Introduction to Operations Management

Introduction to Operations Management True / False Questions 1. Operations managers are responsible for assessing consumer wants and needs and selling and promoting the organization's goods or services. True False 2. Often, the collective success or failure of companies' operations functions will impact the ability of a nation to compete with other nations. True False 3. Companies are either producing goods or delivering services. This means that only one of the two types of operations management strategies are used. True False 4. Operations, marketing, and finance function independently of each other in most organizations. True False 5. The greater the degree of customer involvement, the more challenging the design and management of operations. True False 6. Goods producing organizations are not involved in service activities. True False 7. Service operations require additional inventory because of the unpredictability of consumer demand. True False 8. The value of outputs is measured by the prices customers are willing to pay for goods or services. True False 9. The use of models will guarantee the best possible decisions. True False 10. People who work in the field of operations should have skills that include both knowledge and people skills. True False 11. Assembly lines achieved productivity but at the expense of standard of living. True False 12. The operations manager has primary responsibility for making operations system design decisions, such as system capacity and location of facilities. True False 13. The word "technology" is used only to refer to "information technology". True False 14. ‘Value added' by definition is always a positive number since 'added' implies increases. True False 15. Service often requires greater labor content, whereas manufacturing is more capital intensive. True False 16. Measurement of productivity in service is more straightforward than in manufacturing since it is not necessary to take into account the cost of materials. True False 17. Special-purpose technology is a common way of offering increased customization in manufacturing or services without taking on additional labor costs. True False 18. One concern in the design of production systems is the degree of standardization. True False 19. Most people encounter operations only in profit-making organizations. True False 20. Service involves a much higher degree of customer contact than manufacturing. True False 21. A systems approach emphasizes interrelationships among subsystems, but its main theme is that the whole is greater than the sum of its individual parts. True False 22. The Pareto phenomenon is one of the most important and pervasive concepts that can be applied at all levels of management. True False 23. Operations managers, who usually use quantitative approaches, are not really concerned with ethical decision-making. True False 24. The optimal solutions produced by quantitative techniques should always be evaluated in terms of the larger framework. True False 25. Managers should most often rely on quantitative techniques for important decisions since quantitative approaches result in more accurate decisions. True False 26. Many operations management decisions can be described as tradeoffs. True False 27. A systems approach means that we concentrate on efficiency within a subsystem and thereby assure overall efficiency. True False 28. Prior to the Industrial Revolution, goods were produced primarily by craftsmen or their apprentices using custom made parts. True False 29. Elton Mayo's "Hawthorne Experiment" was the focal point of the Human Relations Movement, which emphasized the importance of the human element in job design. True False 30. Among Ford's many contributions was the introduction of mass production, using the concept of interchangeable parts and division of labor. True False 31. Operations management and marketing are the two functional areas that exist to support activities in other functions such as accounting, finance, IT and human resources. True False 32. Lean production systems incorporate the advantages of both mass production and craft production. True False 33. As an abstraction of reality, a model is a simplified version of a real phenomenon. True False 34. Lean production systems use a highly skilled work force and flexible equipment. True False 35. The lean production philosophy has been slow to be adopted in service industries. True False 36. Operations Management activities will be less important in the future because many firms are becoming service-oriented operations rather than goods producing operations. True False 37. A modern firm has two supply chain considerations - external links with suppliers and customers, and an internal network of flows to and between the operations function itself. True False Multiple Choice Questions 38. Operations management involves continuous decision-making; hopefully most decisions made will be: A. redundant B. minor in nature C. informed D. quantitative E. none of the above 39. A 'product package' consists of: A. the exterior wrapping B. the shipping container C. a combination of goods and services D. goods if a manufacturing organization E. customer relations if a service organization 40. Business organizations consist of three major functions which, ideally: A. support one another B. are mutually exclusive C. exist independently of each other D. function independently of each other E. do not interface with each other 41. Which of the following is not a type of operations? A. goods production B. storage/transportation C. entertainment D. communication E. all the above involve operations 42. Technology choices seldom affect: A. costs. B. productivity. C. union activity. D. quality. E. flexibility. 43. Measurements taken at various points in the transformation process for control purposes are called: A. plans B. directions C. controls D. feedback E. budgets 44. Budgeting, analysis of investment proposals, and provision of funds are activities associated with the _______ function. A. operation B. marketing C. purchasing D. finance E. internal audit 45. Which one of the following would not generally be classified under the heading of transformation? A. assembling B. teaching C. staffing D. farming E. consulting 46. Manufacturing work sent to other countries is called: A. downsized B. outsourced C. internationalization D. vertical integration E. entrepreneurial ship 47. Product design and process selection are examples of _______ decisions. A. financial B. tactical C. system design D. system operation E. forecasting 48. The responsibilities of the operations manager are: A. planning, organizing, staffing, procuring, and reviewing B. planning, organizing, staffing, directing, and controlling C. forecasting, designing, planning, organizing, and controlling D. forecasting, designing, operating, procuring, and reviewing E. designing and operating 49. Knowledge skills usually don't include: A. process knowledge B. accounting skills C. communication skills D. global knowledge E. all of the above 50. Which of the following is not true about systems approach? A. A systems viewpoint is almost always beneficial in decision making. B. A systems approach emphasizes interrelationships among subsystems. C. A systems approach concentrates on efficiency within subsystems. D. A systems approach is essential whenever something is being redesigned or improved. E. All of the above are true. 51. What is credited with gains in industrial productivity, increased standards of living and affordable products? A. personal computers B. the internet C. mass transportation D. assembly lines E. multi-level marketing 52. Production systems with customized outputs typically have relatively: A. high volumes of output B. low unit costs C. high amount of specialized equipment D. fast work movement E. skilled workers 53. Which is not a significant difference between manufacturing and service operations? A. cost per unit B. uniformity of output C. labor content of jobs D. customer contact E. measurement of productivity 54. Which of the following is not a characteristic of service operations? A. intangible output B. high customer contact C. high labor content D. easy measurement of productivity E. low uniformity of output 55. Which of the following is a recent trend in business? A. pollution control B. total quality management C. supply chain management D. competition from foreign manufacturers E. technological change 56. Farming is an example of: A. an obsolete activity B. a virtual organization C. non-manufactured goods D. a growth industry E. customized manufacturing 57. Dealing with the fact that certain aspects of any management situation are more important than others is called: A. analysis of tradeoffs B. sensitivity analysis C. recognition of priorities D. analysis of variance E. decision table analysis 58. The fact that a few improvements in a few key areas of operations will have more impact than many improvements in many other areas is consistent with the: A. Irwin phenomenon B. Pareto phenomenon C. Stevenson phenomenon D. Tellier phenomenon E. Adam Smith phenomenon 59. The process of comparing outputs to previously established standards to determine if corrective action is needed is called: A. planning B. directing C. controlling D. budgeting E. disciplining 60. Which of the following does not relate to system design? A. altering the system capacity B. location of facilities C. inventory management D. selection and acquisition of equipment E. physical arrangement of departments 61. Taking a systems viewpoint with regard to operations in today's environment increasingly leads decision-makers to consider ______________ in response to the ___________. A. flexibility; pressure to be more efficient B. offshoring; need to promote domestic production C. sustainability; threat of global warming D. technology; impact of random variation E. forecasting; stabilization of demand 62. Some companies attempt to maximize the revenue they receive from fixed operating capacity by influencing demands through price manipulation. This is an example of __________________: A. Illegal price discrimination B. Collusion C. Volume analysis D. Revenue management E. Outsourcing 63. Which of the following is not an ongoing trend in manufacturing? A. globalization B. quality improvement C. flexibility and agility D. mass production for greater economies of scale E. technological advances 64. Which of the following is not a benefit of using models in decision making? A. They provide a standardized format for analyzing a problem. B. They serve as a consistent tool for evaluation. C. They are easy to use and less expensive than dealing with the actual situation. D. All of the above are benefits. E. None of the above is a benefit. 65. Modern firms increasingly rely on other firms to supply goods and services instead of doing these tasks themselves. This increased level of _____________ is leading to increased emphasis on ____________ management. A. outsourcing; supply chain B. offshoring; lean C. downsizing; total quality D. optimizing; inventory E. internationalization; intercultural 66. Operations and sales are the two ________ functions in businesses. A. strategic B. tactical C. support D. value-adding E. line 67. Marketing depends on operations for information regarding ___________. A. productivity B. lead time C. cash flow D. budgeting E. corporate intelligence 68. Two widely used metrics of variation are the __________ and the _________. A. mean; standard deviation B. productivity ratio; correlation C. standardized mean; assignable deviation D. randomized mean; standardized deviation E. normal distribution; random variation 69. Which of the following statements about variation is FALSE? A. Variation prevents a production process from being as efficient as it can be. B. Some variation can be prevented. C. Variation can either be assignable or random. D. Any variation makes a production process less productive. E. Random variation generally cannot be influenced by managers. 70. Which of the following is essential to consider with respect to managing a process to meet demand? A. strategy B. demand forecasts C. capacity D. random variability E. all of the above Chapter 01 Introduction to Operations Management Answer Key True / False Questions 1. Operations managers are responsible for assessing consumer wants and needs and selling and promoting the organization's goods or services. FALSE Operation managers are not responsible for promoting goods/services. 2. Often, the collective success or failure of companies' operations functions will impact the ability of a nation to compete with other nations. TRUE A nation is often only as competitive as its companies. 3. Companies are either producing goods or delivering services. This means that only one of the two types of operations management strategies are used. FALSE Most systems involve a blend of goods and services. 4. Operations, marketing, and finance function independently of each other in most organizations. FALSE Operations, marketing and finance are naturally dependent upon one another. 5. The greater the degree of customer involvement, the more challenging the design and management of operations. TRUE Greater customer involvement leads to more complexity in the design and management of operations. 6. Goods producing organizations are not involved in service activities. FALSE Most systems involve a blend of goods and services. 7. Service operations require additional inventory because of the unpredictability of consumer demand. FALSE Service operations cannot use inventory as a hedge against unpredictable demand. 8. The value of outputs is measured by the prices customers are willing to pay for goods or services. TRUE Customers' willingness to pay for goods or services sets the value of these outputs. 9. The use of models will guarantee the best possible decisions. FALSE Models are useful, but their use does not guarantee the best decisions. 10. People who work in the field of operations should have skills that include both knowledge and people skills. TRUE Operations management requires a blend of knowledge and people skills. 11. Assembly lines achieved productivity but at the expense of standard of living. FALSE Productivity and standard of living go hand in hand. 12. The operations manager has primary responsibility for making operations system design decisions, such as system capacity and location of facilities. FALSE The operations manager plays a role in these decisions but is not primarily responsible for them. 13. The word "technology" is used only to refer to "information technology". FALSE Technology also refers to the technology involved in resource transformations. 14. ‘Value added' by definition is always a positive number since 'added' implies increases. FALSE Some transformations result in the output being worth less than the inputs. 15. Service often requires greater labor content, whereas manufacturing is more capital intensive. TRUE Service operations tend to be more labor-intensive than manufacturing. 16. Measurement of productivity in service is more straightforward than in manufacturing since it is not necessary to take into account the cost of materials. FALSE Materials cost must be considered in services as well. 17. Special-purpose technology is a common way of offering increased customization in manufacturing or services without taking on additional labor costs. FALSE Special-purpose technology typically reduces costs through standardization. 18. One concern in the design of production systems is the degree of standardization. TRUE How standardized outputs will be is a critical consideration in the system design question. 19. Most people encounter operations only in profit-making organizations. FALSE Operations are also relevant to not-for-profit organizations such as the Red Cross. 20. Service involves a much higher degree of customer contact than manufacturing. TRUE Customer contact tends to be much higher in services. 21. A systems approach emphasizes interrelationships among subsystems, but its main theme is that the whole is greater than the sum of its individual parts. TRUE Optimizing the performance of individual subsystems does not guarantee optimal performance from the overall system. 22. The Pareto phenomenon is one of the most important and pervasive concepts that can be applied at all levels of management. TRUE Pareto phenomena can be observed in a wide variety of organization situations. 23. Operations managers, who usually use quantitative approaches, are not really concerned with ethical decision-making. FALSE Ethics issues are touching on all areas of management, including operations. 24. The optimal solutions produced by quantitative techniques should always be evaluated in terms of the larger framework. TRUE Quantitative techniques have limitations that must be considered. 25. Managers should most often rely on quantitative techniques for important decisions since quantitative approaches result in more accurate decisions. FALSE Just as other techniques do, quantitative techniques have limitations. 26. Many operations management decisions can be described as tradeoffs. TRUE Managing tradeoffs is the essence of operations management. 27. A systems approach means that we concentrate on efficiency within a subsystem and thereby assure overall efficiency. FALSE Subsystem efficiency doesn't necessarily translate into overall efficiency. 28. Prior to the Industrial Revolution, goods were produced primarily by craftsmen or their apprentices using custom made parts. TRUE After the Industrial Revolution, more standardized approaches became common. 29. Elton Mayo's "Hawthorne Experiment" was the focal point of the Human Relations Movement, which emphasized the importance of the human element in job design. TRUE The Hawthorne Experiments were the beginning of the Human Relations Movement. 30. Among Ford's many contributions was the introduction of mass production, using the concept of interchangeable parts and division of labor. TRUE Ford made mass production a practical success. 31. Operations management and marketing are the two functional areas that exist to support activities in other functions such as accounting, finance, IT and human resources. FALSE Operations management and marketing are supported by these functions. 32. Lean production systems incorporate the advantages of both mass production and craft production. TRUE Lean production blends the best of both worlds. 33. As an abstraction of reality, a model is a simplified version of a real phenomenon. TRUE Models are valuable abstractions and simplifications of real, complex phenomena. 34. Lean production systems use a highly skilled work force and flexible equipment. TRUE Lean depends on a skilled workforce. 35. The lean production philosophy has been slow to be adopted in service industries. FALSE Lean concepts apply very well in service industries. 36. Operations Management activities will be less important in the future because many firms are becoming service-oriented operations rather than goods producing operations. FALSE Operations management is just as important for service firms. 37. A modern firm has two supply chain considerations - external links with suppliers and customers, and an internal network of flows to and between the operations function itself. TRUE Supply chain considerations are at play both in and beyond the modern firm. Multiple Choice Questions 38. Operations management involves continuous decision-making; hopefully most decisions made will be: A. redundant B. minor in nature C. informed D. quantitative E. none of the above Informed decisions incorporate all relevant issues. 39. A 'product package' consists of: A. the exterior wrapping B. the shipping container C. a combination of goods and services D. goods if a manufacturing organization E. customer relations if a service organization Most firms are not pure service or manufacturing firms; they produce combinations of goods and services. 40. Business organizations consist of three major functions which, ideally: A. support one another B. are mutually exclusive C. exist independently of each other D. function independently of each other E. do not interface with each other Finance, Marketing and Operations are these major functions. 41. Which of the following is not a type of operations? A. goods production B. storage/transportation C. entertainment D. communication E. all the above involve operations All of these involve taking inputs and transforming them. 42. Technology choices seldom affect: A. costs. B. productivity. C. union activity. D. quality. E. flexibility. Union activity can affect a firm's technology choices, but not the other way around. 43. Measurements taken at various points in the transformation process for control purposes are called: A. plans B. directions C. controls D. feedback E. budgets Feedback is used to monitor and improve processes. 44. Budgeting, analysis of investment proposals, and provision of funds are activities associated with the _______ function. A. operation B. marketing C. purchasing D. finance E. internal audit These are the primary tasks for the finance function. 45. Which one of the following would not generally be classified under the heading of transformation? A. assembling B. teaching C. staffing D. farming E. consulting Staffing doesn't involve transforming resources so much as it involves acquiring them. 46. Manufacturing work sent to other countries is called: A. downsized B. outsourced C. internationalization D. vertical integration E. entrepreneurial ship Outsourcing is increasingly a part of operations management. 47. Product design and process selection are examples of _______ decisions. A. financial B. tactical C. system design D. system operation E. forecasting These major decisions affect decisions made at lower levels. 48. The responsibilities of the operations manager are: A. planning, organizing, staffing, procuring, and reviewing B. planning, organizing, staffing, directing, and controlling C. forecasting, designing, planning, organizing, and controlling D. forecasting, designing, operating, procuring, and reviewing E. designing and operating The scope of operations management ranges across the organization. 49. Knowledge skills usually don't include: A. process knowledge B. accounting skills C. communication skills D. global knowledge E. all of the above Communication skills generally are considered to be people skills. 50. Which of the following is not true about systems approach? A. A systems viewpoint is almost always beneficial in decision making. B. A systems approach emphasizes interrelationships among subsystems. C. A systems approach concentrates on efficiency within subsystems. D. A systems approach is essential whenever something is being redesigned or improved. E. All of the above are true. Subsystem efficiency doesn't necessarily translate into overall system efficiency. 51. What is credited with gains in industrial productivity, increased standards of living and affordable products? A. personal computers B. the internet C. mass transportation D. assembly lines E. multi-level marketing Mass production has played a prominent role in increasing standards of living. 52. Production systems with customized outputs typically have relatively: A. high volumes of output B. low unit costs C. high amount of specialized equipment D. fast work movement E. skilled workers Skilled workers are necessary to accommodate the variation inherent in customized outputs. 53. Which is not a significant difference between manufacturing and service operations? A. cost per unit B. uniformity of output C. labor content of jobs D. customer contact E. measurement of productivity Manufacturing operations aren't necessarily more or less efficient than service operations. 54. Which of the following is not a characteristic of service operations? A. intangible output B. high customer contact C. high labor content D. easy measurement of productivity E. low uniformity of output The productivity of service operations is often hard to measure. 55. Which of the following is a recent trend in business? A. pollution control B. total quality management C. supply chain management D. competition from foreign manufacturers E. technological change Supply chain management involves a broader systemic view of operations. 56. Farming is an example of: A. an obsolete activity B. a virtual organization C. non-manufactured goods D. a growth industry E. customized manufacturing Farm operations are not manufacturing operations. 57. Dealing with the fact that certain aspects of any management situation are more important than others is called: A. analysis of tradeoffs B. sensitivity analysis C. recognition of priorities D. analysis of variance E. decision table analysis Solutions tend to be targeted toward higher priority aspects of a situation. 58. The fact that a few improvements in a few key areas of operations will have more impact than many improvements in many other areas is consistent with the: A. Irwin phenomenon B. Pareto phenomenon C. Stevenson phenomenon D. Tellier phenomenon E. Adam Smith phenomenon Pareto phenomena direct our attention to the difference between the "important few" and the "trivial many." 59. The process of comparing outputs to previously established standards to determine if corrective action is needed is called: A. planning B. directing C. controlling D. budgeting E. disciplining Controls are used to maintain performance. 60. Which of the following does not relate to system design? A. altering the system capacity B. location of facilities C. inventory management D. selection and acquisition of equipment E. physical arrangement of departments Inventory management is a system operation decision area. 61. Taking a systems viewpoint with regard to operations in today's environment increasingly leads decision-makers to consider ______________ in response to the ___________. A. flexibility; pressure to be more efficient B. offshoring; need to promote domestic production C. sustainability; threat of global warming D. technology; impact of random variation E. forecasting; stabilization of demand Sustainability is a relatively recent operations management consideration. 62. Some companies attempt to maximize the revenue they receive from fixed operating capacity by influencing demands through price manipulation. This is an example of __________________: A. Illegal price discrimination B. Collusion C. Volume analysis D. Revenue management E. Outsourcing Revenue management is used to ensure that as much perishable capacity as possible is sold. 63. Which of the following is not an ongoing trend in manufacturing? A. globalization B. quality improvement C. flexibility and agility D. mass production for greater economies of scale E. technological advances Manufacturers are moving away from mass production for economies of scale. 64. Which of the following is not a benefit of using models in decision making? A. They provide a standardized format for analyzing a problem. B. They serve as a consistent tool for evaluation. C. They are easy to use and less expensive than dealing with the actual situation. D. All of the above are benefits. E. None of the above is a benefit. Models are useful tools for making decisions without confronting the actual situation with all of its complexity. 65. Modern firms increasingly rely on other firms to supply goods and services instead of doing these tasks themselves. This increased level of _____________ is leading to increased emphasis on ____________ management. A. outsourcing; supply chain B. offshoring; lean C. downsizing; total quality D. optimizing; inventory E. internationalization; intercultural Supply chain management takes a more systemic view of the firm, its operations, and its suppliers. 66. Operations and sales are the two ________ functions in businesses. A. strategic B. tactical C. support D. value-adding E. line Others are support functions. 67. Marketing depends on operations for information regarding ___________. A. productivity B. lead time C. cash flow D. budgeting E. corporate intelligence Marketing uses lead time information to make promises to customers. 68. Two widely used metrics of variation are the __________ and the _________. A. mean; standard deviation B. productivity ratio; correlation C. standardized mean; assignable deviation D. randomized mean; standardized deviation E. normal distribution; random variation