Service Operations Management Exam Preparation Guide
Course Introduction
Service Operations Management explores the principles, strategies, and practices involved in designing, managing, and improving service-based organizations. The course covers key topics such as service process design, quality management, capacity planning, demand forecasting, queue management, service delivery, and customer experience. Emphasizing both analytical and managerial perspectives, students will examine real-world case studies and use tools to optimize service performance, enhance productivity, and ensure customer satisfaction across various service sectors, including healthcare, hospitality, finance, and retail.
Recommended Textbook
Decision Sciences and Operations Management Coursemate 4th Edition by David
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Page 2
A. Collier
Chapter 1: Goods, Services, and Operations Management
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Q1) Differentiate between a good and a service. What is the difference between a durable and nondurable good. Give an example of each.
Answer: A good is a physical product you can see, touch or possibly consume. A service is any primary or complementary activity that does not directly produce a physical product. Services represent the non-goods part of a transaction between a buyer customer) and a seller supplier).
A durable good is a product that typically lasts at least three years. Vehicles, dishwashers and furniture are examples of durable goods. A nondurable good is perishable and generally lasts for less than three years. Examples include toothpaste, software, shoes and fruit.
Q2) Support processes would typically include all of the following except
A)inventory management
B)customer help desk operations
C)research and development
D)manufacturing and assembly
Answer: D
Q3) What are the four key current challenges in OM that managers need to understand?
Answer: 11ea89ff_22e5_c2ff_8b44_5b96df0726be_TB2054_00
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Chapter 2: Value Chains
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Q1) A manufacturing company needs to know whether to make in-house or buy a roller gear assembly for its new fax machine production. The company expects to produce 9,000 units per year. The following estimates have been made: \(\begin{array}{lrr} &\underline{\text {Make}}& \underline{\text {Buy }}\\ \text {Fixed cost per year } &\$8,000&\$0\\ \text { Variable cost per part } &\$5.45&\$6.93\\ \end{array}\)
a. What is the annual cost to make the roller gear assembly in-house?
b. What is the annual cost to buy the roller gear assembly?
c. At what volume are they indifferent regarding the decision to make or buy?
Answer: a. Cost to make: $8,000 + $5.459,000) = $57,050
b. Cost to buy: $6.93 9,000) = $62,370 Make in-house since it has lower cost.
c. $8000 + $5.45X = $6.93X => X = 5405.40 = 5405
Q2) Backward integration refers to acquiring capabilities toward distribution.
A)True
B)False
Answer: False
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Chapter 3: Measuring Performance in Operations
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Q1) Which category of the Malcolm Baldrige National Quality Award examines how the organization fulfills its ethical, legal, and societal responsibilities, and supports its key communities?
A)Leadership
B)Strategic Planning
C)Customer Focus
D)Results
Answer: A
Q2) Quality measures the degree to which the output of a process conforms to management's expectations and requirements.
A)True
B)False
Answer: False
Q3) The "value of a loyal customer" links customer satisfaction and loyalty to a firm's profitability measures.
A)True
B)False
Answer: True
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Chapter 4: Operations Strategy
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Q1) With regard to the three types of customer attributes in evaluating the quality of goods and services, those associated with the features of a new laptop computer such as processor speed and hard disk capacity would best be classified as
A)search attributes
B)experience attributes
C)credence attributes
D)reflect attributes
Q2) Improving design quality usually allows a firm to charge higher prices and thus increase revenue and profit.
A)True
B)False
Q3) ____ attributes are most likely to be experienced by the customer when using estate planning services.
A)Search attributes
B)Experience attributes
C)Credence attributes
D)Order winners
Q4) 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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Q1) All of the following are benefits of adopting technology except
A)improve/increase productivity and quality
B)integrate supply and value chain players
C)raise world standard of living
D)easier to protect employees' and customers' privacy
Q2) Apple computer would best be described as what type of company?
A)B2B
B)B2C
C)C2C
D)All of these choices
Q3) Scalability is a phenomenon by which the same or an increased quality and quantity of goods and/or services are created using fewer natural resources.
A)True
B)False
Q4) Without the internet, there would be little application of technology in services.
A)True
B)False
Q5) Explain the concept of ERP -Enterprise Resource Planning Systems.
Q6) Describe the three stages of the technology development and adoption process.
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Chapter 6: Goods and Service Design
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Q1) Which of the following is not one of the six customer attributes that impact the design and configuration of a customer benefit package?
A)Time
B)Information
C)Exchange
D)Reliability
Q2) Which of the following is not a principal dimension of the servicescape?
A)Ambient condition
B)Process and job design
C)Spatial layout and functionality
D)Signs, symbols and artifacts
Q3) Which of the following is not correct regarding product or process simplification?
A)reduces flexibility
B)reduces opportunity for error
C)speeds up flow time
D)improves reliability
Q4) Define reliability. Include the four major elements.
Q5) Explain the concept of Design for Manufacturability DFM).
Q6) Explain the importance of service recovery and service guarantees.
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Chapter 7: Process Selection, Design, and Analysis
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Q1) Automobile factories and hospital laboratory work are examples of A)Projects
B)Job shop
C)Flow shop processes
D)Continuous flow processes
Q2) A company is able to process 100 customer statements (bills) per day per processing clerk. It has 250 customer statements to process per day. How many full-time processing clerks are needed if the company wants a processing-clerk utilization rate as close to .80 as possible?
Q3) An automobile emissions testing center has six (6) inspectors and tests 50 autos per hour. Each inspector can inspect twelve (12) autos per hour. What is the center's utilization?
Q4) A manufacturing firm that produces a standardized product, not made of discrete parts, with little-to-no customization, with high demand, is most likely to use this type of process.
A)project
B)job shop
C)flow shop
D)continuous flow
Q5) Compare and contrast a product-process matrix with a service positioning matrix.
Page 9
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Chapter 8: Facility and Work Design
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Q1) Changes in goods and services for a firm's customer benefit package do not impact facility layouts.
A)True
B)False
Q2) Which of the following is not a disadvantage of virtual teams?
A)Security
B)Working hours
C)Synchronizing calendars
D)Socialization
Q3) List the many questions that must be addressed in designing a workstation.
Q4) ALDEP is a process layout technique that focuses on materials handling costs as the primary solution.
A)True
B)False
Q5) The determination of specific job tasks and responsibilities is called ____.
A)Job design
B)Ergonomics
C)Job enlargement
D)Job enrichment
Q6) Describe approaches used for process layout design.
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Chapter 9: Supply Chain Design
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Q1) Explain the difference between a supply chain and a value chain.
Q2) A pull system
A)requires high levels of finished goods inventory
B)relies heavily on accurate sales forecasts
C)waits for customer orders
D)necessitates standardized products
Q3) Supply chains often must be redesigned when a firm's product lines and markets change or expand.
A)True
B)False
Q4) The basic purpose of a supply chain is to coordinate communication among employees and customers in order to maximize customer satisfaction.
A)True
B)False
Q5) Describe how supply chains should be designed for multisite management situations.
Q6) Wal-Mart uses a push supply chain.
A)True
B)False
Q7) What are the key functions of a supply chain?
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Chapter 10: Capacity Management
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Q1) The long-term capacity expansion strategy that can be called a capacity straddle strategy is
A)One large capacity increase
B)Small capacity increases that match demand
C)Small capacity increases that lead demand
D)Small capacity increases that lag demand
Q2) A doctor's office would charge no-show patients $30 if they did not cancel their appointment 24 hours ahead of the appointment because
A)insurance will pay the no-show fee anyway.
B)the appointment time and associated revenue is perishable, and the doctor may lose revenue.
C)the doctor's office does a poor job of forecasting demand.
D)the no-show price of $30 can be added to medical fees for reimbursement.
Q3) A measure of capacity is the number of seats on an airplane per flight.
A)True
B)False
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.
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Chapter 11: Forecasting and Demand Planning
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Q1) The manager of a gas station along an interstate highway has observed that gasoline sales generally increase each week over the summer months as more families travel by car on vacations. He also believes that sales are sensitive to fluctuations in the price of gasoline. He developed the following regression model: Sales = 59407 + 509( Week) - 16463 (Price/gallon)
a.Interpret the coefficients of the independent variables in this model.
b.What is the sales forecast for the 11<sup>th</sup> week of the summer if the price per gallon is estimated to be $3.00?
Q2) An exponential smoothing model can be found easily by applying the Excel Add Trendline option to a time series.
A)True
B)False
Q3) Which of the following is not a statistical method?
A)Delphi
B)Exponential smoothing
C)Moving average
D)Linear regression
Q4) What is a time series, and what types of characteristics typically make up time series?
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Chapter 12: Managing Inventories
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Q1) The recently hired floor manager at the local store of a national home improvement chain is studying their inventory system. He has chosen patio blocks to be the first item examined. The historical supply and demand data for this item has indicated a constant lead time of 16 days. Demand per day d) is normally distributed with a mean demand of 2000 per day and standard deviation of 240 per day. He plans to set the service level at 90% during lead time.
a. What is the average demand during lead time?
b. What is the amount of safety stock of blocks he should keep on hand?
c. What is the order point he should use?
Q2) Which of the following is not a key assumption underlining the classic economic order quantity (EOQ) model?
A)The entire order quantity arrives in the inventory at one time
B)There are only two types of relevant costs: order/setup and inventory-holding
C)Demand is assumed to be stochastic
D)Stockouts are not allowed
Q3) Airline seats and call center phone lines are examples of inventory in service organizations.
A)True
B)False
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Chapter 13: Resource Management
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Q1) Which aggregate planning strategy generally would result in the least amount of inventory?
A)Level production
B)Chase demand
C)Mixed
D)Period-Order-Quantity (POQ)
Q2) Define resource management and list its key objectives.
Q3) End items in a master production schedule or final assembly schedule must be forecast.
A)True
B)False
Q4) Capacity requirements are computed by multiplying the number of units scheduled for production at a work center by
A)The unit resource requirements minus the setup time
B)The unit resource requirements plus the setup time
C)The unit resource requirements and then adding in the setup time
D)The unit resource requirements and then subtracting the setup time
Q5) Dependent demand does not occur in the service business.
A)True
B)False
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Chapter 14: Operations Scheduling and Sequencing
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Q1) Which of the following is an example of a situation for which a Gantt chart would be appropriate?
A) developing a factory layout
B) tracking inventory levels over time
C) monitoring job schedules
D) forecasting personnel requirements in a two?shift operation
Q2) A restaurant needs the following number of wait staff to serve its evening guests.
\[\begin{array} { | c | c | c | c | c | c | c | c | }
\hline \text { Day: } & \text { M } & \text { Tu } & \text { W } & \text { Th } & \text { F } &
\text { Sa } & \text { Su } \\
\hline \begin{array} { c }
\text { Minimum Number of } \\
\text { Wait Staff Needed: }
\end{array} & 5 & 2 & 1 & 4 & 6 & 7 & 2 \\
\hline
\end{array}\]
How many employees are needed so that each as two consecutive days off? Construct a work schedule for these employees.
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Chapter 15: Quality Management
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Q1) Define Six Sigma and explain the key concepts used to implement a Six Sigma quality initiative.
Q2) In reference to quality cost classifications, training and equipment design would fall in the ____ category.
A)Prevention
B)Appraisal
C)Internal-failure
D)External-failure
Q3) Joseph Juran preached the "14 Points" for management in his quality philosophy.
A)True
B)False
Q4) In applying Six Sigma to services, the four key measures of performance include all of the following except
A)accuracy
B)empathy
C)cost
D)customer satisfaction
Q5) Define root cause and describe root cause analysis.
Q6) Discuss Kaizen and how it differs from a Kaizen Blitz.
Q7) Describe the rationale underlying ISO 9000:2000.
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Chapter 16: Quality Control and Spc
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Q1) If process quality approaches six sigma levels, then standard types of control charts are not useful.
A)True
B)False
Q2) 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
Q3) Over several days, 25 samples of 100 items each were tested for electrical resistance. A total of 60 items failed. Determine \(\bar { p }\) and the control limits for a p chart.
Q4) A steel company is interested in determining if a particular process in its mini?mill is capable of meeting customer expectations. The thickness of steel has an upper limit of .540 mm and a lower limit of .480 mm. The process has a standard deviation of .02 mm.
a. What is the process capability index (C<sub>p</sub>) for this process?
b. What must the standard deviation of the process be changed to for the C<sub>p</sub> to equal 1.00?
Q5) Define and give an example of the three components of any control system.
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Chapter 17: Lean Operating Systems
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Q1) Southwest Airlines illustrates the application of "lean principles" when it
A)reduces airplane turnaround time at airport gates.
B)assigns airplane seats.
C)serves all passengers in-flight dinners.
D)requires a change of ticket fee for missing a scheduled flight.
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) In a Kanban system, the numerator of the formula K =[(dp + w)(1 + \(\alpha\))]/C is analogous to
A)demand during the lead time only in a fixed quantity inventory system.
B)safety stock only in a fixed period inventory system.
C)the order up-to-level (M) in a fixed period inventory system.
D)the reorder point (r) in a fixed quantity inventory system.
Q4) Explain the purpose of visual controls and give examples.
Q5) How does Total Productive Maintenance TPM) affect lean operating systems?
Q6) Explain the concept of Single Minute Exchange of Die (SMED).
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Chapter 18: Project Management
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Q1) Explain the role of the project managers and some principles for success.
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) A type of organization which "loans" resources to projects while still maintaining control over them is called
A)Pure project structure
B)Pure functional structure
C)Matrix structure
D)Product structure
Q4) Which is incorrect regarding the critical path?
A)Shortest time to complete a project
B)Longest time to complete a project
C)Project path with 0 slack
D)Delays in activities will delay the project
Q5) Define critical path and explain how it is identified once a project schedule is calculated
Q6) Describe the four major steps in the project-planning process.
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Chapter 19: Work Measurement, Learning Curves, and Standards
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Q1) A yacht manufacturer signed a contract to build five sailboats for a California resort. Assuming an 85% learning curve, how many labor-hours will it take to build all five sailboats if it took 7,000 standard hours to build the original sailboat?
Q2) Explain the concept of learning curves using an 80% learning curve as an example.
Q3) A manufacturer made a commitment to supply 20 units of a product. The first unit took 1,200 hours to make, the second unit took 900 hours and the third unit took 768 hours. Determine the total number of hours required to make the first ten (10) items.
Q4) Determine the sample size for the following time study given a standard deviation of four minutes and a 98% probability that the value of the sample mean is within 1.5 minutes?
Q5) A Performance Rating Factor PRF) of 130% means a worker is slow and needs 30% more time.
A)True
B)False
Q6) Discuss the two different sides of the debate over work standards.
Q7) How do predetermined standards differ from time studies?
Q8) Define and relate normal time and standard time.
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Chapter 20: Queuing Analysis
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Q1) ____ 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)Value-based queuing
Q2) Rules that determine the order in which arrivals are sequenced through the service system are called
A) queuing behavior
B) operating characteristics
C) queue discipline
D) psychology of waiting
Q3) ____ is the use of a criterion that allows new arrivals to displace members of the current queue and become the first to receive service.
A)Shortest Processing Time SPT)
B)A random queue discipline
C)Preemption
D)A reservation
Q4) Discuss three categories of information necessary to analyze a waiting line.
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Chapter 21: Modeling Using Linear Programming
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Q1) The constraint that requires the beginning inventory plus production minus sales to equal the ending inventory is called material-balance equation.
A)True
B)False
Q2) X<sub>1</sub>, X<sub>2</sub> \(\ge\) 0 refers to
A)Feasibility
B)Maximization
C)Production-rate changes
D)Non-negativity
Q3) For linear programming to work for project crashing decisions, a dummy activity is needed at the beginning of the project, with a duration of zero 0) time.
A)True
B)False
Q4) Explain the essence of a transportation problem.
Q5) Solutions to a linear programming model that satisfy all constraints are referred to as optimal.
A)True
B)False
Q6) Differentiate between a feasible solution and an optimal solution.
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Chapter 22: Simulation
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Q1) Which of the following is not an advantage of simulation?
A)Convenient experimental laboratory
B)Can perform 'what-if' studies
C)Don't have to disturb current process
D)Yields optimal solution
Q2) A disadvantage of simulation models is that the structuring is highly dependent on the expertise of the modeler.
A)True
B)False
Q3) Explain the major differences between a fixed-time and a next-event simulation model. Include advantages and disadvantages of each.
Q4) Which is correct regarding a simulation model for inventory management?
A)Only demand can vary
B)The goal is to minimize waiting time
C)Looks at a combination of order quantity and reorder point
D)Does not allow backorders of stockouts
Q5) 'Face validity' means the programmers agree to the model's logic. A)True
B)False
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Chapter 23: Work Measurement, Learning Curves, and Standards
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Q1) Given the following table, calculate the expected value of perfect information. \(\begin{array}{c|ccc|r}
&\text { Low } & \text { Medium } & \text { High } & \text { Expected } \\ &\text { Demand } & \text { Demand } & \text { Demand } & \text { Value } \\ \hline\text { Small } \mathrm{d}_{1} & \$ 400 & \$ 400 & \$ 400 & \$ 400 \\ \text { Medium } \mathrm{d}_{2} & \$ 100 & \$ 600 & \$ 600 & \$ 500 \\ \text { Large } \mathrm{d}_{3} & -\$ 300 & \$ 300 & \$ 900 & \$ 450 \\ \hline \text { Probability } & 0.20 & 0.35 & 0.45 & \end{array}\)
Q2) A conservative or risk-averse approach to one-time decisions without event probabilities is ____.
A)Maximax
B)Maximin
C)Minimax regrets
D)Expected value
Q3) The expected value concept weighs each payoff for an alternative in proportion to the likelihood that the payoff will occur.
A)True
B)False
Q4) Differentiate between uncertainty and risk.
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