Operations Management (Operations and Productivity) Answers Part 1

Operations Management Operations and Productivity What is Operations Management? 1) Some of the operations-related activities of Hard Rock Café include designing music instruments and analyzing them for cost and labor requirements. Answer: FALSE 2) Because Hard Rock Cafés are themed restaurants, operations managers focus their layout design efforts on attractiveness while paying little attention to efficiency. Answer: FALSE 3) All organizations, including service firms such as banks and hospitals, have a production function. Answer: TRUE 4) Operations management is the set of activities that creates value in the form of tangible goods, not services, by transforming inputs into outputs. Answer: FALSE 5) Production is the creation of goods and services. Answer: TRUE 6) At Hard Rock Café, tasks that reflect operations or operations management include: A) designing efficient layouts. B) providing meals. C) receiving ingredients. D) preparing effective employee schedules. E) all of these. Answer: E 7) An operations task performed at Hard Rock Café is: A) borrowing funds to build a new restaurant. B) advertising changes in the restaurant menu. C) creating the company income statement. D) preparing employee schedules. E) overseeing financial reports. Answer: D 8) Operations management is applicable: A) mostly to the service sector. B) to services exclusively. C) mostly to the manufacturing sector. D) to all firms, whether manufacturing or service. E) to the manufacturing sector exclusively. Answer: D 9) ________ is the set of activities that creates value in the form of goods and services by transforming inputs into outputs. Answer: Operations management 10) Identify three or more operations-related tasks carried out by Hard Rock Café. Answer: Providing custom meals; designing, testing, and costing meals; acquiring, receiving, and storing supplies; recruiting and training employees; preparing employee schedules; designing efficient restaurant layouts. 11) Define operations management. Will your definition accommodate both manufacturing and service operations? Answer: Operations management can be defined as the management of all activities directly related to the creation of goods and/or services through the transformation of inputs into outputs. Yes. Organizing to Produce Goods and Services 1) Which of the following are the primary functions of all organizations? A) production/operations, marketing, and human resources B) marketing, human resources, and finance/accounting C) sales, quality control, and production/operations D) marketing, production/operations, and finance/accounting E) research and development, finance/accounting, and purchasing Answer: D 2) Which of the following tasks within a manufacturing firm is performed by the operations function? A) market research B) borrowing funds C) sales promotion D) stock issue E) quality assurance and control Answer: E 3) Which of the following would NOT be an operations function in a commercial bank? A) auditing B) teller scheduling C) maintenance D) collection E) check clearing Answer: A 4) The marketing function is concerned with: A) producing goods or providing services. B) procuring materials, supplies, and equipment. C) building and maintaining a positive image. D) generating the demand for the organization's products or services. E) securing monetary resources. Answer: D 5) The purchasing function is concerned with: A) producing goods or providing services. B) procuring materials, supplies, and equipment. C) building and maintaining a positive image. D) generating the demand for the organization's products or services. E) securing monetary resources. Answer: B 6) The finance function is concerned with: A) producing goods or providing services. B) procuring materials, supplies, and equipment. C) building and maintaining a positive image. D) generating the demand for the organization's products or services. E) securing monetary resources. Answer: E 7) Which of the following tasks within an airline company is related to operations? A) crew scheduling B) international monetary exchange C) sales D) advertising E) accounts payable Answer: A 8) Marketing, production/operations, and ________ are the three functions that all organizations must perform to create goods and services. Answer: finance/accounting The Supply Chain 1) Competition in the 21st century is no longer between companies; it is between supply chains. Answer: TRUE 2) An accounting firm that provides tax services for a company would not be considered to be part of that company's supply chain. Answer: FALSE 3) What is a global network of organizations and activities that supply a firm with goods and services? A) supply tree B) provider network C) supply chain D) vendor network E) vendor tree Answer: C 4) Which of the following fosters specialization and worldwide supply chains? A) more expensive transportation B) instant communication C) economies of scope D) managers with a broad knowledge of many things E) high trade tariffs Answer: B 5) A(n) ________ is a global network of organizations and activities that supply a firm with goods and services. Answer: supply chain 6) Competition in the 21st century is no longer between companies; it is between ________. Answer: supply chains 7) Identify up to four phenomena that foster specialization and worldwide supply chains. Answer: (1) a more technologically oriented society, (2) specialized expert knowledge, (3) instant communication, and (4) cheaper transportation Why Study OM? 1) One reason to study operations management is to learn how people organize themselves for productive enterprise. Answer: TRUE 2) Reasons to study operations management include: A) studying how people organize themselves for productive enterprise. B) knowing how goods and services are consumed. C) understanding what human resource managers do. D) learning about a costly part of the enterprise. E) A and D Answer: E 3) Reasons to study operations management include learning about: A) how people organize themselves for productive enterprise. B) how goods and services are produced. C) what operations managers do. D) a costly part of the enterprise. E) all of these. Answer: E 4) Brandon Production is a small firm focused on the assembly and sale of custom computers. The firm is facing stiff competition from low-priced alternatives, and is looking at various solutions to remain competitive and profitable. Current financials for the firm are shown in the table below. In the first option, marketing will increase sales (and costs) by 50%. The next option is Vendor (Supplier) changes, which would result in a decrease of 12% in the cost of inputs. Finally, there is an OM option, which would reduce production costs by 25%. Which of the options would you recommend to the firm if it can only pursue one option? In addition, comment on the feasibility of each option. Business Function Current Value Cost of Inputs $50,000 Production Costs $30,000 Revenue $83,000 Answer: Marketing would increase sales to $124,500 ($83,000 ∗ 1.5) but increase cost of inputs and production costs to $120,000 (($50,000 + $30,000) ∗ 1.5). This would net an additional $1,500 of profit ($124,500 - $120,000 - current profit of $3,000). Vendor (Supplier) changes would decrease cost of inputs to $44,000 ($50,000 ∗ .88), resulting in $6,000 of additional profit (savings) ($50,000 - $44,000). Finally, the OM option would save $7,500 ($30,000 - $30,000 ∗ . 75), resulting in an additional $7,500 of profit. Thus, the OM option is the most profitable. Comments on feasibility should center on the near impossibility of increasing revenue by 50%, while noting the other two options are difficult but not impossible. What Operations Managers Do 1) The operations manager performs the management activities of planning, organizing, staffing, leading, and controlling of the OM function. Answer: TRUE 2) "Considers inventory ordering and holding decisions" is within the strategic operations management decision area of managing quality. Answer: FALSE 3) In order to have a career in operations management, one must have a degree in statistics or quantitative methods. Answer: FALSE 4) What are the five elements in the management process? A) plan, direct, update, lead, and supervise B) accounting, finance, marketing, operations, and management C) organize, plan, control, staff, and manage D) plan, organize, staff, lead, and control E) plan, lead, organize, manage, and control Answer: D 5) Which of the following is NOT an element of the management process? A) controlling B) leading C) planning D) pricing E) staffing Answer: D 6) An operations manager is NOT likely to be involved in: A) the design of goods and services to satisfy customers' wants and needs. B) the quality of goods and services to satisfy customers' wants and needs. C) the identification of customers' wants and needs. D) work scheduling to meet the due dates promised to customers. E) maintenance schedules. Answer: C 7) All of the following decisions fall within the scope of operations management EXCEPT for: A) creating the company income statement. B) design of goods and services. C) location strategies. D) managing quality and statistical process control. E) human resources, job design and work measurement. Answer: A 8) The 10 strategic operations management decisions include: A) layout strategies. B) maintenance. C) process and capacity strategies. D) managing quality. E) all of these. Answer: E 9) Which of the following is NOT one of the 10 strategic operations management decisions? A) layout strategies B) maintenance C) process and capacity strategies D) mass customization E) supply chain management Answer: D 10) Which of the following is one of the 10 strategic operations management decisions? A) depreciation policy for tax returns B) advertising C) process and capacity strategies D) pricing E) debt/equity ratio Answer: C