Strategic Operations Management
Exam Solutions
Course Introduction
Strategic Operations Management explores the critical role that operations play in achieving organizational goals and sustaining competitive advantage. This course examines the formulation and implementation of operations strategies across diverse industries, focusing on the integration of operations with marketing, finance, and other business functions. Key topics include process design, capacity planning, supply chain management, quality improvement, innovation, and the application of analytical tools to support decision-making. Emphasizing both theoretical frameworks and practical applications, students will analyze real-world case studies to develop skills in optimizing operations and aligning them with overarching business strategies.
Recommended Textbook
Decision Sciences and Operations Management Coursemate 4th Edition by David A. Collier
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23 Chapters
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Chapter 1: Goods, Services, and Operations Management
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Sample Questions
Q1) Which of the following is not a current challenge to OM?
A)globalization
B)technology
C)quality
D)mass production
Answer: D
Q2) What are the four key current challenges in OM that managers need to understand?
Answer: 11ea89ff_22e5_c2ff_8b44_5b96df0726be_TB2054_00
Q3) Ensuring that a credit card has accurate customer information and is delivered quickly to the customer is an example of inventory management in OM.
A)True
B)False
Answer: False
Q4) Which one of the following statements is true?
A)A variant is always a durable good with new features.
B)An automobile is a nondurable good.
C)Demand for goods is more difficult to predict than demand for services.
D)Normally patents do not protect services.
Answer: D
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Chapter 2: Value Chains
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Sample Questions
Q1) The organization that outsources still retains ownership of the outsourced process or function.
A)True
B)False
Answer: False
Q2) A reason for globalization includes shifting work closer to customers for fast delivery and customization.
A)True
B)False
Answer: True
Q3) A value chain can be considered a "cradle-to-grave" model of the operations function.
A)True
B)False Answer: True
Q4) Historically, service work was outsourced before many goods-producing jobs were.
A)True
B)False
Answer: False
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Chapter 3: Measuring Performance in Operations
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Sample Questions
Q1) Briefly discuss the seven categories of the Malcolm Baldrige National Quality Award. Answer: 11ea89ff_22ee_4e89_8b44_2961b1fd8f46_TB2054_00
Q2) In choosing performance measures, an organization might consider all of the following criteria except
A)Is the measure actionable?
B)Is the measure based on behavioral performance?
C)Is the measure important to customers?
D)Does the measurement support the firm's mission?
Answer: B
Q3) Define interlinking. Why is this concept significant?
Answer: The quantitative modeling of cause-and-effect relationships between external and internal performance criteria is called interlinking. Interlinking tries to quantify the performance relationships between all parts of the value chain - the processes "how"), goods and services outputs "what") and customer experiences and outcomes "why"). With interlinking models, managers can objectively make internal decisions that impact external outcomes, for example, determining the effects of adding resources or changing the operating system to reduce waiting time.
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Page 5
Chapter 4: Operations Strategy
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Sample Questions
Q1) Which one of the following statements is true with respect to McDonald's operations and strategy?
A)The #1 competitive priority is demand flexibility.
B)Prof. Terry Hill's strategy framework cannot be applied to services such as McDonald's.
C)There is only one standardized way process) to make French fries in over 30,000 stores worldwide.
D)McDonald's vision is to produce the world's best hamburger.
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) Operations design choices include all of the following except
A)Operating plans and controls
B)Type of processes
C)Value chain integration and outsourcing
D)Inventory and service capacity
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) Which of the following enables engineers to design, analyze, test, simulate, and "manufacture" products before they physically exist?
A)CNC
B)CAD/CAE
C)CIM
D)CAM
Q2) Differentiate between hard technology and soft technology.
Q3) Which of the following is not a major characteristic of a customer relationship management system CRM)?
A)segmenting markets
B)identifying possible fraudulent transactions
C)monitoring the quality levels of products
D)forecasting customer retention
Q4) The dot.com company WebVan focused on
A)grooming pets in customers' driveways
B)customers ordering their groceries on-line.
C)installing/repairing residential wireless networks
D)providing door-to-door medical diagnoses
Q5) What are some of the benefits and challenges of technology?
Q6) Explain the concept of ERP -Enterprise Resource Planning Systems.
Page 7
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Chapter 6: Goods and Service Design
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Sample Questions
Q1) In general, the designs of both goods and services follow a similar path. The critical differences lie in the detailed product and process design phases.
A)True
B)False
Q2) Customer requirements that are expressed in the customer's own language is called the "voice of the customer."
A)True B)False
Q3) Redundancy is the use of backup components in a design.
A)True B)False
Q4) To create and deliver a service four steps are required and based on collecting information on errors per step the following reliabilities have been determined: Step 1 = 0.92, Step 2 = 0.88, Step 3 = 0.94, and Step 4 = 0.84. What is the reliability of the total service system?
Q5) A critical part has a manufacturing specification of 0.325 cm \(\times\) 0.010. Based on historic information, if this measurement is larger than 0.335 or smaller than 0.315, the product fails at a cost of $120. Determine the Taguchi loss function.
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Page 8
Chapter 7: Process Selection, Design, and Analysis
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Sample Questions
Q1) The service positioning matrix focuses on the service encounter level rather than the overall design of the service system.
A)True
B)False
Q2) In using the Product-Process Matrix, the most appropriate match between products and processes occurs along the diagonal of the matrix.
A)True
B)False
Q3) Explain the relationship between custom, option and standard goods and services as they relate to project, job shop, flow shop and continuous flow processes.
Q4) Compare and contrast a product-process matrix with a service positioning matrix.
Q5) Flow shop processes are more rigid and specialized than continuous flow processes. A)True
B)False
Q6) Give three examples of goods or services associated with each of the process types: project, job shop, flow shop and continuous flow.
Q7) Explain why the product-process matrix does not transfer well to services.
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Chapter 8: Facility and Work Design
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Sample Questions
Q1) An assembly line with 28 activities is to be balanced. The total amount of time required for all 28 activities is 39 minutes. The line will operate for 450 minutes per day. What must the cycle time be to achieve an output rate of 400 units/day?
A)1.39 minutes
B)11.54 minutes
C)1.125 minutes
D)0.89 minutes
Q2) An assembly line with 28 operations is to be balanced. The total amount of time required for all 28 operations is 39 minutes. The longest operation takes 2.2 minutes and the shortest takes 0.8 minutes. The line will operate for 450 minutes per day. 1. Determine the minimun and maximu cycle time.
2. What is the output rate if the cycle tine is set at 2.2 minutes?
A)min cycle time = 0.8; max cycle time = 39; output rate = 204.5
B)min cycle time = 2.2; max cycle time = 39; output rate = 204.5
C)min cycle time = 2.2; max cycle time = 31.2; output rate = 562.5
D)min cycle time = 0.8; max cycle time = 2.2; output rate = 562.5
Q3) Product layouts are less flexible than process layouts.
A)True
B)False
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Chapter 9: Supply Chain Design
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Q1) Which of the following is not a basic function of the Supply Chain Operations Reference SCOR) model?
A)source
B)make
C)deliver
D)control
Q2) A supply chain is broader in scope than the value chain, and encompasses all preand post-production activity.
A)True
B)False
Q3) A contract manufacturer can offer significant competitive advantages. Which one of the following is not an advantage of using a contract manufacturer.
A)Access to advanced manufacturing technologies
B)Faster product time-to-market
C)Lower costs from economies of scale
D)Standardized design
Q4) Explain the difference between a supply chain and a value chain.
Q5) What are the key functions of a supply chain?
Q6) Explain the concept of postponement and provide an example of it.
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Chapter 10: Capacity Management
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Sample Questions
Q1) A measure of capacity is the number of seats on an airplane per flight.
A)True
B)False
Q2) 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
Q3) Revenue management systems are vital to most manufacturing organizations.
A)True
B)False
Q4) Define a Revenue Management System(RMS) and explain how it works. Give several examples of assets that can be managed using an RMS.
Q5) An order fulfillment process normally operates two shifts a day, five days per week. Under normal conditions, 380 orders can be processed per shift. What is the daily capacity?
Q6) Short-term capacity decisions usually involve adjusting schedules or staffing levels.
A)True
B)False
Page 12
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Chapter 11: Forecasting and Demand Planning
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Sample Questions
Q1) The forecasting error measurement that is different in that the measurement scale factor is eliminated is
A)MSE
B)MAD
C)RMSE
D)MAPE
Q2) Which is not true regarding simple exponential smoothing?
A)Small values of alpha \(\alpha\)) place more emphasis on past data
B)Larger values of alpha \(\alpha\)) have the advantage of quickly adjusting the forecast
C)If alpha \(\alpha\)) equals zero, the forecast will never change
D)If alpha \(\alpha\)) equals one, the forecast will never change
Q3) Regression analysis
A)Is limited to one dependent and one independent variable
B)Is best with linear relationships
C)Maximizes the sum of the squared deviations between the actual time series value and the estimated values of the dependent variable
D)Can be used with time as the independent variable
Q4) Explain the difference between statistical forecasting and judgment forecasting.
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Chapter 12: Managing Inventories
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Sample Questions
Q1) Inventory that represents partially completed products waiting further processing is called ____ inventory.
A)Raw materials
B)Work-in-process
C)Cycle
D)Safety stock
Q2) Cynthia Baker, manager of a large medical supply house that operates 50 weeks per year and 5 days per week, has decided to implement a fixed period inventory system for all class A items. One such item has the following characteristics:
Demand = 10,000 units/year
Order cost = $50/order
Holding cost = $5/unit/year
If Baker wishes to minimize total cost thereby approximating the EOQ), what should be T, the number of workdays between orders i.e., review period)?
Q3) Inventory holding costs can be accurately measured by accounting departments.
A)True
B)False
Q4) Explain the ABC inventory classification.
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Chapter 13: Resource Management
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Sample Questions
Q1) The Lot-for-Lot (LFL) rule
A)Minimizes purchase or setup costs
B)Allows the firm to take advantage of quantity discounts price (breaks) by suppliers
C)Is best applied when inventory carrying costs are high and setup/order costs are low
D)Masks the true nature of dependent demand
Q2) Which lot sizing rule is best when inventory carrying costs are high and setup/order costs are low?
A)Lot for Lot (LFL)
B)Fixed order quantity (FOQ)
C)Periodic order quantity (POQ)
D)Gross Requirements (GR)
Q3) Lot sizing rules on a parent item do not affect the gross requirements of all lower level component items.
A)True
B)False
Q4) Define Material Requirements Planning MRP) and how it can benefit an organization.
Q5) Define resource management and list its key objectives.
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Chapter 14: Operations Scheduling and Sequencing
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Q1) The chief disadvantage of the shortest processing time rule is:
A) average job completion times are excessive
B) average number of jobs in the system is excessive
C) long-duration jobs may have excessive completion times
D) average job lateness is excessive
Q2) Explain why any sequence chosen in the single-machine scheduling problem will not change makespan time.
Q3) If the highest priority is to minimize the average job lateness, then the jobs sequence should begin with those jobs requiring
A)The shortest processing time
B)The smallest critical ratio
C)The least remaining operations
D)The longest processing time
Q4) Like the SPT rule, the earliest due date EDD) rule minimizes the average flow time.
A)True
B)False
Q5) Differentiate between scheduling and sequencing.
Q6) Describe Johnson's sequencing rule for the two-resource sequencing problem.
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) GE's Six Sigma problem solving approach employs five phases. Which is not one of the phases?
A)Define (D)
B)Measure( M)
C)Analyze (A)
D)Improvise (I)
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) Which leader in quality management promoted the Quality Trilogy of quality planning, quality control, and quality improvement?
A)W. Edwards Deming
B)Joseph Juran
C)Philip Crosby
D)Jack Hillerich
Q4) Explain the four components of the cost of quality.
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Chapter 16: Quality Control and Spc
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Q1) Poor quality that might result from a broken tool or an employee who is ill would be an example of special cause variation.
A)True
B)False
Q2) Larger sample sizes allow smaller changes in process characteristics to be detected with higher probability.
A)True
B)False
Q3) Explain and give the significance of the 1:10:100 Rule.
Q4) Statistical calculations will show that if p = .01, then the sample size needed to have at least a 95% chance of finding at least one nonconformance is
A)30
B)100
C)300
D)1,000
Q5) In-process quality control is typically performed by the employees who run the processes.
A)True B)False
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Chapter 17: Lean Operating Systems
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Q1) To accomplish single piece flow, a manufacturer needs the ability to change between products quickly and inexpensively.
A)True
B)False
Q2) A company is using Kanban containers. There are two adjacent work centers, a downstream using) and an upstream producing) one. The using work center has a production rate of 200 parts per day and each container holds 20 parts. It takes .5 days for a container to make the entire cycle from the time it leaves the upstream center until it is returned, filled with production, and leaves again. The manager wants a safety factor \(\alpha\)) of 20%. The company is interested in reducing the number of containers. a. What is the number of containers currently in use?
b. If the number of parts a container holds is increased to 24 parts, how many containers are needed?
c. If the company wants the number of containers holding 20 parts each) to be 5, what must the safety factor become?
Q3) Firms use the "5S" principles to create a clean and organized work environment.
A)True
B)False
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Chapter 18: Project Management
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Q1) 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
Q2) Define critical path and explain how it is identified once a project schedule is calculated
Q3) A type of organization that can result in inefficiencies because of duplication of resources across the organization is called
A)Pure project structure
B)Pure functional structure
C)Matrix structure
D)Product structure
Q4) In a matrix organization, functional managers may be reluctant to provide the resources and employees, and the employees assigned to projects may relegate a project to a lower priority than their daily functional job.
A)True
B)False
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Chapter 19: Work Measurement, Learning Curves, and Standards
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Q1) The ____ states that the cost of doing any repetitive task, work activity or project decreases as the accumulated experience of doing the job increases.
A)Learning curve
B)Experience curve
C)Deming philosophy
D)Regression method
Q2) For a work sampling study, there is a 95% probability that the processing time of an activity has an error of less than 0.06 minutes. The best estimate we have for "p" is 0.30. Determine the size sample that should be used for this work sampling study.
Q3) Allowances include time for all of the following except
A)Fatigue
B)Equipment breakdowns
C)Rest periods
D)Poor scheduling
Q4) Explain the use of regression analysis in establishing standard times.
Q5) Discuss the two different sides of the debate over work standards.
Q6) Differentiate between an experience curve and the traditional learning curve.
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Q7) Define time study and describe the basic procedures for conducting a time study.
Chapter 20: Queuing Analysis
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Q1) An ice cream shop is quite busy after the neighborhood high school lets out each day. From 3 pm to 5 pm customers arrive at the rate of 50 per hour, on average. Currently, the clerk can serve one customer per minute, on average. The store manager can buy an electrically heated scoop with an automatic ice cream ejector which will decrease the serving time to one customer per 45 seconds, on average.
a. What is the current time in minutes) spent waiting in line?
b. What will the waiting time in minutes) become using the automatic ice cream ejector?
c. What fraction of time is the clerk currently idle?
d. What fraction of time will the clerk be idle using the automatic ice cream ejector?
e. How many customers, on average, are in the shop under the current system?f. How many customers would be in the shop, on average, using the automatic ice cream ejec-tor?
Q2) Contrast wait cost with server cost. Which is harder to estimate?
Q3) Discuss three categories of information necessary to analyze a waiting line.
Q4) The multiple-server queuing model assumes jockeying can take place.
A)True B)False
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Chapter 21: Modeling Using Linear Programming
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Q1) If for a given (month overtime units O<sub>t</sub>) = under-(time units U<sub>t</sub>),
A)Non-negativity would not allow this
B)Only possible with subcontracting
C)There was no over- or under-time
D)Will work if one is positive and the other is negative in the same magnitude
Q2) 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
Q3) Explain the essence of a blending problem.
Q4) Differentiate between a feasible solution and an optimal solution.
Q5) The term 'programming' is used in linear programming because these models find the best 'program' or course of action to follow.
A)True
B)False
Q6) What characterizes a linear function?
Q7) Explain the steps necessary to solve a linear programming problem using Microsoft Excel's Solver.
Page 23
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Chapter 22: Simulation
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Q1) Differentiate and explain the importance of verification and validation.
Q2) The queuing model operating characteristics formula only characterizes 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
Q3) Explain the major differences between a fixed-time and a next-event simulation model. Include advantages and disadvantages of each.
Q4) Define simulation and give some operations management examples.
Q5) With a fixed-time-increment simulation model, detailed information is lost.
A)True
B)False
Q6) 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
Q7) Discuss three advantages and three disadvantages of simulation models.
Page 24
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Chapter 23: Work Measurement, Learning Curves, and Standards
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Q1) The expected value concept weighs each payoff for an alternative in proportion to the likelihood that the payoff will occur.
A)True
B)False
Q2) Risk is a form of uncertainty associated with an unexpected good or undesirable outcome.
A)True
B)False
Q3) Making decisions in an emergency room of a hospital is an example of a decision analysis situation.
A)True
B)False
Q4) Which of the following is not a similarity between a decision matrix and a decision tree?
A)Time
B)States of nature
C)Alternatives
D)Probabilities
Q5) Define the four major elements of a decision problem.
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