Operations Management Midterm Review Solutions

Midterm Exam Review Questions & Answers Chapter 1 Questions: True or False Questions 1) Efficiency means doing the right things to create the most value for the company. FALSE Efficiency means doing something at the lowest possible cost. 2) A process can be effective without being efficient. TRUE Often, maximizing effectiveness and efficiency at the same time creates conflict between the two goals. "Being efficient" at the customer service counter at a local store or bank means using the smallest number of clerks possible at the counter. Being effective, though, means minimizing the amount of time customers need to wait in line. 3) "Operations" refers to manufacturing and service processes used to transform resources employed by a firm into products desired by customers. TRUE Operations refers to manufacturing, service, and health care processes that are used to transform the resources employed by a firm into products desired by customers. 4) The only major supply chain processes are planning, sourcing, delivering, and returning. FALSE Operations and supply chain processes can be conveniently categorized…as planning, sourcing, making, delivering, and returning. Multiple Choice Questions 5) Which of the following is *not* a characteristic that distinguishes services from goods? a. Service jobs are unskilled. b. A service is intangible. c. Services are perishable. d. Services are heterogeneous. e. None of these 6) The goods-services continuum consists of which set of the following categories? a. No goods, some goods, even mix, some service, no service b. Pure goods, core goods, core services, pure services c. No service, some service, good service, excellent service d. Self-service, help desk service, face-to-face service, service-with-a-smile e. None of these Midterm Exam Review Questions & Answers Chapter 2 Questions: True False Questions 1) An operations and supply chain strategy must be integrated with the organization's corporate strategy. TRUE Operations and supply chain strategy is concerned with setting broad policies and plans for using the resources of a firm and must be integrated with corporate strategy. 2) The process when a company seeks to match the benefits of a successful position while maintaining its existing position by adding new features, services, and technologies into its current portfolio is called straddling. TRUE Straddling occurs when a company seeks to match the benefits of a successful position while maintaining its existing position. 3) An operations strategy must resist change because of the long-term nature of equipment and personnel investments. FALSE Because the goals of the larger organization change over time, the operations strategy must be designed to anticipate future needs. 4) Productivity is a relative measure. TRUE Productivity is what we call a relative measure. In other words, to be meaningful, it needs to be compared with something else. Multiple Choice Questions 5) If all you knew about a production system was that total daily output was 400 units and the total labor necessary to produce the 400 units was 350 hours, and the total materials used were 425 units, what kind of productivity measure could you use to compute productivity? a. Partial measure b. Multifactor measure c. A Relative Weighted measure d. Partial measure and Multifactor measure e. Multifactor measure and A Relative Weighted measure Partial measure and multifactor measure is the most correct of the answers. You could use either a partial or a multifactor measure or both kinds of measures. Midterm Exam Review Questions & Answers 6) Which of the following is a total measure of productivity? a. Output/Materials b. Output/(Labor + Capital + Energy) c. Output/Labor d. Output/Inputs e. All of these 7) Which of the following is *not* a major strategic operational competitive dimension that forms a company's competitive position? a. Cost or price b. Delivery speed c. Delivery reliability d. Management acumen e. Coping with changes in demand The operational competitive dimensions that form a company's competitive position are listed in the text and notes. Management acumen is not mentioned. 8) The total output from a production system in one day is 900 units. The total labor necessary to produce the 900 units is 1800 hours. The total energy required was 1500 kilowatts. The required machine hours totaled 1000 hours. Using the appropriate productivity measure for total labor, what is the resulting productivity ratio? a. 0.500 b. 1.428 c. 0.700 d. 0.411 e. None of these 900 units divided by 1800 hours equals 0.5 units per hour. Midterm Exam Review Questions & Answers Chapter 3 Questions: True False Questions 1) Concept development is one of the typical phases of product development. TRUE Our generic product development process consists of six phases, as illustrated in Exhibit 3.1. The process begins with a planning phase, which is the link to advanced research and technology development activities. The output of the planning phase is the project's mission statement, which is the input required to begin the concept development phase. 2) One of the methodologies that can aid in designing a new product for customers is a house of quality matrix. TRUE Customer requirement information forms the basis for a matrix called the house of quality. By building a house of quality matrix, the cross-functional QFD team can use customer feedback to make engineering, marketing, and design decisions. The matrix helps the team translate customer requirements into concrete operating or engineering goals. However, the most important benefit of the house of quality is that it helps the team focus on building a product that satisfies customers. 3) Core competencies are those things that everyone in the firm must be able to do well. FALSE A company's core competency is the one thing that it can do better than its competitors. Multiple Choice Questions 4) Which of the following is *not* a typical phase of product development? a. Concept development b. Value engineering c. System-level design d. Testing and refinement e. Production/ramp-up 5) Which of the following is not a component of the “Generic Product Categories”? a. Platform products b. Process-intensive products c. Customized products d. Quick-build products e. Cost-responsive products Midterm Exam Review Questions & Answers Chapter 4 Questions: True False Questions 1) An event unit package is a subdivision of a project. FALSE There is no such item as an event unit package described in the text or class. 2) The second step in managing a project is writing the statement of work. FALSE A project starts out as a statement of work. 3) One of the advantages of a functional project organizational structure is that a team member can work on several projects. TRUE That a team member can work on several projects in a functional organizational structure is listed as an advantage in the text. 4) One of the assumptions made using CPM is that project activity sequence relationships can be specified and networked. TRUE Determine the required sequence of activities and construct a network reflecting the precedence relationships. Multiple Choice Questions 5) An advantage of a pure project where self-contained teams work full time on a project is which of the following? a. Team members can work on several projects. b. Functional area is a "home" after the project is completed. c. There are duplicated resources. d. Lines of communication are shortened. e. Overall organizational policies and goals can be ignored. 6) A project can be subdivided into which of the following? a. Job orders b. Sub-jobs c. Work packages d. Sub-paths e. Events and decisions A work package is a group of activities combined to be assignable to a single organizational unit. The other elements named are not commonly used in project management. Midterm Exam Review Questions & Answers Chapter 5 Questions True False Questions 1) Capacity can be defined as the input that a system is capable of achieving over some unit of time. FALSE Capacity is the output that a system is capable of achieving over some unit of time 2) The objective of strategic capacity planning is to determine the overall capacity level of capital intensive resources (including facilities, equipment, and overall labor force size) that best supports the company's short-range competitive strategy. FALSE The objective of strategic capacity planning is to provide an approach for determining the overall capacity level of capital-intensive resources—facilities, equipment, and overall labor force size—that best supports the company's long-range competitive strategy. 3) A piece of equipment with twice the capacity of another piece typically costs twice as much to purchase and to operate. FALSE Economies of scale dictate that as a plant gets larger and volume increases, the average cost per unit of output drops. This is partially due to lower operating and capital cost, because a piece of equipment with twice the capacity of another piece typically does not cost twice as much to purchase or operate. Multiple Choice Questions 4) If the actual output of a piece of equipment during an hour is 400 units and its best operating level is at a rate of 500 units per hour, which of the following is the capacity utilization rate? a. 0.80 b. 0.90 c. 1.25 d. 1.33 e. 100 5) When a service system is running at 80% of capacity, the system is said to be: a. In the “Zone of Service” b. In “Steady State” c. In the “Critical Zone” d. In the “Zone of Nonservice” e. In the zone of “Optimal Utilization” Midterm Exam Review Questions & Answers Chapter 6 Questions: True False Questions 1) When plotted on a graph, the learning curve can't be expressed as logarithm. FALSE In practice, learning curves are plotted using a graph with logarithmic scales. 2) An assumption of learning curves is that the time required to complete a unit will increase at an increasing rate as the cumulative number of units completed increases. FALSE Learning curve theory is based on three assumptions: The amount of time required to complete a given task or unit of a product will be less each time the task is undertaken; The unit time will decrease at a decreasing rate; The reduction in time will follow a predictable pattern. 3) Economies of scale and the learning curve have opposite effects on capacity. FALSE Learning curves are also an integral part in planning corporate strategy, such as decisions concerning pricing, capital investment, and operating costs based on experience curves. Multiple Choice Questions 4) You have just timed a person doing a haircut for the first time. The haircut took 50 minutes. What unit improvement factor learning curve would you use if the person took 35 minutes on the second hair cut? a. 35 percent b. 50 percent c. 70 percent d. 75 percent e. 80 percent 5) The general guidelines provided in the notes on improving individual learning based on learning curves include which of the following? a. Use a cumulative improvement factor. b. Use a unit improvement factor. c. Do one or very few jobs at a time. d. Explain learning logarithm analysis to workers. e. Avoid feedback until the job is complete. Midterm Exam Review Questions & Answers Chapter 7 Questions: True False Questions 1) Break-even analysis can only be used in production equipment decision making when dealing solely with variable costs. FALSE Break-even analysis is most suitable when processes and equipment entail a large initial investment and fixed cost, and when variable costs are reasonably proportional to the number of units produced. 2) One difference between an assembly line process flow and a continuous process flow is that on the assembly line, the flow is discrete rather than continuous. TRUE A continuous process is similar to an assembly line in that production follows a predetermined sequence of steps, but the flow is continuous such as with liquids, rather than discrete (e.g., smartphones). 3) Work-center layouts allocate dissimilar machines into cells to work on products that have dissimilar processing requirements. FALSE A work-center layout, sometimes referred to as a job shop, has similar equipment or functions are grouped together. Multiple Choice Questions 4) Assume a fixed cost for a process of $120,000. The variable cost to produce each unit of product is $35, and the selling price for the finished product is $50. Which of the following is the number of units that has to be produced and sold to break even? A. 5,000 units B. 6,000 units C. 8,000 units D. 11,000 units E. 12,000 units Find the margin: $50 - $35 = $15. Use the margin to offset the fixed costs: $120,000/$15 = 8,000 units. 5) Which of the following is not considered a major work flow structure? A. Work center B. Project C. Assembly line D. Fabrication E. Continuous flow Midterm Exam Review Questions & Answers Chapter 9 Questions: True False Questions 1) One characteristic of a well-designed service system is that it is cost-effective. TRUE The seven characteristics of a well-designed service system include: 7. [The system] is costeffective. 2) Because little or no inventory is carried in a service operation, it is easy to separate the operations management functions from marketing in services. FALSE Too much capacity generates excessive costs. Insufficient capacity leads to lost customers. In these situations, of course, we seek the assistance of marketing. This is one reason we have discount airfares, hotel specials on weekends, and so on. This is also a good illustration of why it is difficult to separate the operations management functions from marketing in services. 3) An important aspect of service products is that they cannot be inventoried. TRUE In designing service organizations, we must remember one distinctive characteristic of services: We cannot inventory services. Multiple Choice Questions 4) Which of the following is one of the three contrasting approaches to delivering on-site service? A. Quality approach B. Stock market approach C. Production-line approach D. Retail approach E. Professional approach 5) Which of the following is not a characteristic of a well-designed service system? A. Robust B. Cost-effective C. Puts customers in charge D. User-friendly E. Effectively links "front office" with "back office" Midterm Exam Review Questions & Answers Chapter 11 Questions: True or False Questions 1) Run time is calculated by multiplying the number of units in a batch by the setup time. FALSE Run time is the time required to produce a batch of parts. This is calculated by multiplying the time required to produce each unit by the batch size. 2) If you want to reduce process flow time, it has been suggested that you can perform activities in the process in parallel. TRUE Perform activities in parallel. Most of the steps in an operations process are performed in sequence. 3) Throughput rate of a production process is the amount of time a unit spends actually being worked on. FALSE The throughput rate is the output rate that the process is expected to produce over a period of time. 4) Utilization of a production process is the ratio of output to input. FALSE Utilization is the ratio of the time that a resource is actually activated relative to the time that it is available for use. Multiple Choice Questions 5) Which of the following best describes the term "cycle time"? A. Average time between completions of successive units B. Ratio of the time a resource is activated over its use C. Can be no more than 60 minutes D. The same as utilization E. The labor content of the item being measured 6) To reduce process flow time, you might try which of the following actions? A. Perform activities in parallel. B. Change the sequence of activities. C. Reduce interruptions. D. Acquire additional equipment. E. All of these