstations required.
c.Use the longest-task-time heuristic to balance the assembly line.
d.Compute the efficiency of your assembly line.
Q2) List the many questions that must be addressed while designing a workstation.
Q3) Explain the role of ergonomics in job design.
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10

Chapter 9: Supply Chain Design
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Sample Questions
Q1) Given the retail location coordinates and the value of material movement in the following chart, find the best supply point location using the center-of-gravity method. \(\begin{array}{lll}\text { Reta1 Outlet }&\text { Location Coordinates } \mathrm{X}, \mathrm{Y}&\text { Material Movement }\\
1 & 25,05 & 1,500 \\
2 & 17,20 & 3,000 \\
3 & 12,12 & 1,000 \\
4 & 06,09 & 2,200
\end{array}\) Which of the following is a TRUE statement about the best preliminary location (i.e., the center of gravity) for the possible store location?
A) The x-axis and the y-axis are less than 10.0.
B) The x-axis is less than 10.0, and the y-axis is more than 10.0.
C) The x-axis is more than 10.0, and the y-axis is less than 10.0.
D) The x-axis and the y-axis are more than 10.0.
Q2) For General Motors' supply chain, the _____ is the push-pull boundary.
A) supplier
B) logistic provider
C) dealer
D) customer
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Chapter 10: Capacity Management
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Sample Questions
Q1) What is safety capacity? Discuss reasons for using it.
Q2) Define economies of scale and diseconomies of scale. Explain how they relate to capacity decisions.
Q3) Long-term capacity planning must be closely tied to the strategic direction of an organization.
A)True
B)False
Q4) The strategy of matching capacity additions with demand as closely as possible is often called a capacity straddle strategy.
A)True
B)False
Q5) Define the Theory of Constraints (TOC). How does TOC view throughput differently from the traditional OM perspective?
Q6) Diseconomies of scale is also known as capacity cushion. A)True
B)False
Q7) Define capacity including the two ways it can be viewed. Provide an example of each way.
Page 12
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Chapter 11: Forecasting and Demand Planning
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Sample Questions
Q1) A long-range forecast typically covers a planning horizon of 3 to 12 months.
A)True
B)False
Q2) Which of the following is NOT a statistical forecasting method?
A) Delphi
B) Exponential smoothing
C) Moving average
D) Linear regression
Q3) The mean absolute percentage error (MAPE) is:
A) less than or equal to 5%.
B) more than 5% but less than or equal to 10%.
C) more than 10% but less than or equal to 15%.
D) more than 15% but less than or equal to 20%.
Q4) Seasonal patterns can occur over the weeks during a month, over days during a week, or hours during a day.
A)True
B)False
Q5) Explain how forecasting is used at different levels of an organization.
Q6) Explain the difference between a moving average and single exponential smoothing forecasting model.
Page 13
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Chapter 12: Managing Inventories
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Sample Questions
Q1) "C" items are the critical few that must be closely managed in an inventory system.
A)True
B)False
Q2) Peterson Enterprises uses a fixed-order quantity inventory control system. The firm operates 50 weeks per year and has the following characteristics for an item: Demand = 50,000 units/year
Ordering cost = $35/order
Holding cost = $2/unit/year
Lead time = 3 weeks
Standard deviation in weekly demand = 125 units
a.What is the economic order quantity (EOQ) for this item?
b.If Peterson wishes to provide a 90 percent cycle service level, what is the reorder point with safety stock?
Q3) A bookstore must decide on how many calendars to order for the next year. Each calendar costs $2 and is sold for $4.50. After January 1, any unsold calendars are returned to the publisher for a refund of $0.75 each. The distribution of demand is uniform between 100 and 300. How many calendars should the bookstore order?
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Chapter 13: Resource Management
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Sample
Questions
Q1) What are the components of a materials requirements planning (MRP) record?
Q2) Capacity requirements are computed by multiplying the number of units scheduled for production at a work center by:
A) the setup time and then subtracting the unit resource requirements.
B) the setup time and then adding the unit resource requirements.
C) the unit resource requirements and then adding in the setup time.
D) the unit resource requirements and then subtracting the setup time.
Q3) Which lot sizing rule bases the order quantity on a standard-size container or pallet load?
A) Lot-for-lot (LFL) rule
B) Fixed-order quantity (FOQ) rule
C) Periodic-order quantity (POQ) rule
D) Gross requirements (GR) rule
Q4) In the disaggregation framework, the direct inputs to material requirements planning (MRP) include all of the following EXCEPT:
A) master production schedule (MPS).
B) transaction files.
C) bills of materials (BOM).
D) capacity requirements plan (CRP).
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Chapter 14: Operations Scheduling and Sequencing
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Sample Questions
Q1) Telling an umpire crew to work baseball games in Chicago, then Milwaukee, and then Cleveland is an example of a sequence.
A)True
B)False
Q2) Appointments can be viewed as a reservation of service time and capacity.
A)True
B)False
Q3) A tardiness measure can be either zero (0) or a positive number.
A)True
B)False
Q4) Since all jobs eventually get done, job sequencing has no effect on resource utilization.
A)True
B)False
Q5) Scheduling applies to all aspects of the value chain.
A)True
B)False
Q6) Give at least five examples of service organizations (and employee types) where, due to high variability in customer demand, staff-scheduling problems are prevalent.
Page 16
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Chapter 15: Appendix: Quality Management
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Sample Questions
Q1) Discuss several factors that can affect the applicability of the learning curve or experience curve and/or the amount of learning that occurs.
Q2) Discuss the two different sides of the debate over work standards.
Q3) Work sampling _____.
A) is based on normal distribution
B) is used for repetitive work activities
C) determines the proportion of time spent doing certain activities
D) requires a systematic (non-random) sample to obtain a distribution of activities
Q4) The outputs from a work measurement study lead to the development of labor and equipment standards that are used for all of the following EXCEPT:
A) estimating workforce capacity.
B) determining fatigue and personal need allowances.
C) determining the cost of new work procedures.
D) providing accurate information for scheduling and sequencing.
Q5) A job had a normal time of 2.43 minutes, an allowance of 20 percent, and a forecast demand of 120 units per day. How long should it take to produce one day's output?
Q6) How are predetermined time standards useful?
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Chapter 15: Quality Management
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Sample Questions
Q1) Which of the following is NOT one of W. Edwards Deming's 14 Points?
A) Create a vision and demonstrate commitment.
B) Create an environment that drives out fear.
C) Continuously improve products and processes.
D) Adopt Zero Defects as the only performance standard.
Q2) Discuss different ways of defining quality and how these differ for goods and services.
Q3) Quality management includes how goods and services are designed, rather than simply how quality is assured during the manufacturing or service-delivery process.
A)True
B)False
Q4) In the define phase of the Six Sigma problem-solving (DMAIC) approach, teams identify critical-to-quality characteristics (CTQs) that are considered by the customer to have the most impact on quality.
A)True
B)False
Q5) Define root cause and describe root cause analysis.
Q6) Define Six Sigma, and explain the key concepts used to implement a Six Sigma quality initiative.
Page 18
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Chapter 16: Quality Control and Spc
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Q1) A Proctor and Gamble factory process fills boxes with detergent. Construct an appropriate set of control charts to monitor the process. Historical data for fill weight (in ounces) of eight samples is presented below. A sample size of eight was used.
\[\begin{array} { | c | c | c | }
\hline \text { Sample } & \text { Sample Mean } & \text { Sample Range } \\
\hline 1 & 15.80 & 0.42 \\
\hline 2 & 16.10 & 0.38 \\
\hline 3 & 16.02 & 0.08 \\
\hline 4 & 15.95 & 0.15 \\
\hline 5 & 16.12 & 0.42 \\
\hline 6 & 16.18 & 0.23 \\
\hline 7 & 15.87 & 0.36 \\
\hline 8 & 16.20 & 0.40 \\
\hline
\end{array}\]
a.Compute the limits for both an R-chart and x-bar chart. Compare the sample results to the limits of the charts.
b.Briefly explain what the quality control charts tell you. What actions, if any, would you take?
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19

Chapter 16: Appendix: Queuing Analysis
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Q1) 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
Q2) A sandwich shop near a college has a special counter, open from 11 am to 1 pm, which is used exclusively for selling pre-made sandwiches. This is much faster than making sandwiches-to-order at lunch time. The clerk can handle a customer in about one minute. Customers arrive at a rate of 40 per hour on average.
a. How long (in minutes) does a customer have to wait?
b. What percentage of the time is the employee working?
c. What is the average number of customers waiting in line?
d. What is the probability of there being 3 or more customers in the system?
Q3) Compare and contrast wait cost with server cost. Which is harder to estimate?
Q4) Many analytical queuing models exist, each based upon unique assumptions about the nature of arrivals.
A)True
B)False
Q5) What are five key assumptions for the basic, single-channel waiting line model?
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Chapter 17: Appendix: Modeling Using Linear Programming
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Q1) Constant terms in the objective function are called objective function _____.
A) variables
B) decisions
C) coefficients
D) constraints
Q2) A computer manufacturing company wants to develop a monthly plan for shipping finished products from three of its manufacturing facilities to three regional warehouses. It is thinking about using a transportation LP formulation to exactly matched capacities and requirements. Data on transportation costs (in dollars per unit), capacities, and requirements are given below:
\(\begin{array}{ccccc}& \text { Plant } & \text { Plant } & \text { Plant } \\
\text { Warehouse } & 1 & 2 & \underline{3}&\text { Requirements }\\
X & 2.41 & 1.63 & 2.09 & 8,000 \\
\mathrm{Y} & 3.18 & 5.62 & 1.74 & 2,000 \\
\mathrm{Z} & 4.12 & 3.16 & 3.09 & 3,000 \\
\text { Capacities } & 4,000 & 6,000 & 3,000 & \end{array}\)
a. How many variables are involved in the LP formulation?
b. How many constraints are there in this problem?
c. What is the constraint corresponding to plant 2?
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Chapter 17: Lean Operating Systems
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Q1) Webster Manufacturing Inc. is implementing a Just-in-Time (JIT) system and wants to know how many Kanbans to use for the initial setup of its JIT system. The daily demand is 400 units and each Kanban (i.e., container) holds 15 units. The combined processing and waiting time per container is 0.7 days. If the initial alpha value for safety stock is 0.6, what is the maximum authorized inventory?
A) More than 100 but less than or equal to 200 units
B) More than 200 but less than or equal to 300 units
C) More than 300 but less than or equal to 400 units
D) More than 400 units
Q2) Total productive maintenance (TPM) seeks to do all of the following EXCEPT _____.
A) maximizing equipment effectiveness
B) creating worker ownership of equipment by involving them in maintenance activities
C) fostering continuous improvement efforts
D) enabling multiple products in small batches to be run on the same equipment
Q3) Kanban is the Japanese term for elimination of waste.
A)True
B)False
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Chapter 18: Appendix: Simulation
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Q1) 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
Q2) Explain the major differences between a fixed-time and a next-event simulation model.
Q3) There is no single test to prove that a model is 100 percent valid.
A)True
B)False
Q4) The queuing model's operating characteristic formulas only characterize 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) Discuss two advantages and three disadvantages of simulation models.
Q6) Discuss a simulator. Provide appropriate examples.
Page 23
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Chapter 18: Project Management
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Q1) Crash time is the longest possible time in which the activity can realistically be completed.
A)True
B)False
Q2) Strong leadership is an impediment to project management success because of the team-based nature of most projects.
A)True
B)False
Q3) What is the total project (normal plus crash) cost?
A) Less than or equal to $60,000
B) Greater than $60,000 but less than or equal to $65,000
C) Greater than $65,000 but less than or equal to $70,000
D) Greater than $70,000
Q4) Define critical path and explain how it is identified once a project schedule is calculated.
Q5) What is the total project (normal plus crash) cost?
A) Less than or equal to $60,000
B) Greater than $60,000 but less than or equal to $65,000
C) Greater than $65,000 but less than or equal to $70,000
D) Greater than $70,000

Page 24
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Chapter 19: Appendix: Decision Analysis
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Sample Questions
Q1) Discuss the five characteristics of management decisions when decision analysis techniques should be utilized.
Q2) In a decision tree, event nodes are denoted by _____.
A) rectangles
B) ovals
C) squares
D) circles
Q3) Opportunity loss or ill-feeling that people often have after making a nonoptimal decision is best related to _____.
A) maximax
B) maximin
C) minimax regret
D) expected value
Q4) Which of the following is NOT a characteristic of management decisions for which decision analysis techniques apply?
A) They must be important.
B) They are probably unique.
C) They are usually deterministic.
D) They are complex.
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