Operations and Supply Chain Management, 3rd Edition Test Bank by Ace Test Banks

Operations and Supply Chain Management, 3rd Edition Test Bank

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Ch 01: Operations Management and Value Chains True / False 1. Preproduction services of a value chain include warranty and claim services. a. True b. False ANSWER: False 2. If the value ratio for a good or service is high, the good or service is perceived favorably by customers. a. True b. False ANSWER: True 3. A pair of running shoes is an example of a durable good. a. True b. False ANSWER: False 4. The intangible nature of a service makes it difficult to keep a competitor from copying a service encounter design. a. True b. False ANSWER: True 5. Vehicles, furniture, and dishwashers are examples of nondurable goods. a. True b. False ANSWER: False 6. The higher the customer participation in service processes, the more certainty a firm has with respect to service time and capacity. a. True b. False ANSWER: False 7. A process invariably resides within a department or traditional management function. a. True b. False ANSWER: False 8. Proportional increases or decreases in the perceived benefits and the price of a product result in no net change in the value of the product. a. True b. False ANSWER: True 9. Big data analytics is intended to support service businesses such as virtual banking. Copyright Cengage Learning. Powered by Cognero.

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Ch 01: Operations Management and Value Chains a. True b. False ANSWER: True Multiple Choice 10. A warm welcome by an employee at a hotel check-in counter is an example of a. social sustainability. b. predictive analytics. c. a service blueprint. d. a moment of truth. ANSWER: d 11. Which of the following is a sequence of activities that is intended to create a certain result, such as a physical good, a service, or information? a. Process b. Matrix c. Variant d. Task ANSWER: a 12. In the context of customer benefit packages, which services are those that are not essential to the primary service but enhance it? a. Core b. Tertiary c. Peripheral d. Central ANSWER: c 13. Which of the following statements is true of goods-producing processes? a. They use employees as a substitute for physical inventory. b. They require extensive customer participation in service creation and delivery. c. They require more flexibility and adaptation to special circumstances than service processes. d. They are mechanistic and controllable because of the lack of customer participation. ANSWER: d 14. Building a high-performing organization with a capable leadership and workforce is an example of what type of sustainability? a. Economic b. Technological c. Political d. Environmental ANSWER: a 15. Which of the following statements is true of service employees? Copyright Cengage Learning. Powered by Cognero.

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Ch 01: Operations Management and Value Chains a. They require good human interaction skills and strong cross-selling skills. b. They perform mechanized and rigid processes. c. They have little or no interaction with customers. d. They rely more on hard technology than soft technology to perform work. ANSWER: a 16. Which of the following is a valid difference between goods and services? a. Goods can be stored as physical inventory, whereas services cannot be stored as physical inventory. b. Goods-producing firms rely solely on soft technology, whereas service-providing firms rely solely on hard technology. c. The demand for goods cannot be predicted, whereas the demand for services can be easily predicted. d. Customers directly participate in goods-producing activities, whereas customers do not participate in serviceproviding activities. ANSWER: a 17. What type of good is one that does not quickly wear out but typically lasts at least three years? a. Durable b. Soft c. Consumer packaged d. Fast-moving consumer ANSWER: a 18. Which of the following refers to raw materials, work-in-process, or finished goods that are maintained to support production or satisfy customer demand? a. Throughput b. A variant c. A subsidy d. Inventory ANSWER: d 19. Which of the following is an example of a nondurable good? a. An airplane b. Software c. Furniture d. A dishwasher ANSWER: b 20. Predictive analytics is used by organizations to a. analyze business policies through visual representations. b. identify the best decisions for a particular situation. c. understand past and current performance. d. envisage the future by detecting patterns and relationships in data. ANSWER: d Copyright Cengage Learning. Powered by Cognero.

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Ch 01: Operations Management and Value Chains 21. What type of sustainability is an organization's commitment to maintain healthy communities and improve the quality of life? a. Environmental b. Economic c. Social d. Political ANSWER: c 22. What type of good is one that is no longer useful once it's used or lasts for less than three years? a. Heavy-duty b. Nondurable c. Hard d. Slow-moving consumer ANSWER: b 23. Which of the following statements is true of goods? a. Goods-producing industries rely on machines and hard technology to perform work. b. Goods-producing employees require stronger behavioral skills than physical skills. c. The demand for goods is more difficult to predict than the demand for services. d. Durable goods are those that are no longer useful once they are used. ANSWER: a 24. Which of the following statements is true of operations management (OM)? a. The application of the concepts and methods of OM is limited to the technology industry. b. OM is the only function by which managers can directly affect the value provided to all stakeholders. c. The activities involved in OM focus on creating value solely for external customers. d. OM and its principles are exclusively applicable to firms that produce tangible products. ANSWER: b 25. Ensuring consumer safety in using goods and services is an example of what type of sustainability? a. Social b. Economic c. Political d. Environmental ANSWER: a 26. Which of the following terms is a key activity performed by operations managers that involves deciding the best way to assign people to work tasks and responsibilities? a. Forecasting b. Process design c. Job design d. Reengineering ANSWER: c Copyright Cengage Learning. Powered by Cognero.

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Ch 01: Operations Management and Value Chains 27. Which of the following statements is true of service facilities? a. They need to be in close proximity to customers. b. They store their services as physical inventory. c. They require employees with stronger technical skills than behavioral skills. d. They rely more on hard technology than soft technology to perform work. ANSWER: a 28. Purchasing is a key activity performed by operations managers that involves a. determining when resources such as employees and equipment should be assigned to work. b. using technology to improve productivity and respond faster to customers. c. coordinating the acquisition of materials, supplies, and services. d. ensuring that goods, services, and processes will meet customer expectations and requirements. ANSWER: c 29. Which of the following statements is true of a value chain? a. The pre- and postservice framework of a value chain emphasizes that service is a critical component of traditional manufacturing processes. b. The input-output framework of a value chain suggests that the value chain begins with inputs from customers. c. A value chain solely focuses on the operations function of an organization. d. A value chain is narrower in scope than a supply chain. ANSWER: a 30. Service encounter design is a key activity performed by operations managers that involves a. managing the flow of materials, information, people, and money from suppliers to customers. b. ensuring that the right amount of resources is available when needed. c. predicting the future demand for raw materials, finished goods, and services. d. determining how to recover from service upsets. ANSWER: d 31. Which of the following is a network of facilities and processes that describes the flow of materials, finished goods, services, information, and financial transactions from suppliers, through the facilities and processes that create goods and services, and those that deliver them to the customer? a. Product-process matrix b. Product life cycle c. Value chain d. Business cycle ANSWER: c 32. Nico and his friend went to a coffee shop. They ordered two cappuccinos and received a complimentary chocolate waffle and cookie along with their order. In the context of a customer benefit package (CBP), the chocolate waffle and the cookie are a. intangible products. b. core offerings. c. peripheral goods. d. primary goods. Copyright Cengage Learning. Powered by Cognero.

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Ch 01: Operations Management and Value Chains ANSWER: c 33. In order to increase value, an organization must a. increase perceived benefits while decreasing actual benefits. b. increase both perceived benefits and price or cost proportionally. c. decrease both perceived benefits and price or cost proportionally. d. decrease price or cost while holding perceived benefits constant. ANSWER: d 34. North Zone Bank gives all its customers a complimentary credit card along with a custom-made wallet when they open an account with the bank. The credit card and the wallet offered by the bank represent a. peripheral goods. b. core offerings. c. intangible products. d. primary goods. ANSWER: a 35. Which of the following terms describes the perception of the benefits associated with a good, service, or bundle of goods and services in relation to what buyers are willing to pay for them? a. Value b. Equity c. Turnover d. Revenue ANSWER: a 36. Which of the following is an example of a general management process in a business? a. Research and development b. Inventory management c. Technology acquisition d. Human resource management ANSWER: d 37. In the context of the pre- and postproduction services perspective of a value chain, which of the following statements is true of preproduction services? a. They focus on gaining a customer. b. They include on-site installation and application services. c. They focus solely on keeping an existing customer. d. They include recycling and remanufacturing initiatives. ANSWER: a 38. Which centers are warehouses that act as intermediaries between factories and customers, shipping directly to customers or to retail stores where products are made available to customers? a. Production b. Distribution c. Cost Copyright Cengage Learning. Powered by Cognero.

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Ch 01: Operations Management and Value Chains d. Business recovery ANSWER: b 39. Which of the following is a similarity between goods and services? a. Both can be standardized for the mass market or customized to individual needs. b. Both use physical inventory as a buffer for fluctuations in demand. c. Both require customers to participate extensively in the creation and delivery processes. d. Both can be protected by patents owing to their tangible nature. ANSWER: a 40. Which of the following is an example of a primary service? a. The cooling provided by an air conditioner b. The customer service hotline of an electronics company c. A pen drive given along with a laptop d. An antivirus program given along with a smartphone ANSWER: a 41. Which of the following can be classified as a support process in a business? a. Product manufacturing b. Technology acquisition c. Human resource management d. Order shipment ANSWER: b 42. In the context of the pre- and postproduction services perspective of a value chain, which of the following statements is true of postproduction services? a. They focus solely on gaining new customers. b. They include contract negotiations. c. They focus on keeping existing customers. d. They include good and service guarantees. ANSWER: c 43. What is a customer benefit package (CBP) feature that departs from the standard CBP and is normally location specific or firm specific? a. Bottleneck b. Peripheral product c. Core product d. Variant ANSWER: d 44. Mikayla is planning to go on a camping trip. She purchases a bottle of mineral water, a pack of biscuits, a small tube of toothpaste, and a toothbrush from the supermarket near her house. The items that Mikayla has purchased from the supermarket are what type of good? a. Hard b. Durable Copyright Cengage Learning. Powered by Cognero.

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Ch 01: Operations Management and Value Chains c. Nondurable d. Intangible ANSWER: c 45. Which of the following statements is true of sustainability? a. Sustainability practices lead to better public perception. b. Sustainability practices are limited to service-providing firms. c. The use of sustainable technology reduces short-term operational costs. d. The application of sustainable technology is limited to the agriculture industry. ANSWER: a 46. Which term refers to an organization's ability to strategically address current business needs and successfully develop a long-term strategy that embraces opportunities and manages risk for all products, systems, supply chains, and processes to preserve resources for future generations? a. Sustainability b. Scalability c. Scheduling d. Forecasting ANSWER: a 47. In the context of the pre- and postproduction services perspective of a value chain, which of the following are postproduction services of a value chain? a. Purchasing services b. Recycling and remanufacturing initiatives c. Contract negotiations d. Product and service guarantees ANSWER: b 48. When business analytics is used to understand past and current performance, it is called what type of analytics? a. Decision b. Descriptive c. Predictive d. Prescriptive ANSWER: b 49. What type of management is defined as the science and art of ensuring that goods and services are created and delivered successfully to customers? a. Operations b. Communications c. Network d. Security ANSWER: a 50. One of the key activities that operations managers perform is ensuring that the right amount of resources (labor, equipment, materials, and information) is available when needed. This is called what type of management? Copyright Cengage Learning. Powered by Cognero.

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Ch 01: Operations Management and Value Chains a. Quality b. Supply chain c. Network d. Resource and capacity ANSWER: d 51. Industry 4.0 and Service 4.0 are different from previous generations due to their a. complete globalization. b. information intensity. c. use of blockchain to manage materials and information. d. reliance on drones and robotics. ANSWER: b 52. Global supply chains have historically competed based on the three factors of quality, cost, and time. What is the fourth factor that has been added to this mix? a. Compatibility b. Cloud storage c. Sustainability d. Neutrality ANSWER: c 53. Which of these is a benefit of globalization from the perspective of the organization moving operations to other countries? a. Number of languages b. Different cultures c. Number of competitors d. Number of new markets ANSWER: d 54. Which of these issues can best be described as a global supply chain concern? a. Risks related to intellectual property b. Rapid evolution of technology c. Increase in peripheral goods d. Perceived decline in value ANSWER: a 55. Determining where best to source raw materials and how to schedule and transport them is a part of which current and future challenge in OM? a. Technology b. Optimizing supply chains c. Workforce d. Service 4.0 ANSWER: b Copyright Cengage Learning. Powered by Cognero.

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Ch 01: Operations Management and Value Chains 56. While the innovative cereal bowl was an instant hit with everyone that saw the prototype, Emily had no idea how it could be made at volume with a high level of quality and low cost. What OM skill does she need to draw upon to solve that problem? a. Scheduling b. Inventory management c. Process design d. Budgeting ANSWER: c 57. Hilaria was the manager of the student success center in the College of Business at a metropolitan university. There were specific times each year when his advising staff was overwhelmed with students needing degree checks and advice on next semester’s classes. Even working weekends would not permit all students wanting an appointment to obtain one. Which OM skill could Hilaria draw upon to help with this issue? a. Planning and budgeting b. Inventory management c. Quality d. Scheduling and capacity ANSWER: d 58. Caleb monitored the levels of office supplies, books, cocktail napkins, and tiny umbrellas in his role. Running out of any of these items could be catastrophic, and it was vital that he stretch his budget to last an entire semester. Which OM skill does he use for these concerns? a. Inventory management b. Process design c. Scheduling d. Quality ANSWER: a 59. One of Lauren’s responsibilities as the director of graduate enrollment was to make the first night of class in the MBA program, known as Base Camp, a welcoming and impressive event. She assembled portfolios and name tents, checked dietary restrictions and shoe sizes, and performed a sound check. All of this work was performed flawlessly thanks to which OM skill? a. Inventory management b. Quality c. Scheduling and capacity d. Budgeting ANSWER: b 60. Grant’s sense of style captivated his colleagues, who were always interested in hearing the full biography of the designer and fashion house responsible for his latest outfit. It was a closely guarded secret of his that all his outfits and accessories came from a local consignment store. His bowler hat, for example, was a genuine Thurston Howell, but instead of paying the retail price of $700, he purchased it on consignment for only $250. What is the value ratio of the hat to Grant? a. $700 b. $250 c. 2.8 Copyright Cengage Learning. Powered by Cognero.

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Ch 01: Operations Management and Value Chains d. $450 ANSWER: c

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Ch 02: Measuring Performance in Operations and Value Chains True / False 1. In the context of the value chain model, when "information replaces assets," the costs increase. a. True b. False ANSWER: False 2. When considering the value of a loyal customer, it costs three to five times more to keep an existing customer than to acquire a new customer. a. True b. False ANSWER: False 3. Actionable performance measures should be meaningful to a company's management and should provide the basis for decisions at the strategic level in an organization. a. True b. False ANSWER: False 4. With interlinking models, managers can objectively make internal decisions that impact external outcomes. a. True b. False ANSWER: True 5. In the context of the value chain model, fewer resources are needed to achieve performance goals when "information replaces assets." a. True b. False ANSWER: True 6. Quality measures the degree to which the output of a process conforms to the management's expectations and requirements. a. True b. False ANSWER: False 7. Performance measures should support customer requirements. a. True b. False ANSWER: True 8. Actionable measures do not need to consider time. a. True b. False ANSWER: False Copyright Cengage Learning. Powered by Cognero.

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Ch 02: Measuring Performance in Operations and Value Chains Multiple Choice 9. Tailortech, a privately owned computer technology company, provides a wide range of customized laptops to suit the needs of students, corporate professionals, and small business owners. In this case, Tailortech's ability to provide a wide range of customized laptops to suit its customers' needs best describes a. volume flexibility. b. design flexibility. c. budget variance. d. manufacturing yield. ANSWER: b 10. What term describes the ability to provide goods and services to customers with minimum waste and maximum utilization of resources? a. Operational efficiency b. Volume flexibility c. Reliability d. Sustainability ANSWER: a 11. Key measures of innovation and learning include a. supply-chain performance. b. processing time. c. percentage of new products developed. d. the variance around the average time. ANSWER: c 12. What is the act of quantifying the performance of organizational units, goods and services, processes, people, and other business activities? a. Measurement b. Forecasting c. Fulfillment d. Litigating ANSWER: a 13. The following table shows the data for the number of pair of shoes produced and the cost incurred by Rugged Footwear Inc. for the current year. Pair of Shoes Produced 150,000 Cost Incurred Direct Labor Cost $60,000 Energy Cost $ 5,800 Raw Material Cost $42,000 Based on the given data, the productivity of Rugged Footwear for the year is a. 1 pair/USD. b. 1.39 pairs/USD. c. 2 pairs/USD. d. 2.46 pairs/USD. Copyright Cengage Learning. Powered by Cognero.

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Ch 02: Measuring Performance in Operations and Value Chains ANSWER: b 14. Which of the following is a measure of innovation and learning? a. Patent applications b. Employee retention c. Product recalls d. Labor productivity ANSWER: a 15. In the context of sustainability, which performance measures include corporate ethics and governance? a. Environmental b. Social c. Economic d. Political ANSWER: b 16. Which of the following is a quality performance measure at an operational level? a. Customer ratings of goods and services b. Customer retention c. Service representative courtesy d. Product recalls ANSWER: c 17. In the context of the triple bottom line (TBL), which of the following measures includes the number of ethical violations? a. Responsiveness b. Service quality c. Social sustainability d. Customer retention rate ANSWER: c 18. In the context of business and operations performance measurement, which of the following is an example of an innovation and learning measure? a. Employee satisfaction b. Flow processing or cycle time c. Manufacturing yield d. Product-related litigation ANSWER: a 19. What measures the degree to which the output of a process meets customer requirements? a. Learning b. Innovation c. Variability d. Quality Copyright Cengage Learning. Powered by Cognero.

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Ch 02: Measuring Performance in Operations and Value Chains ANSWER: d 20. Energy consumption, recycling, and other resource conservation activities are measures of a. operational efficiency. b. innovation and learning. c. sustainability. d. financial stability. ANSWER: c 21. According to research, which of the following is a key dimension that customers use to assess service quality? a. Operational efficiency b. Flexibility c. Empathy d. Queue time ANSWER: c 22. A paint manufacturing company has three factories located in France, Germany, and Spain. The productivity data of the factories are as follows: Amount of Paint Produced (US Factory Location Total Input Cost (USD) Gallons) Spain 4,600,000 $5,250 Germany 5,500,000 $5,250 France 4,000,000 $3,500 Based on the productivity analysis of all the factories, the productivity of the factory in a. Germany is lower than that of the factory in Spain. b. Spain is higher than that of the factory in France. c. France is higher than that of the factory in Spain. d. France is lower than that of the factory in Germany. ANSWER: c 23. Which of the following performance perspectives in the balanced scorecard model includes measures such as productivity, flow time, and asset utilization? a. The financial perspective b. The customer perspective c. The innovation and learning perspective d. The internal perspective ANSWER: d 24. Which of these measures focuses on an organization's people and infrastructure? a. Goods and service design flexibility b. Customer and market c. Service quality d. Innovation and learning ANSWER: d Copyright Cengage Learning. Powered by Cognero.

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Ch 02: Measuring Performance in Operations and Value Chains 25. Which of the following performance perspectives in the balanced scorecard model measures the ultimate value that a business provides to its shareholders? a. The financial perspective b. The internal perspective c. The learning perspective d. The customer perspective ANSWER: a 26. The innovation and learning perspective in the balanced scorecard model includes measures such as a. Return on Investment, Economic Value Added, and Shareholder Value. b. number of cooperative customer–company design initiatives and percent of sale from new services. c. training hours per employee, hiring process effectiveness, and revenue per employee. d. service-quality levels, design and demand flexibility, and asset utilization. ANSWER: c 27. Which of the following represents the ratio of the output of a process to the input? a. Productivity b. Flexibility c. Variability d. Reliability ANSWER: a 28. What term means the willingness to help customers and provide prompt recovery to service upsets? a. Responsiveness b. Empathy c. Assurance d. Reliability ANSWER: a 29. Which of the following models of organizational performance is based on a set of cause-and-effect linkages between internal and external performance and defines the key performance measurements on which service-based firms should focus? a. Service-Profit Chain model b. Value chain model c. Balanced scorecard d. Malcolm Baldrige Performance Excellence program ANSWER: a 30. The time required to ramp up to an increased production output level in response to a surge in the sales of a product is a measure of a. budget variance. b. volume flexibility. c. product recalls. d. service upset. Copyright Cengage Learning. Powered by Cognero.

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Ch 02: Measuring Performance in Operations and Value Chains ANSWER: b 31. Airline revenue per passenger mile and hotel revenue per full-time employee are examples of what type of measures? a. Reliability b. Flexibility c. Sustainability d. Productivity ANSWER: d 32. Which of the following is a financial performance measure at an organizational level? a. Cost of quality b. Revenue and profit c. Budget variance d. Labor and material costs ANSWER: b 33. In the context of the triple bottom line (TBL), which of the following is a measure of economic sustainability? a. Fines for environmental violations b. Corporate ethics and governance c. Revenue from new goods and services d. Measures of perceived value ANSWER: a 34. In an assembly line of a factory that makes gears, it takes fifteen minutes to complete a drilling operation using a lathe. The duration of this operation is called a. delay time. b. queue time. c. processing time. d. standard time. ANSWER: c 35. The quantitative modeling of cause-and-effect relationships between external and internal performance criteria is called a. productivity. b. operational efficiency. c. interlinking. d. sustainability. ANSWER: c 36. Which of the following performance categories in the balanced scorecard model includes the percent of sale from new goods and services? a. The financial perspective b. The innovation perspective c. The learning perspective Copyright Cengage Learning. Powered by Cognero.

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Ch 02: Measuring Performance in Operations and Value Chains d. The customer perspective ANSWER: d 37. The ability of an organization to respond quickly to changes in the quantity and type of demand is called a. utility. b. reliability. c. demand variability. d. volume flexibility. ANSWER: d 38. Which of these service firms would be more likely to focus on providing maximum value to their customers? a. Carpet and tile cleaning service b. House painting service c. Plumbing service d. Low-income housing service ANSWER: d 39. Jim's Gym provides the brightest, whitest, freshest towels to its customers who use the gym's team of elite personal trainers. Which dimension of service quality is being addressed by this? a. Tangibility b. Reliability c. Assurance d. Empathy ANSWER: a 40. A barbershop tracks its customers through all stages of its process. Which of these process steps represents queue time? a. The customer pays for their haircut. b. The customer enters the barbershop and watches SportsCenter until the next barber is ready. c. The customer instructs the barber on how short their hair should be cut. d. The barber executes the haircut. ANSWER: b 41. The university deftly moved to online classes when Covid-19 hit its campus, thereby demonstrating what ability when faced with such an unpredictable and adverse occurrence? a. Innovation and learning b. Reliability c. Resilience d. Assurance ANSWER: c 42. A carpet retailer installs 20 yards of carpet in 4 hours using 2 gallons of glue at $10/gallon. The two installers are paid $15/hour. Which of these is a measure of productivity for this installation? a. $15/hour b. 20 yards Copyright Cengage Learning. Powered by Cognero.

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Ch 02: Measuring Performance in Operations and Value Chains c. $10/gallon d. 10 yards/gallon ANSWER: d 43. A pizzeria produces 3,000 pizzas a week using 10 drums of marinara sauce, 150 hours of labor, and 50 therms of energy. Pizza sells for $15 each, and workers are paid $18 per hour. The marinara sauce costs $200 per drum, and the energy cost is $7 per therm. Which of these is a measure of productivity? a. 3,000 pizzas b. 20 pizzas/hour c. $15/drum d. $7/therm ANSWER: b 44. A pizzeria produces 3,000 pizzas during its first week of operation using 10 drums of marinara sauce, 150 hours of labor, and 50 therms of energy. Pizzas sell for $15 each, and workers are paid $18 per hour. The marinara sauce costs $200 per drum, and the energy cost is $7 per therm. During its second week of operation, it produces 2,900 pizzas using only 140 hours of labor. All costs and prices are constant from the first to second week. What has been the change in their labor productivity? a. Productivity has increased by 5.3%. b. Productivity has decreased by 5.3%. c. Productivity has increased by 3.6%. d. Productivity has decreased by 3.6%. ANSWER: c 45. A pizzeria produces 3,000 pizzas during its first week of operation using 10 drums of marinara sauce, 150 hours of labor, and 50 therms of energy. Pizzas sell for $15 each, and workers are paid $18 per hour. The marinara sauce costs $200 per drum, and the energy cost is $7 per therm. Which of these changes will result in the largest multifactor productivity increase for the pizzeria in their second week of operation? (Assume that all other numbers remain the same as the first week.) a. Increasing the output to 3,100 pizzas b. Lowering the labor hours to 140 c. Lowering the cost of a drum of marinara by $25 d. Increasing the cost per therm by $10 ANSWER: c 46. La Puerta Company manufactures solid core interior doors for residences. In the cutting process for their Dveri model, the dimension should be 32". If too large, the door won't close, and if too small, there will be an unseemly gap between the door and the frame. The operations manager took 20 samples throughout the day and made a table with the measurements. What are the mean and standard deviation of the doors in this sample? 32.4 32.3 32.1 32.1 32.1 31.8 32 32 32.1 32.4 32.4 32.4 31.9 32.4 32.2 32.7 32.5 32.1 31.8 32.1 a. Mean = 32.19"; standard deviation = 0.240" b. Mean = 32.1"; standard deviation = 0.234" Copyright Cengage Learning. Powered by Cognero.

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Ch 02: Measuring Performance in Operations and Value Chains c. Mean = 32.7"; standard deviation = 0.240" d. Mean = 31.8"; standard deviation = 0.234" ANSWER: a 47. La Puerta Company manufactures solid core interior doors for residences. In the cutting process for their Mén model, the dimension should be 32". If too large, the door won't close, and if too small, there will be an unseemly gap between the door and the frame. The operations manager took 20 samples throughout the day and made a table with the measurements. What are the mean and standard deviation of the doors in this sample? 32.8 32.6 32.8 32.8 32 32.8 32.7 32.4 32.4 32.8 32.2 31.9 32.8 32.5 32.5 32.1 32.1 32.7 32.4 32.6 a. Mean = 32.8"; standard deviation = 0.291" b. Mean = 32.5"; standard deviation = 0.298" c. Mean = 32.495"; standard deviation = 0.291" d. Mean = 32.495"; standard deviation = 0.298" ANSWER: d 48. Gary's Shoes and Accessories is attempting to quantify the value of a loyal customer. Al Bundy, Gary's data analyst, has carefully analyzed ten years of data and determined that Gary's customers tend to purchase a new pair of shoes every four years and the customer defection rate is 10%. The contribution margin of most of the shoe lines is 65%, and the revenue for a pair of shoes is $150. What is Gary's value of a loyal customer? a. $243.75 b. $131.25 c. $3,900 d. $727.75 ANSWER: a 49. Gary's Shoes and Accessories is attempting to quantify the value of a loyal customer. Al Bundy, Gary's data analyst, has carefully analyzed ten years of data and determined that its customers tend to purchase a new pair of shoes every two years and its customer defection rate is 25%. Its fixed costs are 20%, and it makes a before-tax profit of 10%. The revenue for the store's Peggy line of shoes, which accounts for virtually all of the sales, is $250. What is Gary's value of a loyal customer? a. $100 b. $150 c. $200 d. $250 ANSWER: b 50. Gary's Shoes and Accessories is attempting to quantify the value of a loyal customer. Al Bundy, Gary's data analyst, has carefully analyzed ten years of data and determined that its customers tend to purchase a new pair of shoes every four years and its customer defection rate is 10%. The contribution margin of most of its shoe lines is 65%, and the revenue for a pair of shoes is $150. An aggressive marketing campaign is planned that Al estimates will increase Gary's share of customers by 5,000. What is the market value increase? a. $984,375 b. $656,250 Copyright Cengage Learning. Powered by Cognero.

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Ch 02: Measuring Performance in Operations and Value Chains c. $1,218,750 d. $1,082,812 ANSWER: c 51. Gary's Shoes and Accessories is attempting to quantify the value of a loyal customer. Al Bundy, Gary's data analyst, has carefully analyzed ten years of data and determined that its customers tend to purchase a new pair of shoes every two years and its customer defection rate is 25%. Gary's fixed costs are 20%, and it makes a before-tax profit of 10%. The revenue for the store's Peggy line of shoes, which accounts for virtually all of the sales, is $250. An aggressive marketing campaign is planned that Al estimates will increase the store's share of customers by 8,000. What is the market value increase? a. $450,000 b. $550,000 c. $650,000 d. $1,200,000 ANSWER: d 52. Gary's Shoes and Accessories is attempting to quantify the value of a loyal customer. Al Bundy, Gary's data analyst, has carefully analyzed ten years of data and determined that Gary's customers tend to purchase a new pair of shoes every two years and the customer defection rate is 25%. Its fixed costs are 20%, and it makes a before-tax profit of 10%. The revenue for the store's Peggy line of shoes, which accounts for virtually all of the sales, is $250. How many customers does Gary's need to increase its market value by $2,000,000? a. 13,333 b. 14,000 c. 14,667 d. 15,533 ANSWER: a 53. Which of these categories is featured in both the Malcolm Baldrige criteria and the balanced scorecard perspectives? a. Customers b. Strategy c. Data and Analysis d. Quality ANSWER: a 54. The Malcolm Baldrige operations criteria is found in which balanced scorecard perspective? a. Innovation and Learning b. Internal c. Customer d. Financial ANSWER: b 55. Which of these models of organizational performance is the dominant model for operations managers? a. Balanced scorecard b. Malcolm Baldrige Performance Excellence Framework c. Value chain model Copyright Cengage Learning. Powered by Cognero.

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Ch 02: Measuring Performance in Operations and Value Chains d. Service-Profit Chain ANSWER: c 56. Which of these cause-and-effect linkages appears in the Service-Profit Chain model? a. Customer satisfaction causes employee satisfaction, which causes internal service quality. b. Employee satisfaction causes internal service quality, which causes customer loyalty. c. Customer loyalty causes customer satisfaction, which causes employee retention. d. Internal service quality causes employee satisfaction, which causes employee productivity. ANSWER: d 57. The idea that "happy employees create happy customers" is the basic idea of the a. Service-Profit Chain. b. value chain model. c. balanced scorecard. d. Malcolm Baldrige framework. ANSWER: a 58. Category 4 of the Malcolm Baldrige criteria is Measurement, Analysis, and Knowledge Management. This category spans the breadth of which organizational performance model? a. Service-Profit Chain b. Value chain c. Balanced scorecard d. Toyota Production System ANSWER: b 59. Which of these elements in the value chain model is not directly involved in the flow that is the creation of goods and services? a. Land, labor, capital, and information resources b. Value creation processes c. Support and general management processes d. Suppliers ANSWER: c 60. In a good performance measurement system for operations, each measurement should have a(n) a. owner. b. customer. c. inverse perspective. d. dashboard. ANSWER: a 61. For a measure to be effective, it should be a. efficient. b. measured by a standard unit like a second, kilogram, or meter. c. measured in a simple count. Copyright Cengage Learning. Powered by Cognero.

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Ch 02: Measuring Performance in Operations and Value Chains d. easy to understand. ANSWER: d

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Ch 03: Operations Strategy True / False 1. Professor Terry Hill's operations strategy framework cannot be applied to service-providing firms. a. True b. False ANSWER: False 2. Customer segments cannot be based on sales volume and profitability. a. True b. False ANSWER: False 3. The core competencies of an organization are the strengths that are unique to that organization. a. True b. False ANSWER: True 4. For firms that adopt innovation as a core component of their strategy, price, not product performance, is the major selling feature. a. True b. False ANSWER: False 5. A strategy of quality improvement often leads to increased short-run profitability. a. True b. False ANSWER: False 6. A small change in a firm's targeted markets or strategic direction usually has little impact on the value chain. a. True b. False ANSWER: False Multiple Choice 7. Which of the following represents the strategic emphasis that a firm places on certain performance measures and operational capabilities within a value chain? a. Competitive priorities b. Order satisfiers c. Search attributes d. Order winners ANSWER: a 8. The style and fit of a jacket can be classified as what type of attribute? a. Search Copyright Cengage Learning. Powered by Cognero.

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Ch 03: Operations Strategy b. Experience c. Credence d. Variant ANSWER: a 9. Noah is admitted to a hospital to undergo a surgery for hernia. He is unable to discern the expertise of his surgeon before the surgery nor evaluate the quality of the service after the surgery. In this case, the expertise of Noah’s surgeon is an example of what type of attribute? a. Search b. Experience c. Credence d. Variant ANSWER: c 10. Which of the following is a difference between the evaluation of goods and the evaluation of services by customers? a. Customers rely more on information from nonpersonal sources when evaluating services, whereas they rely more on information from personal sources when evaluating goods. b. Customers perceive lesser risks when buying services, whereas they perceive greater risks when buying goods. c. Customers cannot look at or touch services prior to the purchase decision, whereas they can feel a product prior to purchase. d. Customers adopt innovations in services faster, whereas they resist adopting innovations in products. ANSWER: c 11. Which term means the discovery and practical application or commercialization of a device, method, or idea that differs from existing norms? a. Measurement b. Learning c. Innovation d. Diversity ANSWER: c 12. What type of sustainability is driven by ethics and human ideals of protecting the planet and its people for the wellbeing of future generations? a. Environmental b. Social c. Economic d. Political ANSWER: b 13. Credence attributes stem from a. the design of products. b. the nature of services. c. key operational controls. d. operations design choices. ANSWER: b Copyright Cengage Learning. Powered by Cognero.

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Ch 03: Operations Strategy 14. Applying Professor Terry Hill's generic strategy framework to McDonald's, the operating design choices of resource scheduling, inventory placement and control, and standardized operational and job procedures best relate to the corporate objective of a. profitable growth. b. operational excellence. c. operational sustainability. d. operational diversity. ANSWER: b 15. Destiny is planning a vacation to an exotic island. Though she has preplanned her accommodation and itinerary, she is unsure of how the vacation will turn out. In this case, Destiny’s vacation is high in which attribute? a. Search b. Experience c. Credence d. Variant ANSWER: b 16. Which of the following is considered an order winner in an automobile? a. A comfortable seating arrangement that is similar to other automobiles b. A driver-side air bag that most high-end automobiles have c. A good-quality radio particular to that brand of automobile d. A collision avoidance system particular to that design of automobile ANSWER: d 17. Which of the following often drive(s) simultaneous improvements in quality, cost, and productivity? a. Credence attributes b. Time reductions c. Corporate strategies d. Mass standardization ANSWER: b 18. Basic customer expectations are generally considered the minimum performance level required to stay in business and are often called a. order qualifiers. b. credence attributes. c. experience attributes. d. order winners. ANSWER: a 19. According to several research studies, which of the following findings is true of the role of quality in gaining competitive advantage? a. Quality is negatively related to return on investment for almost all kinds of market situations. b. A strategy of quality improvement is usually accompanied by increased short-run profitability. c. Quality has a trivial effect on returns in most kinds of market situations. Copyright Cengage Learning. Powered by Cognero.

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Ch 03: Operations Strategy d. Businesses offering premium-quality goods usually have large market shares. ANSWER: d 20. Rues and West Inc. manufactures various electronic goods. It uses mass-customization strategies to make its products available to all consumers at any place in the world. It also manufactures various electronic goods in the same assembly line. Given this information, Rues and West Inc.'s operations are aligned around a. sustainability. b. flexibility. c. reliability. d. durability. ANSWER: b 21. Which of the following is an example of innovation in services? a. Optical fibers b. Internet banking c. Customer satisfaction surveys d. Smart tags ANSWER: b 22. Which of the following is one of the key areas that is addressed by operations design choices? a. Functional plans and control systems b. Learning and innovation systems c. Value chain integration and outsourcing d. Quality control and mass customization ANSWER: c 23. According to Professor Terry Hill's generic strategy framework, which of the following statements is true of the first loop? a. It ties together an organization's corporate strategy and marketing strategy. b. It describes how operations evaluate the implications of competitive priorities in terms of process choice. c. It determines if process choice decisions are consistent with infrastructure decisions. d. It represents operations' input into the corporate and marketing strategy. ANSWER: a 24. At Ritufa Food Corp., flexibility is the key competitive priority. Food products are manufactured according to customers' requirements, at any volume and globally delivered at any time. Given this information, Ritufa Food Corp.'s operations strategy is based on a. compensation. b. mass customization. c. mass standardization. d. cost reduction. ANSWER: b 25. Which of the following companies is most likely to have a competitive advantage in its market? a. Porthis Inc., a sports good manufacturer that treats the market as a single segment Copyright Cengage Learning. Powered by Cognero.

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Ch 03: Operations Strategy b. Singletone Corp., a stationery manufacturer that reduces mass customization c. Huran Co., a clothing manufacturer that focuses on the organization's capability rather than customers' needs or wants d. Greyon Inc., a computer manufacturer that builds and leverages operational capabilities to support desired priorities ANSWER: d 26. The decisions management must make as to what type of process structure is best suited to produce goods or create services are known as a. operations design choices. b. competitive priorities. c. core competencies. d. credence attributes. ANSWER: a 27. Which of the following statements is true of quality as a key competitive priority? a. It has evolved over the years and now is generally considered an order qualifier. b. It is usually improved by businesses to increase short-run profitability. c. It is negatively related to a higher return on investment for almost all kinds of market situations. d. It suffers increasingly with time reductions in a supply chain. ANSWER: a 28. Sustainability is best described as a(n) a. idea that differs from existing norms. b. pattern that integrates an organization's major goals. c. organizational strategy. d. competitive priority. ANSWER: c 29. Which of the following statements is true of sustainability? a. Sustainability is not an organizational strategy. b. Environmental sustainability is driven by stakeholders such as the community, green advocacy groups, and the government. c. Sustainability is narrower than a competitive priority. d. Economic sustainability is driven by ethics and human ideals of protecting the planet and its people for the well-being of future generations. ANSWER: b 30. Families of goods or services having similar characteristics or methods of creation are called a. core competencies. b. order qualifiers. c. strategic business units. d. customer benefit packages. ANSWER: c Copyright Cengage Learning. Powered by Cognero.

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Ch 03: Operations Strategy 31. Goods and service features and performance characteristics that differentiate one customer benefit package from another and win the customer's business are called a. order qualifiers. b. credence attributes. c. experience attributes. d. order winners. ANSWER: d 32. Which of the following statements is true of mass customization? a. It involves the commercialization of a device, method, or idea that differs from existing norms. b. Flexibility is manifested in mass-customization strategies that are becoming increasingly prevalent today. c. It requires companies to align their operations around quality. d. Goods and services produced by a firm through mass customization are available only in the country where the firm is located. ANSWER: b 33. Which of the following companies is most likely to have a true understanding of customer wants and needs? a. Harlose Suits, where customer benefit packages include more order qualifiers than order winners b. Magnira Jewelry, where all customers are provided with the same type of jewelry c. Blyrie Apparels, where customers are segmented into groups based on buying behavior and demographics d. Scorla Automobiles, where customers are provided with low quality products at prices slightly lower than the standard prices ANSWER: c 34. Which of the following statements is true about corporate strategy of large organizations? a. It defines the focus for strategic business units of an organization. b. It provides the means by which business strategies are accomplished. c. It is necessary to define the businesses in which an organization will participate. d. It defines how an organization's processes are designed and organized. ANSWER: c 35. Competitive advantage can be defined as a. the ability of customers to properly perform and co-produce their part of a service. b. a firm's ability to achieve market and financial superiority over its competitors. c. a pattern or plan that integrates an organization's major goals, policies, and action sequences into a cohesive whole. d. a firm's ability to commercialize a device, method, or idea that differs from existing norms. ANSWER: b 36. An operations strategy can be defined as a. the set of decisions across the value chain that supports the implementation of higher-level business strategies. b. a strategy necessary to define the businesses in which a corporation will participate. c. a strategy necessary to develop plans for the acquisition and allocation of resources among businesses. d. the decisions management must make as to what type of process structure is best suited to produce goods or create services. Copyright Cengage Learning. Powered by Cognero.

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Ch 03: Operations Strategy ANSWER: a 37. Which attributes are those that a customer can determine prior to purchasing goods or services? a. Search b. Experience c. Credence d. Variant ANSWER: a 38. Which attributes are any aspects of a good or service that a customer must believe in but cannot personally evaluate even after purchase and consumption? a. Search b. Experience c. Credence d. Variant ANSWER: c 39. Which type of enterprise is an organization that sources, markets, and produces its goods and services in several countries to minimize costs, and to maximize profit, customer satisfaction, and social welfare? a. External distribution b. Complex c. Sustainable d. Multinational ANSWER: d 40. Creating a competitive advantage requires a fundamental understanding of a. customer needs and expectations. b. costs of production. c. the political and legal landscape. d. economic forces and the likelihood of inflation. ANSWER: a 41. Operations can assist an organization’s pursuit of its desired competitive priorities by a. creating a supply chain that cooperates with suppliers, customers, and competitors. b. building and leveraging operational capabilities that support them. c. continuously examining opportunities to offshore operations to less expensive countries. d. pursuing a carbon-neutral goal and linking the results to the organization’s marketing campaign. ANSWER: b 42. Which of these is typically most difficult for operations managers to accomplish? a. Selecting technology and processes b. Making human resource policy choices c. Changing the structure of the value chain d. Determining what components of the value chain to emphasize Copyright Cengage Learning. Powered by Cognero.

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Ch 03: Operations Strategy ANSWER: c 43. Which of these actions taken by Uber Eats allowed it to develop operational capabilities necessary during the COVID19 pandemic? a. Charging an additional delivery fee to homes with COVID-positive customers b. Reducing the number of restaurants that it would deliver for each metropolitan area c. Automating the integration of restaurant menus with its ride-hailing service and supplying plasticware to all cars so customers could eat while riding to their destination d. Acquiring Postmates, which delivers groceries, alcoholic drinks, party supplies, and pharmacy items to customers’ homes ANSWER: d 44. Strategic choices in operations should largely be driven by a. current and emerging customer needs and expectations. b. the operational budget and revenue projections. c. what competitors are doing with their operations. d. a consensus of front-line workers. ANSWER: a 45. In order to make sure that all customers can be satisfied with their goods and services, what approach is usually taken by producers? a. Standardization b. Segmentation c. Marketing d. Mass production ANSWER: b 46. The Slapchop has different features aimed for different generational groups. For example, the Slapchop Senior has larger lettering and sound amplification and is targeted for the Baby Boomer segment, while the Extreme Slapchop has features that are attractive to Generation Z. Slapchop is segmenting their customers based on a. buying behavior. b. geography. c. demographics. d. sales volume. ANSWER: c 47. In addition to scheduling and training employees, Hamli’s duties as restaurant manager require her to spend significant time circulating throughout the restaurant talking to diners, asking if they were pleased with their meals and occasionally topping off their drinks. These informal chats enable Hamli to identify immediate customer wants as well as overall trends by a. reducing the negative comments on social media. b. using qualitative forecasting techniques. c. eliminating customer comment cards. d. being close to the customer. ANSWER: d Copyright Cengage Learning. Powered by Cognero.

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Ch 03: Operations Strategy 48. Which of these lists shows the natural progression over time of product features? a. Order winners become order qualifiers. b. Order losers become order qualifiers. c. Order qualifiers become order losers. d. Order winners become order losers. ANSWER: a 49. Teysha does a thorough search online before purchasing a washer/dryer combo from a big box retailer. She made her purchase and experiments with different load sizes, temperatures, and detergents. After the exhaustive testing of her washer and dryer, she fully understood all the features and capabilities and settled in for many happy years of clean clothes. What is the proper temporal sequence between these attributes for her recent purchase? a. Credence comes before search. b. Search comes before experience. c. Experience comes before credence. d. Credence comes before revival. ANSWER: b 50. Which of these statements about product and service attributes is best? a. A haberdashery is high in credence attributes. b. A terpsichorean is high in search attributes. c. A kabbadi league is high in experience attributes. d. An auto repair shop is high in search attributes. ANSWER: c 51. Which of these is a reason that service design is more difficult than goods design? a. Goods are lower in search qualities than services and their features are unknown. b. Customers seek and rely more on the opinions of strangers when evaluating services, and the strangers are unknown quantities. c. The risk is lower when buying services than when buying goods. d. Customers often participate in creating their own service and improperly perform their part. ANSWER: d 52. Online University has the most skilled instructional designers and telegenic faculty found anywhere. What do these strengths form that others cannot match and explains why their strategy is to expand their services into new markets? a. Core competency b. Functional strategy c. Operations strategy d. Order winners ANSWER: a 53. The Hill framework for strategy development stresses two important elements of an effective operations strategy: operations design choices and: a. supply chain agility. b. building the right infrastructure. c. supply chain speed. Copyright Cengage Learning. Powered by Cognero.

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Ch 03: Operations Strategy d. customer-focused processes. ANSWER: b 54. Which of these is an element of operations infrastructure? a. The mix of labor and technology used to deliver goods or services b. Process selection, such as batch processing or job shop c. Operating plans and control systems d. The marketing strategy ANSWER: c 55. The fourth loop in Terry Hill’s framework for strategy development represents operations’ a. determination of order winners and qualifiers. b. linkage with upstream suppliers and downstream customers. c. assessment of the consistency of their process choices with infrastructure decisions and capabilities. d. input into the corporate and marketing strategy. ANSWER: d 56. McDonald’s operations function ensures consistency between its order-taking process and its mantra of keeping it simple. This is an example of which loop in Terry Hill’s strategy framework? a. First b. Second c. Third d. Fourth ANSWER: c 57. In Hill’s strategy framework, the only loop that is not directly involved with operations strategy is a. Loop #1. b. Loop #2. c. Loop #3. d. Loop #4. ANSWER: a

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Ch 04: Technology and Operations Management True / False 1. Scalability is a key issue in e-commerce. a. True b. False ANSWER: True 2. The use of technology has increased opportunities for employee creativity and empowerment. a. True b. False ANSWER: False 3. Low scalability implies that serving additional customers requires low incremental variable costs. a. True b. False ANSWER: False Multiple Choice 4. Using the Internet and technology to provide facilities that create and deliver time, place, information, entertainment, and exchange value to customers and support the sale of goods is known as a. outsourcing. b. offshoring. c. e-service. d. e-readiness. ANSWER: c 5. Which of the following is true of radio-frequency identification (RFID) tags? a. They can bring visibility and enhanced security to the handling and transportation of products. b. They are used to segment markets based on demographic and behavioral characteristics. c. They are used to create customized goods and services and deliver them faster at lower prices. d. They can help small companies create counterfeit knock-offs of genuine products. ANSWER: a 6. Which of the following is true of customer relationship management (CRM)? a. A typical CRM system includes market segmentation and analysis. b. It helps firms gain competitive advantage by making counterfeit knock-offs of genuine products. c. It encourages the production of standardized goods for all customers to reduce manufacturing costs. d. A CRM system prohibits firms from bundling goods and services together. ANSWER: a 7. Which of the following refers to machine tools that enable the machinist's skills to be duplicated by a programmable device that controls the movements of a tool used to make complex shapes? a. Virtual control (VC) b. Numerical control (NC) Copyright Cengage Learning. Powered by Cognero.

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Ch 04: Technology and Operations Management c. Revision control (RC) d. Movement control (MC) ANSWER: b 8. Which systems consist of two or more computer-controlled machines or robots linked by automated handling devices such as transfer machines, conveyors, and transport systems? a. Computer-aided engineering (CAE) systems b. Computer-aided design (CAD) systems c. Enterprise planning systems (EPSs) d. Flexible manufacturing systems (FMSs) ANSWER: d 9. In the context of technology in value chains, customer relationship management (CRM) a. enables small firms to make counterfeit knock-offs of genuine products. b. prohibits firms from bundling goods and services together. c. encourages firms to produce standardized goods for all consumers to reduce manufacturing costs. d. exploits the vast amount of data that can be collected from consumers. ANSWER: d 10. Which of the following is a difference between firms that have high scalability and firms that have low scalability? a. Firms with high scalability incur extremely low fixed costs, whereas firms with low scalability incur extremely high fixed costs. b. Firms with high scalability have variable costs as 80 to 85 percent of total costs, whereas firms with low scalability have variable costs as zero to five percent of total costs. c. Firms with high scalability serve additional customers at extremely low incremental costs, whereas firms with low scalability serve additional customers at high incremental variable costs. d. Firms with high scalability have a low contribution margin, whereas firms with low scalability have a high contribution margin. ANSWER: c 11. We Create Inc. is an electronics company. It designs, produces, and assembles desktop gadgets. The entire process is controlled by programmable robots, which are in turn linked to computers. These computers direct the robots to the appropriate task. In this context, We Create Inc. uses what type of system to produce its goods? a. Partner relationship management b. Enterprise resource planning c. Employee experience management d. Flexible manufacturing ANSWER: d 12. Which of the following is an example of soft technology? a. Database system b. Bar-code scanner c. Image sensor d. Radio-frequency identification tag ANSWER: a Copyright Cengage Learning. Powered by Cognero.

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Ch 04: Technology and Operations Management 13. Which of the following can be attached to objects and used to track and manage inventory and assets? a. Proximity cards b. Nanofountain probes c. Resistance-temperature detectors d. Radio-frequency identification tags ANSWER: d 14. The fixed costs of WeBuy&Sell.com, an e-commerce website, make up about 90 percent of the total costs incurred by the company. However, since its primary means of communication is web advertising, WeBuy&Sell.com has variable costs as low as 10 percent of its total costs. This allows WeBuy&Sell.com to earn high profits at a very low cost. According to the given scenario, WeBuy&Sell.com has what level of scalability? a. Zero b. Low c. Infinite d. High ANSWER: d 15. Which of the following allows all parts of the value chain to immediately recognize and react to changes in demand and supply? a. Super-precision manufacturing b. Rapid prototyping c. Descriptive analytics d. Electronic transaction capability ANSWER: d 16. The modern successor to bar codes are a. optical switches. b. artificial intelligence programs. c. electro-optical sensors. d. radio-frequency identification tags. ANSWER: d 17. What type of technology refers to the application of the Internet, computer programs, and information systems to provide data, information, and analysis to facilitate the creation and delivery of goods and services? a. Hard b. Soft c. Assistive d. Adaptive ANSWER: b 18. Customer relationship management (CRM) helps firms gain and maintain competitive advantage by a. encouraging them to produce standardized goods. b. merging all demographic-based and behavior-based segments of markets. c. studying which goods and services are purchased together. Copyright Cengage Learning. Powered by Cognero.

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Ch 04: Technology and Operations Management d. prohibiting them from bundling goods and services together. ANSWER: c 19. Which of the following terms means a measure of the contribution margin required to deliver a good or service as the business grows and volumes increase? a. Scalability b. Process capability c. Sustainability d. Operability ANSWER: a 20. Which of the following is a benefit of using technology? a. It increases the number of human service providers in firms. b. It increases quality and productivity of firms. c. It increases opportunities for employee empowerment. d. It makes it easy for customers to change decisions and return goods. ANSWER: b 21. Which of the following refers to equipment and devices that perform a variety of tasks in the creation and delivery of goods and services? a. Hard technology b. Soft technology c. A database system d. A neural network ANSWER: a 22. Valuetronics, an electronics company, is currently in the preproduction stage of launching one of its new stereo systems. In order to analyze the feasibility of the product, Valuetronics adopts an integrated system that allows it to manufacture the product before it physically exists, that is, the system allows Valuetronics to finalize the design of the stereo, analyze it, and do a test-run. In this context, Valuetronics is using a(n) a. enterprise resource planning (ERP) system. b. flexible manufacturing system (FMS). c. computer-aided engineering (CAE) system. d. computer-aided manufacturing (CAM) system. ANSWER: c 23. Which of the following is a challenge of adopting technology? a. Technology leads to job shift and displacement. b. The use of technology reduces product quality. c. Technology deteriorates the standard of living of the world. d. The use of technology disintegrates supply and value chain players. ANSWER: a 24. The tiny computer chips that can be placed on shipping containers, individual products, credit cards, prescription medicines, passports, livestock, and even people are known as Copyright Cengage Learning. Powered by Cognero.

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Ch 04: Technology and Operations Management a. bar codes. b. radio-frequency identification tags. c. thermocouples. d. voice-recognition modules. ANSWER: b 25. A key benefit of adopting technology would be that a. it helps restructure old and less productive industries. b. its use increases opportunities for employee empowerment. c. it increases opportunities for employee creativity. d. its use does not require adherence to any laws or regulations. ANSWER: a 26. Which of these is a capability of a flexible manufacturing system? a. A part can be designed, scheduled, and machined without human intervention. b. More than one item can be machined or assembled simultaneously, and many different items can be processed in random order. c. Both additive and subtractive production can be performed simultaneously, with the subtracted materials from one piece added to the other workpiece. d. The system can perform machining operations, office automation functions like word processing and spreadsheeting, and intercom functions. ANSWER: b 27. DeColdest had three cats that ate about the same amount of food each day, so he went online and set up automated delivery of their favorite foods and litter repeatedly. This service technology is an example of a. automation. b. Computer-Integrated Service (CIS). c. e-service. d. Feline Management System (FMS). ANSWER: c 28. The CRM functionality that separates markets based on the demographic or behavioral characteristics of the customers is known as a. permutation. b. segmentation. c. fragmentation. d. combination. ANSWER: b 29. Many firms choose to outsource their customer relationship management system, an approach made possible by a. the Internet of things (IoT). b. smart factories. c. rapid prototyping. d. cloud computing. Copyright Cengage Learning. Powered by Cognero.

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Ch 04: Technology and Operations Management ANSWER: d 30. The local hockey complex in Detroit has requested bids for ice maintenance for the upcoming 20-week season, and four companies have submitted proposals. The four companies that bid on the job all have different pricing structures. The ice rink in question has a regulation 19,000-square-foot surface and all companies provide their variable cost pricing in terms of dollars per 100 square feet of ice. Variable costs typically increase during the season due to expensive Zamboni maintenance. Company Abel Lindsay Howe Sawchuck

Fixed Cost/Week ($) 700 3,000 0 7,000

Cost/Sq. Ft. Weeks 1-10 ($) 2.5 1.25 2 0

Cost/Sq. Ft. Weeks 11-20 ($) 4.5 3.75 8 0

Which company has the lowest total cost for the first ten weeks of the season? a. Abel b. Lindsay c. Howe d. Sawchuck ANSWER: c 31. The local hockey complex in Detroit has requested bids for ice maintenance for the upcoming 20-week season, and four companies have submitted proposals. The four companies that bid on the job all have different pricing structures. The ice rink in question has a regulation 19,000-square-foot surface, and all companies provide their variable cost pricing in terms of dollars per 100 square feet of ice. Variable costs typically increase during the season due to expensive Zamboni maintenance. Company Abel Lindsay Howe Sawchuck

Fixed Cost/Week ($) 700 3,000 0 7,000

Cost/Sq. Ft. Weeks 1-10 ($) 2.5 1.25 2 0

Cost/Sq. Ft. Weeks 11-20 ($) 4.5 3.75 8 0

If the season were to be cut short at the end of week 15, which provider would have the lowest total cost? a. Abel b. Lindsay c. Howe d. Sawchuck ANSWER: a 32. The local hockey complex in Detroit has requested bids for ice maintenance for the upcoming 20-week season, and four companies have submitted proposals. The four companies that bid on the job all have different pricing structures. The ice rink in question has a regulation 19,000-square-foot surface, and all companies provide their variable cost pricing in terms of dollars per 100 square feet of ice. Variable costs typically increase during the season due to expensive Zamboni maintenance. Company Abel

Fixed Cost/Week ($) 700

Cost/Sq. Ft. Weeks 1-10 ($) 2.5

Cost/Sq. Ft. Weeks 11-20 ($) 4.5 Page 6

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Ch 04: Technology and Operations Management Lindsay 3,000 1.25 3.75 Howe 0 2 8 Sawchuck 7,000 0 0 Which provider has the lowest total cost over the entire 20-week season? a. Abel b. Lindsay c. Howe d. Sawchuck ANSWER: d 33. The local hockey complex in Detroit has requested bids for ice maintenance for the upcoming 20-week season, and four companies have submitted proposals. The four companies that bid on the job all have different pricing structures. The ice rink in question has a regulation 19,000-square-foot surface, and all companies provide their variable cost pricing in terms of dollars per 100 square feet of ice. Variable costs typically increase during the season due to expensive Zamboni maintenance. Company Fixed Cost/Week ($) Cost/Sq. Ft. Weeks 1-10 ($) Abel 700 2.5 Lindsay 3,000 1.25 Howe 0 2 Sawchuck 7,000 0 For which week does Howe’s cumulative cost exceed Sawchuck’s?

Cost/Sq. Ft. Weeks 11-20 ($) 4.5 3.75 8 0

a. Week 14 b. Week 15 c. Week 16 d. Week 17 ANSWER: a 34. The local hockey complex in Detroit has requested bids for ice maintenance for the upcoming 20-week season, and four companies have submitted proposals. The four companies that bid on the job all have different pricing structures. The ice rink in question has a regulation 19,000-square-foot surface, and all companies provide their variable cost pricing in terms of dollars per 100 square feet of ice. Variable costs typically increase during the season due to expensive Zamboni maintenance. Company Fixed Cost/Week ($) Cost/Sq. Ft. Weeks 1-10 ($) Cost/Sq. Ft. Weeks 11-20 ($) Abel 700 2.5 4.5 Lindsay 3,000 1.25 3.75 Howe 0 2 8 Sawchuck 7,000 0 0 For which week does the cumulative cost for Lindsay exceed that of Abel? a. Week 9 b. Week 10 c. Week 11 d. Week 12 ANSWER: c Copyright Cengage Learning. Powered by Cognero.

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Ch 04: Technology and Operations Management 35. The local hockey complex in Detroit has requested bids for ice maintenance for the upcoming 20-week season, and four companies have submitted proposals. The four companies that bid on the job all have different pricing structures. The ice rink in question has a regulation 19,000-square-foot surface, and all companies provide their variable cost pricing in terms of dollars per 100 square feet of ice. Variable costs typically increase during the season due to expensive Zamboni maintenance. Company Fixed Cost/Week ($) Cost/Sq. Ft. Weeks 1-10 ($) Abel 700 2.5 Lindsay 3,000 1.25 Howe 0 2 Sawchuck 7,000 0 Which provider never has the lowest total cost throughout the season?

Cost/Sq. Ft. Weeks 11-20 ($) 4.5 3.75 8 0

a. Abel b. Lindsay c. Howe d. Sawchuck ANSWER: b 36. The Tamale Factory is considering the purchase of a new extruding machine. Option 1 costs $15,000 for the machine and installation and results in a unit cost of $2/tamale, while Option 2 costs $10,000 for the unit and installation, but the per unit cost of the tamales it produces is $3/tamale. What is the breakeven point in dollars? a. $5,000 b. $12,500 c. $17,500 d. $25,000 ANSWER: d 37. A machine shop has three options for a new milling machine. Machine Orpheus has a fixed cost of $5,000, Machine Rex has a fixed cost of $15,000, and the Zulu Machine has a fixed cost of $25,000. The per-unit cost to operate the equipment is $12 for Orpheus, $8 for Rex, and $6 for Zulu. For what range of output is it best to purchase an Orpheus? a. 0 to 2,500 units b. 0 to 3,333 units c. 0 to 5,000 units d. It is always cheaper to have an Orpheus. ANSWER: a 38. A machine shop has three options for a new milling machine. Machine Orpheus has a fixed cost of $5,000, Machine Rex has a fixed cost of $15,000, and the Zulu Machine has a fixed cost of $25,000. The per-unit cost to operate the equipment is $12 for Orpheus, $8 for Rex, and $6 for Zulu. For what range is the total cost of a Zulu machine lowest? a. 5,000 units and higher b. 3,333 units and higher c. 2,500 units and higher d. It is always less expensive to have a Zulu. ANSWER: a Copyright Cengage Learning. Powered by Cognero.

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Ch 04: Technology and Operations Management 39. A professor considers rideshare options for their campus commute and learns that the average per-mile cost of rideshare is $2. Unfortunately, they would need to buy one of those fancy smartphones at an annual cost of $500. Their alternative to being a passenger on the way to campus is driving, and they learn they could purchase a reliable used F150 for $20,000. How many miles would they have to drive to be indifferent between rideshare services and owning their own vehicle to commute to campus? a. $9,250 b. $9,500 c. $9,750 d. $10,000 ANSWER: c 40. A retailer is deciding on the location for a new call center and has narrowed its choices down to four states, each of which has an empty mall that can be purchased and converted into an office workspace. The cost of the mall and the unit cost of each call, based on the prevailing labor and energy costs in each state, appear in the table. State Building Cost ($) Call Cost ($/call) Oklahoma 7,500,000 6 Louisiana 12,250,000 5 Arkansas 18,500,000 4 Tennessee 27,000,000 3 Which location is best if the call volume is 5,000,000? a. Oklahoma b. Louisiana c. Arkansas d. Tennessee ANSWER: b 41. A retailer is deciding on the location for a new call center and has narrowed its choices down to four states, each of which has an empty mall that can be purchased and converted into an office workspace. The cost of the mall and the unit cost of each call, based on the prevailing labor and energy costs in each state, appear in the table. State Building Cost ($) Call Cost ($/call) Oklahoma 7,500,000 6 Louisiana 12,250,000 5 Arkansas 18,500,000 4 Tennessee 27,000,000 3 Which location is best if the call volume is 7,000,000? a. Oklahoma b. Louisiana c. Arkansas d. Tennessee ANSWER: c 42. A retailer is deciding on the location for a new call center and has narrowed its choices down to four states, each of which has an empty mall that can be purchased and converted into an office workspace. The cost of the mall and the unit cost of each call, based on the prevailing labor and energy costs in each state, appear in the table. State Building Cost ($) Call Cost ($/call) Copyright Cengage Learning. Powered by Cognero.

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Ch 04: Technology and Operations Management Oklahoma 7,500,000 Louisiana 12,250,000 Arkansas 18,500,000 Tennessee 27,000,000 For what range of call volume is Arkansas the best location?

6 5 4 3

a. 4.75 million to 5.5 million b. 5.5 million to 6.5 million c. 6.25 million to 7.375 million d. 6.25 million to 8.5 million ANSWER: d 43. A retailer is deciding on the location for a new call center and has narrowed its choices down to four states, each of which has an empty mall that can be purchased and converted into an office workspace. The cost of the mall and the unit cost of each call, based on the prevailing labor and energy costs in each state, appear in the table. State Building Cost ($) Call Cost ($/call) Oklahoma 7,500,000 6 Louisiana 12,250,000 5 Arkansas 18,500,000 4 Tennessee 27,000,000 3 The CEO is from Oklahoma and wants to remain in state regardless of the cost. They believe the actual call volume will be 6 million. How much money will their decision cost the company? a. $1,250,000 b. $1,000,000 c. $1,500,000 d. $1,750,000 ANSWER: a 44. A retailer is deciding on the location for a new call center and has narrowed its choices down to four states, each of which has an empty mall that can be purchased and converted into an office workspace. The cost of the mall and the unit cost of each call, based on the prevailing labor and energy costs in each state, appear in the table. State Building Cost ($) Call Cost ($/call) Oklahoma 7,500,000 6 Louisiana 12,250,000 5 Arkansas 18,500,000 4 Tennessee 27,000,000 3 By how much would Oklahoma’s unit cost have to fall to make it the lowest cost location at a volume of 8 million calls? a. 57.5 cents per call b. 62.5 cents per call c. 67.5 cents per call d. 72.5 cents per call ANSWER: b 45. A retailer is deciding on the location for a new call center and has narrowed its choices down to four states, each of which has an empty mall that can be purchased and converted into an office workspace. The cost of the mall and the unit Copyright Cengage Learning. Powered by Cognero.

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Ch 04: Technology and Operations Management cost of each call, based on the prevailing labor and energy costs in each state, appear in the table. State Building Cost ($) Call Cost ($/call) Oklahoma 7,500,000 6 Louisiana 12,250,000 5 Arkansas 18,500,000 4 Tennessee 27,000,000 3 At what call volume is the cost of operating in Tennessee and Louisiana identical? a. 6.5 million b. 6.85 million c. 7.375 million d. 7.75 million ANSWER: c 46. A professor considers rideshare options for their campus commute and learns that the average per-mile cost of a rideshare is $2.50. Unfortunately, they would need to buy one of those fancy smartphones for an annual cost of $1,000. Their alternative to being a passenger on the way to campus is driving, and they learn they could purchase a mid-engine Corvette for $120,000. How many miles would they have to drive to be indifferent between rideshare services and owning their own vehicle to commute to campus? a. 32,800 b. 38,500 c. 42,400 d. 47,600 ANSWER: d 47. The Really Big Company is deciding between three levels of automation for the work cell that produces a key component. Nostradamus, the company forecaster, believes that there could be three levels of demand for the products produced in this work cell and has developed this table of all possible profits (in $100,000’s) for company executives. Low Demand Medium Demand High Demand No Automation 65 50 35 Low Automation 45 55 65 Medium Automation 55 30 55 High Automation 80 45 10 If the executives tend to be risk-averse, which level of automation should they choose? a. No Automation b. Low Automation c. Medium Automation d. High Automation ANSWER: b 48. The Really Big Company is deciding between three levels of automation for the work cell that produces a key component. Nostradamus, the company forecaster, believes that there could be three levels of demand for the products produced in this work cell and has developed this table of all possible profits (in $100,000’s) for company executives. Low Demand Medium Demand High Demand No Automation 65 50 35 Low Automation 45 55 65 Copyright Cengage Learning. Powered by Cognero.

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Ch 04: Technology and Operations Management Medium Automation 55 30 55 High Automation 80 45 10 If the executives tend to be optimistic risk-takers, which level of automation should they choose? a. No Automation b. Low Automation c. Medium Automation d. High Automation ANSWER: d 49. The Really Big Company is deciding between three levels of automation for the work cell that produces a key component. Nostradamus, the company forecaster, believes that there could be three levels of demand for the products produced in this work cell and has developed this table of all possible profits (in $100,000’s) for company executives. Low Demand Medium Demand High Demand No Automation 65 50 35 Low Automation 45 55 65 Medium Automation 55 30 55 High Automation 80 45 10 The executives tend to avoid big losses and opt for satisficing solutions, so Nostradamus recommends the minimax regret criterion. Which alternative will they select? a. No Automation b. Low Automation c. Medium Automation d. High Automation ANSWER: c 50. The Really Big Company is deciding between three levels of automation for the work cell that produces a key component. Nostradamus, the company forecaster, believes that there could be three levels of demand for the products produced in this work cell and has developed this table of all possible profits (in $100,000’s) for company executives. Low Demand Medium Demand High Demand No Automation 65 50 35 Low Automation 45 55 65 Medium Automation 55 30 55 High Automation 80 45 10 Nostradamus determines that the probability of low demand is 0.3, medium demand is 0.4, and high demand is 0.3. Which alternative has the highest expected value? a. No Automation b. Low Automation c. Medium Automation d. High Automation ANSWER: b 51. The Really Big Company is deciding between three levels of automation for the work cell that produces a key component. Nostradamus, the company forecaster, believes that there could be three levels of demand for the products produced in this work cell and has developed this table of all possible profits (in $100,000’s) for company executives. Copyright Cengage Learning. Powered by Cognero.

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Ch 04: Technology and Operations Management Low Demand Medium Demand High Demand No Automation 65 50 35 Low Automation 45 55 65 Medium Automation 55 30 55 High Automation 80 45 10 Nostradamus determines that the probability of low demand is 0.3, medium demand is 0.4, and high demand is 0.3. What is the expected value of perfect information in this case? a. $850,000 b. $950,000 c. $1,050,000 d. $1,150,000 ANSWER: c 52. Conhugeco is deciding between three levels of automation for the work cell that produces a key component. The Amazing Criswell, the company forecaster, believes that there could be three levels of demand for the products produced in this work cell and has developed this table of probable annual maintenance costs for company executives. Low Demand Medium Demand High Demand No Automation 125 85 105 Robotics 110 120 130 CAD/CAM 190 160 50 FMS 140 160 120 What is the best decision if Conhugeco company executives are aggressive risk-seekers? a. No Automation b. Robotics c. CAD/CAM d. FMS ANSWER: c 53. Conhugeco is deciding between three levels of automation for the work cell that produces a key component. The Amazing Criswell, the company forecaster, believes that there could be three levels of demand for the products produced in this work cell and has developed this table of probable annual maintenance costs for company executives. Low Demand Medium Demand High Demand No Automation 125 85 105 Robotics 110 120 130 CAD/CAM 190 160 50 FMS 140 160 120 What is the best decision if Conhugeco company executives are risk-averse? a. No Automation b. Robotics c. CAD/CAM d. FMS ANSWER: a 54. Conhugeco is deciding between three levels of automation for the work cell that produces a key component. The Copyright Cengage Learning. Powered by Cognero.

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Ch 04: Technology and Operations Management Amazing Criswell, the company forecaster, believes that there could be three levels of demand for the products produced in this work cell and has developed this table of probable annual maintenance costs for company executives. Low Demand Medium Demand High Demand No Automation 125 85 105 Robotics 110 120 130 CAD/CAM 190 160 50 FMS 140 160 120 What is the best decision if Conhugeco company executives use a minimax regret approach to this decision? a. No Automation b. Robotics c. CAD/CAM d. FMS ANSWER: a 55. Conhugeco is deciding between three levels of automation for the work cell that produces a key component. The Amazing Criswell, the company forecaster, believes that there could be three levels of demand for the products produced in this work cell and has developed this table of probable annual maintenance costs for company executives. Low Demand Medium Demand High Demand No Automation 125 85 105 Robotics 110 120 130 CAD/CAM 190 160 50 FMS 140 160 120 The Amazing Criswell also predicts that the probability of low demand is 0.7, the probability of medium demand is 0.2, and the probability of high demand is 0.1. Which level of automation is best if these predictions are accurate? a. No Automation b. Robotics c. CAD/CAM d. FMS ANSWER: b 56. Conhugeco is deciding between three levels of automation for the work cell that produces a key component. The Amazing Criswell, the company forecaster, believes that there could be three levels of demand for the products produced in this work cell and has developed this table of probable annual maintenance costs for company executives. Low Demand Medium Demand High Demand No Automation 125 85 105 Robotics 110 120 130 CAD/CAM 190 160 50 FMS 140 160 120 The Amazing Criswell also predicts that the probability of low demand is 0.7, the probability of medium demand is 0.2, and the probability of high demand is 0.1. What is the expected value of perfect information in this instance? a. $29 b. $24 c. $21 d. $15 Copyright Cengage Learning. Powered by Cognero.

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Ch 04: Technology and Operations Management ANSWER: d

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Ch 05: Goods and Service Design True / False 1. Ambient conditions are the explicit signals that communicate an image about a firm and include examples such as mission statements and diplomas on a wall. a. True b. False ANSWER: False 2. Location is an important competitive priority in a service business. a. True b. False ANSWER: True 3. Customer contact is measured by the percentage of time the customer must be in the service-delivery system relative to the total time it takes to provide the service. a. True b. False ANSWER: True 4. In the context of service-encounter design, free trips and extra vacation days are not considered a form of employee recognition. a. True b. False ANSWER: False 5. An Energy Star dishwasher results in increased release of carbon dioxide to the air. a. True b. False ANSWER: False 6. Service-delivery systems with high customer contact can be treated much like an assembly line. a. True b. False ANSWER: False Multiple Choice 7. The specifications for an automobile part (in inches) are 10.00 ± 0.15, and the Taguchi loss function is estimated to be L(x) = 9,300(x – T)2. Determine the estimated loss per part if the concerned quality feature has an actual value of 10.20 inches. a. $37,200 b. $93,000 c. $372 d. $93 ANSWER: c Copyright Cengage Learning. Powered by Cognero.

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Ch 05: Goods and Service Design 8. The part of the House of Quality that shows the interrelationships between any pair of technical features is the a. bottom. b. left. c. center. d. roof. ANSWER: d 9. The critical differences between the designs of goods and services lie in the a. detailed product and process design phases. b. research and analysis phases. c. customer benefit package design and configuration phases. d. market introduction and deployment phases. ANSWER: a 10. The specifications for a refrigerator part (in cm) are 5.00 ± 0.10, and the Taguchi loss function is estimated to be L(x) = 5,500(x – T)2. Determine the estimated loss per part if the quality characteristic (i.e., actual process performance) under study takes on a value of 4.91 cm. a. More than $30 but less than or equal to $50 b. More than $50 but less than or equal to $70 c. More than $70 but less than or equal to $90 d. More than $90 ANSWER: a 11. In the context of the servicescape, in the service-delivery system design, building footprints are examples of a. ambient conditions. b. artifacts. c. spatial layout and functionality. d. signs and symbols. ANSWER: c 12. In the context of service-encounter design, high-contact systems would most commonly be found in a. distribution systems. b. process designs. c. front office operations. d. construction services. ANSWER: c 13. Dante runs a bed and breakfast on the outskirts of a big city. His employees are allowed to spend up to $200 to resolve any customer complaints, with no questions asked. This is an example of a. service guarantee. b. assurance. c. flexibility. d. empowerment. ANSWER: d Copyright Cengage Learning. Powered by Cognero.

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Ch 05: Goods and Service Design 14. The behavioral setting where service encounters take place is provided by the a. facility location. b. service process and job design. c. servicescape. d. value chain model. ANSWER: c 15. Which of the following is true of the House of Quality? a. It contains supplier estimations. b. It fails to incorporate customer requirements. c. It contains key selling points and features. d. It does not incorporate competitive evaluations. ANSWER: c 16. Unlike the customer benefit package design and configuration stage of designing goods and services, the detailed goods, services, and process design a. is more conceptual in nature. b. is more strategic in nature. c. focuses on implementation. d. focuses on the evaluation of quality. ANSWER: c 17. The bottom of a House of Quality identifies the technical features that a. are interrelated to each other. b. have the highest competitive performance. c. are the weakest selling points. d. have the strongest relationships to customer requirements. ANSWER: d 18. In the context of quality function deployment, one of the first steps to building the House of Quality is to a. advertise, market, and offer the product to customers. b. evaluate the competition. c. identify the technical features of the design of the product. d. conduct prototype testing. ANSWER: c 19. Which of the following elements is included in the service-delivery system design? a. Prototype testing b. Service guarantees and recovery c. Company mission d. Facility location and layout ANSWER: d Copyright Cengage Learning. Powered by Cognero.

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Ch 05: Goods and Service Design 20. A quality characteristic has a specification (in cm) of 0.40 ± 0.03. If the value of the quality characteristic exceeds 0.40 by the tolerance of 0.030 on either side, the product will require a $180.00 repair. In the given scenario, the Taguchi loss function is correctly represented by which of the following equations? a. L(x) = 200(x − 0.03)2 b. L(x) = 2,000(x − 0.43)2 c. L(x) = 20,000(x − 0.37)2 d. L(x) = 200,000(x − 0.40)2 ANSWER: d 21. For manufactured goods, design blueprints specify a target dimension, along with a range of permissible variation called the a. nominal. b. buffer. c. tolerance. d. leeway. ANSWER: c 22. Bardem and Cruz, a law firm, is expanding to incorporate three conference rooms and two executive waiting lounges in its office. Which of the following dimensions of servicescape is the firm addressing? a. Ambient conditions b. Market deployment and evaluation c. Spatial layout and functionality d. Signs, symbols, and artifacts ANSWER: c 23. In the context of service-delivery system design, which of the following establishments depends on good location decisions? a. A health club b. An ice-cream factory c. An insurance claim processing center d. A distribution center ANSWER: a 24. In the context of quality function deployment, building a House of Quality begins by identifying the a. competitive priorities. b. voice of the customer. c. marketplace dynamics. d. service provider requirements. ANSWER: b 25. Iman is the owner of Souvenirstop, a chain of souvenir shops. One of the shops is located at the City Centre Mall. Though the shop is popular, she does not get many tourists in the City Centre Mall branch. She is considering opening another store near a popular tourist attraction to attract more tourists to her shop. Which of the following elements of service-delivery system design is Iman addressing? Copyright Cengage Learning. Powered by Cognero.

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Ch 05: Goods and Service Design a. The servicescape b. Service process design c. Facility location and layout d. The voice of the customer ANSWER: c 26. The process by which a model (real or simulated) is constructed to assess a product's performance under actual operating conditions, as well as consumer reactions to the model, is referred to as a. quality function deployment. b. value engineering. c. detailed product design. d. prototype testing. ANSWER: d 27. For manufactured goods, design blueprints specify a nominal dimension which is the a. dimension with the least manufacturing cost. b. dimension with the greatest variation from the target dimension. c. range of permissible variation in the target dimension of the goods. d. specified target dimension of the goods. ANSWER: d 28. Prior to designing and configuring a customer benefit package, a firm should understand and develop its a. goods, services, and process design in detail. b. processes and service encounter design. c. strategic mission and competitive priorities. d. marketplace deployment techniques. ANSWER: c 29. The term for design that focuses on the interaction, directly or indirectly, between the service provider(s) and the customer is a. service process. b. service encounter. c. lean servicescape. d. customer benefit package. ANSWER: b 30. In the context of designing manufactured goods, socially responsible designs are the ones that follow the concept of a. Design for Environment. b. Design for Reliability. c. Design for Manufacturability. d. Design for Accuracy. ANSWER: a 31. Mitch is the owner of GameOn, a popular sports bar. He personally trains his servers and then gives them autonomy to Copyright Cengage Learning. Powered by Cognero.

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Ch 05: Goods and Service Design make on-the-spot decisions to resolve any customer complaints and issues. This is a form of a. service guarantee. b. assurance. c. flexibility. d. empowerment. ANSWER: d 32. A critical part has a manufacturing specification (in cm) of 0.325 ± 0.010. Based on this 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 in the given scenario. a. L(x) = 1,200,000(x – 0.335)2 b. L(x) = 1,200,000(x – 0.325)2 c. L(x) = 1,200(x – 0.315)2 d. L(x) = 1,200(x – 0.010)2 ANSWER: b 33. Which of the following is an example of customer-contact requirements? a. Convenient facility location b. Ambient conditions c. Cross-selling d. Prominently displayed company logo ANSWER: c 34. In the context of service-encounter design, giving discounts to employees is a form of a. recognition. b. guarantee. c. assurance. d. compensation. ANSWER: a 35. Which of these is the explicit consideration of ecological concerns during the design of goods, services, and processes, and includes such practices as designing for recycling and disassembly? a. Quality function deployment b. Service-encounter design c. Environmental intervention d. Design for Environment ANSWER: d 36. Which of the following is one of the principal elements of service-encounter design? a. Customer benefit package design b. Market introduction c. Recognition and reward d. Quality function deployment Copyright Cengage Learning. Powered by Cognero.

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Ch 05: Goods and Service Design ANSWER: c 37. Which of the following should begin immediately after a service upset occurs and when the customer is visibly upset? a. Service guarantee b. Servicescape design c. Service recovery d. Service process design ANSWER: c 38. In the context of the servicescape, in the service-delivery system design, which of the following facilities is a part of the spatial layout and functionality? a. Room temperature b. Company logo on company vehicles c. Building facade d. Free soft drinks instead of vending machines ANSWER: c 39. Which of the following is true of Energy Star-certified products? a. They cannot be salvaged for reuse. b. They exert less demand on electrical power plants. c. They have a higher carbon footprint in the environment. d. They cannot be repaired easily since they use advanced technology. ANSWER: b 40. At which of the following stages are the perceptions of a firm and its goods and services created? a. The process design stage b. The service-encounter design stage c. The customer benefit package configuration stage d. The market introduction and evaluation stage ANSWER: b 41. Which of these is the primary good offered at LensCrafters? a. Contact lens accessories b. Eyewear accessories and cases c. Eyewear d. Modern equipment in the showroom ANSWER: c 42. Which of these is a service-encounter design consideration at LensCrafters? a. What can be done to make the one-hour wait a positive experience for customers? b. How much inventory should each store hold? c. Should the frames and lenses be ordered by a central purchasing service? d. Should LensCrafters have a stand-alone building or a space within a larger mall or big box store? ANSWER: a Copyright Cengage Learning. Powered by Cognero.

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Ch 05: Goods and Service Design 43. Which of these is an element of LensCrafters' servicescape? a. The mix of high-volume and low-volume operations b. The layout of the store c. The years of training required to provide optometrist services d. The price point for its services ANSWER: b 44. Which of these is a key element of the customer benefit package at LensCrafters? a. The equipment used to produce the lenses is modern. b. Associates are cross-trained. c. Most stores have an open concept so customers can watch their lenses being made. d. Customer glasses are ready in one hour. ANSWER: d 45. Wile E. Coyote straps an Acme rocket to his back and roller skates to his feet in a desperate attempt to catch the Roadrunner. The rocket has a reliability of 0.95, and the roller skates have a reliability of 0.97. What is the reliability of his overall rocket-powered skates roadrunner-catching system? a. 0.97 b. 0.95 c. 0.94 d. 0.92 ANSWER: d 46. Following an embarrassing wardrobe malfunction the previous week, Professor Willis dons a belt and three sets of suspenders to ensure that his pants stay up. These fashion elements work in parallel, so that even if all of the suspenders fall, the belt will ensure his pants stay in place. The suspenders have a reliability of 0.7, and the belt has a reliability of 0.8. What is the overall reliability of the system? a. 0.997 b. 0.996 c. 0.995 d. 0.994 ANSWER: c 47. An engineer designs a system with two components, A and B. Both A and B have a backup of identical reliability, and both A and B work in series for the entire system to operate. If the overall system reliability must be at least 0.8, what is the least reliable component B that can be used if component A has a reliability of 0.7? a. 0.837 b. 0.775 c. 0.714 d. 0.652 ANSWER: d 48. Components A, B, and C are in series and have reliabilities of 0.5, 0.6, and 0.7. If you could add Component D as a backup to only A, B, or C, where should you add it to make the most reliable system overall? Component D's reliability is Copyright Cengage Learning. Powered by Cognero.

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Ch 05: Goods and Service Design 0.4. a. D should be used in parallel with A. b. D should be used in parallel with B. c. D should be used in parallel with C. d. It doesn't matter which component D is in parallel with, as the overall system reliability increases by the same amount. ANSWER: a 49. On the Standard Edsel, the master cylinder has a reliability of 0.9, the brake line has a reliability of 0.85, and the brake discs have a reliability of 0.7. All three must work for the brake system to operate correctly. For the Premium Edsel, the master cylinder and brake lines are the same, but the brake discs have a reliability of 0.8, and the discs have a brake shoe assembly as a backup with a reliability of 0.4. How much more reliable is the Premium Edsel's brake system than the Standard Edsel's system? a. 0.1377 b. 0.0918 c. 0.0459 d. 0.0688 ANSWER: a 50. A chain is composed of identical links with reliability of 0.99. How many links must a chain have in order for its reliability to be less than 0.5? a. 69 b. 73 c. 77 d. 81 ANSWER: a 51. Muses Terpsichore, Euterpe, and Melpomene work together to entertain Zeus. Terpsichore's reliability is 0.6, Euterpe's is 0.5, and Melpomene's is 0.4. They have as backup their sisters Clio (reliability 0.7) and Calliope (reliability 0.8). If any of Terpsichore, Euterpe, or Melpomene fail, then their backup is able to complete the task; however, Clio and Calliope must both be operational to fulfill their backup role. What is the overall reliability of this Five Muses system? a. 0.56 b. 0.61 c. 0.66 d. 0.71 ANSWER: b 52. Customer requirements for a product or a service, in their own words, are called the a. customer wants. b. customer needs. c. voice of the customer. d. customer satisfiers. ANSWER: c 53. After completing a House of Quality, the design team notices that a row in the relationship matrix is empty. What are Copyright Cengage Learning. Powered by Cognero.

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Ch 05: Goods and Service Design the implications of this? a. The product has no features that meet this customer need. b. The product feature is not valued by the customer. c. The product feature has no relationship with any other product feature. d. The competitors have inferior products. ANSWER: a 54. After completing a House of Quality, the design team notices that a column in the relationship matrix is empty. What are the implications of this? a. The product has no features that meet this customer need. b. The product feature is not valued by the customer. c. The product feature has no relationship with any other product feature. d. The competitors have inferior products. ANSWER: b 55. When Ron says to his coworker, "I have many leather-bound books and my office smells of rich mahogany," he is addressing which dimension of his servicescape? a. Ambient conditions b. Spatial layout and functionality c. Signs, symbols, and artifacts d. Location proximity ANSWER: c 56. Service design can be challenging because unlike manufacturing, a. customers often coproduce the service. b. the cost to satisfy a customer cannot be financed. c. the service can be completed before the customer requests it. d. the servicescape cannot be lean. ANSWER: a 57. Which of these decisions must LensCrafters make about its manufacturing process? a. Which eyewear-making equipment is the most flexible b. How employee performance should be measured c. What HR processes will ensure it hires the right people d. Where the store should be located ANSWER: a 58. Latisha sent her Panerai watch to a repair facility. When the watch was returned, it kept the correct time, but the clasp was broken. When she pointed this out to the company, a technician was dispatched to her house and replaced the clasp free of charge. This action on the part of the repair company is an example of a. service after the sale. b. voice of the customer. c. the mobile servicescape. d. service recovery. Copyright Cengage Learning. Powered by Cognero.

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Ch 05: Goods and Service Design ANSWER: d 59. The sign on Mitchell's hot dog stand reads: "Money back if not fully satisfied with your hot dog," and Brad was not a happy or satisfied customer. Mitchell's sign is an example of a(n) a. implicit guarantee. b. service upset. c. explicit guarantee. d. service recovery. ANSWER: c 60. Which of these is a motivational factor that will help Corrine's Doggie Spa retain her best mobile dog groomers? a. Fewer hours b. The nature of the work itself c. Longer hours d. Including cat grooming services ANSWER: b 61. Which of these is an important element of a good service guarantee? a. An easy-to-understand website b. Assigning blame among employees c. Determining what services to provide d. Ensuring that the customer will not return ANSWER: c

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Ch 06: Supply Chain Design True / False 1. Zara's value chain model focuses on two basic rules: "Give customers what they want, and get it to them faster than anyone else." a. True b. False ANSWER: True 2. In the context of intellectual property of multinational enterprises, patents protect services. a. True b. False ANSWER: False 3. In the context of sourcing, a single supplier often provides economies of scale and the ability to form close partnerships. a. True b. False ANSWER: True 4. The center-of-gravity method increases the weighted distance between the facility to be located and its supply and demand points. a. True b. False ANSWER: False 5. Supply chain optimization includes minimizing the total costs of manufacturing and transportation, which might consider sourcing, distribution, and placement of inventory throughout the supply chain. a. True b. False ANSWER: True 6. Third-party logistics providers can leverage business intelligence and analytics to create efficiencies and economies of scale in the supply chain. a. True b. False ANSWER: True 7. Supply chain optimization includes minimizing the total costs of manufacturing and transportation. a. True b. False ANSWER: True Multiple Choice 8. In location decision process, which of the following factors are considered in local site location decision? a. International monetary policy b. Time zones Copyright Cengage Learning. Powered by Cognero.

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Ch 06: Supply Chain Design c. Sustainability issues d. Foreign languages ANSWER: c 9. A firm that specializes in certain types of goods-producing activities, such as customized design, manufacturing, assembly, and packaging, and works under contract for end users is called a a. third-party logistics provider. b. contract manufacturer. c. distribution center. d. vendor-managed inventory supplier. ANSWER: b 10. Which of the following is a disadvantage of push systems? a. They are not effective when sales patterns are consistent. b. They are not effective when there are few distribution centers and products. c. They increase transportation costs in a supply chain. d. They result in higher costs when forecasting sales is difficult. ANSWER: d 11. At Blyrie Apparels, the apparel stocks in the firm's outlets are changed every week. This is based on the changing fashion preferences of its customers. Its managers also coordinate in real-time among its other stores and satisfy its customers' requirements. In this case, Blyrie Apparels most likely uses a. the center-of-gravity method. b. the push-pull boundary. c. an efficient supply chain. d. a responsive supply chain. ANSWER: d 12. The center-of-gravity method is often used to locate a. availability of raw materials. b. demand markets. c. site locations. d. service facilities. ANSWER: d 13. Which of these produces only what is needed at upstream stages in the supply chain in response to customer demand signals from downstream stages? a. Third-party logistics provider b. Push system c. Pull system d. Distribution center ANSWER: c 14. In location decision process, community location decision involves a. evaluating international monetary policies and cultural practices. Copyright Cengage Learning. Powered by Cognero.

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Ch 06: Supply Chain Design b. coping with issues such as tariffs, customs, and trade restrictions. c. choosing a general region of a country. d. selecting a specific city in which to locate. ANSWER: d 15. Which of the following refers to acquiring capabilities toward distribution, or even customers? a. Contract manufacturing b. Outsourcing c. Backward integration d. Forward integration ANSWER: d 16. Which of the following is considered economic factors in location decisions? a. Community attitudes b. Operating costs c. Transportation services d. Climatic conditions ANSWER: b 17. Which of the following is an advantage of pull systems? a. They are efficient even when schedules are missed. b. They minimize inventory and production costs. c. They forecast changes in customer demand. d. They reduce transportation costs. ANSWER: b 18. Fourlotts Corp. provides integrated services that include storing manufactured goods, packaging, and delivering it to the dealers or customers. Given this information, Fourlotts Corp. is most likely a a. third-party logistics provider. b. contract manufacturer. c. distribution center. d. supplier. ANSWER: a 19. Greyon Suits, a company that specializes in making hand-made suits, moved its sourcing and operations from Lumeria back to its home country. This led to easier management and decreased carbon footprint. In this case, Greyon Suits is involved in a. offshoring. b. reshoring. c. insourcing. d. outsourcing. ANSWER: b 20. In the context of sourcing, multiple suppliers Copyright Cengage Learning. Powered by Cognero.

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Ch 06: Supply Chain Design a. often provide the ability to form close partnerships. b. often provide economies of scale. c. lower the risk of supply disruption. d. lower the chances of using a push or pull system. ANSWER: c 21. Which of the following statements is true of Inditex's supply chain? a. It can deliver most goods in 24 hours in Europe and the United States. b. It can be viewed as a push system. c. It is efficient rather than responsive. d. It avoids proximity sourcing as its products are expensive. ANSWER: a 22. The process of having suppliers provide goods and services that were previously provided internally is known as a. insourcing. b. outsourcing. c. backward integration. d. forward integration. ANSWER: b 23. Rues and West Inc. is an automobile manufacturing firm. It produces and assembles all the parts of automobiles in its factory and later ships the finished products to its storehouses. The managers at the storehouses distribute the goods to wholesalers. Customers then buy the products from the wholesalers. In this scenario, the push–pull boundary for Rues and West Inc. is at the a. factory. b. wholesalers. c. storehouses. d. assembly section. ANSWER: b 24. In the context of supply chain design trade-offs, which of the following is true of a push system? a. It works best when there are a large number of distribution centers. b. It is more appropriate for make-to-order items. c. It has an advantage of immediate availability of goods to consumers. d. It works best with variable sales patterns. ANSWER: c 25. Unlike firms that outsource, firms engaged in offshoring a. manage to reduce travel expenses. b. are able to enforce intellectual property rights easily. c. maintain ownership of the facility in another country. d. have better control of quality. ANSWER: c Copyright Cengage Learning. Powered by Cognero.

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Ch 06: Supply Chain Design 26. A responsive supply chain works best when a. demand is stable and predictable. b. product life cycles are short and change often because of innovation. c. customers require standardization rather than customization. d. contribution margins are low. ANSWER: b 27. A difference between efficient supply chains and responsive supply chains is that responsive supply chains a. focus on flexibility and responsive service. b. focus on maximizing efficiencies in process flow. c. seek to balance capacity and demand, resulting in low levels of inventory. d. seek to minimize cost of routing products from factory to customers. ANSWER: a 28. The variable "Wi" typically used in the numerator and denominator of the center-of-gravity equations represents the a. quality of goods or services moved to or from location i. b. x coordinate of location i. c. volume of goods or services moved to or from location i. d. y coordinate of location i. ANSWER: c 29. Which of the following statements is true of outsourcing decisions? a. Break-even analysis can be used to provide insight into outsourcing decisions. b. The simplest outsourcing decision is a single supplier versus multiple suppliers. c. If a company decides to make a part in-house, it does not incur any fixed costs. d. If a company outsources its work to external supplier, the variable cost per unit will be low. ANSWER: a 30. Which of the following statements is true of responsive supply chains? a. They use only a few, large distribution centers to generate economies of scale. b. They use optimization models that minimize costs of routing products from factory through distribution centers to retail stores and customers. c. They are designed for efficiency and low cost by minimizing inventory and maximizing efficiencies in process flow. d. They are supported by information technology that provides real-time information to managers across the supply chain. ANSWER: d 31. Which of these is a noneconomic factor in location decisions? a. Construction b. Availability of labor c. Depreciation and maintenance d. Insurance ANSWER: b Copyright Cengage Learning. Powered by Cognero.

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Ch 06: Supply Chain Design 32. One advantage of a distributive system, such as blockchain technology, is that a. accountability among value chain participants is dependent on a single supplier. b. transactions cannot be traced back to the original source. c. control of information is in the hands of one individual, rather than multiple people. d. no single individual or organization has total control of the information. ANSWER: d 33. Drills ‘n More is releasing a new power drill that requires the manufacturing of a new part. It is considering whether it should manufacture the part in-house or outsource it from a supplier. The demand forecast is 1,355 units. The break-even quantity is calculated at 1,750 parts. What decision should Drills ‘n More make? a. The product should not be released, as the demand is not high enough. b. A percentage of the product should be manufactured in-house, and the rest should be outsourced. c. The part should be outsourced. d. The part should be manufactured in-house. ANSWER: c 34. The decision of where to purchase materials and how to track returns and recalls is called a. outsourcing. b. sourcing. c. control. d. strategy. ANSWER: b 35. The vignette on food safety in Walmart’s supply chain using blockchain underscores the importance of blockchain’s a. shared ledger of transactions that is updated in real time. b. support of the Internet of things. c. involvement in digital currency. d. minimal storage requirements due to the volume of transactions. ANSWER: a 36. The majority of the carbon footprint for most firms is found in a. ancillary services. b. their labor. c. the supply chain. d. cloud services. ANSWER: c 37. Los Pollos Hermanos uses a measure called fill rate to measure how well they are meeting customer demand. Use of this measure is what type of decision? a. Operational b. Customer service c. Strategic d. Tactical Copyright Cengage Learning. Powered by Cognero.

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Ch 06: Supply Chain Design ANSWER: d 38. Blockchain transactions are stored a. over multiple computers. b. in the blockchain supercomputer. c. on the Internet of things. d. in the supply chain. ANSWER: a 39. Which of the following statements about blockchain is most accurate? a. A supply chain that tracks items using blockchain must use bitcoin as its base currency. b. All firms involved in a transaction have complete knowledge of the status of the transaction if it is tracked using blockchain. c. One risk of blockchain is that anyone can edit a record at any time without others’ knowledge of the transaction. d. Full disclosure among blockchain-enabled value chain participants is dependent upon a single organization. ANSWER: b 40. One rule that Zara’s value chain focuses on is a. high sustainability. b. high quality. c. high speed. d. low cost. ANSWER: c 41. In order to meet company objectives, Inditex’s global supply chain a. designs garments in the Zara retail locations. b. consists of 100% in-house production in its vertically integrated supply chain. c. conducts no product testing, instead relying on suppliers to self-monitor. d. sources locally when possible. ANSWER: d 42. What does Zara do to ensure that it does not supply more of an item than it can sell at any one location? a. It initially sends only a few orders for new styles to any single location. b. It forecasts consumer demand and produces no more than 50% of its sales forecast. c. It budgets 50% of revenue on omnichannel marketing campaigns. d. It uses reverse logistics to return goods and repurpose materials and fasteners into the next wave of designs. ANSWER: a 43. Which of these supply chain practices does Inditex follow? a. It produces goods up to six months in advance of selling season and holds these goods in a centralized delayed distribution center. b. It observes what is selling and makes more of that product while eliminating what is not selling. c. Zara outsources everything, from pattern-cutting to sewing and finishing work to Southeast Asian garment centers. Copyright Cengage Learning. Powered by Cognero.

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Ch 06: Supply Chain Design d. Zara does not perform any non-value-adding tasks, from traceability to point-of-sale data. ANSWER: b 44. Part of Zara’s strategy is to keep who close to its factories? a. Inditex b. Designers c. Suppliers d. Customers ANSWER: c 45. What is Zara’s term for subcontracting labor-intensive sewing and finishing work to small regional facilities? a. Localizing b. Working smarter, not harder c. Last milling d. Proximity sourcing ANSWER: d 46. Inditex’s business model is based on the premise that all its processes must be what? a. Sustainable and responsible b. Fast and repeatable c. Economical and agile d. Passionate and profitable ANSWER: a 47. Jerrail Amazon is deciding where to locate a necessary regional distribution center to serve population centers in Nashville, Seattle, New Orleans, and Lubbock. The cities’ locations on an x-y grid and the anticipated annual volume of goods, in tons, are displayed in the following table. Use the center-of-gravity method to find the best location of the distribution center. (The number pairs for each answer are in order of x,y.) City x-coordinate y-coordinate Volume 9 0 New Orleans 100,000 1 6 Seattle 400,000 10 2 Nashville 700,000 6 2 Lubbock 200,000 a. 5.7, 2.4 b. 6.8, 3.0 c. 6.5, 2.5 d. 7.5, 2.0 ANSWER: b 48. Jesús Gargantuan is deciding where to locate a necessary regional distribution center to serve population centers in New York, Portland, Miami, and San Diego. The cities’ locations on an x-y grid and the anticipated annual volume of goods, in tons, are displayed in the following table. Use the center-of-gravity method to find the best location of the distribution center. (The number pairs for each answer are in order of x,y.) City

x-coordinate

y-coordinate

Volume Page 8

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Ch 06: Supply Chain Design New York Miami Portland San Diego

13 12 1 3

6 1 6 2

800,000 500,000 200,000 200,000

a. 7.3, 3.8 b. 8.3, 4.6 c. 10.1, 4.1 d. 7.5, 4.2 ANSWER: c 49. Mena is deciding where to locate a necessary regional distribution center to serve population centers in New York, Portland, Miami, and San Diego. The cities’ locations on an x-y grid and the anticipated annual volume of goods, in tons, are displayed in the following table. Her company has always used the center-of-gravity method to find the best location for distribution centers, but she has an ulterior motive. She wants to relocate to Denver and manage the distribution center. Denver is located at (6.2, 4.1) according to her grid of the United States. She needs to shift product demand between New York and San Diego to make Denver the best location. The combined demand for San Diego and New York must total 400,000. How much should be allocated to each city to make Mena’s relocation dream come true? City New York Miami Portland San Diego

x-coordinate 13 12 1 3

y-coordinate 6 1 6 2

Volume ? 200,000 350,000 ?

a. San Diego 400,000 and New York 0 b. San Diego 300,000 and New York 100,000 c. New York 300,000 and San Diego 100,000 d. New York 200,000 and San Diego 200,000 ANSWER: d 50. Civil Defense Administration has decided to locate the strategic supply of tapioca using the center-of-gravity criterion. The tapioca centers of the United States are indicated in the following table, along with their location and annual tonnage. What is the x-y coordinate of the underground tapioca bunker that should be constructed? City New York Miami Fargo McAllen Portland San Diego

x-coordinate 13 12 8 8 1 3

y-coordinate 6 1 7 1 6 2

Volume 9,000 8,000 10,000 2,000 9,000 4,000

a. 7.9, 4.7 b. 7.5, 3.8 Copyright Cengage Learning. Powered by Cognero.

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Ch 06: Supply Chain Design c. 8.0, 4.0 d. 8.1, 4.5 ANSWER: a 51. Woodstock 99 planners would like to locate the porta potties using the center-of-gravity criterion. The various stages and centers on concert grounds are indicated in the table, along with their location and daily tonnage. What is the x-y coordinate of the location of the porta potties? Area x-coordinate y-coordinate Volume Main stage 200 250 5,000 Rave 200 100 4,000 Mosh pit 250 350 4,000 Water station 350 200 9,000 First aid 150 100 4,000 Morgue 100 250 4,000 a. 214.5, 216.7 b. 231.7, 208.3 c. 208.3, 208.3 d. 200.1, 225.6 ANSWER: b 52. Commercial grunion fishing operations in the western United States are responsible for meeting demand in four large population centers in the eastern United States. The demands, supply capacity, and cost to ship one ton between each combination of cities are shown in the following table. Supply and demand figures are in tons. Dallas Philadelphia New York Washington D.C. Supply San Francisco $9 $6 $9 $10 15,000 Los Angeles $4 $10 $8 $15 14,000 Seattle $11 $8 $14 $5 9,000 Phoenix $5 $4 $6 $8 1,000 Demand 5,000 8,000 15,000 11,000 39,000 Which of these is a valid solution to this problem? a. San Francisco to Philadelphia 5,000 tons; San Francisco to New York 8,000 tons; San Francisco to Washington D.C. 2,000 tons; Los Angeles to Dallas 5,000 tons; Los Angeles to New York 9,000 tons; Seattle to Washington D.C. 9,000 tons; Phoenix to New York 1,000 tons b. San Francisco to Philadelphia 5,000 tons; San Francisco to New York 8,000 tons; San Francisco to Washington D.C. 2,000 tons; Los Angeles to Dallas 5,000 tons; Los Angeles to New York 1,000 tons; Seattle to Washington D.C. 9,000 tons; Phoenix to New York 9,000 tons c. San Francisco to Philadelphia 8,000 tons; San Francisco to New York 5,000 tons; San Francisco to Washington D.C. 2,000 tons; Los Angeles to Dallas 5,000 tons; Los Angeles to New York 9,000 tons; Seattle to Washington D.C. 9,000 tons; Phoenix to New York 1,000 tons d. San Francisco to Philadelphia 8,000 tons; San Francisco to New York 5,000 tons; San Francisco to Washington D.C. 2,000 tons; Los Angeles to Dallas 9,000 tons; Los Angeles to New York 5,000 tons; Seattle to Washington D.C. 9,000 tons; Phoenix to New York 1,000 tons ANSWER: c 53. Commercial grunion fishing operations in the western United States are responsible for meeting demand in four large Copyright Cengage Learning. Powered by Cognero.

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Ch 06: Supply Chain Design population centers in the eastern United States. The demands, supply capacity, and cost to ship one ton between each combination of cities are shown in the following table. Supply and demand figures are in tons. Dallas Philadelphia New York Washington D.C. Supply San Francisco $9 $6 $9 $10 15,000 Los Angeles $4 $10 $8 $15 14,000 Seattle $11 $8 $14 $5 9,000 Phoenix $5 $4 $6 $8 1,000 Demand 5,000 8,000 15,000 11,000 39,000 What is the lowest cost solution to this transportation problem? a. $238,000 b. $244,000 c. $250,000 d. $256,000 ANSWER: d 54. Lancelot’s Barbecue makes its sauce using an old family recipe. Due to overwhelming response on its Instagram account in January 2020, it decides to sell directly to the public and is considering four locations. Two months later, the world shuts down due to the Covid-19 pandemic and Lancelot’s fails to produce a single bottle of its sauce. Which location would have been ideal for making no sauce? Cost Data Fixed costs Direct material cost per unit Direct labor cost per unit Overhead per unit Transportation cost per unit a. Abilene b. Beaumont c. Conroe d. Dalhart ANSWER: a

Abilene Beaumont Conroe Dalhart $180,000 $220,000 $235,000 $265,000 $10.50 $10.00 $10.00 $9.25 $3.90 $4.00 $2.75 $3.45 $1.10 $1.00 $1.50 $1.20 $1.10 $0.80 $1.25 $0.90

55. Tyreek is comparing the cost to produce footballs at four different locations, shown in the table below along with their cost structure. His marketing director feels that its premier model, The Tyreek, could become the dominant model in the market. If volume is extremely high, which location will have the lowest cost? Cost Data Stillwater Kansas City Miami Douglas Fixed costs $500,000 $650,000 $600,000 $800,000 Direct material cost per unit $10.00 $11.00 $8.00 $7.00 Direct labor cost per unit $3.00 $3.00 $4.00 $5.00 Overhead per unit $1.10 $1.00 $1.50 $1.20 Transportation cost per unit $1.10 $0.80 $1.25 $0.90 a. Stillwater b. Kansas City c. Miami Copyright Cengage Learning. Powered by Cognero.

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Ch 06: Supply Chain Design d. Douglas ANSWER: d 56. Lancelot’s Barbecue makes its sauce using an old family recipe. Due to overwhelming response on its Instagram account, it decides to sell directly to the public and is considering four locations. The cost structure for each location is slightly different. Which would incur the lowest cost at a volume of 50,000 units? Cost Data Fixed costs Direct material cost per unit Direct labor cost per unit Overhead per unit Transportation cost per unit a. Abilene b. Beaumont c. Conroe d. Dalhart ANSWER: d

Abilene Beaumont Conroe Dalhart $180,000 $220,000 $235,000 $265,000 $10.50 $10.00 $10.00 $9.25 $3.90 $4.00 $2.75 $3.45 $1.10 $1.00 $1.50 $1.20 $1.10 $0.80 $1.25 $0.90

57. Wilma’s Wings and Waffles is expanding and needs to find an additional location in Pennsylvania that can accommodate a poultry processing center that can process 250,000 birds per year. Given the cost structure in the following table, which is the lowest cost city for the new plant? Cost Data Allentown Bangor Cadogan Daisytown Fixed costs $500,000 $550,000 $600,000 $650,000 Direct material cost per unit $10.00 $9.00 $8.00 $7.00 Direct labor cost per unit $2.00 $3.00 $4.00 $5.00 Overhead per unit $1.10 $1.00 $1.50 $1.20 Transportation cost per unit $1.10 $0.80 $1.25 $0.90 a. Allentown b. Bangor c. Cadogan d. Daisytown ANSWER: b 58. Tyreek is comparing the cost to produce footballs at four different locations, shown in the table below along with their cost structure. He estimates that demand will be 300,000 units next year and really wants to get back to Stillwater. By how much must he lower his direct material cost per unit in order to put Stillwater in a tie for the least expensive city? (Answers have been rounded to the nearest cent.) Cost Data Fixed costs Direct material cost per unit Direct labor cost per unit Overhead per unit Transportation cost per unit

Stillwater Kansas City Miami Douglas $500,000 $650,000 $600,000 $800,000 $10.00 $11.00 $8.00 $7.00 $3.00 $3.00 $4.00 $5.00 $1.10 $1.00 $1.50 $1.20 $1.10 $0.80 $1.25 $0.90

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Ch 06: Supply Chain Design a. 8 cents b. 10 cents c. 12 cents d. 14 cents ANSWER: c 59. Commercial grunion fishing operations in the western United States are responsible for meeting demand in four large population centers in the eastern United States. The demands, supply capacity, and cost to ship one ton between each combination of cities are shown in the following table. Dallas Philadelphia New York Washington D.C. Supply San Francisco $9 $6 $9 $10 15,000 Los Angeles $4 $10 $8 $15 14,000 Seattle $11 $8 $14 $5 9,000 Phoenix $5 $4 $6 $8 1,000 Demand 5,000 8,000 15,000 11,000 39,000 How many decision variables are there in a transportation model formulation of this problem? a. 4 b. 8 c. 12 d. 16 ANSWER: d 60. Commercial grunion fishing operations in the western United States are responsible for meeting demand in four large population centers in the eastern United States. The demands, supply capacity, and cost to ship one ton between each combination of cities are shown in the following table. Dallas Philadelphia New York Washington D.C. Supply San Francisco $9 $6 $9 $10 15,000 Los Angeles $4 $10 $8 $15 14,000 Seattle $11 $8 $14 $5 9,000 Phoenix $5 $4 $6 $8 1,000 Demand 5,000 8,000 15,000 11,000 39,000 Which of these mathematical statements is a supply constraint for a transportation method formulation of this problem? a. xSan Francisco-Dallas + xSan Francisco-Philadelphia +xSan Francisco-New York + xSan Francisco-Washington D.C. = 15,000 b. xSan Francisco-Dallas + xSan Francisco-Philadelphia +xSan Francisco-New York + xSan Francisco-Washington D.C. ≤ 15,000 c. xSan Francisco-Dallas + xLos Angeles-Dallas + xPhoenix-Dallas + xPhoenix-Dallas = 5,000 d. xSan Francisco-Dallas + xLos Angeles-Dallas + xPhoenix-Dallas + xPhoenix-Dallas ≥ 5,000 ANSWER: a

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Ch 07: Process Selection, Design, and Improvement True / False 1. In a process design, an activity refers to a group of tasks needed to create and deliver an intermediate or final output. a. True b. False ANSWER: True 2. Continuous flow processes are used to create custom goods and services. a. True b. False ANSWER: False 3. The most appropriate match between type of product and type of process occurs as one moves away from the diagonal in the product-process matrix. a. True b. False ANSWER: False 4. All processes and functional areas participate in the reengineering efforts of a firm. a. True b. False ANSWER: True Multiple Choice 5. Which of the following is a characterization of product growth, maturity, and decline over time? a. Product life cycle b. Service blueprint c. Value stream map d. Product-process matrix ANSWER: a 6. Which of the following is the beginning or end of a process? a. A process design b. A process map c. A process boundary d. A process bottleneck ANSWER: c 7. Which of the following statements is true of the service-positioning matrix (SPM)? a. The horizontal axis of the SPM reflects the number of pathways built into a service system design by management. b. The SPM mainly focuses on the alignment of process choice with the characteristics of the manufactured good. c. The SPM helps management design a service system that best meets the technical and behavioral needs of Copyright Cengage Learning. Powered by Cognero.

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Ch 07: Process Selection, Design, and Improvement customers. d. The vertical axis of the SPM denotes the repeatability of a customer's service-encounter activity sequence. ANSWER: c 8. Which of the following is true of reengineering? a. Reengineering increases the number of non-value-added activities in a process design. b. Reengineering decreases throughput by adding process bottlenecks. c. The goal of reengineering is to achieve quantum leaps in performance. d. The aim of reengineering is to focus on quality by adding multiple approval requirements for all transactions. ANSWER: c 9. Non-value-added activities in a process design can be eliminated by: a. using value stream mapping. b. limiting the throughput of all processes. c. adding multiple approval requirements for all transactions. d. increasing process boundaries. ANSWER: a 10. What processes are organized around particular types of general-purpose equipment that are flexible and capable of customizing work for individual customers? a. Assembly line b. Flow shop c. Continuous flow d. Job shop ANSWER: d 11. Management strategies to improve process designs of services focus on a. decreasing process costs by adding multiple approval requirements for all transactions. b. decreasing process bottlenecks by adding non-value-added activities to a process. c. increasing product and/or service quality by reducing defects and service upsets. d. increasing agility by making service processes mechanistic and controlled. ANSWER: c 12. Large-scale, customized initiatives that consist of many smaller tasks and activities that must be coordinated and completed to finish on time and within budget are known as a. projects. b. flow shops. c. continuous flow processes. d. assembly line processes. ANSWER: a 13. Goods that are generally produced and delivered as one of a kind or in small quantities, and are designed to meet specific customers' specifications are known as a. fixed. Copyright Cengage Learning. Powered by Cognero.

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Ch 07: Process Selection, Design, and Improvement b. make-to-order. c. make-to-stock. d. standard. ANSWER: b 14. Which goods are configurations of standard parts, subassemblies, or services that can be selected by customers from a limited set? a. Fixed b. Custom c. Option d. Standard ANSWER: c 15. In the context of process design, the ability to produce the right types and amounts of products as customer demand or preferences change is a. flexibility. b. outsourcing. c. throughput. d. utilization. ANSWER: a 16. Which of the following statements is true of a process map? a. It distorts the boundaries of a process. b. Including non-value-added activities in a process map is one of the important responsibilities of operations managers. c. It documents how work either is or should be accomplished. d. Adding multiple approval requirements for all transactions in a process map is a crucial part in the creation of the process map. ANSWER: c 17. A difference between flow shops and job shops is that unlike flow shops, job shops a. require little or no setup time. b. are organized around a fixed sequence of process steps. c. require frequent machine changeovers and delays. d. produce many large-volume goods and services. ANSWER: c 18. In a process design, a specific unit of work required to create an output is a a. task. b. matrix. c. value chain. d. portfolio. ANSWER: a 19. Which of the following is true of flow shop processes? Copyright Cengage Learning. Powered by Cognero.

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Ch 07: Process Selection, Design, and Improvement a. They produce low volumes of custom goods and services. b. They are large-scale, customized initiatives with wide variations in tasks. c. They have high setup or changeover time. d. They are organized around a fixed sequence of activities and process steps. ANSWER: d 20. Which of the following symbols used in process maps denotes an input or arrival into a process? a. Diamond b. Bold-dashed line c. Double-headed arrow d. Rectangle ANSWER: c 21. Which of the following is true of custom goods? a. They are usually available as they are stocked in inventory. b. They are produced on demand. c. They are made in anticipation of customer demand. d. They are made according to a fixed design. ANSWER: b 22. Lieutenant Columbo trades in his 1959 Peugeot that got 23.7 mpg for an electric vehicle. His typical annual miles driven has been 15,000 as he solves murders in Los Angeles. Ignoring the generation of the electricity to charge his new electric vehicle, how many tons of CO2 are not contributing to the smog in Los Angeles if a gallon of unleaded gasoline has 19.643 pounds of CO2 per gallon? a. 3.517 b. 5.639 c. 6.216 d. 12.432 ANSWER: c 23. The pencil factory cranks out hundreds of #2 pencils a minute, each with a small eraser and mustard-yellow paint. The type of process best-suited for this production is a. flow shop. b. job shop. c. project. d. continuous flow. ANSWER: d 24. A local hospital sponsored a bowling league in the winter and was pleased that there were 10 five-person teams in the first year. The t-shirts it had printed featured the name of the hospital, which was some nice inexpensive advertising. The volume of the shirts and the potential variety of designs that could be produced at the t-shirt company suggests which kind of process is being used? a. Job shop b. Continuous flow Copyright Cengage Learning. Powered by Cognero.

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Ch 07: Process Selection, Design, and Improvement c. Project d. Flow shop ANSWER: a 25. The civil engineering firm of Monty & Python was contracted to design a bridge between the peaks of Mount Kilimanjaro. When it comes time to build the bridge, the process involved will be which type? a. Flow shop b. Project c. Job shop d. Continuous flow ANSWER: b 26. As one drives through Houston, the largest oil refining center in the United States, it is striking to see the complex fields of tanks and pipes, each sending oil and its byproducts from one end of the property to the other. The smooth, nonstop movement of product is the hallmark of which kind of process? a. Flow shop b. Job shop c. Continuous flow d. Project ANSWER: c 27. KittyKorner makes bespoke cat beds at extremely high volumes. Each bed is custom designed by the owner, sometimes in consultation with their cat. No material or stuffing is too exotic for KittyKorner. Where on the Hayes and Wheelwright product-process matrix would you find this process? a. Flow shop b. Off the diagonal position A c. Job shop d. Off the diagonal position B ANSWER: d 28. KittyKorner makes a single cat tower/litterbox model. The Clump Tower is named after its preferred type of litter. The product is still trying to gain its footing, and sales have been poor, so it is made at extremely low volumes. Where does this process fall on the Hayes and Wheelwright product-process matrix? a. Off the diagonal position A b. Continuous flow c. Project d. Off the diagonal position B ANSWER: a 29. Which of these recent developments has demonstrated that an off-diagonal position on the Hayes and Wheelwright product-process matrix may not be as detrimental as initially thought? a. Social media b. Mass customization c. Concurrent engineering d. Lean/Six Sigma Copyright Cengage Learning. Powered by Cognero.

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Ch 07: Process Selection, Design, and Improvement ANSWER: b 30. As a product and the process that produces it both mature, we would expect to move towards a. lower volume on the product-process matrix. b. off-diagonal position B. c. higher volume on the product-process matrix. d. off-diagonal position A. ANSWER: c 31. The incoming patient registered at the front desk, providing the necessary insurance information, and then headed over to the lab for a battery of tests before being whisked into surgery. This sequence of steps is an example of a(n) a. uscita. b. value chain. c. stream. d. pathway. ANSWER: d 32. As he approached the airport, Ho-Chang pondered the options he had available to him. He could use the valet service and check his bag at the curb, or he could park in long-term parking and carry his bag on board the flight or perhaps check his bag at the counter. Each option sent him on a different pathway, and all were up to his whim as part of this a. customer-routed service. b. provider-routed service. c. customer-influenced service. d. provider-influenced service. ANSWER: a 33. Just as Henry Ford had declared that “a customer can have any color he wants, as long as it’s black,” Monica had two options in her salon, a wash and style or simply a style. The style happened to be a bowl placed on the customer’s head with all protrusions lopped off. This lack of variety was necessary to maintain the speed of service, and there were a few customers that preferred these a. singularities. b. provider-routed services. c. customer-routed services. d. monoflow services. ANSWER: b 34. The service-positioning matrix’s customer service encounter activity sequence varies from a. insulting to complimenting. b. annoying to enjoying. c. not repeatable to highly repeatable. d. including to excluding. ANSWER: c 35. The service-positioning matrix’s pathways axis varies from a. short to long. Copyright Cengage Learning. Powered by Cognero.

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Ch 07: Process Selection, Design, and Improvement b. easy to difficult. c. static to dynamic. d. few to many. ANSWER: d 36. The more unique the service encounter is, the a. less repeatable it is. b. more desirable it is for the service provider. c. less expensive it is. d. more efficient it is. ANSWER: a 37. A low degree of repeatability in a service encounter results in a. more standardized service results. b. the need for more flexible equipment. c. a lower relative cost per transaction. d. a higher degree of efficiency in the transaction. ANSWER: b 38. Why is the Hayes and Wheelwright product-process matrix NOT used to analyze service delivery systems? a. Services cannot add capacity. b. Services tend to have lower variety, so the variety element of Hayes & Wheelwright is not applicable. c. The relationship between volume and process is not found in many service businesses. d. When services change processes to increase volume, they can still handle a wide variety of customer requests. ANSWER: c 39. A decision that might result in alternate paths is represented in a value stream map by which of these symbols? a. Rectangle b. Triangle c. Oval d. Diamond ANSWER: d 40. The server took the customer’s order and exited the dining room, disappearing through the swinging double doors to hand it to the cook in the kitchen. As the server exited the dining room, what line did the server cross in the service blueprint diagram of this process? a. Line of customer visibility b. Line of transferred responsibility c. Line of enrichment d. Line of added value ANSWER: a 41. The use of automatic devices or simple methods to avoid human error is known as a. kaizen. Copyright Cengage Learning. Powered by Cognero.

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Ch 07: Process Selection, Design, and Improvement b. poka-yoke. c. gemba. d. andon. ANSWER: b 42. The landscaping service was hired to mow the lawn but instead installed a sprinkler system in the homeowner’s front yard. This is a a. treatment error. b. tangible error. c. task error. d. customer error in preparation. ANSWER: c 43. Kayla, the student success advisor, spent most of her thirty-minute session with the student on her phone, texting with her friends, updating her social media, and checking the latest stock quotes. This is an example of a a. task error. b. tangible error. c. server error in preparation. d. treatment error. ANSWER: d 44. As she sat down to enjoy her meal at their first stop on their night on the town, Brianna opened the menu and a dead cockroach slipped down the menu into her lap. “Hey, at least it’s dead,” her husband offered, but that was of little comfort. This incident is best described as a a. tangible error. b. task error. c. customer error in preparation. d. server error in preparation. ANSWER: a 45. The family vacation to Italy began with a flight to O’Hare Airport, followed by a flight to Rome. Sadly, Nathan’s passport was back at his apartment right where he had left it. The gate agents had no choice but to deny him boarding privileges after this a. customer error during an encounter. b. customer error in preparation. c. customer error at the resolution stage. d. treatment error. ANSWER: b 46. Carrie’s car entered the new fully automatic, touchless car wash that featured near-boiling water and lye soap. As she scrolled through the four dozen photos she had just taken of her Yorkie on her (and his) lunch hour, her fond remembrance was interrupted by jets of scalding water spraying through her open windows. Her failure to heed all the instructions at the start of the car wash is a classic case of a. customer error at the resolution stage. b. tangible error. Copyright Cengage Learning. Powered by Cognero.

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Ch 07: Process Selection, Design, and Improvement c. customer error during an encounter. d. customer error in preparation. ANSWER: c 47. Tisha’s Eatery always provides a comment card asking probing questions like “Was the food delivered promptly?” and “Was the food hot when delivered?” About a third of its diners can’t be bothered to fill out this feedback form, which is a customer error a. in gross. b. in preparation. c. during an encounter. d. at the resolution stage. ANSWER: d 48. Many power cords feature one blade that is taller than the other. What type of mistake prevention is this? a. Designing potential defects and errors out of the process b. Identifying defects and errors soon after they occur and quickly correcting the process c. Identifying potential defects and errors and stopping a process before they occur d. Identifying defects well after they occur and redesigning the process or product ANSWER: a 49. Therese’s new car had a number of features that her 20-year-old trade-in did not. Each time she parked her car and turned off the ignition, her instrument cluster would flash the message “Check the rear seat,” a safety feature designed to guard against leaving an infant in the car’s back seat. Which kind of mistake prevention is this? a. Designing potential defects and errors out of the process b. Identifying defects and errors soon after they occur and quickly correcting the process c. Identifying potential defects and errors and stopping a process before they occur d. Identifying defects well after they occur and redesigning the process or product ANSWER: b 50. One approach to process improvement is to continuously make small, incremental improvements. Another approach is to rethink the existing process, in effect starting with a clean sheet of paper and considering radically different ways to accomplish the same end. The latter approach is called a. overhauling. b. kaizen. c. reengineering. d. inventing. ANSWER: c 51. Designing a process to improve how quickly a system can respond to changes in demand or customer wants is focusing on a. strategy. b. value. c. tactics. d. agility. ANSWER: d Copyright Cengage Learning. Powered by Cognero.

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Ch 07: Process Selection, Design, and Improvement 52. During process analysis, one question that must be asked of each process step is whether it adds a. value. b. cost. c. time. d. speed. ANSWER: a 53. Process steps where errors might occur are called a. tipping points. b. fail points. c. turning points. d. tuck points. ANSWER: b 54. A new process should be checked for whether there are significant bottlenecks or steps with capacity that greatly exceed the overall process flow rate, which is a check for a. measurement. b. sequence. c. balance. d. automation. ANSWER: c 55. A loan officer at a bank calls an appraiser’s office (5 minutes for each participant on the call) and requests an appraisal for a home that is under contract. The request is not acted upon for 24 hours ($50 per hour). The appraiser visits the site (one hour), conducts a search for comparable sales (two hours), and writes up the appraisal (one hour) before transmitting the information back to the loan officer (5 minutes for each person on the phone). The loan officer makes $75 per hour, and the appraiser makes $125 per hour. What is the percentage of non-value-added time in this example? a. 15% b. 30% c. 70% d. 85% ANSWER: d 56. A loan officer at a bank calls an appraiser’s office (5 minutes for each participant on the call) and requests an appraisal for a home that is under contract. The request is not acted upon for 24 hours ($50 per hour). The appraiser visits the site (one hour), conducts a search for comparable sales (two hours), and writes up the appraisal (one hour) before transmitting the information back to the loan officer (5 minutes for each person on the phone). The loan officer makes $75 per hour, and the appraiser makes $125 per hour. What is the percentage of value-added cost in this example? a. 31% b. 45% c. 69% d. 85% ANSWER: a

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Ch 07: Process Selection, Design, and Improvement 57. A loan officer at a bank calls an appraiser’s office (5 minutes for each participant on the call) and requests an appraisal for a home that is under contract. The request is not acted upon for 24 hours ($50 per hour). The appraiser visits the site (one hour), conducts a search for comparable sales (two hours), and writes up the appraisal (one hour) before transmitting the information back to the loan officer (5 minutes for each person on the phone). The loan officer makes $75 per hour, and the appraiser makes $125 per hour. How quickly would the appraiser have to inspect the house to make the percentage of value-added cost 50 percent in this example? a. 4 hours 20 minutes b. 10 hours 40 minutes c. 12 hours 12 minutes d. 16 hours 40 minutes ANSWER: b 58. The manager of a poultry plant wants to expand operations to house 650,000 laying hens, almost doubling the current capacity. If the plant expands on site, it is facing fixed costs of $8.6 million and a unit cost of $7.21 per bird. One alternative (Plan 9) has fixed costs of $3.6 million and a unit cost of $12.46 per hen. A different alternative (Plan X) has a fixed cost of $7 million and a unit cost of $9.41. Finally, a different perspective is captured by Plan B, with a fixed cost of $6.1 million and a unit cost of $8.11. Which is the lowest-cost alternative at the anticipated volume? a. On site b. Plan 9 c. Plan X d. Plan B ANSWER: d 59. The manager of a poultry plant wants to expand operations to house 650,000 laying hens, almost doubling the current capacity. If the plant expands on site, it is facing fixed costs of $8.6 million and a unit cost of $7.21 per bird. One alternative (Plan 9) has fixed costs of $3.6 million and a unit cost of $12.46 per hen. A different alternative (Plan X) has a fixed cost of $7 million and a unit cost of $9.41. Finally, a different perspective is captured by Plan B, with a fixed cost of $6.1 million and a unit cost of $8.11. The manager knows that if the fixed costs can remain constant, ultimately the current location will be cheapest due to its low unit cost. At what volume of chickens will it be the lowest cost alternative? a. 727,272 b. 952,380 c. 1,666,667 d. 2,777,778 ANSWER: d 60. The manager of a poultry plant wants to expand operations to house 650,000 laying hens, almost doubling the current capacity. If the plant expands on site, it is facing fixed costs of $8.6 million and a unit cost of $7.21 per bird. One alternative (Plan 9) has fixed costs of $3.6 million and a unit cost of $12.46 per hen. A different alternative (Plan X) has a fixed cost of $7 million and a unit cost of $9.41. Finally, a different perspective is captured by Plan B, with a fixed cost of $6.1 million and a unit cost of $8.11. For what range of chickens will Plan 9 be the lowest cost alternative? a. 0 to 574,712 b. 0 to 1,114,754 c. 574,712 to 1,114,754 d. 650,000 to 1,114,754 ANSWER: a

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Ch 08: Facility and Work Design True / False 1. Process layouts require simple planning and control systems. a. True b. False ANSWER: False 2. In a cellular layout, additional floor space is required because machines are not very closely linked within a cell. a. True b. False ANSWER: False 3. The design of service facilities requires the clever integration of layout with the servicescape and process design to support service encounters. a. True b. False ANSWER: True 4. Facility layout does not enhance sustainability in service-producing organizations. a. True b. False ANSWER: False 5. Research has shown that bringing the outdoor environment into the workplace lowers stress. a. True b. False ANSWER: True 6. A Gallup study showed that there is no significant difference found in the productivity among workers who are allowed to personalize their workplaces and those who are not. a. True b. False ANSWER: False 7. According to a study conducted by Software Advice, the likelihood of consumers buying a particular product remains unaffected even when the production of that product causes reduced environmental impact. a. True b. False ANSWER: False Multiple Choice 8. One of the disadvantages of a product layout is that it has: a. high materials handling. b. high work-in-progress inventory. c. low flexibility. Copyright Cengage Learning. Powered by Cognero.

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Ch 08: Facility and Work Design d. low labor utilization. ANSWER: c 9. Which of these layouts is an arrangement based on the sequence of operations that is performed during the manufacturing of a good or delivery of a service? a. Product b. Process c. Cellular d. Fixed-position ANSWER: a 10. Which of the following refers to a technique of grouping tasks among workstations so that each workstation has—in the ideal case—the same amount of work? a. Job enlargement b. Assembly-line balancing c. Cellular manufacturing d. Job enrichment ANSWER: b 11. One of the differences between product layouts and process layouts is that unlike product layouts, process layouts a. require highly specialized equipment. b. provide more flexibility. c. have higher automation potential. d. have less materials-handling costs. ANSWER: b 12. The objective of assembly-line balancing is to a. minimize the imbalance among workstations while trying to achieve a desired output rate. b. maximize the cost of operations while trying to reduce the cycle time. c. maximize the cycle time while trying to minimize the cost of operations. d. minimize the imbalance among workstations while trying to maximize the cycle time. ANSWER: a 13. The production of large goods such as ships is best accomplished using which type of layout? a. Product b. Process c. Cellular d. Fixed-position ANSWER: d 14. Which of the following is true of fixed-position layouts? a. The changeover requirements are low. b. The automation potential is moderate. c. The volume of product demand is high. Copyright Cengage Learning. Powered by Cognero.

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Ch 08: Facility and Work Design d. The equipment utilization is high. ANSWER: b 15. In a cellular layout, the procedure of classifying parts with similar processing requirements into families is called a. group technology. b. traits analysis. c. batch processing. d. commonality identification. ANSWER: a 16. Which of the following is a limitation of a process layout? a. It affects the entire system if any equipment in the layout fails. b. It has higher worker skill requirements. c. It has highly specialized equipment requirements. d. It generally requires a low investment for the production of machines. ANSWER: b 17. Which of the following is concerned with improving productivity and safety by designing workplaces, equipment, instruments, computers, workstations, and so on that take into account the physical capabilities of people? a. Ergonomics b. Employee motivation c. Job design d. Job enrichment ANSWER: a 18. Organizations that need the ability to provide a wide variety of services to customers with differing requirements usually use which type of layout? a. Cellular b. Process c. Fixed-position d. Product ANSWER: b 19. Which of these refers to vertical expansion of job duties to give the worker more responsibility? a. Employee empowerment b. Job enlargement c. Employee recognition d. Job enrichment ANSWER: d 20. Compared to product layouts, process layouts a. require a lower investment in equipment. b. provide less flexibility. c. have high equipment utilization. Copyright Cengage Learning. Powered by Cognero.

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Ch 08: Facility and Work Design d. have less materials-handling costs. ANSWER: a 21. The interval between successive outputs coming off the assembly line is known as a. idle time. b. cycle time. c. lack-of-work delay. d. blocking delay. ANSWER: b 22. Which of the following is an objective of ergonomics? a. To increase the cost of doing a job while reducing fatigue b. To reduce energy requirements while increasing accuracy c. To increase the possibility of human errors while decreasing the cost of training d. To reduce the flexibility in an operation while increasing speed ANSWER: b 23. In the context of assembly-line balancing, what is the term for the difference between total time available and the sum of the actual times for productive tasks? a. Blocking delay b. Lack-of-work delay c. Idle time d. Cycle time ANSWER: c 24. Megan plans the facility layout of her new shop that would sell a variety of healthcare industry machines. She arranges the machines in a way that the machines are grouped according to their functions. Which of the following types of facility layouts has Megan used in her shop? a. A process layout b. A product layout c. A cellular layout d. A fixed-position layout ANSWER: a 25. Layouts that usually require a high level of planning and control compared with other types of facility layouts are a. product. b. process. c. cellular. d. fixed-position. ANSWER: d 26. Which of the following is the most suitable layout for a facility that handles a wide variety of customized orders? a. A fixed-position layout b. A cellular layout Copyright Cengage Learning. Powered by Cognero.

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Ch 08: Facility and Work Design c. A product layout d. A process layout ANSWER: d 27. One of the advantages of a product layout is that it a. can easily accommodate a change in product design. b. has low work-in-process inventories. c. does not usually require highly specialized equipment. d. can easily accommodate new products. ANSWER: b 28. FancyTrends Inc., a handbag manufacturing company, assembles handbags in an assembly line using 10 workstations. The target output for an 8 hour workday is 120 bags. The sum of the task times is 30 minutes/bag. The cycle time is 4 minutes/bag. The assembly-line efficiency is a. 65%. b. 70%. c. 75%. d. 80%. ANSWER: c 29. Which of the following is true of a cellular layout? a. It remains stationary rather than moving work-in-process from one work center to another. b. Its workflow is not standardized. c. It is not designed according to the functional characteristics of equipment. d. Its quality problems are not addressed timely. ANSWER: c 30. Which of the following types of facility layouts is best suited for a heavy machine tools factory? a. A product layout b. A process layout c. A cellular layout d. A fixed-position layout ANSWER: d 31. The first approach to designing process layouts is used when it is difficult to obtain data on costs or volumes moved between departments. The second approach focuses on the costs associated with moving materials. Identify a major difference between these two approaches. a. The first approach relies on materials-handling costs as the primary criterion while the second approach relies on a preference table that specifies the importance of two departments being close to one another. b. The first approach relies on materials-handling costs as the primary criterion while the second approach uses the geometric centroid of each department. c. The first approach uses the geometric centroid of each department while the second approach relies on materials-handling costs as the primary criterion. d. The first approach relies on a preference table that specifies the importance of two departments being close to one another while the second approach relies on materials-handling costs as the primary criterion. Copyright Cengage Learning. Powered by Cognero.

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Ch 08: Facility and Work Design ANSWER: d 32. Which of the following is a reasonable estimate of the amount of time needed to perform a task based on an analysis of the work by an operations expert? a. Standard time b. Time study c. Standard measurement d. Work measurement ANSWER: a 33. Three work study analysts are rating an employee. Work study analyst 1 rates the employee at performance rating factor = 1.0 and an observed time of 2.8 minutes per unit. Work study analyst 2 rates the employee at PRF = 1.1 and an OT of 3.1 minutes per unit. Work study analyst 3 rates the employee at PRF = 0.8 and an OT of 3.0 minutes per unit. What should the standard time be, assuming an allowance factor of 20%? a. 3.339 minutes per unit b. 3.444 minutes per unit c. 3.560 minutes per unit d. 3.667 minutes per unit ANSWER: b 34. An assembly line with 30 activities is to be balanced. The total amount of time required for all 30 activities is 45 minutes. The line will operate for 360 minutes per day. Which of the following must be the cycle time to achieve an output rate of 200 units/day? a. 0.66 minutes b. 1.5 minutes c. 1.8 minutes d. 4.5 minutes ANSWER: c 35. Six departments are to be arranged in a 2 × 3 grid of offices as shown below. Space 1

Space 3

Space 5

Space 2

Space 4

Space 6

The layout coordinator has determined that the closeness ratings for the six departments should be as follows: Dept. 1 Dept. 1 Dept. 2 Dept. 3 Dept. 4 Dept. 5 Dept. 6

F A C A D

Dept. 2 F

Dept. 3 A B

B E C B

B A B

Dept. 4 C E B E D

Dept. 5 A C A E

Dept. 6 D B B D F

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Ch 08: Facility and Work Design What is the best location for Department 3? a. Space 1 b. Space 2 c. Space 3 d. Space 6 ANSWER: c 36. Six departments are to be arranged in a 2 × 3 grid of offices as shown below. Space 1

Space 3

Space 5

Space 2

Space 4

Space 6

The layout coordinator has determined that the closeness ratings for the six departments should be as follows: Dept. 1 Dept. 1 Dept. 2 Dept. 3 Dept. 4 Dept. 5 Dept. 6

F A C A D

Dept. 2 F

Dept. 3 A B

B E C B

B A B

Dept. 4 C E B E D

Dept. 5 A C A E

Dept. 6 D B B D F

Which of these location assignments is best? a. Dept. 1 in Space 1 and Dept. 2 in Space 2 b. Dept. 5 in Space 4 and Dept. 6 in Space 6 c. Dept. 3 in Space 3 and Dept. 4 in Space 4 d. Dept. 5 in Space 5 and Dept. 1 in Space 1 ANSWER: c 37. Six departments are to be arranged in a 2 × 3 grid of offices as shown below. Space 1

Space 3

Space 5

Space 2

Space 4

Space 6

The layout coordinator has determined that the closeness ratings for the six departments should be as follows: Dept. 1 Dept. 1 Dept. 2 Dept. 3 Dept. 4 Dept. 5

F A C A

Dept. 2 F

Dept. 3 A B

B E C

B A

Dept. 4 C E B E

Dept. 5 A C A E

Dept. 6 D B B D F Page 7

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Ch 08: Facility and Work Design Dept. 6

Which of these location assignments is best? a. Dept. 5 in Space 5 and Dept. 1 in Space 1 b. Dept. 2 in Space 6 and Dept. 6 in Space 5 c. Dept. 5 in Space 3 and Dept. 6 in Space 4 d. Dept. 1 in Space 1 and Dept. 2 in Space 2 ANSWER: b 38. Six departments have been arranged in a 2 × 3 grid of offices as shown below. Space 1 Space 3 Space 5 Dept. 1 Dept. 3 Dept. 5 Space 2 Dept. 2

Space 4 Dept. 4

Space 6 Dept. 6

The layout coordinator has determined that the closeness ratings for the six departments should be as follows: Dept. 1 Dept. 2 Dept. 3 Dept. 4 Dept. 5 Dept. 6 Dept. 1 F A C A D Dept. 2 F B E C B Dept. 3 A B B A B Dept. 4 C E B E D Dept. 5 A C A E F Dept. 6 D B B D F Which of these changes is the most beneficial? a. Swap Dept. 2 with Dept. 5 b. Swap Dept. 3 with Dept. 4 c. Swap Dept. 5 with Dept. 6 d. Swap Dept. 1 with Dept. 2 ANSWER: a 39. Six departments have been arranged in a 2 × 3 grid of offices as shown below. Space 1 Space 3 Space 5 Dept. 1 Dept. 2 Dept. 3 Space 2 Dept. 4

Space 4 Dept. 5

Space 6 Dept. 6

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Ch 08: Facility and Work Design Which of these changes is the most beneficial? a. Swap Dept. 1 with Dept. 3 b. Swap Dept. 3 with Dept. 4 c. Swap Dept. 5 with Dept. 4 d. Swap Dept. 6 with Dept. 2 ANSWER: c 40. A manufacturing layout would place two departments near each other if they had a. very few moves between them. b. no shared services. c. the same number of workers in both. d. a large number of moves between them. ANSWER: d 41. Which layout type is concerned with the arrangement of departments or work centers relative to each other? a. Process layout b. Product layout c. Project layout d. Hybrid layout ANSWER: a 42. Consider four departments—A, B, C, and D—located in adjacent offices on one side of the hall. Department A is at one end of the hall, located next to B, and their centroids are 50 feet apart. Department B is between departments A and C, and department D is at the other end of the hall. Similarly, the centroids for B and C are 50 feet apart, as are C and D’s centroids. Each day, workers from department A make ten round trips each to departments B, C, and D. Workers from department B make twenty round trips each day to the other departments, workers from C make thirty round trips daily to each other department, and workers from D make forty round trips to each other department. What is the total distance (in feet) traveled by workers in department C each day to other departments? a. 3,000 b. 6,000 c. 9,000 d. 12,000 ANSWER: d 43. Consider four departments—A, B, C, and D—in adjacent offices on one side of the hall. Department A is at one end of the hall, located next to B. Department B is between departments A and C, and department D is at the other end of the hall. Each day, workers from department A make ten trips each to departments B, C, and D. Workers from department B make twenty trips each day to the other departments, workers from C make thirty trips daily to each of the other departments, and workers from D make forty trips to each other department. Which of these exchanges would result in an improved layout from the perspective of minimizing the distance traveled? a. Exchanging the offices of A and B b. Exchanging the offices of B and C c. Exchanging the offices of C and D d. Exchanging the offices of D and A ANSWER: c Copyright Cengage Learning. Powered by Cognero.

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Ch 08: Facility and Work Design 44. Consider four departments—A, B, C, and D—located in adjacent offices on one side of the hall. Department A is at one end of the hall, located next to B, and their centroids are 50 feet apart. Department B is between departments A and C, and department D is at the other end of the hall. Similarly, the centroids for B and C are 50 feet apart, as are C and D's centroids. Each day, workers from department A make ten round trips each to departments B, C, and D. Workers from department B make twenty round trips each day to the other departments, workers from C make thirty round trips daily to each other department, and workers from D make forty round trips to each other department. What is the total distance (in feet) traveled by workers in department A each day to other departments? a. 3,000 b. 4,000 c. 5,000 d. 6,000 ANSWER: d 45. A shave, shoeshine, facial, and haircut are performed by a single operator that rents booth space at a local barbershop that has no magazines. While an industrial engineer waits his turn, he surreptitiously records the time for each service for the four customers ahead of him. The engineer also rates the performance of the operator and has recorded all this information in the following table. All times are in minutes. Rating 1.2 1.1 0.8 0.9

Service Shave Shoeshine Facial Haircut

1 2 0.1 8.7 13.9

2 2.9 3.7 4.4 18.2

3 9.2 1.1 18.8 27.8

4 5.8 4.5 18.6 5.1

What is the normal time for the shave portion of the service? a. 3.97 minutes b. 4.97 minutes c. 5.97 minutes d. 6.97 minutes ANSWER: c 46. A shave, shoeshine, facial, and haircut are performed by a single operator who rents booth space at a local barbershop with no magazines. While an industrial engineer waits his turn, he surreptitiously records the time for each service for the four customers ahead of him. The engineer also rates the performance of the operator and has recorded all this information in the following table. All times are in minutes. Rating 1.2 1.1 0.8 0.9

Service Shave Shoeshine Facial Haircut

1 2 0.1 8.7 13.9

2 2.9 3.7 4.4 18.2

3 9.2 1.1 18.8 27.8

4 5.8 4.5 18.6 5.1

What is the normal time for the shave portion of the service? a. 28.5 minutes b. 29.7 minutes c. 31.9 minutes d. 33.3 minutes Copyright Cengage Learning. Powered by Cognero.

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Ch 08: Facility and Work Design ANSWER: d 47. A job analyst watches four different workers perform the same assembly task and assigns each one a performance rating. The worker least skillful at the assembly task would be the one with a rating of a. 0.8. b. 0.9. c. 1.0. d. 1.1. ANSWER: a 48. A shave, shoeshine, facial, and haircut are performed by a single operator who rents booth space at a local barbershop with no magazines. While an industrial engineer waits his turn, he surreptitiously records the time for each service for the four customers ahead of him. The engineer also rates the performance of the operator and has recorded all this information in the following table. All times are in minutes. Rating 1.2 1.1 0.8 0.9

Service Shave Shoeshine Facial Haircut

1 2 0.1 8.7 13.9

2 2.9 3.7 4.4 18.2

3 9.2 1.1 18.8 27.8

4 5.8 4.5 18.6 5.1

What is the standard time for the facial portion of the service if the allowance factor is 15 percent? a. 11.0 minutes b. 11.3 minutes c. 11.6 minutes d. 11.9 minutes ANSWER: c 49. A shave, shoeshine, facial, and haircut are performed by a single operator who rents booth space at a local barbershop with no magazines. While an industrial engineer waits his turn, he surreptitiously records the time for each service for the four customers ahead of him. The engineer also rates the performance of the operator and has recorded all this information in the following table. All times are in minutes. Rating 1.2 1.1 0.8 0.9

Service Shave Shoeshine Facial Haircut

1 2 0.1 8.7 13.9

2 2.9 3.7 4.4 18.2

3 9.2 1.1 18.8 27.8

4 5.8 4.5 18.6 5.1

What is the standard time for the entire barbershop experience if the allowance factor is 10 percent? a. 36.0 b. 36.3 c. 36.6 d. 36.9 ANSWER: c Copyright Cengage Learning. Powered by Cognero.

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Ch 08: Facility and Work Design 50. An HVAC design engineer observed four cycles of an experienced worker installing a takeoff collar on the heating duct system. The engineer used continuous timing and recorded the observations in the following table along with a performance rating for each task. All times are in minutes. Cycle 1 2 3 4 PRF Cut hole 11 10 8 9 0.8 Insert collar 12 15 10 11 0.9 Fold down flaps 19 19 17 20 0.9 Apply sealant 22 24 25 29 1.1 What is the observed time for the Insert collar step? a. 2.25 minutes b. 2.5 minutes c. 7.6 minutes d. 12 minutes ANSWER: b 51. An HVAC design engineer observed four cycles of an experienced worker installing a takeoff collar on heating duct system. The engineer used continuous timing and recorded the observations in the following table along with a performance rating for each task. All times are in minutes. Cycle 1 2 3 4 PRF Cut hole 11 10 8 9 0.8 Insert collar 12 15 10 11 0.9 Fold down flaps 19 19 17 20 0.9 Apply sealant 22 24 25 29 1.1 What is the normal time for the Fold down flaps step? a. 5.52 minutes b. 6.08 minutes c. 15.93 minutes d. 18.75 minutes ANSWER: b 52. An HVAC design engineer observed four cycles of an experienced worker installing a takeoff collar on heating duct system. The engineer used continuous timing and recorded the observations in the following table along with a performance rating for each task. The allowance factor for the job is 17 percent. All times are in minutes. Cycle 1 2 3 4 PRF Cut hole 11 10 8 9 0.8 Insert collar 12 15 10 11 0.9 Fold down flaps 19 19 17 20 0.9 Apply sealant 22 24 25 29 1.1 What is the standard time for the Apply sealant step? a. 7.4 minutes b. 7.7 minutes c. 8.0 minutes d. 8.3 minutes ANSWER: c Copyright Cengage Learning. Powered by Cognero.

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Ch 08: Facility and Work Design 53. An HVAC design engineer observed four cycles of an experienced worker installing a takeoff collar on heating duct system. The engineer used continuous timing and recorded the observations in the following table along with a performance rating for each task. The allowance factor for the job is 17 percent. All times are in minutes. Cycle 1 2 3 4 PRF Cut hole 11 10 8 9 0.8 Insert collar 12 15 10 11 0.9 Fold down flaps 19 19 17 20 0.9 Apply sealant 22 24 25 29 1.1 What is the standard time for the entire installation process? a. 22.8 minutes b. 24.1 minutes c. 25.4 minutes d. 26.7 minutes ANSWER: d 54. Which of these approaches to job design is used as a form of job enrichment? a. Work measurement b. Self-managed teams c. Hybrid work d. Ergonomics ANSWER: b 55. Which of the following is a leading alliance of companies, trade unions, and NGOs around the globe that promotes respect for worker's rights? a. BAFTA b. APICS c. ETI d. NAFTA ANSWER: c 56. Job rotation is a subset of a. hybrid work. b. job enrichment. c. job enlargement. d. job ergonomics. ANSWER: c 57. Which of these policies does the Ethical Trading Initiative promote? a. Every worker is assigned a job. b. Insist on mandatory overtime to boost wages. c. The workplace is free from collective bargaining. d. Regular employment is provided. ANSWER: d Copyright Cengage Learning. Powered by Cognero.

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Ch 08: Facility and Work Design 58. The rocket widget for Guinness is made using a 12-step process with task names and durations (in minutes) as shown in the following table. The goal of the line is to produce 40 rocket widgets in an 8-hour shift. Task A B C D E F

Duration 5 8 7 12 6 8

Predecessors — A A B B C

Task G H I J K L

Duration 4 10 4 2 7 9

Predecessors C D, G E F, H I J, K

Use the longest operation time to assign tasks to workstations. Which tasks are assigned to Station 6? a. E, I b. F, J c. E, J d. F, I ANSWER: a 59. The rocket widget for Guinness is made using a 12-step process with task names and durations (in minutes) as shown in the following table. The goal of the line is to produce 40 rocket widgets in an 8-hour shift. Task A B C D E F

Duration 5 8 7 12 6 8

Predecessors — A A B B C

Task G H I J K L

Duration 4 10 4 2 7 9

Predecessors C D, G E F, H I J, K

Use the longest operation time to assign tasks to workstations. What is the theoretical minimum number of stations? a. 6 b. 7 c. 8 d. 9 ANSWER: b 60. The rocket widget for Guinness is made using a 12-step process with task names and durations (in minutes) as shown in the following table. The goal of the line is to produce 40 rocket widgets in an 8-hour shift. Task A B C D E F

Duration 5 8 7 12 6 8

Predecessors — A A B B C

Task G H I J K L

Duration 4 10 4 2 7 9

Predecessors C D, G E F, H I J, K

Use the longest operation time to assign tasks to workstations. What is the minimum balance delay? a. 9.8% Copyright Cengage Learning. Powered by Cognero.

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Ch 08: Facility and Work Design b. 14.6% c. 19.3% d. 24.1% ANSWER: b

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Ch 09: Forecasting and Demand Planning True / False 1. Call center service training is a preproduction service that requires forecasts to create value in a value chain. a. True b. False ANSWER: False 2. In the context of causal forecasting models with multiple regression, an R-squared (R2) value of 0.70 means that 30 percent of the variation in the dependent variable is explained by the independent variable. a. True b. False ANSWER: False 3. Forecasting is a key component in customer relationship management. a. True b. False ANSWER: True 4. Judgmental forecasting relies upon historical data in developing forecasts. a. True b. False ANSWER: False 5. In the context of demand planning, customers' wants and needs define the customer benefit package. a. True b. False ANSWER: True 6. A moving average (MA) method is most appropriate for data with major identifiable trends. a. True b. False ANSWER: False Multiple Choice 7. The following table shows the sales data of a particular model of an air fryer. If the forecast sales for May is 36.25, calculate the sales forecast for July using the simple exponential smoothing (SES) model with a smoothing constant of 0.40. Month Sales Jan 35 Feb 29 Mar 39 Apr 42 May 51 Jun 56 a. The sales forecast for July is more than 30 but less than or equal to 35. Copyright Cengage Learning. Powered by Cognero.

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Ch 09: Forecasting and Demand Planning b. The sales forecast for July is more than 35 but less than or equal to 40. c. The sales forecast for July is more than 40 but less than or equal to 50. d. The sales forecast for July is more than 50 but less than or equal to 55. ANSWER: c 8. In the context of data patterns in a time series, which of these are characterized by repeatable periods of ups and downs over short periods of time? a. Random variations b. Seasonal patterns c. Cyclical patterns d. Irregular variations ANSWER: b 9. In the context of forecasting errors, which of these eliminates the measurement scale factor? a. Normalized mean signed deviation b. Mean absolute deviation c. Normalized root mean square error d. Mean absolute percentage error ANSWER: d 10. In the context of data patterns in a time series, a one-time variation that is explainable is referred to as a. cyclical. b. random. c. irregular. d. seasonal. ANSWER: c 11. Which of these is a common approach to gather data for judgmental forecasts? a. A moving average model b. Regression analysis c. A survey questionnaire d. Single exponential smoothing ANSWER: c 12. Which of the following are necessary to plan for facility expansion? a. Long-range forecasts b. Intermediate-range forecasts c. Make-to-order operations d. Make-to-stock operations ANSWER: a 13. The forecasting technique that uses a weighted average of past time-series values to forecast the value of the time series in the next period is known as a. a moving average forecast. Copyright Cengage Learning. Powered by Cognero.

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Ch 09: Forecasting and Demand Planning b. single exponential smoothing. c. a grassroots forecast. d. regression analysis. ANSWER: b 14. What is the mean absolute percentage error (MAPE) for the forecasts shown in the following table? Month Forecast Demand Actual Demand April 110 100 May 150 125 June 160 170 July 110 130 August 150 180 a. Less than or equal to 5 percent. b. More than 5 percent but less than or equal to 10 percent. c. More than 10 percent but less than or equal to 15 percent. d. More than 15 percent. ANSWER: c 15. The difference between the observed value of the time series and the forecast is called the forecast a. error. b. consumption. c. precision. d. density. ANSWER: a 16. If the time series in an exponential smoothing model exhibits a negative trend, the a. mean square error will be negative. b. value of smoothing constant will either be less than zero or greater than one. c. forecast will overshoot the actual values. d. future forecasts will rely solely upon expertise of people in developing forecasts. ANSWER: c 17. Which of these is the underlying pattern of growth or decline in a time series? a. A trend b. A planning horizon c. A forecast error d. A bias ANSWER: a 18. In the context of forecasting, the term that refers to the tendency of forecasts to consistently be larger or smaller than the actual values of the time series is a. trend. b. bias. c. fad. Copyright Cengage Learning. Powered by Cognero.

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Ch 09: Forecasting and Demand Planning d. variability. ANSWER: b 19. Moving average (MA) methods work best when a. a long planning horizon is involved. b. a cyclical pattern is observed in a time series. c. demand is relatively stable and consistent. d. there is a major trend in a time series. ANSWER: c 20. The following table shows the sales data of server computers of Ziffcore Inc. for the past five years. The management plotted the data on a chart. The chart suggested that the sales appear to be increasing in a fairly predictable linear fashion and that the sales are related to time by a linear function Yt = 240 + 340t. Using simple linear regression, the forecast for sales in year 6 is determined to be more than Year Sales 1 580 2 920 3 1,260 4 1,600 5 1,940 a. 1,800 but less than or equal to 2,000. b. 2,000 but less than or equal to 2,200. c. 2,200 but less than or equal to 2,400. d. 2,400 but less than or equal to 2,600. ANSWER: d 21. Which of these is a method for building a statistical model that defines a relationship between a single dependent variable and one or more independent variables, all of which are numerical? a. The Delphi method b. Regression analysis c. Judgmental forecasting d. The Cooke method ANSWER: b 22. Which of the following is based on the assumption that the future will be an extrapolation of the past? a. Judgmental forecasting b. Statistical forecasting c. The Delphi method d. The Cooke method ANSWER: b 23. A manager at Symbic Inc. plotted the company's total energy costs of 1 billion dollars over the past 10 years on a chart. The chart suggested that the energy costs appear to be increasing in a fairly predictable linear fashion and that the energy costs are related to time by a linear function Yt = 3 + 5t, where Yt represents the estimate of the energy cost in year t. Given the equation, which of the following is the value of the intercept of the straight line that best fits the time series? Copyright Cengage Learning. Powered by Cognero.

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Ch 09: Forecasting and Demand Planning a. 1 b. 3 c. 5 d. 10 ANSWER: b 24. When no historical data are available, the sole basis for predicting future demands is a. statistical forecasting. b. regression analysis. c. judgmental forecasting. d. exponential smoothing. ANSWER: c 25. The following table shows the data for the sales of tennis rackets at a store for 4 consecutive months. Find the forecast error in month 4 using a 3-month moving average. Month 1 2 3 4 Sales 80 95 125 110 a. The forecast error in month 4 is less than or equal to 5. b. The forecast error in month 4 is more than 5 but less than or equal to 10. c. The forecast error in month 4 is more than 10 but less than or equal to 15. d. The forecast error in month 4 is more than 15. ANSWER: b 26. Which of these are needed to plan workforce levels, allocate budgets among divisions, and schedule jobs and resources? a. Make-to-order operations b. Intermediate-range forecasts c. Short-range forecasts d. Make-to-stock operations ANSWER: b 27. What smoothing constant (α) must an exponential smoothing model have to be roughly equivalent to a moving average model with a seven-month moving average? a. Less than or equal to 0.10 b. More than 0.10 but less than or equal to 0.15 c. More than 0.15 but less than or equal to 0.20 d. More than 0.20 ANSWER: d 28. A tracking signal provides a method for monitoring a forecast by quantifying a. bias. b. throughput. c. probability. d. validity. Copyright Cengage Learning. Powered by Cognero.

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Ch 09: Forecasting and Demand Planning ANSWER: a 29. The mean absolute deviation (MAD) for the forecasts shown in the following table is Month Forecast Demand Actual Demand April 190 180 May 175 200 June 190 200 July 240 220 August 225 195 a. more than 10 but less than or equal to 20. b. more than 20 but less than or equal to 30. c. more than 30 but less than or equal to 40. d. more than 40 but less than or equal to 50. ANSWER: a 30. In the context of data patterns in a time series, regular patterns in a data series that take place over long periods of time are called a. orthographic patterns. b. seasonal patterns. c. cyclical patterns. d. parallel patterns. ANSWER: c 31. Which of these are used by operations managers to plan production schedules and assign workers to jobs? a. Balanced scorecards b. Intermediate-range forecasts c. Short-range forecasts d. Credit scorecards ANSWER: c 32. In the context of a fairly stable time series with relatively little random variability, which of the following statements is true of single exponential smoothing (SES)? a. Values of the smoothing constant larger than 0.5 place more emphasis on recent data. b. Exponential smoothing models completely forget past data if the smoothing constant is strictly between 0 and 1. c. Typical values for the smoothing constant are in the range of 1 to 1.5. d. Values of the smoothing constant smaller than 0.1 allow a forecast to react faster to changing conditions. ANSWER: a 33. The mean square error (MSE) for the forecasts shown in the following table is Month Forecast Demand Actual Demand April 170 180 May 225 200 June 210 200 July 260 240 August 200 230 Copyright Cengage Learning. Powered by Cognero.

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Ch 09: Forecasting and Demand Planning a. more than 250 but less than or equal to 300. b. more than 300 but less than or equal to 350. c. more than 350 but less than or equal to 400. d. more than 400 but less than or equal to 450. ANSWER: d 34. In the Delphi method of judgmental forecasting a. predictions are based on the assumption that the future will be an extrapolation of the past. b. predictions are based on one or more independent variables, all of which are numerical. c. people from outside an organization are not eligible to make predictions. d. experts are not consulted as a group to make predictions. ANSWER: d 35. The following table shows the data for the sales of a new music album at a store for four consecutive months. Find the forecast for the next month using a 3-month moving average. Month 1 2 3 4 Sales 112 105 125 118 a. The forecast for the next month is more than 90 but less than or equal to 100. b. The forecast for the next month is more than 100 but less than or equal to 110. c. The forecast for the next month is more than 110 but less than or equal to 120. d. The forecast for the next month is more than 120 but less than or equal to 130. ANSWER: c 36. DIRECTV’s forecast prior to product launch was used to a. solicit funding and develop partnerships. b. initiate its merger with AT&T. c. establish specifications for its customer billing system. d. enhance its long-term strategic plan. ANSWER: a 37. Production forecasts are part of what service or process in the value chain? a. Preproduction services b. Value-creation processes c. Postproduction services d. Support and general management processes ANSWER: b 38. The actual values for a data set all range between 100 and 200, and a manager develops a forecast model for the data. If the mean squared error and the mean absolute deviation error measurements for forecast are identical, what can we conclude about the forecast? a. The forecast tends to overpredict. b. The forecast tends to underpredict. c. The forecast is accurate. d. This is mathematically impossible. Copyright Cengage Learning. Powered by Cognero.

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Ch 09: Forecasting and Demand Planning ANSWER: c 39. A forecast for the first six months of the year revealed a tendency to underpredict the actual demand for the revitalized Hubig’s Pies plant in the Marigny. Month January February March April May June

Actual Forecast 675 600 720 700 640 620 510 495 480 410 565 535

What is the mean squared error of this forecast? a. 1,469 b. 1,694 c. 1,873 d. 2,075 ANSWER: d 40. A forecast for the first six months of the year revealed a tendency to underpredict the actual demand for the revitalized Hubig’s Pies plant in the Marigny. Month January February March April May June

Actual 675 720 640 510 480 565

Forecast 600 700 620 495 410 535

What is the MAD of this forecast? a. 38.33 b. 55.79 c. 64.11 d. 71.89 ANSWER: a 41. A forecast for the first six months of the year revealed a tendency to underpredict the actual demand for the revitalized Hubig’s Pies plant in the Marigny. Month January February March April

Actual Forecast 675 600 720 700 640 620 510 495

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Ch 09: Forecasting and Demand Planning May June

480 565

410 535

What is the MAPE of this forecast? a. 5.82% b. 6.64% c. 7.26% d. 8.68% ANSWER: b 42. Consider a time series of 20 observations where each observation is higher than the previous value by an amount ranging between 0 and 2. What type of pattern will this data display when graphed? a. Cyclical b. Random variation c. Trend d. Seasonal ANSWER: c 43. Juan carefully monitors the use of fruit at a breakfast bar and has developed a forecasting model for the use of cherries. The forecast and actual consumption for cherries for the past week is contained in the table. What is the mean squared error of the forecast? Day Monday Tuesday Wednesday Thursday Friday Saturday

Actual 437.9 460.7 484 509.1 554.1 556.3

Forecast 458.1 466.2 464.7 540 536 579

a. 434.7 b. 460.9 c. 536.1 d. 576.3 ANSWER: a 44. Juan carefully monitors the fruit used at a breakfast bar and has developed a forecasting model for cherries. The forecast and actual consumption for cherries for the past week is contained in the table. What is the mean absolute deviation of this forecast? Day Monday Tuesday Wednesday Thursday Friday

Actual 437.9 460.7 484 509.1 554.1

Forecast 458.1 466.2 464.7 540 536

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Ch 09: Forecasting and Demand Planning 556.3

Saturday

579

a. 5.7 b. 19.45 c. 22.7 d. 30.9 ANSWER: b 45. Juan carefully monitors the use of fruit at a breakfast bar and has developed a forecasting model for the use of cherries. The forecast and actual consumption for cherries for the past week is contained in the table. What is the mean absolute percent error of this forecast? Actual 437.9 460.7 484 509.1 554.1 556.3

Day Monday Tuesday Wednesday Thursday Friday Saturday

Forecast 458.1 466.2 464.7 540 536 579

a. 3.66% b. 3.87% c. 4.13% d. 4.36% ANSWER: b 46. A baker in Pompei tracks the daily demand for the baker’s artisanal barley spelt loaf. One day in 79 A.D. Vesuvius erupted, and demand for the bread dropped dramatically. What time would series pattern best describe a graph of demand in the year 79 A.D.? a. Random variation b. Cyclical pattern c. Irregular variation d. Seasonal pattern ANSWER: c 47. The following table contains sales data for the last eight periods. Forecast the sales for period 9 using a moving average forecast of 3 periods. Period 1 2 3 4

Sales 24 48 56 69

Period 5 6 7 8

Sales 79 69 56 22

a. 49 Copyright Cengage Learning. Powered by Cognero.

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Ch 09: Forecasting and Demand Planning b. 54 c. 61 d. 68 ANSWER: a 48. The following table contains sales data for the last eight periods. Forecast the sales for period 3 using single exponential smoothing with α = 0.3. Round your results to the nearest integer. Period 1 2 3 4

Sales 24 48 56 69

Period 5 6 7 8

Sales 79 69 56 22

a. 28 b. 31 c. 36 d. 41 ANSWER: b 49. Stefan would like his colleague Hossein to develop an exponential smoothing forecast with α = 0.333, but he knows that Hossein is familiar only with the moving average technique. In the interest of expediency, Stefan decides to tell Hossein to create a moving average forecast that has the same effect as exponential smoothing. How many periods should Stefan tell Hossein to use to approximate an exponential smoothing forecast with an α = 0.333? a. 6 b. 5 c. 4 d. 3 ANSWER: b 50. Hossein would like his colleague Stefan to develop a moving average forecast with nine periods, but he knows that Stefan is familiar only with single exponential smoothing as a forecasting technique. In the interest of expediency, Hossein decides to tell Stefan to create a single exponential smoothing forecast that has the same effect as a moving average. What alpha should Hossein tell Stefan to use to approximate a moving average forecast with n = 9? a. 0.30 b. 0.25 c. 0.20 d. 0.15 ANSWER: c 51. A poultry farmer decides to model hens’ egg production based on the number of hours of daylight and the percentage of protein in the layer pellets they are fed. Develop a multiple regression model for this data. Hours 10

Protein 6%

Eggs 0

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Ch 09: Forecasting and Demand Planning 11 12 13 14 15 16

7% 8% 6% 7% 8% 6%

1 3 4 6 7 9

How many additional eggs are laid for each hour of daylight? a. 1.5 b. 2.7 c. 3.4 d. 4.1 ANSWER: a 52. A poultry farmer decides to model hens’ egg production based on the number of hours of daylight and the percentage of protein in the layer pellets they are fed. Develop a multiple regression model for this data. Hours 10 11 12 13 14 15 16

Protein 6% 7% 8% 6% 7% 8% 6%

Eggs 0 1 3 4 6 7 9

How many eggs should the farmer expect if the food pellets contain 8% protein and there are 17 hours of daylight? a. 10.2 b. 9.4 c. 8.6 d. 7.8 ANSWER: a 53. A well-educated poultry farmer decides to model hens’ egg production based on the percentage of protein in the layer pellets they are fed. Develop a regression model for this data. Hours 10 11 12 13 14 15 16

Protein 6% 7% 8% 6% 7% 8% 6%

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Ch 09: Forecasting and Demand Planning How much of the variation in egg production can be explained by the percentage of protein in the layer pellets? a. 0.5% b. 23.5% c. 42.5% d. 99.5% ANSWER: a 54. Regression analysis would have the greatest chance for success with which data pattern? a. Cyclical b. Irregular c. Trend d. Seasonal ANSWER: c 55. A donut shop in Bangalore models demand for its savory donuts based on the number of hours the store is open, the advertising budget, and the number of days remaining until Diwali. The regression output is shown below.

Intercept Hours Ad Budget Days Left

Coefficients 3.1 0.4 1.8 5.8

Standard Error 1.1 0.7 1.4 1.5

t Stat 3.225 1.789 0.605 2.760

P-value 0.047 0.044 0.649 0.043

Based on these results, which factor should be removed from further consideration? a. Intercept b. Hours c. Ad budget d. Days left ANSWER: c 56. A donut shop in Bangalore models demand for its savory donuts based on the number of hours the store is open, the advertising budget, and the number of days remaining until Diwali. The regression output is shown below.

Intercept Hours Ad Budget Days Left

Coefficients 564 0.4 1.8 5.8

Standard Error 1.1 0.7 1.4 1.5

t Stat 3.225 1.489 0.605 2.760

P-value 0.047 0.094 0.649 0.043

Based on these results, how many savory donuts will be demanded if the shop stays open 24 hours, spends 10,000 rupees on advertising, and has two weeks before Diwali? a. 18.090 b. 18.456 c. 18.585 Copyright Cengage Learning. Powered by Cognero.

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Ch 09: Forecasting and Demand Planning d. 18.654 ANSWER: d 57. A donut shop in Bangalore models demand for its savory donuts based on the number of hours the store is open, the advertising budget, the high temperature in degrees C, and the number of days remaining until Diwali. The regression output is shown below. Coefficients 564 0.4 1.8 2.5 5.8

Intercept Hours Ad Budget Temperature Days Left

Standard Error 1.1 0.7 1.4 2.9 1.5

t Stat 3.225 1.489 0.605 1.266 2.760

P-value 0.047 0.094 0.649 0.137 0.043

The baker studies these results and decides to simplify the model. Which independent variable should be retained for another round of donut demand modeling? a. Hours b. Ad budget c. Temperature d. Days left ANSWER: d 58. A donut shop in Bangalore models demand for its savory donuts based on the number of hours the store is open, the advertising budget, the high temperature in degrees C, and the number of days remaining until Diwali. The regression output is shown below.

Intercept Hours Ad Budget Temperature Days Left

Coefficients 564 –0.4 1.8 –2.5 5.8

Standard Error 1.1 0.7 1.4 2.9 1.5

t Stat 3.225 –1.489 0.605 –1.866 2.760

P-value 0.047 0.094 0.649 0.037 0.043

Which of these statements about the model results is correct? a. The longer the hours the shop stays open, the greater the sales of savory donuts. b. As the advertising budget falls, so does the number of days left before Diwali. c. Hotter days reduce sales of savory donuts. d. The closer it is to Diwali, the higher the sales of savory donuts will be. ANSWER: c 59. Use the following data to determine the tracking signal for period 4. Actual 10 23

Forecast 16 16

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Ch 09: Forecasting and Demand Planning 50 63 108 122

49 59 106 118

a. 0.429 b. 0.742 c. 1.108 d. 1.333 ANSWER: d 60. A forecaster who never finished an operations management course developed a forecast for the number of people that would supersize their orders each day. In which period does the forecast go out of control as determined by the tracking signal? Period 1 2 3 4 5 6

Actual 122 134 150 178 192 206

Forecast 148 166 182 198 208 264

a. Period 2 b. Period 3 c. Period 4 d. Period 5 ANSWER: c

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Ch 10: Capacity Management True / False 1. Offering complementary goods or services is an example of a short-term capacity strategy. a. True b. False ANSWER: False 2. The ideas and methods surrounding a revenue management system are often called yield management. a. True b. False ANSWER: True 3. A work order is a specification of work to be performed for a customer or a client. a. True b. False ANSWER: True 4. Long-term capacity decisions usually involve adjusting schedules or staffing levels. a. True b. False ANSWER: False 5. Diseconomies of scale are known as the capacity cushion. a. True b. False ANSWER: False Multiple Choice 6. A doctor's office charges no-show patients $30 if they do not cancel their appointment 24 hours prior to the appointment. In this scenario, which of the following can be used by the doctor's office to handle the risk of idle service capacity? a. A capacity straddle strategy b. A capacity lag strategy c. A revenue management system d. A pull system ANSWER: c 7. Which of these occurs when the average unit cost of a good or service begins to increase as the capacity and/or volume of throughput increases? a. Economies of scale b. Diseconomies of scale c. Demand lags d. Nonphysical constraints ANSWER: b Copyright Cengage Learning. Powered by Cognero.

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Ch 10: Capacity Management 8. Greyon Spinning Mills Inc. owns 600 spinning machines. Out of these, only 500 are used in a given year. Given this information, the utilization of spinning machines at Greyon Spinning Mills Inc. is a. 0.75. b. 0.83. c. 1. d. 1.2. ANSWER: b 9. Which of the following is a way to manage capacity by shifting and stimulating demand? a. Adding peripheral goods and/or services b. Adding or sharing equipment c. Changing labor schedules d. Changing labor skill mix ANSWER: a 10. Scorla Corp. is an apparel manufacturing factory. Its average resource utilization per year is calculated as 70%. The average safety capacity of Scorla Corp. is a. 20%. b. 30%. c. 40%. d. 50%. ANSWER: b 11. Avexim Pharmaceutical Laboratories is an international group of companies that manufactures an antiepileptic prescription drug in huge volumes. The setup time for manufacturing the drug is 75 minutes, the processing time is 8 minutes, and the order size is 700 units. In this case, which of the following is the total time required to meet the given production volume? a. 968 minutes b. 1300 minutes c. 4275 minutes d. 5675 minutes ANSWER: d 12. Harlose Suits owns more equipment than required for manufacturing goods during periods of regular demand in order to tackle sudden demand surges. It also has a certain reserve of produced goods to tackle material shortages. In this case, the reserve of equipment and produced goods are examples of a. a physical constraint. b. the capacity cushion. c. overbooking. d. capacity straddle. ANSWER: b 13. In the context of strategies for expanding capacity, which of the following statements is true of one large capacity increase? a. This strategy aims to match capacity additions with demand as closely as possible. Copyright Cengage Learning. Powered by Cognero.

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Ch 10: Capacity Management b. An advantage of using this strategy is that the fixed costs of construction and operating system setup need to be incurred only once. c. This strategy waits until demand has increased to a point where additional capacity is necessary. d. When this strategy is used, there is always excess capacity and safety capacity to meet unexpected demand from large orders is provided. ANSWER: b 14. In a revenue management system, forecasting, allocation, overbooking, and pricing must work in unison if the objective is to a. manage a nonperishable asset. b. meet the future demand of goods and services. c. determine the single price that needs to be charged to all customers. d. maximize the revenue generated by a perishable asset. ANSWER: d 15. Unlike a focused factory, an unfocused factory is characterized by a. a few key products. b. particular market segments. c. identical people skills. d. dissimilar product lines. ANSWER: d 16. Magnira Hotels is a leading chain of hotels. Its managers reserve 30% of the rooms available only to the members of its club. They also provide the rooms at subsidized prices to these members. In this scenario, which of the following components of revenue management system is most likely used by Magnira Hotels? a. Investment b. Allocation c. Capacity expansion d. Capacity sharing ANSWER: b 17. Which of the following statements is true of setup time? a. It is independent of order size for manufacturing work orders. b. It varies with the volume of work orders. c. It is the least significant part of total system capacity. d. It is usually the same for manufacturing and service-providing applications. ANSWER: a 18. Which of the following consists of dynamic methods to forecast demand, allocate perishable assets across market segments, decide when to overbook and by how much, and determine what price to charge different customer classes? a. Focused factory b. Work order c. Revenue management system d. Work activity ANSWER: c Copyright Cengage Learning. Powered by Cognero.

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Ch 10: Capacity Management 19. At Rues and West Bros., a spare parts manufacturing company, the most important competitive priority is quality. Only a few key spare parts are produced using similar process designs. In this scenario, Rues and West Bros. a. is a focused factory. b. has no throughput. c. is an unfocused factory. d. uses a mass customization strategy. ANSWER: a 20. Which of the following statements is true of a work order? a. It is also called the capacity cushion. b. It includes processing requirements for a type of work. c. It cannot be defined for services. d. It does not include resources needed for a type of work. ANSWER: b 21. Peak Performance, a sporting goods manufacturing company, follows a policy that involves manufacturing only when the demand exceeds the amount of goods already manufactured. Given this information, what capacity strategy is Peak Performance most likely using to expand its capacity? a. Lead b. Reduction c. Straddle d. Lag ANSWER: d 22. In service industries, capacity is often viewed as the a. minimum rate of output per unit time. b. units of resource availability. c. amount of setup time. d. amount of overtime scheduled. ANSWER: b 23. Which of these strategies matches capacity additions with demand as closely as possible? a. Lag b. Straddle c. Lead d. Reduction ANSWER: b 24. The capacity strategy for expanding capacity that waits until demand has increased to a point where additional capacity is necessary is known as a. lag. b. lead. c. reduction. d. match. Copyright Cengage Learning. Powered by Cognero.

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Ch 10: Capacity Management ANSWER: a 25. Which of the following is a way to manage capacity by adjusting short-term capacity levels? a. Varying the price of goods or services b. Adding peripheral goods and/or services c. Providing reservations d. Shifting work to slack periods ANSWER: d 26. The earliest revenue management systems focused solely on a. forecasting. b. overbooking. c. allocation. d. pricing. ANSWER: b 27. Which of the following is achieved when the average unit cost of a good or service decreases as the capacity and/or volume of throughput increases? a. Unfocused factories b. Safety capacities c. Diseconomies of scale d. Economies of scale ANSWER: d 28. Which of these is a measure of capacity in terms of units of resource availability? a. Norman Regional Hospital has 288 patient beds. b. The Tesla factories expect to have a production level of 2 million vehicles per year. c. The dabbawalas deliver 130,000 lunches per day in Mumbai. d. The Kickapoo Turnpike can handle 5,000 cars per hour during the evening commute. ANSWER: a 29. Which is an appropriate response to a week-long rush in the gift-wrapping department of an anchor tenant in a mall? a. Construct a new wrapping facility onsite. b. Ask the existing workforce to work overtime. c. Invest in robotic wrapping equipment. d. Add a second wrapping location offsite. ANSWER: b 30. Which of the following phenomena occurs when capacity exceeds demand? a. Customers wait in line. b. Customers defect to competitors. c. Inventory builds up. d. Orders may be placed on backorder. ANSWER: c Copyright Cengage Learning. Powered by Cognero.

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Ch 10: Capacity Management 31. Once the contractor paid to get the grader and bulldozer on site, it was easy and inexpensive to add additional feet of sidewalk beyond what was originally called for in the construction plans, thanks to the a. high fixed cost. b. short-term focus. c. focused factory it had achieved. d. economies of scale. ANSWER: d 32. The Banana Stand runs three shifts per day, six days a week, and each shift can crank out 200 banana smoothies under optimal conditions. What is the theoretical weekly capacity of the Banana Stand? a. 3,600 smoothies/week b. 3,000 smoothies/week c. 2,400 smoothies/week d. 1,800 smoothies/week ANSWER: a 33. The Banana Stand runs three shifts per day, six days a week, and each shift can crank out 200 banana smoothies under optimal conditions. Conditions are usually good, but occasionally the bananas are infested with the Ecuadorean Leaping Tarantula, resulting in an adequate capacity of only 3,000 smoothies per week. What is the necessary safety capacity? a. 800 smoothies/week b. 600 smoothies/week c. 400 smoothies/week d. 200 smoothies/week ANSWER: b 34. As a public service, Scissorhands will provide a free haircut to socioeconomically disadvantaged grammar school children before the first week of school each fall. Each team member of Scissorhands can trim five children an hour, and there are a dozen members on the team. What is the capacity of this operation? a. 5 haircuts/hour b. 12 haircuts/hour c. 60 haircuts/hour d. 300 haircuts/hour ANSWER: c 35. It takes two hours to adjust the pasta machine to produce the perfect thickness of lasagna noodle and one minute to roll out a standard lasagna sheet. Once the thickness is correct, the machine does not need to be adjusted again until it needs to be switched to spaghetti production. To make five pans of hundred-sheet lasagna, how much time is required? a. 1,100 minutes b. 700 minutes c. 500 minutes d. 620 minutes ANSWER: d 36. It takes one hour to adjust the pasta machine to produce the perfect thickness of lasagna noodle and thirty seconds to Copyright Cengage Learning. Powered by Cognero.

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Ch 10: Capacity Management roll out a standard lasagna sheet. Once the thickness is correct, the machine does not need to be adjusted until it needs to be switched to spaghetti production. To make five pans of thousand-sheet lasagna, how much time is required? a. 2,560 minutes b. 2,800 minutes c. 3,000 minutes d. 3,060 minutes ANSWER: a 37. Disco Stu is opening a new nightspot and knows that a 400-square-foot disco floor can handle 150 dancers every 15 minutes. The new discothèque should attract 1,000 patrons an hour, all of whom will definitely be dancing. How many square feet of dance floor will Disco Stu need to install? a. 2,000 square feet b. 2,667 square feet c. 2,800 square feet d. 3,333 square feet ANSWER: b 38. The tutoring center accepts appointments for 15-minute sessions, half-hour sessions, and hour sessions. Marketing and management tutoring sessions typically last 15 minutes; finance, accounting, and operations sessions last an hour; and information systems and tourism management sessions run 30 minutes. The demand for the seven subjects is shown in the following table. A tutor works 20 hours per week. How many tutors must be scheduled at the center each week? Accounting Finance Info Systems Management Marketing Operations Tourism a. 14 b. 16 c. 18 d. 20 ANSWER: c

140 94 43 16 25 75 18

39. Your operations management professor is planning on moving to Florida next year after retiring and wants to then start eating dinner at 4 p.m. Early diners can take advantage of what’s known in the trade as the Early Bird Special, dinner for 20% off as long as you are out the door by 5 p.m. This is an example of a restaurant managing capacity by shifting and stimulating demand by a. varying the price of goods or services. b. providing customers with information. c. advertising and promotion. d. adding peripheral goods and/or services. ANSWER: a 40. A restaurant mobile app shows the average wait times at each dining establishment that registers for its service, Copyright Cengage Learning. Powered by Cognero.

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Ch 10: Capacity Management thereby letting would-be diners know when to leave the house, join the waitlist, or make a reservation for next week. This service takes which approach to managing capacity? a. Varying the price of goods or services b. Providing customers with information c. Advertising and promotion d. Adding peripheral goods and/or services ANSWER: b 41. A new analytics major offering has been a hit, and the department chair is struggling to schedule senior faculty to cover some of the courses. The chair finally elected to hire a few adjuncts for the spring semester. Adjuncts could be hired quickly outside the time-consuming tenure-track hiring process; better still, they come at a fraction of the price. This approach to capacity management is essentially a. selling unused capacity. b. changing labor capacity and schedules. c. adding or sharing equipment. d. shifting work to slack periods. ANSWER: b 42. Nico bought a pickup truck for his work as a refrigeration tech and consistently used it nine hours a day running service calls. He rented it for $200/month to his roommate Trevor, who worked the swing shift, in a classic case of a. selling unused capacity. b. shifting work to slack periods. c. adding or sharing equipment. d. changing labor capacity and schedules. ANSWER: a 43. Most airlines sell tickets for more seats than are actually on the plane. The rationale is that a few passengers won’t show up and that there will be enough seats for everyone when it comes time to take off. This revenue management technique is known as a. allocating. b. overbooking. c. dual selling. d. inflating. ANSWER: b 44. Which of these are complementary services? a. Manicure and pedicure b. Lawn maintenance and holiday light installation/removal c. Canine and feline veterinary services d. Fire and police services ANSWER: b 45. Which of the four strategies for capacity expansion features a productive capacity that is rarely sufficient to meet demand? a. One large increase Copyright Cengage Learning. Powered by Cognero.

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Ch 10: Capacity Management b. Straddle c. Leading d. Lagging ANSWER: d 46. Which of the four strategies for capacity expansion features a productive capacity that usually exceeds demand? a. One large increase b. Straddle c. Leading d. Lagging ANSWER: c 47. Which of the four strategies for capacity expansion results in an amount of time with an excess capacity equivalent to the time spent under capacity? a. Complementary b. Straddle c. Leading d. Lagging ANSWER: b 48. Anand is developing a neighborhood and installing pools with all the homes. The pool installer takes six days to put in the first pool, and this task has a 90 percent experience curve. How long would it take to install the tenth pool? a. 2.87 days b. 3.55 days c. 4.23 days d. 5.07 days ANSWER: c 49. Anand is developing a neighborhood and installing pools with all the homes. The pool installer takes six days to put in the first pool, and this task has a 90 percent experience curve. How long would it take to install the first five pools? a. 14.69 days b. 19.45 days c. 22.88 days d. 26.04 days ANSWER: d 50. Anand is developing a neighborhood and framing all the houses. It takes his new crew 30 days to frame their first house, and they estimate that this task has a 77 percent experience curve. How long should it take to frame the eighth house? a. 13.69 days b. 14.52 days c. 15.36 days d. 16.74 days ANSWER: a Copyright Cengage Learning. Powered by Cognero.

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Ch 10: Capacity Management 51. It took Mariya 40 hours to design her first study tour course but only 35 hours to design her second one. She believes she is operating on a p-percent learning curve. What is the percentage value she experienced on her second tour design? a. 90% b. 88% c. 86% d. 84% ANSWER: b 52. Ho-Chang was performing logistic regression on bank customer data and completed his first two models in 14 hours. He knows that tasks like this usually have a 70 percent learning curve for him. How long did the first logistic regression take? a. 7.75 hours b. 8 hours c. 8.235 hours d. 8.5 hours ANSWER: c 53. It took Tucker 56 hours to assemble his first car. This being largely a manual task, the workforce is operating on an 80 percent experience curve. He eventually assembled 52 fabulous cars. How long did it take to produce the 52nd car? a. 18.91 hours b. 17.54 hours c. 16.12 hours d. 15.69 hours ANSWER: d 54. It took Tucker 56 hours to assemble his first car. Being largely a manual task, the workforce is operating on an 80 percent experience curve. He eventually assembled 52 fabulous cars. How long did it take to produce all 52 cars? a. 1,158 hours b. 1,121 hours c. 1,098 hours d. 1,064 hours ANSWER: a 55. It takes Jordan 100 hours to install a deck the first time, and this task operates on an 85 percent learning curve. How many decks must be installed before it takes fewer than 50 hours to install a deck? a. 17 b. 20 c. 23 d. 26 ANSWER: b 56. It takes Jesse 200 hours to roof a house the first time, and this task operates on an 82.5 percent learning curve. How many roofs must Jesse install before it takes fewer than 75 hours to install a roof? a. 29 b. 32 Copyright Cengage Learning. Powered by Cognero.

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Ch 10: Capacity Management c. 35 d. 38 ANSWER: c 57. An experience curve based on a doubling of output is governed by the equation y = ax–b where b = based on tripling output would differ only in the b term, which would be calculated as

. A curve

. Suppose one work

crew has an 85 percent experience curve based on doubling output while another crew has an 85 percent experience curve based on tripling output. If both crews take 200 hours to produce their first unit, how many units must be made before the doubling crew can finish a unit 25 hours faster than the tripling crew? a. 6 b. 7 c. 8 d. 9 ANSWER: d 58. A civil engineering firm designs bridges to span great distances. Years ago, the firm’s first design took approximately 1,000 hours to develop. It has subsequently been able to reduce the time, quite dramatically, and believes it is operating on a 70 percent learning curve. Its next bridge design is to span the peaks of Mount Kilimanjaro and will be the 400th bridge it will have designed. How long will it take to design this unique bridge? a. 46 hours b. 92 hours c. 138 hours d. 184 hours ANSWER: a 59. Paul and John have been writing pop songs for quite a while. Their first song took 16 hours of collaboration, and their 40th song took only 30 minutes. What experience curve are they operating on? a. 50% b. 52% c. 54% d. 56% ANSWER: b 60. It took Niko eight hours to revise the questions for the first test bank, and he knew that he operated on an 85 percent experience curve. How long would it take to author the eighth test bank? a. 4.0 hours b. 4.3 hours c. 4.6 hours d. 4.9 hours ANSWER: d

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Ch 11: Process Analysis and Resource Utilization True / False 1. When calculating utilization, the dimensions of the denominator must be greater than those of the numerator. a. True b. False ANSWER: False 2. Total process output is at the throughput rate of the bottleneck. a. True b. False ANSWER: True 3. Flow time depends not only on the actual time to perform the tasks required, but also on how many other entities are in the work-in-process stage. a. True b. False ANSWER: True 4. Little’s Law uses short-term averages to explain relationships. a. True b. False ANSWER: False 5. The imputed cost of waiting is the reasonable value that might reflect the potential loss of future revenue or customer dissatisfaction. a. True b. False ANSWER: True 6. Simulation models are not well equipped to capture the dynamic behavior of queues over time. a. True b. False ANSWER: False 7. The philosophy and principles of the TOC are valuable in understanding demand and capacity management. a. True b. False ANSWER: True Multiple Choice 8. In one method of calculating utilization, which of these is divided by service rate × number of servers? a. Resources available b. Service rate c. Demand rate Copyright Cengage Learning. Powered by Cognero.

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Ch 11: Process Analysis and Resource Utilization d. Resource capacity ANSWER: c 9. In one method of calculating utilization, which of the following is divided by resources available? a. Resources used b. Service rate c. Number of servers d. Resource capacity ANSWER: a 10. The fraction of time a workstation or individual is busy over the long run is called a. computation. b. service rate. c. utilization. d. efficiency. ANSWER: c 11. A hotel has 200 rooms. If on a given day there are 150 rooms occupied, which number would represent the utilization of hotel rooms? a. 33% b. 50% c. 66% d. 75% ANSWER: d 12. The number of units or tasks that are completed per unit time from a process is the a. endput. b. throughput. c. input. d. output. ANSWER: b 13. Which of these is the work activity that effectively limits the throughput of the entire process? a. Breakdown b. Bottleneck c. Blockage d. Broadband ANSWER: b 14. Which of the following describes the general process for identifying a bottleneck? a. Measure the number of units completed per unit time. b. Calculate the speed of the process from start to finish. c. Determine the work activity that runs most efficiently. d. Identify the work activity that has the smallest throughput. Copyright Cengage Learning. Powered by Cognero.

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Ch 11: Process Analysis and Resource Utilization ANSWER: d 15. The process for applying for a work permit at the Manchester department of labor is as follows. First, the administrator fills out an application (5 minutes) and takes a picture (1 minute). Then, a clerk enters the information and processes the permit (5 minutes). There are two administrators and three clerks. If the number of licenses per hour for the administrators is 16 and the number of licenses per hour for the clerks is 20.57, what can you conclude? a. The administrators are the bottleneck resources. b. There should be more clerks. c. The clerks are a physical constraint. d. The total process output is the average of the number of licenses per hour of the administrators and clerks. ANSWER: a 16. The process for applying for a work permit at the Manchester department of labor is as follows. First, the administrator fills out an application (5 minutes) and takes a picture (1 minute). Then, a clerk enters the information and processes the permit (5 minutes). There are two administrators and three clerks. If the number of licenses per hour for the administrators is 16 and the number of licenses per hour for the clerks is 20.57, what is the hourly service rate for administrators? a. 5 b. 6 c. 10 d. 12 ANSWER: c 17. The process for applying for a work permit at the Manchester department of labor is as follows. First, the administrator fills out an application (5 minutes) and takes a picture (1 minute). Then, a clerk enters the information and processes the permit (5 minutes). There are two administrators and three clerks. If the number of licenses per hour for the administrators is 16 and the number of licenses per hour for the clerks is 20.57, what is the hourly service rate for clerks? a. 5 b. 6 c. 10 d. 12 ANSWER: d 18. The average time it takes to complete one cycle of a process is called a. flow time. b. mean time. c. standard time. d. elemental time. ANSWER: a 19. Which of these equals throughput × flow time? a. Best-in-output b. Efficiency evaluation c. Work-in-process d. Standard demand Copyright Cengage Learning. Powered by Cognero.

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Ch 11: Process Analysis and Resource Utilization ANSWER: c 20. A scooter rental company in a major beachside city has 70% of its fleet of 200 scooters rented each day on average. Scooters are rented for an average of five days. Which of the following can you use to start figuring out the average process performance? a. (0.7)(200 scooters)/R × 5 days b. (0.7)(200 scooters) = R × 5 days c. (0.7)(5 days)/R × 200 scooters d. (0.7)(5 days) = R × 200 scooters ANSWER: b 21. A warehouse is capable of processing 600 returns per day, and the average number of returns is 200. Based on the data in the question, what is being calculated by dividing 600 by 200? a. Work-in-process b. Flow time c. Process performance d. Throughput ANSWER: b 22. What is the average time a bouquet stays in a florist shop if it sells 100 bouquets per day and maintains an average inventory of 200 bouquets? a. 1 day b. 2 days c. 5 days d. 10 days ANSWER: b 23. A waiting line is also called a a. queue. b. process system. c. field. d. plot point. ANSWER: a 24. Which of these is the typical queueing system used by banks and airline ticket counters? a. Several parallel servers fed by their own queues b. One or more parallel servers fed by a single queue c. A combination of several queues in a series d. One server, one queue ANSWER: b 25. The typical queueing system used by supermarkets is a. several parallel servers fed by their own queues. b. one or more parallel servers fed by a single queue. c. a combination of several queues in a series. Copyright Cengage Learning. Powered by Cognero.

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Ch 11: Process Analysis and Resource Utilization d. one server, one queue. ANSWER: b 26. An airline has one employee work the counter. On average one customer arrives every 3 minutes, and it takes on average 2 minutes to process the transaction. What is the probability that the system is empty? a. 0% b. 33% c. 66% d. 100% ANSWER: b 27. An airline has one employee work the counter. On average, one customer arrives every 3 minutes, and it takes on average 2 minutes to process the transaction. What is the probability that a customer must wait for service in the queue? a. 0% b. 33% c. 66% d. 100% ANSWER: c 28. Which of the following is NOT part of a queueing system? a. A server that provides the service b. A map of processes and functions c. A queue of entities that wait if the server is busy d. Customers that arrive for service ANSWER: b 29. Analytical queueing models assume a Poisson probability distribution for a. arrivals. b. rates. c. service times. d. departures. ANSWER: a 30. Which of the following is NOT true about simulation models? a. Simulations can be used to analyze processes that cannot be evaluated well analytically. b. A simulation model is used to get estimates; an analytical model provides detailed analysis. c. Simulations can use actual probability rates for both demand and service rates. d. Analytical and simulation models are often used in combination. ANSWER: b 31. In an analytical queueing model, service times measure a. demand. b. process components. c. completion percentage. Copyright Cengage Learning. Powered by Cognero.

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Ch 11: Process Analysis and Resource Utilization d. rates. ANSWER: d 32. Which of the following is another term for one simulation run? a. Replication b. Redundancy c. Reference d. Reflection ANSWER: a 33. Which of the following best defines the Theory of Constraints? a. The concept of purposely creating barriers in a process in order to evaluate the impact on the workflow b. Maximizing cash flow by minimizing throughput c. A set of principles that focuses on increasing total process throughput by maximizing the utilization of all bottleneck work activities d. Limiting demand in order to better service remaining customers ANSWER: c 34. Which of the following is NOT an example of a nonphysical constraint? a. Low product demand b. Associated with the capacity of a resource c. Inefficient management policy d. Anything environmental or organizational ANSWER: b 35. Which of the following is an example of a bottleneck management principle? a. Work-in-process buffer inventory should be placed behind bottlenecks to maximize resource utilization. b. At bottleneck workstations, idle time is acceptable if there is no work to do. c. Large order sizes are used at bottleneck workstations. d. An hour lost at a bottleneck resource has no effect on total process or factory output. ANSWER: c 36. Principles of Finance was scheduled for 10 a.m. on Mondays and Wednesdays in room 209, which had 40 seats available. Only 32 students registered for the class, but Professor Black met them each day with a smile and his HP-12C calculator. What is the utilization of the room? a. 80% b. 60% c. 50% d. 40% ANSWER: a 37. Dr. Mariya Burdina assigns a review of assessment results to professors across an array of disciplines during final exam week. Each professor can review 40 exams per hour, and demand is estimated to be 300 exams per hour. How many professors does Mariya need if her utilization target is 75%? a. 9 Copyright Cengage Learning. Powered by Cognero.

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Ch 11: Process Analysis and Resource Utilization b. 10 c. 11 d. 12 ANSWER: b 38. The faculty parking lot adjacent to the business building has 120 parking spaces. On Mondays, Wednesdays, and Fridays, 30 faculty members show up and spend all day at the office. On Tuesdays and Thursdays, 40 faculty members have class and spend all day at the office. Considering a typical workday of 8 a.m. to 5 p.m., what is the utilization of the parking lot? a. 11.67% b. 14.17% c. 28.33% d. 56.67% ANSWER: c 39. The bartenders at J-Pats can crank out 35 drinks an hour (with flair!), and on a Saturday night in Lubbock there are typically 400 orders per hour when the Red Raiders are playing. What is the maximum staffing level if the bartenders are to be no busier than 90% utilized? a. 10 b. 11 c. 12 d. 13 ANSWER: d 40. Footballs are made using a four-step process. The leather is cut and stamped with the appropriate logo in the stamping step. This takes 15 seconds per football, and the process is staffed with five people. In the stitching step, the four panels are sewn together. This takes 25 seconds per ball, and the process is staffed with nine people. In the bladder insertion step, a rubber inflatable bladder is inserted inside the sewn panels and is partially inflated. This step takes 20 seconds per ball and is performed by seven people. The final step, lacing, is completely manual, taking 35 seconds per ball. This step is performed by a staff of twelve. Which step is the bottleneck? a. Stamping b. Stitching c. Bladder insertion d. Lacing ANSWER: a 41. Footballs are made using a four-step process. The leather is cut and stamped with the appropriate logo in the stamping step. This takes 15 seconds per football, and the process is staffed with six people. In the stitching step, the four panels are sewn together. This takes 25 seconds per ball, and the process is staffed with nine people. In the bladder insertion step, a rubber inflatable bladder is inserted inside the sewn panels and is partially inflated. This step takes 20 seconds per ball and is performed by seven people. The final step, lacing, is completely manual, taking 35 seconds per ball. This step is performed by a staff of twelve. What is the overall process capacity? a. 1,200 b. 1,260 c. 1,296 d. 1,440 Copyright Cengage Learning. Powered by Cognero.

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Ch 11: Process Analysis and Resource Utilization ANSWER: b 42. Footballs are made using a four-step process. In the stamping step, the leather is cut and stamped with the appropriate logo. This takes 15 seconds per football, and the process is staffed with six people. In the stitching step, the four panels are sewn together. This takes 25 seconds per ball, and the process is staffed with ten people. In the bladder insertion step, a rubber inflatable bladder is inserted inside the sewn panels and is partially inflated. This step takes 20 seconds per ball and is performed by eight people. The final step, lacing, is completely manual, taking 40 seconds per ball. What is the minimum number of workers to use at lacing to ensure that the overall process capacity is 1,440 footballs per hour? a. 12 b. 14 c. 16 d. 18 ANSWER: c 43. Footballs are made using a four-step process. In the stamping step, the leather is cut and stamped with the appropriate logo. This takes 15 seconds per football, and the process is staffed with seven people. In the stitching step, the four panels are sewn together. This takes 25 seconds per ball, and the process is staffed with eleven people. In the bladder insertion step, a rubber inflatable bladder is inserted inside the sewn panels and is partially inflated. This step takes 20 seconds per ball and is performed by nine people. The final step, lacing, is completely manual, taking 30 seconds per ball. If 15 workers are assigned to the lacing step, what is the overall process capacity in footballs per hour? a. 1,800 b. 1,680 c. 1,620 d. 1,584 ANSWER: d 44. One slow Tuesday at the OKC airport, the process at TSA averaged 45 minutes total in line and being actively screened. An average of 600 passengers per hour passed through the checkpoint. How many people are in the TSA process at any given time? a. 450 b. 500 c. 550 d. 600 ANSWER: a 45. From 5 p.m. to 6 p.m., 120 cars checked out of the parking garage at Santa Fe Plaza. Each exiting car took 15 seconds to pay and wait for the gate to rise before they could exit. How many cars are in the checkout process on average? a. 0.25 cars b. 0.5 cars c. 15 cars d. 30 cars ANSWER: b 46. A plumbing company outfits six panel vans with $5,000 of supplies each Saturday and sends them out into the field on service calls Monday through Friday where about half the supplies are used. Its warehouse, which is used to restock the vans on Saturdays, holds $20,000 of inventory, and it takes four weeks to turn it. How long does the company hold the Copyright Cengage Learning. Powered by Cognero.

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Ch 11: Process Analysis and Resource Utilization average part? a. 4 weeks b. 5 weeks c. 6 weeks d. 7 weeks ANSWER: c 47. A plumbing company outfits six panel vans with $5,000 of supplies each Saturday and sends them out into the field on service calls Monday through Friday where the parts are installed and billed to their customers. Its warehouse, which is used to restock the vans on Saturdays, holds $20,000 of inventory. The company bills customers an average of $20,000 every two weeks. How long does the company hold the average part? a. 1 week b. 1.5 weeks c. 2 weeks d. 2.5 weeks ANSWER: d 48. The vaccination clinic was enjoying record demand during flu season. Its five nurses could verify patient information and administer a shot in five minutes, while patients poured into the center at the rate of 50 people per hour. What is the average waiting time before a patient receives a shot? a. 3.72 minutes b. 4.12 minutes c. 5.32 minutes d. 6.62 minutes ANSWER: a 49. The vaccination clinic was enjoying record demand during flu season. Its five nurses could verify patient information and administer a shot in five minutes, while patients poured into the center at the rate of 50 people per hour. What is the average number of patients waiting in line to receive a shot? a. 2.1 b. 3.1 c. 4.1 d. 5.1 ANSWER: b 50. The vaccination clinic was enjoying record demand during flu season. Its five nurses could verify patient information and administer a shot in five minutes, while patients poured into the center at the rate of 50 people per hour. What is the utilization of the nurses? a. 0.66 b. 0.75 c. 0.83 d. 0.96 ANSWER: c 51. The vaccination clinic was enjoying record demand during flu season. Its five nurses could verify patient information Copyright Cengage Learning. Powered by Cognero.

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Ch 11: Process Analysis and Resource Utilization and administer a shot in five minutes, while patients poured into the center at the rate of 50 people per hour. What is the average time a patient spends in the system? a. 2.22 minutes b. 3.72 minutes c. 5 minutes d. 8.72 minutes ANSWER: d 52. Customers arrive at a food truck according to the distribution shown in the following arrival distribution table. Use the random number table to determine the number of customers arriving in time periods 5, 7, and 9. Time Random Period Number Arrival Distribution Random Number Interval 0.00 0.15 0.15 0.25 0.25 0.35 0.35 0.55 0.55 0.80 0.80 0.90 0.90 1.00

Number of Arrivals 0 1 2 3 4 5 6

0.567

2 3 4 5 6 7 8 9 10

0.375 0.399 0.181 0.567 0.397 0.249 0.475 0.388 0.165

a. 4, 1, 3 b. 0, 2, 2 c. 2, 2, 0 d. 5, 7, 9 ANSWER: a 53. Use the following arrival distribution table data and the random numbers from the ten time periods to determine the total number of arrivals to this system. Arrival Distribution Random Number Interval 0.00 0.15 0.25 0.35 0.55 0.80 0.90

0.15 0.25 0.35 0.55 0.80 0.90 1.00

Number of Arrivals

Time Period

Random Number

Number Arrivals

0 1 2 3 4 5 6

1 2 3 4 5 6 7 8 9 10

0.539 0.357 0.434 0.643 0.907 0.209 0.497 0.187 0.173 0.372

3 3 3 4 6 1 3 1 1 3

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Ch 11: Process Analysis and Resource Utilization a. 27 b. 28 c. 29 d. 30 ANSWER: b 54. Simulation is used to model a service process. A portion of the model results is shown in the following table. Time Period

Number Arrivals

Server Available

Service Time

Service Completion

1 0 YES 2 0 YES NO 3 2 YES 1 NO 4 3 YES 2 YES 5 1 NO NO How many customers are waiting at the end of period 4? a. 1 b. 2 c. 3 d. 4 ANSWER: c 55. Simulation is used to model a service process. A portion of the model results is shown in the following table. Time Period

Number Arrivals

Server Available

Service Time

Service Completion

1 0 YES 2 0 YES NO 3 2 YES 1 NO 4 3 YES 2 YES 5 1 NO NO How many customers are waiting at the end of period 5? a. 1 b. 2 c. 3 d. 4 ANSWER: d 56. Process X and Process Y both supply parts directly to assembly. Process X is a bottleneck, but Process Y is not. What is the result of running both processes at full capacity? a. There will be an accumulation of output from Process Y waiting for output from Process X at Assembly. b. There will be an accumulation of output from Process X waiting for output from Process Y at Assembly. c. Output from Process X and Process Y will immediately be paired at assembly and sent to market. d. Both processes cannot be run at full capacity simultaneously. Copyright Cengage Learning. Powered by Cognero.

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Ch 11: Process Analysis and Resource Utilization ANSWER: a 57. Process X supplies output to Process Y, which is then ready for sale. Process Y is a bottleneck, while Process X is a non-bottleneck. What is the result of running both processes at full capacity? a. Process Y will be starved for inventory. b. A pile of inventory will build up before Process Y. c. Process X will become a physical constraint. d. Process X will become a nonphysical constraint. ANSWER: b 58. Processes A, B, C, and D are all used to produce a potato chip with seemingly infinite demand. Process A can produce 400 units per minute, Process B can produce 500 units per minute, Process C can produce 300 units per minute, and Process D can produce 400 units per minute. Which process step should be 100 percent utilized in order to maximize output? a. Process A b. Process B c. Process C d. Process D ANSWER: c 59. Processes A, B, C, and D are all used to produce seafood gumbo with seemingly infinite demand. The steps feed directly into one another, so A’s output goes to B, and B’s output goes to C, and finally, C’s output goes to D. Process A can produce 400 units per minute, Process B can produce 300 units per minute, Process C can produce 300 units per minute, and Process D can produce 400 units per minute. Which process step(s) can experience idle time while the overall process still maximizes output? a. Processes B and C b. Process A c. Process D d. Processes A and D ANSWER: d 60. It takes 45 seconds for Guinness to make a cappuccino, and about 60 customers want one each hour during the morning rush. How long (in minutes) must they wait for one? a. 1 b. 2 c. 3 d. 4 ANSWER: c

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Ch 12: Managing Inventories in Supply Chains True / False 1. Single-period inventory models are used in situations involving items that can be carried in inventory and sold in future periods. a. True b. False ANSWER: False 2. Radio-frequency identification (RFID) chips allow firms to track individual containers. a. True b. False ANSWER: True 3. The single-period inventory model applies to inventory situations where demand is uncertain. a. True b. False ANSWER: True 4. Setup costs include costs associated with maintaining storage facilities, such as gas and electricity, taxes, and insurance. a. True b. False ANSWER: False 5. In the context of using technology to manage inventories, radio-frequency identification (RFID) chips offer an accuracy of less than 70 percent. a. True b. False ANSWER: False 6. In the Pareto Principle, a vital few control a high percentage of the wealth. a. True b. False ANSWER: True 7. In a fixed-order-quantity system, when demand is uncertain, using economic order quantity (EOQ) based only on the average demand will result in a low probability of a stockout. a. True b. False ANSWER: False 8. Marketing and operations prefer high inventory levels, whereas finance would prefer small inventories. a. True b. False ANSWER: True Multiple Choice Copyright Cengage Learning. Powered by Cognero.

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Ch 12: Managing Inventories in Supply Chains 9. Using the data regarding the inventory management of a stock-keeping unit shown in the following table, it can be concluded that the economic time interval for establishing an optimal policy for a fixed-period system (FPS) under the model assumptions is which of the following? Demand 12,000 units per year Order Cost $50 per order Inventory-Holding Cost $0.5 per unit per year Lead Time 2 weeks Standard Deviation in Weekly Demand 7 Service Level 95 percent a. Less than or equal to 3 weeks b. More than 3 weeks but less than or equal to 6 weeks c. More than 6 weeks but less than or equal to 9 weeks d. More than 9 weeks ANSWER: c 10. Vision Toys uses a fixed-quantity system to manage its inventories. The inventory includes plastic and LED bulbs. It was observed that the company often faces stockout of plastic. The average weekly demand for plastic is 100 pounds, and historical data show that the standard deviation of weekly demand is about 7. The lead time from the plastic supplier is 2 weeks. If the company's acceptable service level is 95 percent and the number of standard deviations necessary to achieve the acceptable service level is 1.645, the reorder point for plastic with safety stock is a. less than or equal to 125 pounds. b. more than 125 pounds but less than or equal to 175 pounds. c. more than 175 pounds but less than or equal to 225 pounds. d. more than 225 pounds. ANSWER: c 11. A single-period inventory problem can be solved using a technique called a. marginal economic analysis. b. total cost analysis. c. critical value analysis. d. reorder point analysis. ANSWER: a 12. Brynn is the owner of a spa store that operates 50 weeks per year. Dazzle Shampoo is a high margin stock-keeping unit (SKU), but the product goes out of stock frequently. She decides to use a fixed-quantity system (FQS) and orders boxes of Dazzle Shampoo containing 10 bottles per box from a vendor 160 miles away. She collects the following data with respect to the sales of Dazzle Shampoo. Demand 10 boxes per week Order Cost $40 per order Item Cost $80 per box per year Inventory-Holding Cost 15 percent per year Lead Time 3 weeks Standard Deviation in Weekly Demand 6 Service Level 96 percent Using the given data, it can be concluded that the economic order quantity (EOQ) of the Dazzle Shampoo boxes is a. less than 25 boxes. Copyright Cengage Learning. Powered by Cognero.

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Ch 12: Managing Inventories in Supply Chains b. more than 25 but less than or equal to 35 boxes. c. more than 35 but less than or equal to 45 boxes. d. more than 55 boxes. ANSWER: d 13. In the context of ABC inventory analysis, which of the following statements is true of class A items? a. They require close control by operations managers. b. They comprise less than 30 percent of the total dollar usage. c. They can be managed using automated computer systems. d. They account for more than 50 percent of inventory items. ANSWER: a 14. A buyer for a department store orders sweaters about 6 months before the winter season. The store plans to hold a March clearance sale to sell any surplus goods by February 29. Each piece costs $100 per pair and sells for $120 per pair. At the sale price of $60 per pair, it is expected that any remaining stock can be sold during the March sale. Assume that a uniform probability distribution ranging from 250 to 450 items describes the demand. The expected demand is 300. In the context of the single period inventory system, the optimal order size Q must satisfy what condition? a. P(demand ≤ Q*) = 1/2 b. P(demand ≤ Q*) = 1/3 c. P(demand ≤ Q*) = 1/4 d. P(demand ≤ Q*) = 1/5 ANSWER: b 15. In the context of inventory costs, which costs can reflect backorders or service interruptions for external customers? a. Holding costs b. Stockout costs c. Ordering costs d. Setup costs ANSWER: b 16. In the context of inventory management, a single item or asset stored at a particular location is referred to as a(n) a. stock-keeping unit. b. make-to-stock product. c. average lead stock. d. buffer stock. ANSWER: a 17. Stable demand is usually called a. static demand. b. overfull demand. c. unwholesome demand. d. dynamic demand. ANSWER: a 18. In the context of ABC inventory analysis, which of the following statements is true of class C items? Copyright Cengage Learning. Powered by Cognero.

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Ch 12: Managing Inventories in Supply Chains a. They require close control by operations managers. b. They comprise more than 80 percent of the total dollar usage. c. They can be managed using automated computer systems. d. They make up less than 10 percent of inventory items. ANSWER: c 19. Using the data regarding the inventory management of a stock-keeping unit shown in the following table, it can be concluded that the optimal replenishment level with safety stock for a fixed-period system (FPS) under the model assumptions is which of the options? Demand 140 units per week Order Cost $30 per order Inventory-Holding Cost $0.4 per unit per year Lead Time 3 weeks Economic Time Interval 7 weeks Standard Deviation in Weekly Demand 8 Acceptable Service Level 95 percent Standard Deviations to Achieve the Acceptable Service 1.645 Level a. More than 1,350 but less than 1,550 units b. More than 1,550 but less than 1,650 units c. More than 1,650 but less than 1,750 units d. More than 1,750 but less than 1,850 units ANSWER: a 20. In the context of inventory costs, which costs are incurred as a result of the work involved in configuring tools, equipment, and machines within a factory to produce an item? a. Setup costs b. Holding costs c. Stockout costs d. Unit costs ANSWER: a 21. CraftWare Inc., a furniture manufacturer, uses ABC analysis to define its inventory value. The inventory contains wood, cast iron, adhesive, and carbon fiber. If wood accounts for 50 percent of the items and 5 percent of the total dollar value; carbon fiber accounts for 10 percent of the items and 60 percent of the total dollar value; cast iron accounts for 25 percent of the items and 18 percent of the total dollar value; and adhesive accounts for 15 percent of the items and 17 percent of the total dollar value. Which of the following can be classified as a class C item? a. Wood b. Carbon fiber c. Cast iron d. Adhesive ANSWER: a 22. The demand for bread in Ahoma City ranges from 100 to 120 tons per day, every day of the year. The demand is easily satisfied on a daily basis. This demand for bread can be categorized as a. static demand. Copyright Cengage Learning. Powered by Cognero.

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Ch 12: Managing Inventories in Supply Chains b. overfull demand. c. unwholesome demand. d. dynamic demand. ANSWER: a 23. Which of these applies to inventory situations in which one order is placed for a good in anticipation of a future selling season where demand is uncertain? a. A fixed-period inventory system b. A fixed-quantity inventory system c. The deliver-lag inventory model d. The single-period inventory model ANSWER: d 24. Using the data regarding the inventory management of a stock-keeping unit shown in the following table, it can be concluded that the optimal replenishment level without any safety stock for a fixed-period system (FPS) under the model assumptions is which of the options? Demand 100 units per week Order Cost $30 per order Inventory-Holding Cost $0.6 per unit per year Lead Time 2 weeks Economic Time Interval 5 weeks a. More than 100 but less than or equal to 200 units b. More than 200 but less than or equal to 400 units c. More than 400 but less than or equal to 600 units d. More than 600 but less than or equal to 800 units ANSWER: d 25. Which type of inventory is an additional amount of inventory that is kept over and above the average amount required to meet demand? a. Seasonal b. Work-in-process c. Finished-goods d. Safety stock ANSWER: d 26. Net Steel is a steel manufacturing company. It orders 180 metric tons of raw material per order. It was observed that the company often faces stockout. To tackle this issue, the company incorporated a fixed-quantity system (FQS) and collected the following data. Demand 11,000 metric tons per year Order Cost $18,000 per order Item Cost $36,000 per year Inventory-Holding Cost 20 percent per year Using the data, Net Steel determined that the economic order quantity (EOQ) should be 235 metric tons. In this scenario, the annual amount that Net Steel can save by ordering as per the EOQ instead of its conventional order is a. less than $45,000. b. more than $45,000 but less than or equal to $55,000. Copyright Cengage Learning. Powered by Cognero.

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Ch 12: Managing Inventories in Supply Chains c. more than $55,000 but less than or equal to $65,000. d. more than $65,000. ANSWER: c 27. Which of the following statements is true of a fixed-period system (FPS)? a. It orders a fixed quantity of items when the inventory position reaches or drops below the reorder point (r). b. It orders sufficient stock at the time of review to bring the inventory position up to the replenishment level (M). c. It maintains a constant order quantity every review period. d. It checks the inventory position on a continuous basis. ANSWER: b 28. Based on the constant demand assumption in the economic order quantity (EOQ) model, the average cycle inventory is a. the order quantity divided by the number of inventory cycles per year. b. the annual demand divided by the number of inventory cycles per year. c. half of the order quantity. d. half of the annual usage. ANSWER: c 29. The inventory that consists of partially completed products in various stages of completion that are awaiting further processing is called a. raw materials. b. work-in-process. c. finished-goods. d. safety stock. ANSWER: b 30. Inventory that results from purchasing or producing in larger lots than are needed for immediate consumption or sale is referred to as a. finished-goods. b. stockout. c. cycle. d. work-in-process. ANSWER: c 31. In the context of a fixed-order-quantity system, stockouts occur whenever the lead-time demand a. exceeds the reorder point. b. exceeds the work-in-process inventory. c. equals the finished-goods inventory. d. equals the break-even point. ANSWER: a 32. In the context of inventory costs, which of the following costs can reflect lost sales for external customers or costs associated with interruptions to assembly lines for internal customers? Copyright Cengage Learning. Powered by Cognero.

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Ch 12: Managing Inventories in Supply Chains a. Holding costs b. Stockout costs c. Ordering costs d. Setup costs ANSWER: b 33. In the context of fixed-quantity systems, which of these is defined as the on-hand quantity (OH) plus any orders placed but which have not arrived minus any backorders (BO)? a. Inventory position b. The reorder point c. A stock-keeping unit d. Work-in-process inventory ANSWER: a 34. Which of the following statements is true of the independent demand for a stock-keeping unit (SKU)? a. It needs to be calculated using the forecast of dependent demand. b. It is affected by the demand of other SKUs. c. It is directly related to the demand of raw materials. d. It needs to be forecasted. ANSWER: d 35. In the context of managing inventories in supply chains, which of the following refers to the time between placement of an order and its receipt? a. The lead time b. A time series c. The changeover time d. A time horizon ANSWER: a 36. The demand for trains between Marshdell and Deepbarrow varies throughout the year. The demand reaches its peak in summer and drops during winter. This demand for trains can be categorized as a. static demand. b. overfull demand. c. unwholesome demand. d. dynamic demand. ANSWER: d 37. Which of the following statements is true of backorders? a. They occur as a result of excessive stock. b. They occur when a customer is unwilling to wait for an ordered item. c. They result in additional costs. d. They force a customer to purchase elsewhere. ANSWER: c Copyright Cengage Learning. Powered by Cognero.

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Ch 12: Managing Inventories in Supply Chains 38. Jae’s Shoes is considering a change of its current inventory control system for tennis shoes. The information regarding the tennis shoes is: Demand = 1000 pairs/week; Lead time = 3 weeks; Order cost = $20/order; Holding cost = $10.00/pair/yr; Cycle service level = 95%; Standard deviation of weekly demand = 48; and Number of weeks per year = 52. To calculate the relative frequency, use which of the following values? a. Number of Days and Standard Deviation of Weekly Demand b. Units Sold and Demand c. Units Sold and Number of Days d. Lead Time and Holding Cost ANSWER: c 39. Jae’s Shoes is considering a simulation analysis of its inventory system. It has collected the following data on demand for the GiGi, a high-heeled tennis shoe. Units Sold Number of Weeks 15 16 20 22 25 26 30 16 What is the relative frequency for sales of 20 units? a. 0.225 b. 0.250 c. 0.275 d. 0.325 ANSWER: c 40. The bodega was out of D-cell batteries late one night, so Lisa went to the local big box retailer and bought some there instead. From the perspective of the bodega, this inventory situation is a. a backorder. b. dependent demand. c. independent demand. d. a lost sale. ANSWER: d 41. Every electric toothbrush produced by Tuna Enterprises comes with a brush head and a replacement brush head that users are supposed to install after six months of use. Therefore, brush heads can be considered what type of items? a. Dependent demand b. Static demand c. Independent demand d. Dynamic demand ANSWER: a 42. Genchev Industries conducts an ABC analysis of its inventory and develops the following table from its findings. Dollar Item Annual Usage Unit Cost Usage 1 9,960 $43.20 $430,272 2 3,362 $22.80 $76,654 Copyright Cengage Learning. Powered by Cognero.

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Ch 12: Managing Inventories in Supply Chains 3 4 5 6 7 8 9 10

8,332 3,074 2,968 4,195 4,536 9,538 3,484 10,232

$9.90 $22.30 $8.40 $25.00 $19.20 $65.60 $3.20 $5.70

$82,487 $68,550 $24,931 $104,875 $87,091 $625,693 $11,149 $58,322

Which of these items is an A item? a. Item 3 b. Item 6 c. Item 8 d. Item 10 ANSWER: c 43. Genchev Industries conducts an ABC analysis of its inventory and develops the following table from its findings. Dollar Item Annual Usage Unit Cost Usage 1 9,960 $43.20 $430,272 2 3,362 $22.80 $76,654 3 8,332 $9.90 $82,487 4 3,074 $22.30 $68,550 5 2,968 $8.40 $24,931 6 4,195 $25.00 $104,875 7 4,536 $19.20 $87,091 8 9,538 $65.60 $625,693 9 3,484 $3.20 $11,149 10 10,232 $5.70 $58,322 Which of these items is a C item? a. Item 1 b. Item 5 c. Item 6 d. Item 8 ANSWER: b 44. Genchev Industries conducts an ABC analysis of its inventory and develops the following table from its findings. Item Annual Usage Unit Cost 1 10,960 $47.28 2 3,362 $22.80 3 8,332 $9.90 4 3,074 $22.30 5 2,968 $8.40 6 4,195 $25.00 Copyright Cengage Learning. Powered by Cognero.

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Ch 12: Managing Inventories in Supply Chains 7 8 9 10

4,536 8,538 3,484 10,232

$19.20 $60.60 $3.20 $5.70

Which of these items requires the closest scrutiny by its operations manager? a. Item 1 b. Item 4 c. Item 6 d. Item 10 ANSWER: a 45. Najmi Incorporated conducts an ABC analysis of its inventory and develops the following table from its findings. Item 1 2 3 4 5 6 7 8 9 10

Annual Usage 10,960 3,362 8,332 3,074 2,968 4,195 4,536 8,538 3,484 10,232

Unit Cost $47.28 $22.80 $9.90 $22.30 $8.40 $25.00 $19.20 $60.60 $3.20 $5.70

Which of these items should be managed using Najmi’s automated computer inventory system? a. Item 1 b. Item 3 c. Item 7 d. Item 9 ANSWER: d 46. Gumbo House is enacting an ABC inventory analysis of its kitchen supplies. It records the annual usage and unit price of all ten ingredients in its award-winning gumbo but cannot find the price for gizzards. Which of these is a price for gizzards that would establish them as a category B item?

Item Andouille Celery Cayenne Bell pepper White pepper Black pepper Onion

Annual Usage 2,121 5,447 8,199 5,337 9,218 2,766 6,267

Unit Cost $12.30 $43.40 $47.80 $19.00 $37.50 $47.30 $4.90

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Ch 12: Managing Inventories in Supply Chains Gizzards Chicken stock Roux

9,878 7,138 8,259

$? $15.40 $3.20

a. $46.15 b. $21.80 c. $10.15 d. $8.75 ANSWER: b 47. Smylie & Son uses a fixed-period system to manage its inventory of hand-rolled cigars. One model, the “el diablo,” enjoys robust demand at 480 boxes per week (20 cigars per box) with a standard deviation of 120. Cigars must be stored in a carefully controlled climate, so storage costs are $5/cigar per year. Smylie and Son’s supplier is located on an island south of Miami, Florida, and ordering is complicated and thus expensive, at $1,500 an order. Even at that price, it takes an average of six weeks to receive a shipment. El diablo is popular even at the exorbitant price Smylie & Son charges, so the company is loath to run out of stock and has set its service level at a respectable 99 percent. What should the review period be? a. 6 weeks b. 7 weeks c. 8 weeks d. 9 weeks ANSWER: c 48. Smylie & Son uses a fixed-period system to manage its inventory of hand-rolled cigars. One model, the “el diablo,” enjoys robust demand at 480 boxes per week (20 cigars per box) with a standard deviation of 120. Cigars must be stored in a carefully controlled climate, so storage costs are $5/cigar per year. Smylie and Son’s supplier is located on an island south of Miami, Florida, and ordering is complicated and thus expensive, at $1,500 an order. Even at that price, it takes an average of six weeks to receive a shipment. What should the replenishment level be? a. 5,280 b. 5,760 c. 6,240 d. 6,720 ANSWER: d 49. Smylie & Son uses a fixed-period system to manage its inventory of hand-rolled cigars. One model, the “el diablo,” enjoys robust demand at 480 boxes per week (20 cigars per box) with a standard deviation of 120. Cigars must be stored in a carefully controlled climate, so storage costs are $5/cigar per year. Smylie and Son’s supplier is located on an island south of Miami, Florida, and ordering is complicated and thus expensive, at $1,500 an order. Even at that price, it takes an average of six weeks to receive a shipment. El diablo is popular even at the exorbitant price Smylie & Son charges, so the company is loath to run out of stock and has set its service level at a respectable 99 percent. What should the safety stock be? a. 1,044 b. 1,256 c. 1,448 d. 1,520 ANSWER: a Copyright Cengage Learning. Powered by Cognero.

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Ch 12: Managing Inventories in Supply Chains 50. Smylie & Son uses a fixed-period system to manage its inventory of hand-rolled cigars. One model, the “el diablo,” enjoys robust demand at 480 boxes per week (20 cigars per box) with a standard deviation of 120. Cigars must be stored in a carefully controlled climate, so storage costs are $5/cigar per year. Smylie and Son’s supplier is located on an island south of Miami, Florida, and ordering is complicated and thus expensive, at $1,500 an order. Even at that price, it takes an average of six weeks to receive a shipment. El diablo is popular even at the exorbitant price Smylie & Son charges, so the company sets the replenishment level at an even 7,000. What is the service level it is using? a. 65% b. 73% c. 81% d. 89% ANSWER: b 51. What are the two principal decisions when using a fixed-period inventory system? a. The quantity to order and the demand during lead time b. The demand during lead time and the replenishment level c. The replenishment level and the time interval between reviews d. The time interval between reviews and the quantity to order ANSWER: c 52. The bookstore at State University orders copies of a textbook on quantitative analysis for $50 and then sells the texts to unsuspecting students for $250 each. A few weeks after the semester begins, the bookstore must return any unsold books to the publisher, who pays it $25 for each copy. Demand is strong for the quantitative analysis course, with class enrollment normally distributed with a mean of 200 and a standard deviation of 25. How many copies of the book should the bookstore order each semester? a. 184 b. 200 c. 217 d. 231 ANSWER: d 53. The bookstore at State University orders copies of a textbook on quantitative analysis for $50 and then sells the texts to unsuspecting students for $250 each. A few weeks after the semester begins, the bookstore must return any unsold books to the publisher, who pays it only $5 for each copy. Demand is strong for the quantitative analysis, with class enrollment normally distributed with a mean of 200 and a standard deviation of 25. The bookstore decides to hedge its bets by recording the professor’s classes and selling podcast subscriptions to students that arrive after all the books have sold out. It sells a podcast subscription for $25, and since it’s a digital product, the bookstore never runs out of these. How many copies of the book should the bookstore order each semester? a. 221 b. 225 c. 228 d. 231 ANSWER: a 54. The bookstore at State University orders copies of a textbook on quantitative analysis for $50 and then sells the texts to unsuspecting students for $250 each. A few weeks after the semester begins, the bookstore must return any unsold books to the publisher, who pays it only $5 for each copy. Demand is strong for the quantitative analysis, with class enrollment normally distributed with a mean of 200 and a standard deviation of 25. The bookstore decides to hedge its Copyright Cengage Learning. Powered by Cognero.

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Ch 12: Managing Inventories in Supply Chains bets by recording the professor’s classes and selling podcast subscriptions to students that arrive after all the books have sold out. It sells a podcast subscription for $25, and since it’s a digital product, the bookstore never runs out of these. What is the bookstore’s shortage cost for the quantitative analysis book? a. $150 b. $175 c. $200 d. $250 ANSWER: b 55. An apparel company offers its World Champion line of caps and t-shirts to the major North American sports organizations. The World Champion line is the caps and shirts that members of the winning teams of the Super Bowl, World Series, and NBA Championship put on immediately after the game. For the previous Super Bowl, the company bought blank stock for $5 and charged the NFL $50 per shirt. The NFL gives the losing team’s shirts away to impoverished people living in remote locations, so there is no salvage value for the apparel company. If the expected demand is normally distributed with a mean of 150 and a standard deviation of 40, how many blank shirts should the apparel company order? a. 181 b. 191 c. 201 d. 211 ANSWER: c 56. Consider the following inventory simulation table. The column labeled Random Number drives both the demand distribution and lead time distribution values. The reorder point is 4 units, and the order quantity is 7 units.

Demand Distribution Number Interval Demand 0 0.4 0 0.4 0.65 2 0.65 0.9 4 0.9 1 6 Lead Time Distribution Number Interval Lead Time 0 0.2 1 0.2 0.4 2 0.4 0.6 3 0.6 0.8 4 0.8 1 5

Day 1 2 3 4 5 6 7 8 9 10 11 12 13

Beg Inv 10

Order Rec’d

Units Rec’d 0

Random Number 0.158073 0.422413 0.225157 0.058620 0.242133 0.084502 0.518792 0.117484 0.142370 0.047039 0.433358 0.693380 0.351718

Dmd

End Inv

Back Order

What is the ending inventory for day one? a. 4 b. 6 c. 8 d. 10 Copyright Cengage Learning. Powered by Cognero.

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Ch 12: Managing Inventories in Supply Chains ANSWER: d 57. Consider the following inventory simulation table. The column labeled Random Number drives both the demand distribution and lead time distribution values. The reorder point is 4 units, and the order quantity is 7 units.

Demand Distribution Number Interval Demand 0 0.4 0 0.4 0.65 2 0.65 0.9 4 0.9 1 6 Lead Time Distribution Number Interval Lead Time 0 0.2 1 0.2 0.4 2 0.4 0.6 3 0.6 0.8 4 0.8 1 5

Day 1 2 3 4 5 6 7 8 9 10 11 12 13

Beg Inv 10

Order Rec’d

Units Rec’d 0

Random Number 0.158073 0.422413 0.225157 0.058620 0.242133 0.084502 0.518792 0.117484 0.142370 0.047039 0.433358 0.693380 0.351718

Dmd

End Inv

Back Order

Which day has a demand of four? a. 12 b. 7 c. 4 d. 2 ANSWER: a 58. Consider the following inventory simulation table. The column labeled Random Number drives both the demand distribution and lead time distribution values. The reorder point is 4 units, and the order quantity is 7 units.

Demand Distribution Number Interval Demand 0 0.4 0 0.4 0.65 2 0.65 0.9 4 0.9 1 6 Lead Time Distribution Number Interval Lead Time 0 0.2 1 0.2 0.4 2 0.4 0.6 3 0.6 0.8 4 0.8 1 5

Day 1 2 3 4 5 6 7 8 9 10 11 12 13

Beg Inv 10

Order Rec’d

Units Rec’d 0

Random Number 0.158073 0.422413 0.225157 0.058620 0.242133 0.084502 0.518792 0.117484 0.142370 0.047039 0.433358 0.693380 0.351718

Dmd

End Inv

Back Order

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Ch 12: Managing Inventories in Supply Chains When should the first order occur? a. Day 12 b. Day 11 c. Day 7 d. Day 2 ANSWER: b 59. Consider the following inventory simulation table. The column labeled Random Number drives both the demand distribution and lead time distribution values. The reorder point is 4 units, and the order quantity is 7 units.

Demand Distribution Number Interval Demand 0 0.4 0 0.4 0.65 2 0.65 0.9 4 0.9 1 6 Lead Time Distribution Number Interval Lead Time 0 0.2 1 0.2 0.4 2 0.4 0.6 3 0.6 0.8 4 0.8 1 5

Day 1 2 3 4 5 6 7 8 9 10 11 12 13

Beg Inv 10

Order Rec’d

Units Rec’d 0

Random Number 0.158073 0.422413 0.225157 0.058620 0.242133 0.084502 0.518792 0.117484 0.142370 0.047039 0.433358 0.693380 0.351718

Dmd

End Inv

Back Order

When does a back order occur? a. Day 11 b. Day 12 c. Day 13 d. A back order does not occur within the 13-day period covered by the table. ANSWER: d 60. Consider the following inventory simulation table. The column labeled Random Number drives both the demand distribution and lead time distribution values. The reorder point is 4 units, and the order quantity is 7 units.

Demand Distribution Number Interval Demand 0 0.4 0 0.4 0.65 2 0.65 0.9 4 0.9 1 6 Lead Time Distribution

Day 1 2 3 4 5 6 7

Beg Inv 10

Order Rec’d

Units Rec’d 0

Random Number 0.158073 0.422413 0.225157 0.058620 0.242133 0.084502 0.518792

Dmd

End Inv

Back Order

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Ch 12: Managing Inventories in Supply Chains Number Interval 0 0.2 0.2 0.4 0.4 0.6 0.6 0.8 0.8 1

Lead Time 1 2 3 4 5

8 9 10 11 12 13

0.117484 0.142370 0.047039 0.433358 0.693380 0.351718

Which of these days has the lowest ending inventory? a. 3 b. 6 c. 9 d. 12 ANSWER: d

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Ch 13: Supply Chain Management and Logistics True / False 1. Technology upgrades and backup systems and sites can help mitigate security risks. a. True b. False ANSWER: True 2. A high average inventory value reduces the chances of inventory obsolescence. a. True b. False ANSWER: False 3. Electronic data interchange and Internet links decrease the velocity of supply chains. a. True b. False ANSWER: False 4. Cash-to-cash conversion cycle is the average time to convert a dollar spent to acquire raw materials into a dollar collected for a finished good. a. True b. False ANSWER: True 5. Import tariffs help in preventing the dumping of low-cost products in the domestic economy. a. True b. False ANSWER: True 6. Air shipments have the lowest transportation cost and can carry unlimited weight. a. True b. False ANSWER: False Multiple Choice 7. Which of these specialize in handling all aspects of customers giving back a manufactured good or delivered service and requesting their money back, repairing the manufactured good and giving it to the customer, and/or invoking the service guarantee? a. Certified suppliers b. Process designers c. Demand forecasters d. Return facilitators ANSWER: d 8. Inventory that has been ordered but is in transit is called a. pipeline inventory. Copyright Cengage Learning. Powered by Cognero.

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Ch 13: Supply Chain Management and Logistics b. decoupling inventory. c. buffer inventory. d. anticipation inventory. ANSWER: a 9. Which function of a supply chain is responsible for selecting transportation carriers and managing company-owned fleets of vehicles? a. Integration b. Procurement c. Logistics d. Scheduling ANSWER: c 10. Managing orders, transportation, and distribution to provide goods and services is part of which function of the Supply Chain Operations Reference (SCOR) model? a. Plan function b. Source function c. Make function d. Deliver function ANSWER: d 11. If an online retail store has cost of goods sold equal to $2 million, has 200 operating days in a year, and has a total average on-hand inventory of $500,000, the cost of goods sold per day is a. $2,500. b. $7,500. c. $10,000. d. $15,000. ANSWER: c 12. Which of these is the discipline of managing the flow of materials and transportation activities to ensure adequate customer service at reasonable cost? a. Logistics b. Scheduling c. Procurement d. Integration ANSWER: a 13. Which of the following is true of purchasing? a. It can have a significant impact on total supply chain costs. b. It is critical to satisfy employees' needs and expectations. c. The delivery of goods and services is the responsibility of the purchasing function of a supply chain. d. The principal goal of purchasing is to source products from a single supplier to avoid capacity risks. ANSWER: a 14. Which of the following refers to managing the flow of finished goods, materials, or components that may be unusable Copyright Cengage Learning. Powered by Cognero.

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Ch 13: Supply Chain Management and Logistics or discarded through the supply chain from customers toward either suppliers, distributors, or manufacturers for the purpose of reuse, resale, or disposal? a. Reverse logistics b. Response management c. Process design d. Scheduling ANSWER: a 15. Any entity—real or virtual—that coordinates and shares information between buyers and sellers is a(n) a. manufacturer. b. franchisor. c. intermediary. d. investor. ANSWER: c 16. TekSupply Inc., an automobile parts supplier, held an average automobile parts inventory of $4 million last year. Its cost of goods sold was $25 million. What was the inventory turnover of the automobile parts last year? a. 2.5 b. 4.25 c. 6.25 d. 9.5 ANSWER: c 17. Which of the following is a disadvantage of vendor-managed inventory (VMI)? a. It often results in higher customer inventories than necessary. b. It does not allow vendors to view inventory needs from the customer's perspective. c. It prohibits the use of customer information, which leads to poor control of inventory and capacity. d. It prevents vendors from making production decisions using downstream customer demand data. ANSWER: a 18. In the context of measuring supply chain performance, the goal of sustainability measures is to a. reduce the order cycle time for all customers. b. have a byproduct-free production process. c. have a carbon-neutral supply chain. d. minimize the time taken to fill a customer's order. ANSWER: c 19. Speedex, an automobile company, has an annual sales volume of $3 million, cost of goods sold equal to $2 million, total average on-hand inventory of $600,000, and 150 operating days in a year. What is the daily revenue earned by the company? a. $10,000 b. $20,000 c. $30,000 d. $40,000 Copyright Cengage Learning. Powered by Cognero.

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Ch 13: Supply Chain Management and Logistics ANSWER: b 20. Which of the following best defines inventory turnover? a. It is the cost associated with repairs of goods that have been returned. b. It is the time taken to fill a customer's order. c. It is a measure of how quickly goods are moving through the supply chain. d. It is a measure of the number of perfect orders. ANSWER: c 21. Most companies expend considerable effort testing the products provided by their suppliers. Any company that is determined to have provided material of such quality that routine testing on each lot received is no longer necessary is known as a a. certified supplier. b. contract manufacturer. c. licensed franchisor. d. return facilitator. ANSWER: a 22. Which of the following is true of order amplification? a. Order amplification in the supply chain leads to the bullwhip effect. b. Large order sizes can help manage order amplification. c. Order amplification decreases as one moves back up the supply chain away from the retail customer. d. Increasing price fluctuations can help manage order amplification. ANSWER: a 23. Which of these is the supply chain function responsible for acquiring raw materials, component parts, tools, services, and other items required from external suppliers? a. Procurement b. Scheduling c. Integration d. Job design ANSWER: a 24. ProShopper, a sportswear store, held an average sportswear inventory of $10 million last year and reported an inventory turnover of 5 times per year. What was its cost of goods sold? a. $10 million b. $20 million c. $40 million d. $50 million ANSWER: d 25. In the context of the metrics used to identify improvements to the operation of supply chains, financial measures: a. include perfect order fulfillment and perfect delivery fulfillment. b. show how supply chain performance affects the bottom line. c. calculate order fulfillment lead time in supply chains. Copyright Cengage Learning. Powered by Cognero.

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Ch 13: Supply Chain Management and Logistics d. show how quickly goods move through supply chains. ANSWER: b 26. Taylor, the materials manager at a retail store, has determined that a particular product experienced 5 turns last year, with an annual sales volume of $15 million. What was the average inventory value for this product last year? a. $1 million b. $2.5 million c. $3 million d. $4.5 million ANSWER: c 27. Which of the following is NOT true about returns of sold goods? a. The key idea of returns is to reduce consumer risk when purchasing items on-line. b. In many situations, moving an item backwards in the supply chain is more costly than moving new products forward in the supply chain. c. Returned items can be resold as new, refurbished, repaired, or recycled. d. The cost of returns averages between 7 to 10 percent of the cost of goods sold, but it is decreasing. ANSWER: d 28. Inventory days’ supply (IDS) is calculated as Average total inventory divided by a. Transportation cost. b. Average sold inventory. c. Total annual sales of goods. d. Cost of goods sold per day. ANSWER: d 29. Based on the following information, how many days of supply of inventory is the firm holding (assuming 260 days of operation per year)? Do not round intermediate calculations. Round your answer to one decimal place. Sales $8,300,000 Cost of goods sold $7,540,000 Gross profit $760,000 Overhead costs $600,000 Net profit $160,000 Total inventory $2,600,000 Fixed assets $3,100,000 Long-term debt $2,300,000 a. 89.2 days b. 89.7 days c. 95.2 days d. 99.2 days ANSWER: b 30. The SCOR model is a framework for understanding supply chain management. SCOR is an acronym for a. Supply Client Organization Return. b. Source Create Organize Return. Copyright Cengage Learning. Powered by Cognero.

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Ch 13: Supply Chain Management and Logistics c. Supply Chain Operations Reference. d. Source Chain Operations Return. ANSWER: c 31. How many organizations does the SCOR model span? a. 2 b. 3 c. 4 d. 5 ANSWER: d 32. When comparing costs to purchases from different suppliers, it is best to consider a. total cost of ownership. b. sales price of each item. c. cost to return or replace defective parts. d. cost of substitute goods and/or services. ANSWER: a 33. Fastenal sends trucks from its distribution centers out to retail locations with supplies to replenish their inventory. On the way back to the distribution centers, the trucks haul packages for shipping companies from various drop-off locations along their route. This practice is known as a. deadheading. b. backhaul. c. reversing. d. the milk run. ANSWER: b 34. A supplier in China sends product to customers in the United States. What shipping modes will this supplier rely on? a. Water and truck b. Air and rail c. Air and water d. Rail and truck ANSWER: c 35. Which transportation mode is the most flexible? a. Water b. Air c. Rail d. Truck ANSWER: d 36. What are the two primary responsibilities of logistics managers? a. Purchasing transportation services and managing inventories and the movement of materials and goods through the supply chain Copyright Cengage Learning. Powered by Cognero.

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Ch 13: Supply Chain Management and Logistics b. Managing inventories and the movement of materials and goods through the supply chain and order amplification c. Screening candidates for vendor-managed inventory and order amplification d. Order amplification and screening candidates for vendor-managed inventory ANSWER: a 37. Which of these actions would be most appropriate for a supply chain manager seeking to mitigate the risk of inventory and warehouse stockouts? a. Add temporary and float pool workers. b. Add safety stock. c. Increase quality control inspections. d. Upgrade technology and add offsite system backups. ANSWER: b 38. Which of these actions would be most appropriate for a supply chain manager seeking to mitigate the risk of insufficient production capacity? a. Increase lead times. b. Add more inventory buffers between process steps. c. Schedule overtime. d. Review the current and future plans for the mix of franchise and company-owned sites. ANSWER: c 39. Which of these actions would be most appropriate for a supply chain manager seeking to mitigate the risk of supplier delivery problems? a. Champion social sustainability in the host country. b. Increase the frequency of scheduled (preventive) maintenance. c. Develop cooperative plans with competitors to share resources. d. Change order quantities. ANSWER: d 40. In order to mitigate the risk of insufficient workforce skills and availability, a supply chain manager should a. explore multicountry sourcing options. b. review their corporate value and mission statements. c. lease extra warehouse space. d. add safety stock throughout the supply chain. ANSWER: a 41. In order to reduce the impact of potential government tariffs, a supply chain manager should a. establish better demand forecasting capabilities. b. explore multicountry outsourcing to contract manufacturers and suppliers. c. upgrade software and hardware data mining technology. d. shift towards a virtual versus a direct sales channel mix. ANSWER: b 42. The county government selling online educational services to local businesses is an example of what type of Copyright Cengage Learning. Powered by Cognero.

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Ch 13: Supply Chain Management and Logistics commerce? a. B2B b. B2C c. G2B d. G2C ANSWER: c 43. Food stamps, now in the form of electronic credit cards, are an example of a. G2D. b. G2G. c. G2B. d. G2C. ANSWER: d 44. The rising popularity of online shopping has resulted in an increase in promises of free shipping and hassle-free returns. In the final analysis, it can be concluded that free returns and shipping a. are not free. b. are a requirement of e-commerce in the European Union. c. are required by most states for B2C companies. d. result in lower costs for most e-commerce transactions. ANSWER: a 45. The cost of returns in e-commerce averages between a. 4 and 7 percent. b. 7 and 10 percent. c. 10 and 13 percent. d. 13 and 17 percent. ANSWER: b 46. An initiative to take manufactured goods that might be discarded or otherwise unusable and repurpose them is a. reverse logistics. b. reverse engineering. c. manufactured goods recovery. d. recycling. ANSWER: c 47. The transmission was shot on school bus number 38, but the engine was fine. When the engine on bus 227 had issues, the mechanic pulled good engine parts from bus number 38 and installed them on bus 227 so it could deliver eager children to school the next day. This practice is called a. recycling. b. refurbishing. c. remanufacturing. d. cannibalization. ANSWER: d Copyright Cengage Learning. Powered by Cognero.

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Ch 13: Supply Chain Management and Logistics 48. Espresso machines are a popular impulse purchase, and after a few years of taking up space on the kitchen counter, are often returned to the manufacturer. The manufacturer cleans them up, replaces the seals and o-rings, applies a new coat of paint, and can then sell them as a. refurbished espresso machines. b. repaired espresso machines. c. recycled espresso machines. d. new espresso machines. ANSWER: a 49. Once again, the starter on Logan’s tractor failed, and the exasperated farmer turned to the parts department at the manufacturer. Logan had two alternatives—one starter was fresh off the assembly line and had never been used, and the other starter was originally built several years earlier and had recently been traded in. The manufacturer’s repair department completely disassembled the starter, replaced all worn-out parts, and upgraded the firmware to the current version. This starter was less expensive than the brand-new starter and was marketed as a. reimagined. b. remanufactured. c. repaired. d. recycled. ANSWER: b 50. Which of the following activities are part of the reverse logistics process? a. Human resources b. Manufacturing c. Call center service d. Training ANSWER: c 51. Which of these statements about reverse logistics is true? a. By definition, material in reverse logistics must move up the supply chain through the producer and back to the suppliers. b. Material in a reverse logistics process is all returned to the manufacturer. c. Of the primary disciplines in a company, marketing and accounting do not play a role in reverse logistics. d. In many firms, the forward supply chain operates independently of reverse logistics activities. ANSWER: d 52. A recent study determined that a company can recover what percent of annual sales with a good reverse logistics system? a. 0.3 percent b. 3 percent c. 13 percent d. 30 percent ANSWER: a 53. The tire shop sold new tires to customers and offered lifetime flat repair services. They took old, worn-out tires from their customers and sent them to a processing center where they were shredded. These rubber chips were used for asphalt Copyright Cengage Learning. Powered by Cognero.

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Ch 13: Supply Chain Management and Logistics roads, mulch, and could even be turned back into tires. This is an example of a. refurbishing. b. recycling. c. remanufacturing. d. repairing. ANSWER: b 54. The supply chain manager for a French airframe manufacturer in Toulouse is weighing options among four different suppliers of toggle switches. The manufacturer uses 300,000 toggle switches a year (a work year is 250 days) and prefers to order 15,000 at a time. All costs shown in the following table are based on that order quantity. Albanian Bulgarian Czech Procurement $7.65 $7.75 $14.95 Mgt oversight $6.55 $6.35 $6.75 Unit transport $0.60 $6.70 $3.30 Order cost $625.00 $630.20 $626.30 Holding cost $4.55 $8.45 $3.75 Lead time $60.00 $64.20 $59.50 Which of these suppliers has the highest procurement cost? a. Albanian b. Bulgarian c. Czech d. Danish ANSWER: c

Danish $11.45 $7.85 $3.70 $632.20 $8.95 $61.10

55. The supply chain manager for a French airframe manufacturer in Toulouse is weighing options among four different suppliers of toggle switches. The manufacturer uses 300,000 toggle switches a year (a work year is 250 days) and prefers to order 15,000 at a time. All costs shown in the following table are based on that order quantity. Albanian Bulgarian Czech Procurement $7.65 $7.75 $14.95 Mgt oversight $6.55 $6.35 $6.75 Unit transport $0.60 $6.70 $3.30 Order cost $625.00 $630.20 $626.30 Holding cost $4.55 $8.45 $3.75 Lead time $60.00 $64.20 $59.50 What is the average pipeline inventory cost for the Danish supplier? a. $641,820 b. $644,648 c. $650,988 d. $656,214 ANSWER: d

Danish $11.45 $7.85 $3.70 $632.20 $8.95 $61.10

56. The supply chain manager for a French airframe manufacturer in Toulouse is weighing options among four different suppliers of toggle switches. The manufacturer uses 300,000 toggle switches a year (a work year is 250 days) and prefers to order 15,000 at a time. All costs shown in the following table are based on that order quantity. Copyright Cengage Learning. Powered by Cognero.

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Ch 13: Supply Chain Management and Logistics Albanian Bulgarian Procurement $7.65 $7.75 Mgt oversight $6.55 $6.35 Unit transport $0.60 $6.70 Order cost $625.00 $630.20 Holding cost $4.55 $8.45 Lead time $60.00 $64.20 Which supplier has the lowest total supply chain cost? a. Albanian b. Bulgarian c. Czech d. Danish ANSWER: a

Czech $14.95 $6.75 $3.30 $626.30 $3.75 $59.50

Danish $11.45 $7.85 $3.70 $632.20 $8.95 $61.10

57. The supply chain manager for a French airframe manufacturer in Toulouse is weighing options among four different suppliers of toggle switches. The manufacturer uses 200,000 toggle switches a year (a work year is 250 days) and prefers to order 10,000 at a time. All costs shown in the following table are based on that order quantity. Albanian Bulgarian Procurement $7.65 $7.75 Mgt oversight $6.55 $6.35 Unit transport $0.60 $6.70 Order cost $625.00 $630.20 Holding cost $4.55 $8.45 Lead time $60.00 $64.20 Which supplier has the lowest total supply chain cost? a. Albanian b. Bulgarian c. Czech d. Danish ANSWER: b

Czech $14.95 $6.75 $3.30 $626.30 $3.75 $59.50

Danish $11.45 $7.85 $3.70 $632.20 $8.95 $61.10

58. Los Pollos Hermanos does a brisk business in the southwestern United States with annual sales of $275 million and annual cost of goods sold of $35 million. It operates 312 days a year and on average have inventory of $82 million, accounts receivable of $11 million, and accounts payable of $3.5 million. What is its inventory days’ supply? a. 711 b. 721 c. 731 d. 741 ANSWER: c 59. Los Pollos Hermanos does a brisk business in the southwestern United States with annual sales of $275 million and annual cost of goods sold of $35 million. It operates 312 days a year and on average have inventory of $82 million, accounts receivable of $11 million, and accounts payable of $3.5 million. What is its accounts receivable days’ supply? a. 9.72 Copyright Cengage Learning. Powered by Cognero.

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Ch 13: Supply Chain Management and Logistics b. 10.68 c. 11.52 d. 12.48 ANSWER: d 60. Los Pollos Hermanos does a brisk business in the southwestern United States with annual sales of $275 million and annual cost of goods sold of $35 million. It operates 312 days a year and on average have inventory of $82 million, accounts receivable of $11 million, and accounts payable of $3.5 million. What is its cash-to-cash conversion cycle? a. 739.5 b. 755.5 c. 781.5 d. 807.5 ANSWER: a

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Ch 14: Resource Management True / False 1. The purpose of a master production schedule (MPS) is to break down the aggregate planning decisions into such details as order sizes and schedules for individual subassemblies and resources by week and day. a. True b. False ANSWER: False 2. Enterprise resource planning (ERP) systems integrate all aspects of a business into a unified information system. a. True b. False ANSWER: True 3. In industries where jobs have low skill requirements, changing workforce levels can be cost effective. a. True b. False ANSWER: True 4. Resource management for most service-providing organizations generally requires as many intermediate levels of planning as it does for manufacturing. a. True b. False ANSWER: False Multiple Choice 5. The lot-for-lot (LFL) rule is best applied when a. inventory-carrying costs are high. b. space constraints are low. c. costs associated with purchase orders are high. d. setup costs are moderate. ANSWER: a 6. Which of the following is true of a master production schedule (MPS)? a. Its primary output is a time-phased report for scheduling raw materials purchase. b. It provides a means for evaluating alternative schedules in terms of capacity requirements. c. Its input is obtained from the materials requirements planning. d. It projects the requirements for the individual parts based on the demand for the finished goods. ANSWER: b 7. A company currently has no items in inventory. The demand for the next four months is 200, 400, 250, and 350 units. Assuming a level production rate of 350 units per month, determine the ending inventory at the end of the fourth month. a. 100 b. 150 c. 200 Copyright Cengage Learning. Powered by Cognero.

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Ch 14: Resource Management d. 250 ANSWER: c 8. In a garments factory, a part requires 0.10 hours of labor per unit in Work Center B and 1 hour of setup time. The planned order release (order size) for a week is 2000 units. Which of the following is the capacity requirement for a week at Work Center B? a. 101 hours b. 151 hours c. 201 hours d. 251 hours ANSWER: c 9. In manufacturing, a statement of how many finished items are to be produced and when they are to be produced is called a a. master production schedule. b. capacity requirements plan. c. materials requirements plan. d. planned order receipt. ANSWER: a 10. A company currently has 100 items in inventory. The demand for the next four months is 500, 800, 900, and 300 units. Determine the monthly production rate if a level strategy is selected with the goal of ending the fourth month with 400 units in inventory. a. 500 units/month b. 700 units/month c. 900 units/month d. 1,100 units/month ANSWER: b 11. Capacity requirements are computed by multiplying the number of units scheduled for production at a work center by the a. unit resource requirements and then adding in the setup time. b. setup time and then subtracting the unit resource requirements. c. setup time and then adding in the unit resource requirements. d. unit resource requirements and then subtracting the setup time. ANSWER: a 12. Which of the following statements is true of aggregate planning? a. It is not driven by demand forecasts. b. It includes detailed staff schedules. c. It helps in defining budget allocations and associated resource requirements. d. It does not translate forecast into production plans. ANSWER: c 13. Which of the following is true of a level production strategy? Copyright Cengage Learning. Powered by Cognero.

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Ch 14: Resource Management a. Labor schedules are dynamic. b. Equipment schedules are stable. c. There are no capacity restrictions. d. The production rate keeps changing. ANSWER: b 14. Which of the following lot sizing rules bases the order quantity on a standard-size container or pallet load? a. The lot-for-lot rule b. The fixed-order quantity rule c. The periodic-order quantity rule d. The gross requirements rule ANSWER: b 15. A company currently has 500 items in inventory. The demand for the next 2 months is 900 and 1,200 units. Assuming a level production rate of 1,000 units per month, determine the ending inventory at the end of the second month. a. 300 units b. 400 units c. 500 units d. 600 units ANSWER: b 16. For goods-producing firms, at which of the following levels of resource planning does scheduling for individual subassemblies and resources by week and day take place? a. Aggregate planning b. Disaggregation c. Execution d. Demand forecasting ANSWER: b 17. In the context of aggregate planning options, which of the following costs are an implication of allowing stockouts? a. Inventory-carrying costs b. Lost sales and customer loyalty costs c. High labor costs and premiums d. Separation costs ANSWER: b 18. Which of the following is the process of translating aggregate plans into short-term operational plans that provide the basis for weekly and daily schedules and detailed resource requirements? a. Aggregation b. Execution c. Disaggregation d. Enterprise resource planning ANSWER: c Copyright Cengage Learning. Powered by Cognero.

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Ch 14: Resource Management 19. Which of the following is true of the lot-for-lot (LFL) rule? a. It minimizes the costs associated with production setups. b. It ignores the costs associated with purchase orders. c. It maximizes the amount of inventory that needs to be carried. d. It masks the true nature of dependent demand. ANSWER: b 20. The periodic-order quantity (POQ) can be determined using an economic time interval, which is the economic order quantity (EOQ) divided by a. on-hand inventory. b. annual demand. c. gross requirements. d. total required inventory. ANSWER: b 21. Which of these is the process of determining the amount of labor and machine resources required to accomplish the tasks of production on a more detailed level, taking into account all component parts and end items in the materials plan? a. Capacity requirements planning b. Materials requirements planning explosion c. Disaggregation d. Execution ANSWER: a 22. Which of the following refers to moving work from one workstation to another, assigning people to tasks, setting priorities for jobs, scheduling equipment, and controlling processes? a. Aggregate planning b. Disaggregation c. Capacity planning d. Execution ANSWER: d 23. Which of the following lot sizing rules is best applied when setup or order costs are high? a. The fixed-order quantity rule b. The lot-for-lot rule c. The periodic-order quantity rule d. The gross requirements rule ANSWER: a 24. The quantity of a component needed to support production at the next-higher level of assembly is called a. planned order receipts. b. scheduled receipts. c. explosions. d. gross requirements. ANSWER: d Copyright Cengage Learning. Powered by Cognero.

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Ch 14: Resource Management 25. Which of these is the process of using the logic of dependent demand to calculate the quantity and timing of orders for all subassemblies and components that go into and support the production of the end item(s)? a. Final assembly schedule b. Materials requirements planning explosion c. Disaggregation d. Capacity requirements planning ANSWER: b 26. Which of these models seeks to determine quantities of different products to produce and sell in order to maximize contribution to profit? a. Product mix b. Process selection c. Linear optimization d. Linear regression ANSWER: a 27. Which of the following is true of process selection models? a. The objective is usually to minimize cost, and typical constraints are meeting demand requirements and resource limitations. b. The goal is to use machines with identical capabilities. c. They seek to determine quantities of different products to produce and sell in order to maximize contribution to profit. d. Typical constraints include marketing requirements such as minimum and maximum amounts to produce. ANSWER: a 28. JamTime Music Company manufactures two types of headsets: a basic model and a professional model. In order to manufacture the headsets, they go through two departments: assembly and testing. The assembly department has 9 workers who work 8 hours/day each. The testing department has 3 workers who also work 8 hours/day each. Each basic headset model spends 3 hours in the assembly department and 1.5 hours in the testing department. Each professional headset model spends 5 hours in the assembly department and 3 hours in the testing department. The company makes a net profit of $100 for each basic headset and $175 for each professional headset. JamTime Music Co. predicts that it will sell at least two times as many basic models as professional models. Using this information, determine the objective function to maximize profit. Use the variable B for the number of basic model headsets and P for the number of professional model headsets. a. 5B + 3P b. 3B + 5P c. 100B + 175P d. 175B + 100P ANSWER: c 29. The resource planning framework breaks down the process into three levels. Which of these process steps takes place in level 3? a. Forecasting b. Aggregate planning c. Disaggregation d. Execution Copyright Cengage Learning. Powered by Cognero.

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Ch 14: Resource Management ANSWER: d 30. Le Bon Pain produces a variety of sweet and savory breads for retail purchase. Next month’s forecast calls for 10,000 pounds of bread. Entering the month, the manager believes that the 10,000 pounds will break down into 5,000 pounds of savory breads and 5,000 sweet breads, with 3,000 of those being dessert breads and 2,000 being breakfast pastries. Those breakfast pastries can further be broken down into a specific number of donuts, cinnamon rolls, apple fritters, and Danish that will be needed each day. This action is an example of a. disaggregation. b. aggregation. c. estimation. d. translation. ANSWER: a 31. Which of these pairs of process steps in resource management planning is correct? a. Disaggregation comes before aggregate planning. b. Forecasting comes before aggregate planning. c. Execution comes before aggregation. d. Execution comes before disaggregation. ANSWER: b 32. What is the typical time frame considered by aggregate planning? a. One month to six months b. Six months to one year c. One to two years d. Two to five years ANSWER: c 33. Which of these are considered resources in the context of resource planning? a. Accounting, marketing, and operations b. Equipment, facilities, and utilities c. Materials, utilities, and facilities d. People, technical knowledge, and information ANSWER: d 34. According to the resource management planning framework, what is an input to the forecasting process? a. Global and country economic conditions and analysis b. Resource costs and availability c. Financial health of firm and industry d. Shop floor control ANSWER: a 35. Which of these aggregate planning options falls primarily outside the purview of the operations function? a. Inventory changes b. Demand management c. Production-rate changes Copyright Cengage Learning. Powered by Cognero.

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Ch 14: Resource Management d. Subcontracting ANSWER: b 36. Which of these aggregate planning options results in customers not receiving their goods when they are ordered? a. Overtime b. Subcontracting c. Backorders d. Hiring ANSWER: c 37. Which of these aggregate planning options results in long-term expenses for the company? a. Production-rate changes b. Subcontracting c. Hiring d. Facilities and equipment ANSWER: d 38. Hiring and layoffs are reasonable approaches in aggregate planning when a. jobs have low skill requirements. b. the company is providing goods of any kind. c. the company is providing services of any kind. d. jobs have high skill requirements. ANSWER: a 39. Which of these aggregate planning options results in increased output for the company that adopts it? a. Back orders b. Overtime c. Lost Sales d. Undertime ANSWER: b 40. Bonci’s Pizzeria can’t meet all of its customer demand, so it decides to use backorders and lost sales as an aggregate planning tool. What is the difference between a backorder and a lost sale? a. A backorder will take longer to get the product in the customer’s hands. b. A lost sale will be produced before a backorder. c. A backorder will ultimately result in revenue for Bonci’s, but a lost sale will not. d. A lost sale will require labor and materials, but a backorder will not. ANSWER: c 41. Which of these aggregate planning options will result in increased revenue and lower unit costs? a. Overtime b. Layoffs c. Anticipation inventory d. Pricing strategies Copyright Cengage Learning. Powered by Cognero.

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Ch 14: Resource Management ANSWER: d 42. Primo Pots and Pans Company enters month 1 with 100 units in inventory and demand forecasts of 600 for month 1, 800 for month 2, and 1,200 for month 3. It elects to adopt a chase demand production strategy for this three-month period. How many units will it produce in month 2? a. 800 b. 733 c. 700 d. 600 ANSWER: a 43. Bells and Whistles Company’s three-month planning period indicated demand of 500 units in month 1 followed by 800 units in month 2 and 600 units in month 3. The production costs fluctuated each month, at $11 per unit for the first month, $12 for the second month, and $15 for the third. Holding costs were constant over the period though, at $2 per unit for each unit in inventory at the end of the month. What is the objective function for a linear programming solution to this aggregate planning conundrum? a. Min Quantity = P1 + P2 + P3 + I1 + I2 + I3 b. Min Cost = $11P1 + $12P2 + $15P3 + $2(I1 + I2 + I3) c. Min Quantity = P1 + P2 + P3 d. Min Cost = ($11 + $2)P1 + ($12 + $2)P2 + ($15 + $2)P3 ANSWER: b 44. Bells and Whistles Company’s three-month planning period indicated demand of 500 units in month 1 followed by 800 units in month 2 and 600 units in month 3. The production costs fluctuated each month, at $11 per unit for the first month, $12 for the second month, and $15 for the third. Holding costs were constant over the period though, at $2 per unit for each unit in inventory at the end of the month. What is a constraint for a linear programming solution to this aggregate planning conundrum? a. I1 + P2 + D2 = I2 b. P1 + P2 + P3 = 1,900 c. I1 + P2 -D2 = I2 d. I2 + P2 -D2 = I2 ANSWER: c 45. Bells and Whistles Company’s three-month planning period indicated demand of 500 units in month 1 followed by 800 units in month 2 and 600 units in month 3. The production costs fluctuated each month, at $11 per unit for the first month, $12 for the second month, and $15 for the third. Holding costs were constant over the period though, at $2 per unit for each unit in inventory at the end of the month. What is the minimum cost solution for a linear programming solution to this aggregate planning conundrum? a. P1 = 1,900, P2 = 0, P3 = 0 b. P1 = 500, P2= 800, P3 = 600 c. P1 = 500, P2 = 1,400, P3 = 0 d. P1 = 0, P2=1,900, P3 = 600 ANSWER: d Copyright Cengage Learning. Powered by Cognero.

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Ch 14: Resource Management 46. Bells and Whistles Company’s three-month planning period indicated demand of 500 units in month 1 followed by 800 units in month 2 and 600 units in month 3. The production costs fluctuated each month, at $11 per unit for the first month, $12 for the second month, and $15 for the third. Holding costs were constant over the period though, at $2 per unit for each unit in inventory at the end of the month. What is the minimum cost for a linear programming solution to this aggregate planning conundrum? a. $23,500 b. $24,100 c. $24,900 d. $25,600 ANSWER: a 47. Sky’s Edge produces an unsmart cellular phone with a rotary dial, an LED digital display, and no applications. Its production cost is $125 per unit with a holding cost of $2/unit/month, a lost sales cost of $175/unit, and an overtime cost of 30/unit. The normal production rate is 1,200 units per month, and the beginning inventory at the start of this period is 200 units. If the demand is as shown in the following table, what is the cost of a chase plan? January February March April May June Demand 1,200 1,500 2,000 2,300 1,800 900 a. $812,500 b. $902,500 c. $912,500 d. $922,500 ANSWER: b 48. Sky’s Edge produces an unsmart cellular phone with a rotary dial, an LED digital display, and no applications. Its production cost is $125 per unit with a holding cost of $2/unit/month, a lost sales cost of $175/unit, and an overtime cost of 30/unit. The normal production rate is 1,200 units per month, and the beginning inventory at the start of this period is 200 units. If the demand is as shown in the following table, what is the lowest cost level output plan? January February March April May June Demand 1,200 1,500 2,000 2,300 1,800 900 a. $1,112,250 b. $1,142,250 c. $1,173,250 d. $1,203,250 ANSWER: c 49. Norm and his buddies make shelving units, bathroom vanities, and kitchen islands in their spare time. The kitchen islands sell for $1,100, the shelving units sell for $500, and the bathroom vanities sell for $950. For a typical month, the team has 1,000 board feet of lumber, 400 hours of assembly time, and 100 hours of fabrication time available. Each kitchen island uses 40 board feet of lumber, takes 50 hours to assemble, and requires 3 hours of fabrication time. A shelving unit needs 30 board feet of lumber and requires 10 hours of assembly and 1 hour of fabrication. A bathroom vanity takes 25 board feet of lumber and 30 hours of assembly and 4 hours of fabrication. What is the objective function in this scenario? a. (40 × Island) + (30 × Shelves) + (25 × Vanity) ≤ 1,000 b. Max Revenue = $2,550 × (Island + Shelves + Vanity) c. (40 × Island) + (30 × Shelves) + (25 × Vanity) = 1,000 Copyright Cengage Learning. Powered by Cognero.

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Ch 14: Resource Management d. Max Revenue = ($1,100 × Island) + ($500 × Shelves) + ($950 × Vanity) ANSWER: d 50. Norm and his buddies make shelving units, bathroom vanities, and kitchen islands in their spare time. The kitchen islands sell for $1,100, the shelving units sell for $500, and the bathroom vanities sell for $950. For a typical month, the team has 1,000 board feet of lumber, 400 hours of assembly time, and 100 hours of fabrication time available. Each kitchen island uses 40 board feet of lumber, takes 50 hours to assemble, and requires 3 hours of fabrication time. A shelving unit needs 30 board feet of lumber and requires 10 hours of assembly and 1 hour of fabrication. A bathroom vanity takes 25 board feet of lumber and 30 hours of assembly and 4 hours of fabrication. Which of these is an appropriate constraint? a. (40 × Island) + (30 × Shelves) + (25 × Vanity) ≤ 1,000 b. (40 × Island) + (30 × Shelves) + (25 × Vanity) = 1,000 c. (40 × Island) + (30 × Shelves) + (25 × Vanity) = (50 × Island) + (10 × Shelves) + (30 × Vanity) d. (50 × Island) + (10 × Shelves) + (30 × Vanity) ≥ 40 ANSWER: a 51. Norm and his buddies make shelving units, bathroom vanities, and kitchen islands in their spare time. The kitchen islands sell for $1,100, the shelving units sell for $500, and the bathroom vanities sell for $950. For a typical month, the team has 1,000 board feet of lumber, 400 hours of assembly time, and 100 hours of fabrication time available. Each kitchen island uses 40 board feet of lumber, takes 50 hours to assemble, and requires 3 hours of fabrication time. A shelving unit needs 30 board feet of lumber and requires 10 hours of assembly and 1 hour of fabrication. A bathroom vanity takes 25 board feet of lumber and 30 hours of assembly and 4 hours of fabrication. What is the best product mix in this scenario? a. 25 kitchen islands, 0 shelving units, and 0 bathroom vanities b. 0 kitchen islands, 30.77 shelving units, and 3.07 bathroom vanities c. 5 kitchen islands, 0 shelving units, and 5 bathroom vanities d. 6 kitchen islands, 10 shelving units, and 0 bathroom vanities ANSWER: b 52. Norm and his buddies make shelving units, bathroom vanities, and kitchen islands in their spare time. The kitchen islands sell for $1,100, the shelving units sell for $500, and the bathroom vanities sell for $950. For a typical month, the team has 1,000 board feet of lumber, 400 hours of assembly time, and 100 hours of fabrication time available. Each kitchen island uses 40 board feet of lumber, takes 50 hours to assemble, and requires 3 hours of fabrication time. A shelving unit needs 30 board feet of lumber and requires 10 hours of assembly and 1 hour of fabrication. A bathroom vanity takes 25 board feet of lumber and 30 hours of assembly and 4 hours of fabrication. What is the optimal revenue for this scenario? a. $17,419 b. $17,712 c. $18,307 d. $19,211 ANSWER: c 53. Norm and his buddies make shelving units, bathroom vanities, and kitchen islands in their spare time. The kitchen islands sell for $1,100, the shelving units sell for $500, and the bathroom vanities sell for $950. For a typical month, the team has 1,000 board feet of lumber, 400 hours of assembly time, and 100 hours of fabrication time available. Each kitchen island uses 40 board feet of lumber, takes 50 hours to assemble, and requires 3 hours of fabrication time. A shelving unit needs 30 board feet of lumber and requires 10 hours of assembly and 1 hour of fabrication. A bathroom Copyright Cengage Learning. Powered by Cognero.

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Ch 14: Resource Management vanity takes 25 board feet of lumber and 30 hours of assembly and 4 hours of fabrication. Which of these product mixes exceeds the resources available? a. 6 kitchen islands, 10 shelving units, and 0 bathroom vanities b. 5 kitchen islands, 0 shelving units, and 5 bathroom vanities c. 0 kitchen islands, 7 shelving units, and 11 bathroom vanities d. 4 kitchen islands, 0 shelving units, and 7 bathroom vanities ANSWER: d 54. Norm and his buddies make shelving units, bathroom vanities, and kitchen islands in their spare time. The kitchen islands sell for $1,100, the shelving units sell for $500, and the bathroom vanities sell for $950. For a typical month, the team has 1,000 board feet of lumber, 400 hours of assembly time, and 100 hours of fabrication time available. Each kitchen island uses 40 board feet of lumber, takes 50 hours to assemble, and requires 3 hours of fabrication time. A shelving unit needs 30 board feet of lumber and requires 10 hours of assembly and 1 hour of fabrication. A bathroom vanity takes 25 board feet of lumber and 30 hours of assembly and 4 hours of fabrication. What are the implications of allowing negative values of the decision variables in a linear programming analysis of this scenario? a. A product with a negative value could be disassembled and the lumber, fabrication hours, and assembly hours could be used on a different product. b. Negative values have no impact on this linear programming model. c. The negative units would contribute to profit just like any products with positive values. d. If one of these products has a negative value, it has the same impact as a product having a production quantity of zero. ANSWER: a 55. It takes Hui 30 minutes to prep her painting rig, and once she is ready to paint, she can cover 20 square feet in a minute. How long will it take to paint a 336-square-foot bedroom? a. 61.8 minutes b. 46.8 minutes c. 31.8 minutes d. 16.8 minutes ANSWER: b 56. It takes Grant an hour and a half to prep a job and get his welding rig ready, and once he is ready to weld, Grant can weld a joint every five minutes. A typical trailer has 110 joints. How long will it take to weld it together? a. 9 hours and 10 minutes b. 9 hours and 55 minutes c. 10 hours and 40 minutes d. 11 hours and 30 minutes ANSWER: c 57. The university president’s office is prepping for the incoming freshmen next week and must assemble information packets and books for each group of students. The information packets are assembled by a team that requires a 45-minute setup each morning and 2 minutes for each packet thereafter. The bookstore needs an hour for a setup each morning and 5 minutes to pick the books for each student. Monday Tuesday Wednesday Thursday Friday Business Lib Arts Education Math-Sci Fine Arts 600 350 800 500 40 Copyright Cengage Learning. Powered by Cognero.

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Ch 14: Resource Management How much time is needed by the information packet team to complete the work for the week? a. 74 hours and 25 minutes b. 76 hours and 15 minutes c. 78 hours and 45 minutes d. 80 hours and 5 minutes ANSWER: d 58. The university president’s office is prepping for the incoming freshmen next week and must assemble information packets and books for each group of students. The information packets are assembled by a team that requires a 45-minute setup each morning and 2 minutes for each packet thereafter. The bookstore needs an hour for a setup each morning and 5 minutes to pick the books for each student. Monday Tuesday Wednesday Thursday Friday Business Lib Arts Education Math-Sci Fine Arts 600 350 800 500 40 How much time is needed by the bookstore team to complete the work for the week? a. 195 hours and 50 minutes b. 197 hours and 40 minutes c. 199 hours and 30 minutes d. 201 hours and 20 minutes ANSWER: a 59. The university president’s office is prepping for the incoming freshmen next week and must assemble information packets and books for each group of students. The information packets are assembled by a team that requires a 45-minute setup each morning and 2 minutes for each packet thereafter. The bookstore needs an hour for a setup each morning and 5 minutes to pick the books for each student. Monday Tuesday Wednesday Thursday Friday Business Lib Arts Education Math-Sci Fine Arts 600 350 800 500 40 How much time is needed to complete the work for the week? a. 273 hours and 5 minutes b. 275 hours and 55 minutes c. 277 hours and 45 minutes d. 279 hours and 35 minutes ANSWER: b 60. What is the name of the capacity requirements planning report that will show how much labor is needed at each workstation on a week-by-week basis? a. Bill of materials b. Requirements plan c. Work center load report d. Bill of labor ANSWER: c

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Ch 15: Operations Scheduling and Sequencing True / False 1. Different industries use different software packages for scheduling because every industry has different problem structures. a. True b. False ANSWER: True 2. Customized scheduling spreadsheets use readily available software such as Microsoft Excel but may be rather expensive to develop. a. True b. False ANSWER: True 3. The Clarke-Wright Method is used to solve the common scheduling problem in logistics that involves determining routes from a central depot or warehouse to many customers. a. True b. False ANSWER: True 4. Two examples of process-focused performance measures for sequencing rules are tardiness and lateness. a. True b. False ANSWER: False 5. In priority dispatching rules, the acronym FNO stands for feasible number of operations remaining. a. True b. False ANSWER: False Multiple Choice 6. In the context of operations management, which of these refers to the assignment of start and completion times to particular jobs, people, or equipment? a. Scheduling b. Appointing c. Statistical forecasting d. Demand planning ANSWER: a 7. Bar charts are used to a. develop a factory layout. b. track inventory levels over time. c. monitor planned schedules. d. forecast personnel requirements. Copyright Cengage Learning. Powered by Cognero.

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Ch 15: Operations Scheduling and Sequencing ANSWER: c 8. In the context of sequencing, the rule that minimizes the average lateness of a set of jobs is the a. shortest processing time rule. b. earliest due date rule. c. first come, first served rule. d. fewest number of operations remaining rule. ANSWER: a 9. In the context of sequencing, the shortest processing time (SPT) rule tends to a. maximize the number of jobs in the system. b. maximize average flow time. c. minimize resource utilization. d. minimize work-in-process inventory. ANSWER: d 10. In a two-resource sequencing problem, a. the processing time for each job on each resource is unknown. b. flow time is maximized. c. the goal is to minimize makespan. d. a job can be processed by either of its resources in any sequence. ANSWER: c 11. Five jobs are ready for processing at time zero through a workstation. The details regarding the processing time and the due date of completion are provided in the following table. Job Processing Time (days) Due Date A 6 10 B 5 17 C 2 13 D 3 9 E 4 15 Using the earliest due date (EDD) rule, the average tardiness of the five jobs is: a. more than 0.1 but less than or equal to 0.3 day. b. more than 0.3 but less than or equal to 0.5 day. c. more than 0.5 but less than or equal to 0.7 day. d. more than 0.7 but less than or equal to 0.9 day. ANSWER: c 12. A requirement of two-resource sequencing rule is that a. all jobs must begin at the same time. b. each job must be processed first on the first resource and then on the second. c. a maximum of two jobs can be processed at a time on each resource. d. total processing time must be minimized. ANSWER: b Copyright Cengage Learning. Powered by Cognero.

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Ch 15: Operations Scheduling and Sequencing 13. A movie theater requires the following minimum number of employees, each of whom is required to have two consecutive days off. Day: Mon. Tue. Wed. Thur. Fri. Sat. Sun. Minimum Number of Employees 1 1 3 2 5 4 3 Required Using the staff scheduling method, it is determined that the number of employees required as per the final employee schedule is a. 3. b. 4. c. 5. d. 6. ANSWER: c 14. There are five jobs in a factory. Each of these jobs has to go through two workstations for processing. Each job is processed on Workstation #1 and then on Workstation #2. The processing time for each job on each workstation is given below. Job Time on Workstation #1(minutes) Time on Workstation #2(minutes) A 50 50 B 20 8 C 25 50 D 30 12 E 11 22 F 11 19 Using Johnson's sequencing rule, it can be concluded that the makespan of the sequence is a. more than 50 but less than or equal to 100 minutes. b. more than 100 but less than or equal to 150 minutes. c. more than 150 but less than or equal to 200 minutes. d. more than 200 but less than or equal to 250 minutes. ANSWER: c 15. Five jobs are ready for processing at time zero through a workstation. The details of the processing time and the due date of completion is provided in the following table. Job Processing Time (days) Due Date A 6 18 B 3 14 C 4 9 D 5 19 E 2 11 Using the earliest due date (EDD) rule, the average flow time for the five jobs is a. more than 8 but less than or equal to 10 days. b. more than 10 but less than or equal to 12 days. c. more than 12 but less than or equal to 14 days. d. more than 14 but less than or equal to 16 days. ANSWER: c 16. An electronic gadgets store requires the following minimum number of employees, each of whom is required to have Copyright Cengage Learning. Powered by Cognero.

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Ch 15: Operations Scheduling and Sequencing two consecutive days off. Day: Mon. Tue. Wed. Thur. Fri. Sat. Sun. Minimum employees 9 2 8 6 9 1 3 required: If there are no day offs provided on Thursday and Friday, the number of employees required to work on Thursday as per the final employee schedule is a. 9. b. 10. c. 11. d. 12. ANSWER: b 17. In the context of operations management, triage nurses deciding on the order in which emergency patients are to be treated is an example of a. appointing. b. sequencing. c. statistical forecasting. d. demand planning. ANSWER: b 18. Five jobs are ready for processing at time zero through a workstation. The details of the processing time and the due date of completion is provided in the following table. Job Processing Time (days) Due Date A 8 12 B 4 9 C 3 6 D 7 7 E 5 20 Using the shortest processing time (SPT) rule, it can be concluded that the average flow time for these five jobs is a. more than 8 but less than or equal to 10 days. b. more than 10 but less than or equal to 12 days. c. more than 12 but less than or equal to 14 days. d. more than 14 but less than or equal to 16 days. ANSWER: c 19. In the context of sequencing, the earliest due date (EDD) rule a. minimizes the maximum jobs past due. b. maximizes average flow time of jobs past due. c. maximizes resource utilization of jobs past due. d. minimizes the average processing time of jobs past due. ANSWER: a 20. A new surgical facility called Cut & Sew has opened in the United States. The branches of the facility are spread throughout the country. These are job shops that handle a variety of outpatient surgical procedures. The process of the facility is set up in a way that one doctor will cut and another will sew. The data regarding the patients and the estimated Copyright Cengage Learning. Powered by Cognero.

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Ch 15: Operations Scheduling and Sequencing time for cutting and sewing for each patient are given in the following table: Patient Cut Time (hours) Sew Time (hours) A 2.3 2.8 B 2.5 3.0 C 2.0 1.5 D 0.6 1.0 E 3.6 2.6 Using Johnson's sequencing rule, the final sequence of the patients is a. A-B-C-D-E. b. B-E-A-C-D. c. C-A-B-E-D. d. D-A-B-E-C. ANSWER: d 21. In the context of sequencing, the time needed to process a given set of jobs is called a. flow time. b. makespan. c. lateness. d. tardiness. ANSWER: b 22. Five jobs are ready for processing at time zero through a workstation. The details of the processing time and the due date of completion is provided in the following table. Job Processing Time (days) Due Date A 5 11 B 6 16 C 3 19 D 4 10 E 2 9 Using the earliest due date (EDD) rule, the average lateness for the five jobs is a. more than –6 but less than or equal to –2 days. b. more than –2 but less than or equal to 2 days. c. more than 2 but less than or equal to 6 days. d. more than 4 but less than or equal to 8 days. ANSWER: b 23. In the context of sequencing, the difference between the completion time and the due date of a job is known as a. flow time. b. makespan. c. lateness. d. tardiness. ANSWER: c 24. In the context of sequencing, which of these refers to the amount of time by which the completion time exceeds the due date of a job? a. Flow time Copyright Cengage Learning. Powered by Cognero.

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Ch 15: Operations Scheduling and Sequencing b. Makespan c. Lateness d. Tardiness ANSWER: d 25. The following six jobs are to be scheduled on a single machine: Job 1 2 3 4 5 6 Processing time (min.) 80 130 210 120 150 110 Suppose the jobs are processed in shortest processing time order. Compute the average flowtime after each job is completed. Round your answer to two decimal places. a. 401.67 b. 391.97 c. 416.67 d. 422.67 ANSWER: a 26. Aiyana’s Printing and Pressing Company is a t-shirt printing shop with four processes: printing (P1), pressing (P2), sealing (S), and finishing (F). The arrival time and processing sequence for three upcoming jobs is shown below. Job Arrival Time Processing Sequence (Processing Time in minutes) 1 0 P1(10), P2(20), S(15), F(10) 2 10 P1(10), P2(10), S(15) 3 20 P1(20), S(5), F(10) Using the FNO rule, what scheduling decision should the dispatcher make at time 45? a. Job 3 should start on the sealing machine. b. Job 2 should start on the sealing machine. c. Job 1 should start on the pressing machine. d. Job 3 should start on the pressing machine. ANSWER: b 27. The first step in implementing the Clarke-Wright Method is to compute the savings for all pairs of customers. A local restaurant franchise has four locations in one city. Each week, cases of taco shells must be delivered from the central warehouse to the restaurants. The table below shows the travel time in minutes between the locations (1, 2, 3, 4), as well as to and from the warehouse (0). Delivery Time i/j 0 1 2 3 4 0 — 21 11 3 8 1 — 10 5 12 2 — 9 4 3 — 13 4 —

Demand (Cases required) — 10 6 4 8

Which pair of customers s(i,j) has the largest savings? a. 1, 2 b. 1, 3 Copyright Cengage Learning. Powered by Cognero.

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Ch 15: Operations Scheduling and Sequencing c. 2, 3 d. 2, 4 ANSWER: a 28. The 4×100 meter relay was to begin at 2 p.m. At the team breakfast, Coach Fowler told the team, “Anita, you’ll run leadoff. Then, Ciara, you will run the second leg, followed by Bella and Keisha running anchor. Remember to run fast!” Coach Fowler has just established a a. schedule. b. sequence. c. priority. d. criteria. ANSWER: b 29. Mara, the new assistant professor, eyeballed her teaching assignment for the fall semester. She had two sections of operations management at 8 a.m. on Monday-Wednesday and Tuesday-Thursday. She also had a Wednesday 7:30-10:15 p.m. section of Linear Optimization. This is Mara’s a. sequence. b. makespan. c. schedule. d. flow. ANSWER: c 30. Three customers dropped off their dry cleaning at 8:00 Monday morning, and the operator promised each one a different ready time. The third and final pick-up time was to be 5:30 p.m. Monday. For the three jobs, 9.5 hours represents which of the following? a. Flow time b. Value-added time c. Non-value-added time d. Makespan ANSWER: d 31. Devin’s scheduling software showed that the customer order wasn’t late, but curiously, the calculated tardy time was identical to its lateness. How tardy is the job? a. 0 b. +1 c. –1 d. Cannot be determined from the information given ANSWER: a 32. Every customer order in the cabinet shop was meticulously tracked by employees. They knew who ordered what and when the order was placed. They also recorded when the job was promised and delivered. Using the delivery date and the order date, the employees were able to compute a. profitability. b. the flow time. c. the lateness. Copyright Cengage Learning. Powered by Cognero.

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Ch 15: Operations Scheduling and Sequencing d. the tardiness. ANSWER: b 33. Why are front-office operations, like the reception and intake area of an emergency clinic, difficult to schedule in comparison to a manufacturing operation? a. Because manufacturing requests are typically scheduled months in advance b. Because front-office service operations take much longer c. Because both customers and service providers participate in service creation and delivery d. Because the front-office service operations must operate independently from back-office operations ANSWER: c 34. Firefighters work a 24-hour shift at Station 1 in Edmond. Some start at noon each day, while others begin their shift at midnight. A minimum number of firefighters should be on duty for each of the half days as shown in the following table. Monday Tuesday Wednesday Thursday Friday Saturday Sunday 2 4 4 4 5 8 8 Morning 3 4 4 4 8 8 6 Afternoon What minimum number of firefighters should be scheduled over the entire week? a. 34 b. 37 c. 40 d. 43 ANSWER: b 35. Firefighters work a 24-hour shift at Station 1 in Edmond. Some start at noon each day, while others begin their shift at midnight. A minimum number of firefighters should be on duty for each of the half days as shown in the following table. Monday Tuesday Wednesday Thursday Friday Saturday Sunday 2 4 4 4 5 8 8 Morning 3 4 4 4 8 8 6 Afternoon How many decision variables are there in this problem if it is modeled using linear programming? a. 7 b. 14 c. 21 d. 28 ANSWER: b 36. Firefighters work a 24-hour shift at Station 1 in Edmond. Some start at noon each day, while others begin their shift at midnight. As shown in the following table, a minimum number of firefighters should be on duty for each of the half days. Monday Tuesday Wednesday Thursday Friday Saturday Sunday 2 4 4 4 5 8 8 Morning 3 4 4 4 8 8 6 Afternoon How many constraints are there in this problem if it is modeled using linear programming? a. 7 b. 14 c. 16 Copyright Cengage Learning. Powered by Cognero.

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Ch 15: Operations Scheduling and Sequencing d. 18 ANSWER: b 37. Firefighters work a 24-hour shift at Station 1 in Edmond. Some start at noon daily, while others begin their shift at midnight. As shown in the following table, a minimum number of firefighters should be on duty for each of the half days. Monday Tuesday Wednesday Thursday Friday Saturday Sunday 2 4 4 4 5 8 8 Morning 3 4 4 4 8 8 6 Afternoon How many firefighters should report for work at noon on Tuesday if this problem is modeled using linear programming? a. 0 b. 1 c. 2 d. 3 ANSWER: a 38. What percentage of your customers should be no-shows on their appointments before you consider overbooking? a. 1% b. 4% c. 7% d. 10% ANSWER: d 39. When scheduling staff to match anticipated customer demand, the first step is to a. convert customer demand to a capacity measure (i.e., the number of staff required). b. accurately forecast demand. c. determine who is available to work which shifts. d. confirm that customer demand is real and not just a forecast. ANSWER: a 40. A professional office uses an appointment time interval of 15 minutes to schedule customers. What should office staff do if they know a particular customer’s needs exceed this time interval? a. Refuse service to this customer, and refer them to a different office. b. Use a multiple of 15 minutes, like 30 or 45 minutes for this customer. c. Schedule the customer as the last appointment of the day and stay late. d. Schedule the customer as the first appointment of the day and open early. ANSWER: b 41. Prussia Industries accepts three new jobs for processing in its four-machine job shop. They have a drill, grinder, mill, and lathe. The processing sequence and machine(time) are as follows. All times are in minutes. Job 1: L(15), D(30), M(60) Job 2: D(20), M(20), G(30) Job 3: M(5), G(15), D(30), L(15) Job 1 is ready at time 0; Job 2 arrives at time 20; and Job 3 arrives at time 30. Prussia Industries uses an FNO dispatching rule. At what time is Job 3 done? a. 95 minutes Copyright Cengage Learning. Powered by Cognero.

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Ch 15: Operations Scheduling and Sequencing b. 100 minutes c. 110 minutes d. 115 minutes ANSWER: c 42. Prussia Industries accepts three new jobs for processing in its four-machine job shop. They have a drill, grinder, mill, and lathe. The processing sequence and machine(time) are as follows. All times are in minutes. Job 1: L(15), D(30), M(60) Job 2: D(20), M(20), G(30) Job 3: M(5), G(15), D(30), L(15) Job 1 is ready at time 0; Job 2 arrives at time 20; and Job 3 arrives at time 30. Prussia Industries uses an FNO dispatching rule. What is happening at the milling machine at time 100? a. The milling machine is idle. b. Job 3 is being processed. c. Job 2 is being processed. d. Job 1 is being processed. ANSWER: d 43. Prussia Industries accepts three new jobs for processing in its four-machine job shop. They have a drill, grinder, mill, and lathe. The processing sequence and machine(time) are as follows. All times are in minutes. Job 1: L(15), D(30), M(60) Job 2: D(20), M(20), G(30) Job 3: M(5), G(15), D(30), L(15) Job 1 is ready at time 0; Job 2 arrives at time 20; and Job 3 arrives at time 30. Prussia Industries uses an FNO dispatching rule. At what time is Job 2 done? a. 155 minutes b. 165 minutes c. 175 minutes d. 185 minutes ANSWER: a 44. Prussia Industries accepts three new jobs for processing in its four-machine job shop. They have one drill, one grinder, one mill, and one lathe. The processing sequence and machine(time) are as follows. All times are in minutes. Job 1: L(15), D(30), M(60) Job 2: D(20), M(20), G(30) Job 3: M(5), G(15), D(30), L(15) Job 1 is ready at time 0; Job 2 arrives at time 20; and Job 3 arrives at time 30. Prussia Industries uses an FNO dispatching rule. The grinder has a gap of idle time after Job 3 is done. How much time elapses before the next job arrives at the grinder? a. 65 minutes b. 75 minutes c. 85 minutes d. 95 minutes ANSWER: b

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Ch 15: Operations Scheduling and Sequencing 45. Brown’s Machining has three jobs with the routings and processing times (in minutes) as indicated on its drill press, lathe, milling machine, and grinder. It uses an LWR dispatching rule. Job 1: D(15), L(25), G(45) Job 2: D(20, M(25), G(30) Job 3: G(25), L(25), D(15), M(15) What time is Job 1 completed? a. 110 minutes b. 115 minutes c. 120 minutes d. 125 minutes ANSWER: c 46. Brown’s Machining has three jobs with the routings and processing times (in minutes) as indicated on its drill press, lathe, milling machine, and grinder. It uses an LWR dispatching rule. Job 1: D(15), L(25), G(45) Job 2: D(20, M(25), G(30) Job 3: G(25), L(25), D(15), M(15) What is happening at the milling machine at time 60? a. Job 1 is being milled. b. Job 2 is being milled. c. Job 3 is being milled. d. The milling machine is idle. ANSWER: d 47. Brown’s Machining has three jobs with the routings and processing times (in minutes) as indicated on its drill press, lathe, milling machine, and grinder. It uses an LWR dispatching rule. Job 1: D(15), L(25), G(45) Job 2: D(20, M(25), G(30) Job 3: G(25), L(25), D(15), M(15) What time is Job 3 completed? a. 80 minutes b. 85 minutes c. 90 minutes d. 95 minutes ANSWER: a 48. Brandon has a big night planned but must first take care of his laundry. He has sorted items into seven different types and determined the time each load will spend first in the washing machine and then the dryer. Type Washer Dryer Whites 45 40 Permanent press 30 35 Leathers 15 10 Silk 25 20 Cotton 30 25 Towels 40 60 Copyright Cengage Learning. Powered by Cognero.

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Ch 15: Operations Scheduling and Sequencing Heavily soiled

Determine the optimal sequence for the laundry that minimizes the makespan so Brandon can finish his laundry as soon as possible. a. Leathers – Silk – Cotton – Whites – Heavily soiled – Towels – Permanent press b. Permanent press – Towels – Heavily soiled – Whites – Cotton – Silk – Leathers c. Leathers – Silk – Cotton – Heavily soiled – Whites – Towels – Permanent press d. Permanent press – Towels – Whites – Heavily soiled – Cotton – Silk - Leathers ANSWER: b 49. Brandon has a big night planned but must first take care of his laundry. He has sorted items into seven different types and determined the time each load will spend first in the washing machine and then in the dryer. Type Washer Dryer Whites 45 40 Permanent press 30 35 Leathers 15 10 Silk 25 20 Cotton 30 25 Towels 40 60 Heavily soiled 90 45 What is the minimum makespan possible? a. 280 minutes b. 290 minutes c. 300 minutes d. 310 minutes ANSWER: c 50. Brandon has a big night planned but must first take care of his laundry. He has sorted items into seven different types and determined the time each load will spend first in the washing machine and then the dryer. Type Washer Dryer Whites 45 40 Permanent press 30 35 Leathers 15 10 Silk 25 20 Cotton 30 25 Towels 40 60 Heavily soiled 90 45 How much idle time occurs on the dryer if the loads are washed and dried in a makespan-minimizing sequence? a. 35 minutes b. 45 minutes c. 55 minutes d. 65 minutes ANSWER: d Copyright Cengage Learning. Powered by Cognero.

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Ch 15: Operations Scheduling and Sequencing 51. Mickey takes his seven cats to the pet salon for their weekly shampoo and styling. Experience has shown that the typical times (in minutes) in the shampoo step and styling step are as follows: Cat Tim Heidi Cow Guinness Ocho Sadie Gigi

Shampoo 10 30 15 25 15 8 23

Style 12 35 10 20 15 12 18

What is the makespan for the optimal sequence? a. 146 minutes b. 152 minutes c. 158 minutes d. 164 minutes ANSWER: a 52. Mickey takes his seven cats to the pet salon for their weekly shampoo and styling. Experience has shown that the typical times (in minutes) in the shampoo step and styling step are as follows: Cat Tim Heidi Cow Guinness Ocho Sadie Gigi

Shampoo 10 30 15 25 15 8 23

Style 12 35 10 20 15 12 18

What time is Heidi finished with the stylist? a. 92 minutes b. 98 minutes c. 104 minutes d. 110 minutes ANSWER: b 53. Mickey takes his seven cats to the pet salon for their weekly shampoo and styling. Experience has shown that the typical times (in minutes) in the shampoo step and styling step are as follows: Cat Tim Heidi Cow Guinness

Shampoo 10 30 15 25

Style 12 35 10 20

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Ch 15: Operations Scheduling and Sequencing 15 8 23

Ocho Sadie Gigi

15 12 18

What percentage of the stylist’s time is idle time once the first cat enters the shampoo step? a. 15.2% b. 15.8% c. 16.4% d. 17.0% ANSWER: c 54. The bar chart shows the scheduling process of the following jobs where all durations are in days.

Job 1 Job 2 Job 3 Job 4 Job 5 Job 6

Step 1 15 30 15 25 15 10

Step 2 12 35 10 20 20 15

If it is currently Day 60, what is taking place in Step 1 and Step 2? a. Job 1 is on Step 1, and Job 2 is on Step 2. b. Job 2 is on Step 1, and Step 2 is idle. c. Job 2 is on Step 1, and Job 5 is on Step 2. d. Job 4 is on Step 1, and Job 2 is on Step 2. ANSWER: d 55. The bar chart shows the original schedule of the following jobs where all durations are in days. The operations manager studies the bar chart and notes that there is idle time in step 2 initially, ten days while Job 6 is being processed on Step 1, and then another ten days once Job 5 is completed on step 2 while waiting for Job 2 to finish on step 1.

Job 1 Job 2 Job 3 Job 4 Job 5 Job 6

Step 1 15 30 15 25 15 10

Step 2 12 35 10 20 20 15

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Ch 15: Operations Scheduling and Sequencing

She notices that each of the jobs is a batch of several items that are being processed together and decided to cut each batch in half. So, for example, Job 1 will now be Job 1a and Job 1b, and those two halves will each take 7.5 days in step 1 and 6 days in step 2. The total processing time for each job will be exactly the same, but once Job 1a is done on step 1, it can transfer to step 2. What will be the net effect on the idle time on step 2? a. Idle time will drop by 15 days. b. Idle time will drop by 12 days. c. Idle time will drop by 7 days. d. Idle time will drop by 5 days. ANSWER: a 56. The bar chart shows the scheduling process of the following jobs where all durations are in days.

Job 1 Job 2 Job 3 Job 4 Job 5 Job 6

Step 1 15 30 15 25 15 10

Step 2 12 35 10 20 20 15

It is currently Day 50, and Job 5 has just started on step 2. Which statement is best? a. The shop is 10 days behind schedule. b. The shop is five days behind schedule. c. The shop is on schedule. d. The shop is five days ahead of schedule. ANSWER: b 57. One thing Jermain, a UPS driver, enjoyed about his job was the enormous freedom he had regarding routes. Every day was different and contained an incredible number of possibilities. On a slow Tuesday last week he had a dozen parcels to deliver when he left the sorting facility in the morning. How many possible routes could he take that day? a. 181,440 b. 1,814,000 Copyright Cengage Learning. Powered by Cognero.

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Ch 15: Operations Scheduling and Sequencing c. 19,958,400 d. 239,500,800 ANSWER: c 58. La Taqueria has five food trucks parked permanently around the city. Each week, cases of burritos must be delivered from El Mercado to the five trucks. The table shows the travel time in minutes between the locations as well as from El Mercado (location 0). Assume that only one delivery truck is available and that it has a capacity of 60 cases. Delivery Time i/j 0 1 2 3 4 5 Cases 0 19 20 27 46 36 1 36 4 27 17 47 2 19 20 22 18 3 21 34 17 4 17 1 5 29 What is the largest savings in minutes if two food trucks are combined into one trip? a. 42 b. 46 c. 52 d. 65 ANSWER: d 59. La Taqueria has five food trucks parked permanently around the city. Each week, cases of burritos must be delivered from El Mercado to the five trucks. The table shows the travel time in minutes between the locations as well as from El Mercado (location 0). Assume that only one delivery truck is available and that it has a capacity of 60 cases. cations as well as from El Mercado (location 0). Assume that only one delivery truck is available and that it has a capacity of 60 cases. Delivery Time i/j 0 1 2 3 4 5 Cases 0 19 20 27 46 36 1 36 4 27 17 47 2 19 20 22 18 3 21 34 17 4 17 1 5 29 Suppose the owner decides to make only one combination route and have the remaining routes as individual (i.e., from the warehouse to a single location and back). What is the best combination route to use? a. 0-4-5-3-0 b. 0-5-4-3-2-0 c. 0-4-5-0 d. 0-5-4-1-0 ANSWER: a 60. La Taqueria has five food trucks parked permanently around the city. Each week, cases of burritos must be delivered from El Mercado to the five trucks. The table shows the travel time in minutes between the locations as well as from El Copyright Cengage Learning. Powered by Cognero.

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Ch 15: Operations Scheduling and Sequencing Mercado (location 0). Assume that only one delivery truck is available and has a capacity of 50 cases. Delivery Time i/j 0 1 2 3 4 5 0 6 27 26 21 47 1 21 8 13 15 2 20 27 35 3 33 11 4 22 5 What is the most economical routing for the delivery truck? a. 0-1-2-0, 0-3-4-0, 0-5-0 b. 0-2-3-0, 0-1-0, 0-4-0, 0-5-0 c. 0-1-2-0, 0-3-0, 0-4-0, 0-5-0 d. 0-1-2-0, 0-3-0, 0-4-5-0 ANSWER: b

Cases 15 34 12 38 42

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Ch 16: Quality Management True / False 1. Six Sigma cannot be applied to service processes. a. True b. False ANSWER: False 2. The GAP model helps managers analyze goods and services and the processes that make and deliver them to identify and close the largest gaps and improve performance. a. True b. False ANSWER: True 3. A kaizen event is an approach for mistake-proofing processes, using automatic devices or methods to avoid simple human error. a. True b. False ANSWER: False 4. The Deming cycle is composed of four stages: prepare, deliver, simplify, and achieve (PDSA). a. True b. False ANSWER: False 5. Checksheets are special types of data-collection forms in which the results need additional processing in order to be interpreted. a. True b. False ANSWER: False 6. Service quality is consistently meeting or exceeding customer expectations (external focus) and service-delivery system performance criteria (internal focus) during all service encounters. a. True b. False ANSWER: True 7. The International Organization for Standardization (ISO) is a specialized agency for standardization. The term ISO is a scientific term that means equal. a. True b. False ANSWER: True 8. The cost of quality refers specifically to the costs associated with avoiding poor quality or those incurred as a result of poor quality. a. True b. False Copyright Cengage Learning. Powered by Cognero.

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Ch 16: Quality Management ANSWER: True Multiple Choice 9. At Bueller Tractors, a few machines in the assembly section were faulty and had to be shut down till they were repaired. This reduced the output of tractors for the quarter. In this case, the costs incurred by Bueller Tractors for repairing the machines are an example of a. prevention costs. b. appraisal costs. c. internal failure costs. d. external failure costs. ANSWER: c 10. Which of the following is a core philosophy of Six Sigma? a. Achieving cycle time reduction b. Increasing non-value-added activities c. Avoiding errors per million opportunities as a standard metric d. Increasing variation in cash flow ANSWER: a 11. Josephine’s T-Shirts faced a lot of complaints from customers when its recent batch of long-sleeved shirts was dispatched. The employees at Josephine’s T-Shirts, hence, had to rework on the returned items, and in some cases, the company had to even replace the faulty goods. In this case, the costs incurred by Josephine’s T-Shirts are an example of a. prevention costs. b. appraisal costs. c. internal failure costs. d. external failure costs. ANSWER: d 12. A run chart is a line graph in which data a. are plotted over time. b. are constantly moving forward. c. charted is from a long time period. d. is considered dynamic. ANSWER: a 13. Which of the following is a true statement about International Organization for Standardization (ISO) 9000? a. It states that generic management practices can never be standardized. b. Its standards do not apply to services such as health care, banking, and transportation. c. It is the first version of the ISO family of standards. d. Its standards apply to all types of businesses, including electronics and chemicals. ANSWER: d 14. The type of improvement that refers to discontinuous change, as opposed to the philosophy of kaizen, is called a. dynamic improvement. Copyright Cengage Learning. Powered by Cognero.

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Ch 16: Quality Management b. procedural improvement. c. benchmarking improvement. d. breakthrough improvement. ANSWER: d 15. According to Philip B. Crosby's Absolutes of Quality Management philosophy, a. quality means conformance to elegance. b. there is no such thing as a quality problem. c. there is no such thing as zero defects. d. the only performance measurement is the economics of quality. ANSWER: b 16. Isa is head of housekeeping services at the Ashworth Hotel, a luxury hotel and resort. Last week, she received 29 customer complaints. A total of 428 guests had stayed in the hotel that week. Given this information, what would be the errors per million opportunities? a. 400 b. 23,456 c. 67,757 d. 14,758,620 ANSWER: c 17. Which of the following concepts characterizes quality performance by defects per million opportunities? a. Deming cycle b. ISO 9000 c. Gap model d. Six Sigma ANSWER: d 18. The board of directors at Blaine Glassworks wants its company's products to be of higher quality than the products of other companies in the market, and the board believes it is hitting this target. However, a recent survey found that customers rate the company's products as below average due to the inferior process design specifications in the company. This is an example of which gap in the GAP model? a. Gap 2 b. Gap 3 c. Gap 4 d. Gap 5 ANSWER: a 19. Which of the following is a true statement about the GAP model? a. It defines quality system standards based on the premise that certain generic characteristics of management practices can be standardized. b. Minimizing gaps 4 and 5 will result in low customer satisfaction. c. Failure to understand and minimize gaps presents the risk of losing customer loyalty. d. It eliminates causes of defects and errors in manufacturing and service processes by focusing on outputs that are critical to customers. Copyright Cengage Learning. Powered by Cognero.

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Ch 16: Quality Management ANSWER: c 20. In the context of SERVQUAL, the caring, individual attention a firm provides to its customers is called a. responsiveness. b. reliability. c. assurance. d. empathy. ANSWER: d 21. The management of Clarity Communications, a wireless headphone manufacturing company, wants all employees in the organization to contribute to the quality of the firm by setting a long-term goal to make small, gradual, and frequent improvements without a large financial investment. Given this information, Clarity Communications embraces an approach known as a. the GAP model. b. kaizen. c. Six Sigma. d. the 5-Why Technique. ANSWER: b 22. Which of the following is a true statement about kaizen? a. It is based on the concept of continuous improvement. b. It focuses on short-term impact. c. It is performed on a part-time basis. d. It involves a huge financial investment. ANSWER: a 23. Which of the following statements is true of Gap 3 in the GAP model? a. It can be minimized by making senior managers work in frontline jobs a few days every year so that they keep in contact with customers and frontline employees. b. It is where the customer judges quality and makes future purchase decisions. c. It can be minimized by advertising. d. It recognizes that manufacturing and service delivery systems must execute quality specifications well. ANSWER: d 24. Which gap in the GAP model represents the discrepancy between actual manufacturing and service-delivery system performance and external communications to the customers? a. Gap 1 b. Gap 2 c. Gap 3 d. Gap 4 ANSWER: d 25. A basic statistical tool that graphically shows the frequency or number of observations of a particular value or within a specified group is a a. flowchart. Copyright Cengage Learning. Powered by Cognero.

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Ch 16: Quality Management b. histogram. c. cause-and-effect diagram. d. scatter diagram. ANSWER: b 26. Gap 3 in the GAP model is the discrepancy between a. the customer's expectations and perceptions. b. management's perceptions of what features constitute a target level of quality and the task of translating these perceptions into executable specifications. c. quality specifications documented in operating and training manuals and plans and their implementation. d. customer expectations and management perceptions of those expectations. ANSWER: c 27. The principles of customer focus, leadership, engagement, process approach, improvement, evidence-based decision making, and relationship management support the a. GAP model. b. Deming philosophy. c. Crosby's Absolutes of Quality Management. d. ISO. ANSWER: d 28. Which of the following definitions of quality is proposed by Joseph M. Juran? a. Quality means conformance to requirements. b. Quality is fitness for use. c. A product or a service possesses quality if it helps somebody and enjoys a good and sustainable market. d. A product or a service possesses quality if it consistently exceeds customer expectations. ANSWER: b 29. Luca, operations manager of a company that produces ground coffee beans, wants to know the sequence of the production process in the company to determine if any process can be combined or eliminated. In this case, which tool will suit Luca’s requirement? a. Run chart b. Flow chart c. Checksheet d. Histogram ANSWER: b 30. Which of the following statements is true of SERVQUAL? a. Quality is simply ensuring that goods and services consistently conform to specifications. b. It is designed to apply to all service industries. c. It uses 15 dimensions of service quality performance. d. Empathy is the ability to provide what was promised, dependably and accurately. ANSWER: b 31. Which of these costs are expended to keep nonconforming goods and services from being made and reaching the Copyright Cengage Learning. Powered by Cognero.

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Ch 16: Quality Management customer? a. Prevention costs b. Appraisal costs c. Internal failure costs d. External failure costs ANSWER: a 32. Which of the following statements is true of the Deming cycle? a. It institutes a top-down management style, in which the leadership comes from the executives, and all other levels of employees must follow their commands. b. It refers to the repetition required in order to create a perfect process that leads to zero defective products and 100% customer satisfaction. c. It involves a series of trials, after which the best process is selected. d. It guides teams to develop an improvement plan, try it out, examine the results, and institute changes, then repeat the cycle. ANSWER: d 33. Which of the following costs are incurred as a result of unsatisfactory quality that is found before the delivery of a good or service to the customer? a. Prevention costs b. Appraisal costs c. Internal failure costs d. External failure costs ANSWER: c 34. Huran Co., a food manufacturer, encountered a blown fuse during manufacturing. Although it was able to fix the issue and resume operations, Huran used the 5-Why Technique to determine the a. poka-yoke of the problem. b. root cause of the problem. c. long-term effect of the problem. d. symptom of the problem. ANSWER: b 35. Which of the following are targets and tolerances determined by designers of goods and services? a. Defects b. Specifications c. Units of work d. Costs of quality ANSWER: b 36. Marin is the manufacturing coordinator of a food and beverage company. Recently, some of the products were rejected by the quality control department because they failed to meet the quality standards. Upon inspection, a number of defects were found at multiple stages of production. Marin wants to identify the defects that have the most impact on the whole production process. In this case, which of the following quality control (QC) tools should she use? a. A flowchart Copyright Cengage Learning. Powered by Cognero.

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Ch 16: Quality Management b. A histogram c. A cause-and-effect diagram d. A Pareto diagram ANSWER: d 37. The business improvement approach that seeks to find and eliminate causes of defects and errors in manufacturing and service processes by focusing on outputs that are critical to customers, resulting in a clear financial return for the organization, is called a. Six Sigma. b. the GAP model. c. poka-yoke. d. a kaizen event. ANSWER: a 38. Joseph M. Juran's philosophy of quality management a. advocated the use of quality cost measurement to focus attention on quality problems. b. argued that employees at different levels of an organization speak one common language. c. proposed a major cultural change in the organization. d. stated that there is no such thing as a quality problem. ANSWER: a 39. The 16-ounce bottle of pure spring water was filled to exactly 16 ounces, so Juan added it to his shopping cart and headed to the produce section. The water bottler has demonstrated quality of a. performance. b. conformance. c. reliability. d. empathy. ANSWER: b 40. A simple definition of quality according to the textbook is a. that quality is in the eye of the beholder. b. fitness for use. c. that quality is meeting or exceeding customers’ expectations. d. that it’s indefinable and one just knows it when they see it. ANSWER: c 41. Aligning the practice of quality management with emerging capabilities of industry using data and analytics is the essence of a. Industry 4.0. b. Six Sigma. c. 5S. d. Quality 4.0. ANSWER: d 42. A company may have problems in a number of areas. Which of these does not have any problems according to Philip Copyright Cengage Learning. Powered by Cognero.

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Ch 16: Quality Management Crosby? a. Quality b. Accounting c. Manufacturing d. Human resources ANSWER: a 43. What did Philip Crosby mean when he declared, “Quality is free.” a. Quality cost measurement should be expressed in dollars, so management pays attention to it. b. Doing the job right the first time is always less expensive. c. Zero defects is unattainable. d. Higher quality leads to higher costs, which can be passed on to consumers. ANSWER: b 44. The performance standard that Philip Crosby champions is a. 3K specifications. b. Six-Sigma. c. zero defects. d. absolute zero. ANSWER: c 45. True Tread Tire Company’s typical customers are looking for a reasonable price, same-day service, and lifetime flat repair, but True Tread has other ideas. Its management is convinced that low prices alone will win orders and that customers won’t mind waiting a day or two for an installation appointment. Given True Tread’s already low prices, free flat repairs were out of the question. This situation is an example of a. Gap 1. b. Gap 2. c. Gap 3. d. Gap 4. ANSWER: a 46. Selena’s Spa decides to implement transactional surveys to assess how customers perceive the quality of the service. This will help reduce a. Gap 2. b. Gap 3. c. Gap 4. d. Gap 5. ANSWER: d 47. One requirement of ISO standards is a. six sigma capability for all output-generating processes. b. documentation for all processes affecting quality. c. corporate board composition that includes 50 percent minority membership. d. next-day response to all customer requests and complaints. Copyright Cengage Learning. Powered by Cognero.

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Ch 16: Quality Management ANSWER: b 48. ISO standards are based on the premise that a. the customer is always right, and considerable effort should be made to identify all possible customers. b. people are instrumental in developing quality products and services, so human resources is responsible for quality. c. a well-designed and implemented quality system that is carefully managed will produce good output. d. the world is flat and international supply chains should use ISO design engineers to determine product standards. ANSWER: c 49. Which of these lists contain three of the seven principles that support ISO 9000? a. Diversity, engagement of people, and leadership b. Leadership, improvement, and decision making c. Process approach, attention to detail, and improvement d. Relationship management, process approach, and engagement of people ANSWER: d 50. Rudolf has been reading names at commencement exercises every year for the past twenty years. An average of 500 students have been going to graduation each semester, and Rudolf usually flubs three of the names. What is the number of defects per unit? a. 0.006 b. 0.009 c. 0.012 d. 0.015 ANSWER: a 51. Rudolf has been reading names at commencement exercises every year for the past twenty years. An average of 500 students have been going to graduation each semester, handing him their name card with their first, middle, and last name, and waiting eagerly for him to read it over the PA system. Rudolf usually flubs only three names—either the first, middle, or last—during the entire ceremony. What is the number of defects per million opportunities? a. 3 b. 2,000 c. 3,000 d. 4,378 ANSWER: b 52. Rudolf has been reading names at commencement exercises every year for the past twenty years. An average of 700 students have been going to graduation each semester, handing him their name card with their first, middle, and last name, and waiting eagerly for him to read it over the PA system. Rudolf usually flubs only three names—either the first, middle, or last—during the entire ceremony. What is his sigma level? a. 4.26 b. 4.37 c. 4.48 d. 4.59 Copyright Cengage Learning. Powered by Cognero.

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Ch 16: Quality Management ANSWER: c 53. Django Industries appraised all costs associated with production and found the following data. Scheduled maintenance $35,000 Machine downtime $160,000 Annual equipment calibration $39,000 Warranty exchange Supplier quality audits Equipment repair Customer field repairs Incoming material audits

$125,000 $186,500 $56,000 $97,000 $180,000

Which of the traditional cost of quality categories has the highest total cost? a. Prevention b. Appraisal c. Internal failure d. External failure ANSWER: d 54. Django Industries conducted an appraisal of all costs associated with production and found the following data. Scheduled maintenance $35,000 Machine downtime $160,000 Annual equipment calibration $39,000 Warranty exchange Supplier quality audits Equipment repair Customer field repairs Incoming material audits

$125,000 $75,000 $56,000 $97,000 $80,000

Categorize these costs into the traditional four types of quality costs. What is the cumulative percentage of the two highest categories? a. 65.6% b. 68.4% c. 70.2% d. 71.8% ANSWER: a 55. Which of these quality costs are customers aware of? a. Prevention costs b. External failure costs c. Appraisal costs d. Internal failure costs ANSWER: b 56. Which quality control tool should be used to determine why your paycheck is always incorrect? Copyright Cengage Learning. Powered by Cognero.

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Ch 16: Quality Management a. Scatter diagram b. Pareto diagram c. Cause-and-effect diagram d. Checksheet ANSWER: c 57. Which quality control tool should be used to demonstrate the relationship between average daily temperature and murder rate? a. Pareto diagram b. Cause-and-effect diagram c. Run chart d. Scatter diagram ANSWER: d 58. The admissions office at the regional metropolitan university took a field trip to the county courthouse to observe how registered voters were summoned for jury duty. This incident is an example of a. benchmarking. b. a kaizen event. c. breakthrough improvement. d. corporate espionage. ANSWER: a 59. The study step of the Deming cycle refers to a. carefully monitoring a particular process in a company that has achieved best practices. b. examining the results of a pilot study or experiment. c. studying textbooks and instruction manuals for how to improve quality practices. d. making frequent small improvements in operations over the long haul. ANSWER: b 60. An intense and rapid improvement process where a team throws all its resources into an improvement project over a short period of time is called a. a Deming blitz. b. breakthrough improvement. c. a kaizen event. d. a benchmarking bonanza. ANSWER: c

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Ch 17: Quality Control and SPC True / False 1. In-process control is typically performed by people who run the back-end processes. a. True b. False ANSWER: False 2. The 1:10:100 Rule states that if a defect is first detected during the production process, it might cost $1 to fix. a. True b. False ANSWER: False 3. Keeping special cause variation from occurring is the essence of statistical quality control. a. True b. False ANSWER: True 4. In the context of quality control practices in manufacturing, if supplier documentation is done properly, incoming inspection can be completely eliminated. a. True b. False ANSWER: True 5. The value of the process capability index, (Cp), depends on the mean of the process. a. True b. False ANSWER: False 6. Overadjusting a process that is in control will decrease the variation in the output. a. True b. False ANSWER: False 7. A discrete metric is one that is calculated from data that are counted. a. True b. False ANSWER: True 8. The control limits represent the range between which all points are expected to fall if the process is in statistical control. a. True b. False ANSWER: True 9. Designing control charts involves two key issues: sample size and sampling frequency. a. True Copyright Cengage Learning. Powered by Cognero.

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Ch 17: Quality Control and SPC b. False ANSWER: True Multiple Choice 10. Which of the following is true of common cause variation? a. It can be controlled and described using nonstatistical methods. b. It appears at random, and individual sources cannot be identified or explained. c. It accounts for about 10 to 15 percent of the observed variation in a process. d. It arises from external sources that are not inherent in a process. ANSWER: b 11. Which of the following is true of control charts? a. Control charts can be used only for processes that have a very high sigma level. b. The use of small sample sizes in control charts increases the chances that a process may have changed during the sampling interval. c. Conventional statistical process control charts have the lowest frequency of false alarms. d. Standard control charts are not effective when the rate of defects is extremely low. ANSWER: d 12. Which of the following is the upper control limit for a c-chart (UCLc) with the average number of nonconformances per unit equal to 7? a. More than 11 but less than or equal to 12 b. More than 12 but less than or equal to 13 c. More than 13 but less than or equal to 14 d. More than 14 but less than or equal to 15 ANSWER: d 13. In the context of statistical process control and variation, if no special causes affect the output of a process, we say that the process is a. inconsistent. b. out of control. c. in control. d. overadjusted. ANSWER: c 14. The relationship between the natural variation and specifications is quantified by a measure known as the a. net promoter score. b. process capability index. c. net detractor score. d. process design index. ANSWER: b 15. An operator wants to determine the standard deviation for a machine they operate. To do this, they want to create a pchart. Over a month's time, they collect 30 samples of 75 observations each and records the number of errors. The average Copyright Cengage Learning. Powered by Cognero.

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Ch 17: Quality Control and SPC proportion defective is found to be 0.024. Which of the following is the standard deviation (s) of the machine? a. Less than or equal to 0.1 b. More than 0.1 but less than or equal to 0.5 c. More than 0.5 but less than or equal to 1.0 d. More than 1.0 ANSWER: a 16. What task is designed to ensure that a good or service conforms to specifications and meets customer requirements by monitoring and measuring processes and making any necessary adjustments to maintain a specified level of performance? a. Job design b. Visual control c. Quality control d. Forecasting ANSWER: c 17. The time taken for guests to check out at a hotel front desk was measured over the course of several weeks. Management believes that the average time for checking out guests should be between 2 and 3 minutes with a target of 2.5 minutes. The data gathered for the actual process had a mean time of 2.75 minutes with a standard deviation of 0.45 minutes. The process capability index will be a. less than or equal to 1. b. more than 3 but less than or equal to 5. c. more than 4 but less than or equal to 5. d. more than 5. ANSWER: a 18. In the context of the net promoter score (NPS), scores of 7 or 8 are associated with customers who are satisfied but may switch to competitors, referred to as a. detractors. b. passives. c. promoters. d. proponents. ANSWER: b 19. Customer waiting time and order lead time are examples of a. discrete metrics. b. countable metrics. c. isolated metrics. d. continuous metrics. ANSWER: d 20. The lower and upper specification limits for a toothpaste filling machine are 10.50 and 12.00 ounces, respectively. The standard deviation is 0.05. The process capability index of the machine will be a. less than or equal to 3. b. more than 3 but less than or equal to 5. c. more than 4 but less than or equal to 5. Copyright Cengage Learning. Powered by Cognero.

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Ch 17: Quality Control and SPC d. more than 5. ANSWER: c 21. In the context of designing control charts, which of the following is true of a sample size? a. A large sample allows small changes in process characteristics to be detected with higher probability than a small sample size. b. A small sample is used to detect process shifts of two standard deviations or smaller. c. A large sample size is desirable to keep the cost associated with sampling low. d. A small sample size provides greater degrees of statistical accuracy in estimating the true state of control than a large sample size. ANSWER: a 22. In the context of the net promoter score (NPS), scores of 6 or below represent unhappy customers who may spread negative comments, known as a. detractors. b. passives. c. promoters. d. campaigners. ANSWER: a 23. A bottling machine fills soda bottles with an average of 12.000 ounces of soda. The standard deviation is 0.002 ounces. Assuming the design specification for the fill weight of the bottles is 12.000 ounces plus or minus 0.015 ounces, calculate the process capability index of the machine. a. Less than or equal to 1 b. More than 1 but less than or equal to 2 c. More than 2 but less than or equal to 3 d. More than 4 ANSWER: c 24. If a process has a process capability index value (Cp) of less than 1, it means that a. a significant percentage of output will not conform to the design specifications. b. both the lower and upper specification limits are met. c. the observed variation is the same as the design specification width. d. the process is very capable of meeting the upper specification limit. ANSWER: a 25. Vincent, a quality control manager at an apparel manufacturing company, studies and monitors quality using R-charts. He discovers a quality problem with the construction of zippers. Vincent proposes that 25 samples of eight observations each be collected on a daily basis. He plans to prepare an R-chart to monitor the variation in the size of the zippers. The data collected shows that the mean length of the zippers is 15 inches and the average range is 0.5 inches. If D3 for the Rchart is 0.136, the lower control limit (LCLR) for the R-chart will be a. less than or equal to 1. b. more than 1 but less than or equal to 2. c. more than 2 but less than or equal to 3. Copyright Cengage Learning. Powered by Cognero.

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Ch 17: Quality Control and SPC d. more than 4. ANSWER: a 26. Which of the following is true of special cause variation? a. It cannot be explained or understood. b. It occurs sporadically and can be prevented. c. It cannot be detected using statistical methods. d. It accounts for about 80 to 95 percent of the observed variation in a process. ANSWER: b 27. A hotel chain uses R-charts to periodically analyze its service times to check for variation in service processes. Seven samples, each containing observed checkout time with three different customers, were collected. The average mean and the average range of the service times are found to be 9.924 and 0.957, respectively. If D4 for the R-chart is 1.924, the upper control limit (UCLR) for the R-chart will be a. less than or equal to 1.0. b. greater than 1.0 but less than or equal to 1.5. c. greater than 1.5 but less than or equal to 2.0. d. greater than 2.0 but less than or equal to 2.5. ANSWER: c 28. Which of the following is the upper control limit for a c-chart (UCLc) with the average number of nonconformances per unit equal to 7? a. More than 11 but less than or equal to 12 b. More than 12 but less than or equal to 13 c. More than 13 but less than or equal to 14 d. More than 14 but less than or equal to 15 ANSWER: d 29. Which of the following is NOT one of the components of a control system? a. A performance standard or goal b. A means of measuring actual performance c. Customer feedback forms and the service people who process and address them d. Comparison of actual performance with the standard to form the basis for corrective action ANSWER: c 30. In the context of the net promoter score (NPS), a difference between promoters and detractors is that unlike promoters, detractors a. are customers who are associated with scores of 7 or 8. b. are satisfied customers who may switch to competitors. c. defect at higher rates. d. are less price sensitive. ANSWER: c 31. In determining whether a process is in statistical control, which chart is always analyzed first? Copyright Cengage Learning. Powered by Cognero.

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Ch 17: Quality Control and SPC a. R-chart b. p-chart c. x̄-chart d. c-chart ANSWER: a 32. Which of the following, when extremely low, causes standard control charts NOT to be effective? a. Efficiency rate b. Demand flow c. Rate of defects d. Perceived value ANSWER: c 33. A process capability study is designed to yield specific information about a. the effect of changing one aspect of a system at a time. b. the rate of decay of a system as the equipment ages and begins to fail. c. the performance of a process under specified operating systems. d. how introducing multiple variances in the system at once affects the outcome of a process. ANSWER: c 34. The term that refers to when the people responsible for the work control of their processes by identifying and correcting any defects or errors when they first are recognized or occur is quality at the a. conclusion. b. workstation. c. source. d. delivery. ANSWER: c 35. Ratterman and Son is a custom landscaping company. Data in the following table show results for the question "Would you recommend us to a friend?" from 50 customers who were sampled over the duration of one week. Customer NPS Customer NPS Customer NPS Customer NPS Customer NPS Number Rating Number Rating Number Rating Number Rating Number Rating 1 6 11 8 21 4 31 1 41 8 2 9 12 9 22 9 32 9 42 9 3 10 13 7 23 9 33 3 43 9 4 9 14 4 24 10 34 9 44 9 5 5 15 1 25 9 35 9 45 2 6 10 16 3 26 10 36 7 46 5 7 6 17 7 27 5 37 4 47 9 8 9 18 6 28 10 38 10 48 10 9 4 19 5 29 10 39 9 49 9 10 7 20 10 30 6 40 5 50 8 Calculate the net promoter score. Copyright Cengage Learning. Powered by Cognero.

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Ch 17: Quality Control and SPC a. 14% b. 17% c. 24% d. 27% ANSWER: a 36. It has been a rough three years for the university president. Some thought the president unqualified, and the AAUP finally circulated a questionnaire asking the faculty to rate the president on a scale from 1 to 10, where 10 was "extremely satisfied," and 1 was "extremely dissatisfied." The results of the survey are summarized in the following table.

Rating 10 9 8 7 6

Count 77 59 44 39 35

Rating 5 4 3 2 1

Count 41 30 28 5 7

What is the president's net promoter score? a. −4.5% b. −2.7% c. 2.7% d. 4.5% ANSWER: b 37. One essential component of a control system is a. standard operating procedures. b. statistical process control. c. a performance standard or goal. d. sufficient budget. ANSWER: c 38. Common causes of variation generally account for what percentage of all of the observed variation in a process? a. 35 to 50 percent b. 55 to 70 percent c. 60 to 75 percent d. 80 to 95 percent ANSWER: d 39. A control chart is a special type of a. run chart. b. Pareto chart. c. histogram. d. scatter diagram. ANSWER: a Copyright Cengage Learning. Powered by Cognero.

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Ch 17: Quality Control and SPC 40. If the process is in control, the percentage of points plotted on a control chart that will fall between the upper control limit and the lower control limit is about a. 68 percent. b. 84 percent. c. 95 percent. d. 99 percent. ANSWER: d 41. A control chart is a graph using what metric on the independent axis? a. Percent of output that is good b. The variable being measured (e.g., weight, length, etc.) c. Time d. Process capability ANSWER: c 42. Reducing common cause variation is the responsibility of a. the company that made the equipment. b. production workers. c. the company's suppliers. d. management. ANSWER: d 43. Three lines that appear on every control chart are the a. UCL, the LCL, and the process mean. b. mean, median, and mode. c. mean, the standard deviation, and the process specification. d. UCL, the LCL, and the process specification. ANSWER: a 44. The essence of quality control is to a. keep common cause variation from occurring. b. keep special cause variation from occurring. c. produce control charts. d. identify all sources of common cause and special cause variation. ANSWER: b 45. Ray periodically studies the sunglass lenses he makes, picking a sample of 50 and inspecting them for any scratches or lack of polarization. Any lenses that have these problems are discarded. Results from the last twenty samples appear in the following table. What are the UCL and LCL of a p-chart for this process? 2 2 4 2 4 4 3 2 3 4 1 2 0 2 0 3 1 3 4 2 a. UCL = 0.05, LCL = 0 Copyright Cengage Learning. Powered by Cognero.

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Ch 17: Quality Control and SPC b. UCL = 0.09, LCL = 0 c. UCL = 0.13, LCL = 0 d. UCL = 0.17, LCL = 0 ANSWER: c 46. The local motel decides to use statistical process control to monitor the consistency of its housekeepers. The owner periodically inspects rooms after the housekeeper has cleaned. These checks involve making sure the beds are made, the trash can is emptied, coffee supplies are replenished, and the toilet paper has that neat little triangle at the end of the roll. What type of control chart should be made for this situation? a. R-chart b. chart c. p-chart d. c-chart ANSWER: d 47. A very quantitative English professor counts the number of grammatical errors students make in each essay assignment. The data from the last big assignment appears in the following table. What are the upper and lower control limits for the appropriate control chart? 8 2 0 5 4 1 10 7 7 10 7 2 10 2 2 2 9 6 0 7 a. UCL = 11.79, LCL = 0 b. UCL = 11.79, LCL = –1.69 c. UCL = 1.75, LCL = 0 d. UCL = 1.75, LCL = –1.25 ANSWER: a 48. Which sample size keeps the cost of sampling low and which provides a greater degree of statistical accuracy? a. Small; small b. Small; large c. Large; small d. Large; large ANSWER: b 49. What is the smallest sample size you can use to detect a process shift of two standard deviations or larger? a. 5 b. 10 c. 15 d. 20 ANSWER: a 50. When using a p-chart, how large should the sample be to have a 95 percent chance of finding one nonconformance if the process mean is 0.01? Copyright Cengage Learning. Powered by Cognero.

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Ch 17: Quality Control and SPC a. 50 b. 100 c. 200 d. 300 ANSWER: d 51. The more frequently samples are taken, the a. larger the sample size. b. lower the cost of sampling. c. lower the chance of producing excess nonconforming products. d. higher the process capability. ANSWER: c 52. Statistical process control, or SPC, is a useful methodology as long as the process capability is a. higher than the fraction of nonconforming. b. three-sigma level or lower. c. between three and six sigma. d. higher than six sigma. ANSWER: b 53. A candle manufacturer has a fraction defective of 0.0005. How large should its n be to expect to find one defective candle? a. 200 b. 500 c. 2,000 d. 5,000 ANSWER: c 54. What happens when a process operating a six-sigma capability is monitored using conventional control charts? a. The sample size can be as small as 1. b. The control limits should be replaced with the specification limits. c. The control chart widths should be ±1σ instead of ±3σ. d. There will be a higher frequency of false alarms. ANSWER: d 55. The downside of sampling too frequently is a. the cost of sampling will outweigh any benefit. b. faster feedback on process changes. c. that more frequent samples require larger sample sizes. d. the phenomenon known as sample fatigue. ANSWER: a 56. A do-it-yourselfer has a cabinet-making operation in his barn. He is cutting lengths of poplar for drawer supports to a target of 20" with a tolerance of one-half inch. A sample of 30 was measured. What is the CP? Copyright Cengage Learning. Powered by Cognero.

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Ch 17: Quality Control and SPC 19.3 20.3 20.4 19.7 20.5 a. 0.29 b. 0.36 c. 0.43 d. 0.50 ANSWER: b

19.8 20.2 20.2 20.7 20.4

19.5 19.4 19.8 20.2 20.5

20.1 19.2 20.3 19.3 19.7

19.8 19.6 19.6 19.4 20

20.7 19.7 20.9 20 19.9

57. A do-it yourselfer has a cabinet-making operation in their barn and is cutting lengths of poplar for drawer supports to a target of 20" with a tolerance of one-half inch. A sample of thirty was measured. What is the Cpk? 19.3 19.8 19.5 20.1 19.8 20.7 20.3 20.2 19.4 19.2 19.6 19.7 20.4 20.2 19.8 20.3 19.6 20.9 19.7 20.7 20.2 19.3 19.4 20.0 20.5 20.4 20.5 19.7 20.0 19.9 a. 0.26 b. 0.30 c. 0.34 d. 0.38 ANSWER: c 58. A professional cabinet-making operation is cutting lengths of oak to make drawer supports. The nominal value (target) is 20", and there is a tolerance of one-half inch. An operator pulls a sample of 25 supports and measures them for a process capability study. What is the CP? 20.07 19.91 19.94 20.01 19.94 20.08 19.99 20.07 20.04 20.02 19.98 19.99 20.01 19.98 19.98 20.04 20.06 19.96 20.04 20.02 19.99 20.02 20.02 20.04 20.08 a. 3.36 b. 3.46 c. 3.56 d. 3.66 ANSWER: d 59. A professional cabinet-making operation is cutting lengths of oak to make drawer supports. The nominal value (target) is 20", with a tolerance of one-half inch. An operator pulls a sample of 25 supports and measures them for a process capability study. What is the Cpk? 20.07 19.91 19.94 20.01 19.94 20.08 19.99 20.07 20.04 20.02 19.98 19.99 20.01 19.98 19.98 Copyright Cengage Learning. Powered by Cognero.

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Ch 17: Quality Control and SPC 20.04 19.99 a. 3.58 b. 3.66 c. 3.74 d. 3.82 ANSWER: a

20.06 20.02

19.96 20.02

20.04 20.04

20.02 20.08

60. A professional cabinet-making operation is cutting lengths of oak to make drawer supports. The nominal value (target) is 20", and there is a tolerance of one-half inch. An operator pulls a sample of 25 supports and measures them for a process capability study. The sample data appears in the following table. The operation is happy with the standard deviation of the process but has a contract stipulating that the Cpk must be at least 3.87. How far must the operation shift its process mean to achieve this value? 19.95 19.95 19.97 20.01 19.99 20.02 19.90 19.97 19.94 20.02 20.00 19.97 19.98 20.07 20.05 19.97 20.06 20.02 19.93 19.97 19.97 19.98 20.06 20.02 19.97 a. 0.01 b. 0.03 c. 0.05 d. 0.07 ANSWER: a

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Ch 18: Lean Operating Systems True / False 1. Total productive maintenance (TPM) seeks to reduce worker ownership of production equipment by excluding employees from maintenance activities. a. True b. False ANSWER: False 2. Any activity, material, or operation that does not add value in an organization is considered waste. a. True b. False ANSWER: True 3. In the context of Kanban systems, a withdrawal Kanban authorizes the gateway workstation to produce parts. a. True b. False ANSWER: False 4. Kanban is a Japanese word that means elimination of waste. a. True b. False ANSWER: False 5. Lean Six Sigma focuses on real dollar savings and has the ability to make significant financial impacts on an organization. a. True b. False ANSWER: True 6. Long setup times enable a manufacturer to have frequent changeovers and move toward single-piece flow, thus achieving high flexibility and product variety. a. True b. False ANSWER: False 7. Lean operating systems value idle stock and extra storage because it eliminates wait times to replenish stock. a. True b. False ANSWER: False 8. In the Timken Company’s bootcamp, employees and managers try to solve problems, such as removing non-valueadded steps from processes to try to eliminate waste. a. True b. False ANSWER: True Copyright Cengage Learning. Powered by Cognero.

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Ch 18: Lean Operating Systems Multiple Choice

9. The equation used to calculate the number of Kanban cards required in a system is

, where α denotes

a. the demand during lead time. b. a form of safety stock. c. capacity utilization. d. the reorder point. ANSWER: b 10. In the context of lean tools and approaches, which one of the components of the 5S principles refers to a clean work area? a. Shine b. Standardize c. Sort d. Sustain ANSWER: a 11. Drive-in-Style Motors follows a traditional manufacturing system. It produces a fixed number of cars every month. It is now planning to switch to a system of manufacturing where workers go to the source of required parts and withdraw them based on requirements. In this scenario, which of the following is most likely to occur if Drive-in-Style Motors implements this plan? a. Its inventory levels will increase significantly when the demand is low. b. Its component parts and subassemblies will be replenished only when needed. c. Its finished goods inventory will decrease, but raw materials and work-in-process inventories will increase. d. Its workers, at any given process, will produce units before they are needed. ANSWER: b 12. A manufacturer of automobile engines is designing a new Kanban system for engine #321. The demand for #321 is 75 parts per day, and the container can hold 8 parts at a time. The total processing and waiting time is 3 days. The manager wants a safety factor (α) of 2 or 200 percent. How many Kanbans are required in this system? a. 85 b. 90 c. 100 d. 115 ANSWER: a 13. Which of the following is an example of waste in organizations? a. Short order-cycle time b. Routing a job c. Planned product obsolescence d. High product variety ANSWER: c 14. In the context of the major categories of waste classified by the Toyota Motor Company, which of the following is Copyright Cengage Learning. Powered by Cognero.

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Ch 18: Lean Operating Systems true of overproduction? a. It ties up production facilities, and the resulting excess inventory simply sits idle. b. It is waste associated with the expense of idle stock and extra storage. c. It allows queues to build up between operations, resulting in longer lead times. d. It is a result of inefficient workplace design and location of tools and materials. ANSWER: a 15. Which of these is focused on ensuring that operating systems will perform their intended function reliably? a. Total productive maintenance b. A just-in-time system c. An intermittent production system d. Total quality management ANSWER: a 16. Which of the following is true of a push manufacturing system? a. It leads to high work-in-process inventories and high levels of indirect labor and overhead. b. In this system, just enough new parts are procured to replace those withdrawn. c. In this system, finished goods are made to coincide with the actual rate of demand. d. It leads to minimal inventories and maximum responsiveness. ANSWER: a 17. Which type of system produces finished-goods inventory in advance of customer demand using a forecast of sales? a. Just-in-time b. Push c. Kanban d. Pull ANSWER: b 18. Create & Sell Manufacturing Inc. uses a Kanban system for a component. The daily demand is 175 units. Each container has a combined waiting and processing time of 0.20 days. If the container size is 10 brackets and the safety factor is 11 percent, how many Kanban card sets should be authorized? a. 2 b. 4 c. 6 d. 7 ANSWER: b 19. In the context of the 5S principles, which of the following means to keep a process going through training, communication, and organizational structures? a. Shine b. Sort c. Sustain d. Standardize ANSWER: c Copyright Cengage Learning. Powered by Cognero.

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Ch 18: Lean Operating Systems 20. Which system is one in which employees at a given operation go to the source of required parts, such as machining or subassembly, and withdraw the units as they need them? a. A classic base-stock system b. A push system c. A materials requirement planning system d. A pull system ANSWER: d 21. In the context of the 5S principles, which of these terms refers to ensuring that each item in a workplace is in its proper place or identified as unnecessary and removed? a. Sort b. Sustain c. Standardize d. Set in order ANSWER: a 22. A hinge manufacturing company employs a Kanban system for a component part. The daily demand is 900 hinges. Each container has a waiting time of 0.05 days and a processing time of 0.37 days. The container size is 60 hinges, and the safety factor (α) is 10 percent. Given this data, the number of Kanbans necessary for the system is a. less than 4 Kanbans. b. more than 4 but less than or equal to 8 Kanbans. c. more than 8 but less than or equal to 12 Kanbans. d. more than 12 but less than or equal to 16 Kanbans. ANSWER: b 23. Which of the following is a similarity between lean production and Six Sigma? a. Both solely address visible problems in processes. b. Both focus on efficiency by reducing waste and improving process flow. c. Both are driven by customer requirements. d. Both focus on problems related to variation in performance. ANSWER: c 24. A company is using a Kanban system with 2 containers, each holding 50 parts, between a downstream (using) and an upstream (producing) work center. The using work center can handle 250 jobs per day. The average elapsed time for the entire cycle is currently 0.25 days. The company is concerned about the safety factor for the operation. Which of the following is the safety factor (α) of the current operation? a. 20 percent b. 40 percent c. 60 percent d. 80 percent ANSWER: c 25. Which of the following is a flag or a piece of paper that contains all relevant information for an order, such as part number, description, process area used, time of delivery, quantity available, quantity delivered, production quantity, and so on? Copyright Cengage Learning. Powered by Cognero.

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Ch 18: Lean Operating Systems a. Takt b. Seiketsu c. Kaizen d. Kanban ANSWER: d 26. In the context of the 5S principles, which of these terms means to arrange materials and equipment so that they are easy to find and use? a. Shine b. Standardize c. Sustain to produce d. Set in order ANSWER: d 27. In the context of lean tools and approaches, which of these are indicators for operating activities that are placed in plain sight of all employees so that everyone can quickly and easily understand the status and performance of the work system? a. Kanban cards b. Push systems c. Pull systems d. Visual controls ANSWER: d 28. Which of the following is a difference between lean production and Six Sigma? a. The lean production technique can be used in nonmanufacturing environments, whereas Six Sigma cannot be used in nonmanufacturing environments. b. Lean production addresses less visible problems in processes, whereas Six Sigma is more concerned with visible problems. c. Lean production is focused on effectiveness by reducing errors and defects, whereas Six Sigma is focused on efficiency by reducing waste and improving process flow. d. Lean production tools are more intuitive and easier to apply by anybody in the workplace, whereas many Six Sigma tools require advanced training and expertise of specialists. ANSWER: d 29. Quickly changing tooling and fixtures to reduce setup time and achieve higher flexibility and productivity is the principle of a. Kanban. b. andon. c. the 5Ss. d. SMED. ANSWER: d 30. In the context of the Toyota Motor Company’s seven categories of waste, the result of not performing work correctly the first time is an example of a. production defects. Copyright Cengage Learning. Powered by Cognero.

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Ch 18: Lean Operating Systems b. processing. c. inventory. d. overproduction. ANSWER: a 31. Which of the following is not true about lean principles? a. Lean manufacturing plants look significantly different from traditional plants. b. They are always transferable to front-office services that involve high customer contact. c. Lean manufacturing plants use multi-skilled workers who perform both direct and indirect work. d. In the airline industry, idle time is the largest form of waste. ANSWER: b 32. In the airline industry, short setup and turnaround time translates into a. idle time. b. fewer service encounters. c. overproduction. d. higher asset utilization. ANSWER: d 33. Geeky Gadgets Company’s supplier was having a year-end price reduction on a few components, so Latoya stocked up on a 6-month supply of one of the sales items. As Jeffrey was putting them into storage, he wondered whether this was the best use of the firm’s money, citing the Toyota waste of a. inventory. b. waiting time. c. overproduction. d. processing. ANSWER: a 34. Lean has a goal of zero waste in all value-creation processes and a. all value destruction processes. b. all support processes. c. all waste creation processes. d. most ancillary processes. ANSWER: b 35. When queues build up in between process steps, there is more work-in-process inventory and a. more motion is required. b. an increase in the amount of processing needed. c. longer lead times. d. more production defects. ANSWER: c 36. What is perhaps the most effective way to increase speed and response? a. Build products before they are ordered. Copyright Cengage Learning. Powered by Cognero.

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Ch 18: Lean Operating Systems b. Work smarter, not harder. c. Work harder, not smarter. d. Synchronize the entire value chain. ANSWER: d 37. Which of these guiding principles would allow a company to "go lean"? a. Doing only what is necessary b. Forecasting demand c. Planned obsolescence d. Doing more than what is asked ANSWER: a 38. Which action would be considered a process simplification for a service business? a. Asking the customer to wait in the waiting room instead of closer to the service delivery point b. Completing forms online before one’s appointment starts c. Performing a service before it is requested d. Confirming your contact information each time you drop clothes off at the cleaners ANSWER: b 39. Developing formal procedures and practices to create consistency in how things are done falls under which S in the 5Ss? a. Support b. Sustain c. Standardize d. Set in order ANSWER: c 40. The MRI at KeyCare Hospital was under a $700,000 annual contract, and the survey team for SM Industries thought it could save quite a bit by taking a time and materials approach to maintenance. It would fix it when it broke and pay the bill rather than spending the $150,000. The number of failures per week and the probability of that number appears in the following table. Each failure required a field service tech from the manufacturer to come to the site, and the combination of the replacement parts, the field tech’s expenses, and the lost revenue made the average breakdown an $8,000 expense. How much will SM Industries save or lose by canceling the contract? # Failures Probability 0 0.2 1 0.2 2 0.3 3 0.3 a. SM Industries will save $9,600 per year. b. SM Industries will save $3,600 per year. c. SM Industries will lose $2,400 per year. d. SM Industries will lose $7,200 per year. ANSWER: d Copyright Cengage Learning. Powered by Cognero.

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Ch 18: Lean Operating Systems 41. Which of these is a problem that Six Sigma would address? a. Variation in performance b. A high number of safety incidents c. Excess inventory on the receiving dock d. Material flow problems on second shift ANSWER: a 42. Lean is focused on a. effectiveness by reducing errors and defects. b. efficiency by reducing waste and improving process flows. c. increasing market share by adopting the voice of the customer. d. quantitative statistical techniques. ANSWER: b 43. Six Sigma is focused on a. efficiency by reducing waste and improving process flows. b. visible problems like safety. c. effectiveness by reducing errors and defects. d. visible problems like inventory and material flow. ANSWER: c 44. What benefit does Southwest Airlines reap from its policy of not assigning seats? a. Increased capacity b. Higher fares c. Lower maintenance costs d. Lower costs ANSWER: d 45. Southwest is one of the few airlines encouraging passengers to carry their luggage on the plane. Which of Lean’s wastes is this an example of? a. Processing b. Waiting time c. Transportation d. Overproduction ANSWER: a 46. At Southwest Airlines, all employees cooperate to ensure timely takeoffs and landings, even to the point of the pilots helping load luggage. Which Lean principle does this embody? a. Single-piece flow b. Single Minute Exchange of Dies (SMED) c. Total productive maintenance d. Visual controls ANSWER: b Copyright Cengage Learning. Powered by Cognero.

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Ch 18: Lean Operating Systems 47. Southwest uses only one type of aircraft—the Boeing 737. Which 5S principle is at work with this tactic? a. Sort b. Set in order c. Standardize d. Sustain ANSWER: c 48. The Timken boot camp idea is in keeping with the Lean principle of a. elimination of waste. b. increasing speed. c. reducing cost. d. quality improvement. ANSWER: a 49. Timken’s flexible manufacturing systems help with a. elimination of waste. b. reducing cost. c. improving quality. d. increasing speed and response. ANSWER: d 50. All of Timken’s plants are ISO 9000 certified, which serves to a. drive out fear. b. improve quality. c. reduce cost. d. eliminate waste. ANSWER: b 51. Purrfection Plus schedules workers on an eight-hour workday with a half hour for lunch. Its cat toy division has a sales rate of 900 catnip toys per day. What is the takt time? a. 34 seconds b. 32 seconds c. 30 seconds d. 28 seconds ANSWER: c 52. Juice ‘n Pulp bottles beverages that have a demand in one region of 6,400 units per day. It runs the bottling line for two eight-hour shifts. What is its takt time? a. 6 seconds b. 7 seconds c. 8 seconds d. 9 seconds ANSWER: d Copyright Cengage Learning. Powered by Cognero.

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Ch 18: Lean Operating Systems 53. Don't Have a Cow LLC is a family-run dairy that makes cheese, yogurt, and cottage cheese. Demand for its cottage cheese is 300 units per day (with a 16-ounce container representing one unit). The cottage cheese line runs in half-day shifts or four hours per day. What should this division’s takt time be? a. 48 seconds b. 54 seconds c. 60 seconds d. 72 seconds ANSWER: a 54. Cletus and Spike Company is implementing a Kanban system for a heated water bowl manufacturing line that produces 1,500 units in an eight-hour day. The heating element has a waiting time of five minutes and a processing time of one hour. The container size is 60 heating elements, and the safety factor is 10 percent. How many Kanban cards should be used? a. 3 b. 4 c. 5 d. 6 ANSWER: b 55. Cletus and Spike Company is implementing a Kanban system for a heated water bowl manufacturing line that produces 1,500 units in an eight-hour day. The heating element has a waiting time of five minutes and a processing time of one hour. The container size is 60 heating elements, and the safety factor is 10 percent. What is the maximum inventory of heating elements in the system? a. 60 b. 120 c. 240 d. 360 ANSWER: c 56. Cletus and Spike Company is implementing a Kanban system for a heated water bowl manufacturing line that produces 1,500 units in an eight-hour day. The heating element has a waiting time of five minutes and a processing time of one hour. The container size is 60 heating elements, and the safety factor is 10 percent. What is the takt time? a. 16.8 seconds b. 17.6 seconds c. 18.4 seconds d. 19.2 seconds ANSWER: d 57. Cletus and Spike Company is implementing a Kanban system for a heated water bowl manufacturing line that produces 1,500 units in an eight-hour day. The heating element has a waiting time of 30 minutes and a processing time of one hour. The container size is 40 heating elements, and the safety factor is 15 percent. How many Kanban cards should be used? a. 240 b. 360 c. 480 d. 600 Copyright Cengage Learning. Powered by Cognero.

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Ch 18: Lean Operating Systems ANSWER: b 58. Cletus and Spike Company is implementing a Kanban system for a heated water bowl manufacturing line that produces 1,500 units in an eight-hour day. The heating element has a waiting time of 30 minutes and a processing time of one hour. The container size is 40 heating elements, and the safety factor is 15 percent. How many Kanban cards should be used? a. 8 b. 9 c. 10 d. 11 ANSWER: b 59. In comparison with both lean thinking and Six Sigma, the theory of constraints a. is more focused on reducing waste. b. aims to reduce variation in the process. c. is more reliant on value stream maps and financial measures. d. relies on visual controls. ANSWER: c 60. One difference between Six Sigma, the Theory of Constraints, and Lean is a. only the Theory of Constraints is concerned with process flow. b. only Lean is concerned with higher productivity. c. only Lean is concerned with reduced waste. d. Six Sigma requires a more analytical, measurement-driven approach. ANSWER: d

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Ch 19: Project Management True / False 1. The Project Evaluation and Review Technique (PERT) was developed as a means of scheduling and controlling projects with constant activity times. a. True b. False ANSWER: False 2. A pure project organizational structure eliminates the duplication of resources across the organization. a. True b. False ANSWER: False 3. The Critical Path Method (CPM) allows us to investigate the effects of uncertainty of activity times on the project completion time. a. True b. False ANSWER: False 4. The earliest time that an activity can be completed is equal to the latest time it can begin minus the time to perform the activity. a. True b. False ANSWER: False 5. In the context of the Critical Path Method (CPM), latest start (LS) and latest finish (LF) times are computed by making a backward pass through the network, beginning with the ending project activity or activities. a. True b. False ANSWER: True 6. Project managers do not need technical expertise. a. True b. False ANSWER: False 7. The only way the project completion time can be reduced is by crashing activities on the critical path. a. True b. False ANSWER: True 8. A key assumption with crashing is that the time can be reduced to any proportion of the crash time at a proportional increase in cost. a. True b. False ANSWER: True Copyright Cengage Learning. Powered by Cognero.

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Ch 19: Project Management Multiple Choice 9. Which of the following is an example of a project that belongs to the functional area of accounting and finance? a. Market research study b. Planning a firm's initial public offering c. Annual performance and compensation review d. Installing a revenue management system ANSWER: b 10. In the context of the Critical Path Method (CPM), the slack time (ST) for an activity is computed as the a. latest start (LS) time minus the earliest finish (EF) time. b. latest finish (LF) time minus the earliest start (ES) time. c. latest start (LS) time minus the earliest start (ES) time. d. earliest finish (EF) time minus the latest start (LS) time. ANSWER: c 11. The district magistrate of a city has decided to reconstruct the most frequented street of the city. He plans to block the street for the duration of the work, which will cause considerable inconvenience to the people of the city. The project has three parallel paths defined as the following: Path A–B–C–H will take 16 days. Path A–D–E–H will take 22 days. Path A–F–G–H will take 30 days. In the given scenario, which of the following statements is true? a. The expected duration of the project is 68 days. b. Activities B, D, and F have an earliest starting time of 0. c. Path A–D–E–H has the largest slack time. d. Path A–F–G–H is the critical path. ANSWER: d 12. Which of the following is true of crashing a project? a. It involves the removal of resources from selected project activities to reduce costs. b. It increases the total cost of the project. c. It increases the total time taken to complete the project. d. It is a trade-off between project revenue and additional input costs. ANSWER: b 13. In the context of the Project Evaluation and Review Technique (PERT), which of the following is true of the beta probability distribution approach? a. It allows managers to identify the best case, worst case, and most likely case for activity times. b. It describes the inherent similarity in the optimistic, most probable, and pessimistic time estimates. c. It is rigid in characterizing the distribution of times. d. It forces activity times to a symmetric normal probability distribution. ANSWER: a Copyright Cengage Learning. Powered by Cognero.

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Ch 19: Project Management 14. The activities, their respective immediate predecessors, and activity times for a particular project are given in the following table. Determine the earliest completion time for this project using a Gantt chart. Activity Immediate Predecessor(s) Activity Time(in weeks) A None 1 B None 1 C A 4 D B 5 E C, D 5 F E 3 G F 2 a. 14 weeks b. 16 weeks c. 18 weeks d. 20 weeks ANSWER: b 15. Which of the following is true of a typical functional organization? a. It eliminates duplication of resources. b. It makes communication across the organization easier and smooth. c. A project cuts across organizational boundaries in a typical functional organization. d. Team members are assigned exclusively to projects in a typical functional organization. ANSWER: c 16. Which of the following stages of the project life cycle entails the scheduling of activities? a. The defining stage b. The planning stage c. The organizing stage d. The controlling stage ANSWER: b 17. Which of the following is an assumption made by the critical path method (CPM)? a. The activity time estimates are accurate and stable. b. Activities are dependent on each other, without clearly defined start and finish times. c. Activities are interrupted many times before completion. d. The project network defines a tentative work sequence that can be changed anytime during the project. ANSWER: a 18. In the project management life cycle, which of the following stages involves collecting and assessing status reports, managing changes to baselines, and responding to circumstances that can negatively impact the project participants? a. The closing stage b. The planning stage c. The organizing stage d. The controlling stage ANSWER: d Copyright Cengage Learning. Powered by Cognero.

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Ch 19: Project Management 19. Which of these concepts refers to reducing the total time to complete the project to meet a revised due date? a. Benchmarking b. Crashing a project c. Project resource leveling d. Activity sequencing ANSWER: b 20. A temporary and often customized initiative that consists of many smaller tasks and activities that must be coordinated and completed to finish the entire initiative on time and within budget is called a a. resource plan. b. schedule. c. project. d. product-process matrix. ANSWER: c 21. Implementing a new computer-aided design system is an example of a project in the functional area of a. engineering. b. operations. c. logistics. d. marketing. ANSWER: a 22. In the context of project management, which of these involves releasing and reassigning people? a. Closing a project b. Organizing a project c. Defining a project d. Planning a project ANSWER: a 23. Which of the following is true of the Critical Path Method (CPM)? a. It allows us to investigate the effects of uncertainty of activity times on project completion times. b. It uses the variance in the critical path activities to evaluate the risks associated with project completion times. c. It assumes that activities are independent of one another, with clearly defined start and finish dates. d. It accounts for the interruptions that may affect an activity between the start and the finish times. ANSWER: c 24. Rosita is in charge of advertising a new product launched by her company. She has defined the advertising for this product as an individual project that consists of seven activities. The following table details the characteristics of these activities: Activity Immediate Predecessor(s) Activity Time(in weeks) A None 2 B None 2 C A 4 D B 5 E C 5 Copyright Cengage Learning. Powered by Cognero.

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Ch 19: Project Management F D 2 G E, F 2 Calculate the earliest completion time for the project using a Gantt chart. a. 10 weeks b. 11 weeks c. 12 weeks d. 13 weeks ANSWER: d 25. In the context of projects, which of the following terms refers to discrete tasks that consume resources and time? a. Value chains b. Activities c. Processes d. Schedules ANSWER: b 26. If an activity can be completed in 10 weeks at a cost of $3,200 instead of the normal time of 12 weeks at a cost of $2,400, then the crash cost per week for the given activity would be a. $200. b. $400. c. $600. d. $800. ANSWER: b 27. The calculation (a + 4m + b)/6 is used to find a. optimistic time. b. expected time. c. average time. d. pessimistic time. ANSWER: b 28. The project team developed its statement of work, “To develop an equitable merit increase system within the current promotion and tenure framework,” during which stage of the project? a. Plan b. Organize c. Define d. Close ANSWER: c 29. The Gamma Force reviewed the status reports from its project, comparing the progress it had made behind enemy lines with the aggressive timeline it had planned out months before. It knew it would have to make a few changes in its operations in which stage of the project? a. Organize b. Define c. Plan Copyright Cengage Learning. Powered by Cognero.

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Ch 19: Project Management d. Control ANSWER: d 30. A good project manager must manage people as a project team and also a. manage people as individuals. b. keep the team leaders informed. c. maintain a process orientation. d. rein in any enthusiastic team members so they can maintain a steady pace. ANSWER: a 31. Information technology projects range from enterprise system implementations to hardware upgrades. The percentage of software projects canceled before completion is over a. 10 percent. b. 20 percent. c. 30 percent. d. 40 percent. ANSWER: c 32. Nicole’s primary responsibility was supervising the student success advisors in the College of Business, but her true talent was compiling and designing the layout of reports, among them the annual report and accreditation report. During annual report time, her supervisor loaned her out to the report team for a few hours a week. This arrangement can be described as a. farming out labor. b. a matrix organizational structure. c. a consignment system. d. a lend-lease agreement. ANSWER: b 33. Most projects are designed to be a. part of a firm’s daily routine. b. ongoing. c. high-volume endeavors. d. temporary. ANSWER: d 34. Malvine manages manuscripts and has developed a CPM analysis of her current one. Sadly, she spilled soda on her output and washed away most of the entries in the table. Activity Pred Time ES EF LS LF Slack A -10 0 B -6 C B 22 D A, B 22 E D 3 F D 22 G C, E, F 5 32 Copyright Cengage Learning. Powered by Cognero.

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Ch 19: Project Management What is the duration of activity C? a. 16 b. 17 c. 18 d. 19 ANSWER: a 35. Malvine manages manuscripts and has developed a CPM analysis of her current one. Sadly, she spilled soda on her output and washed away most of the entries in the table. Activity Pred Time ES EF LS LF Slack A -10 0 B -6 C B 22 D A, B 22 E D 3 F D 22 G C, E, F 5 32 What is the duration of activity E? a. 6 b. 7 c. 8 d. 9 ANSWER: b 36. Malvine manages manuscripts and has developed a CPM analysis of her current one. Sadly, she spilled soda on her output and washed away most of the entries in the table. Activity Pred Time ES EF LS LF Slack A -10 0 B -6 C B 22 D A, B 22 E D 3 F D 22 G C, E, F 5 32 What is the duration of activity F? a. 30 b. 31 c. 32 d. 33 ANSWER: c 37. Malvine manages manuscripts and has developed a CPM analysis of her current one. Sadly, she spilled soda on her output and washed away most of the entries in the table. Activity Pred Time ES EF LS LF Slack A -10 0 Copyright Cengage Learning. Powered by Cognero.

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Ch 19: Project Management B -6 C B D A, B E D F D G C, E, F 5 What is the duration of activity C? a. 7 b. 8 c. 9 d. 10 ANSWER: d

22 22 3 22 32

38. Details about project activities such as identifying people responsible, the specific resources needed, and the end result of the activities are contained in the a. work breakdown structure. b. Gantt chart. c. project network. d. schedule. ANSWER: a 39. A Gantt chart is NOT a good tool for a. showing what activities should be performed at a certain time. b. clearly showing the interdependencies among multiple activities. c. monitoring the daily progress of a project so a project manager can take corrective action. d. depicting a schedule graphically. ANSWER: b 40. A construction project has a fixed cost of $800 per day; that is, every day the workers are on site until the project is complete costs $800. The activities (in days, in the table) also have costs for completion in what is considered a normal duration and a crash cost that would be incurred to expedite the activity’s completion time. Normal Crash Normal Crash Activity Pred Time Time Cost Cost A 3 1 1,200 2,000 B 5 3 2,500 3,500 C 2 1 500 750 A, B D 6 3 300 450 C E 4 3 6,000 8,400 D F 3 3 9,000 9,000 D G 3 2 4,400 5,500 E, F H 3 3 3,000 3,000 F I 4 2 4,000 6,000 G, H J 2 2 3,200 3,200 I K 2 2 1,800 1,800 J How much does the project cost if it is completed using only the normal time durations? Copyright Cengage Learning. Powered by Cognero.

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Ch 19: Project Management a. $22,400 b. $35,900 c. $58,300 d. $66,000 ANSWER: c 41. A construction project has a fixed cost of $800 per day; that is, every day the workers are on site until the project is complete costs $800. The activities (in days, in the table) also have costs for completion in what is considered a normal duration and a crash cost that would be incurred to expedite the activity’s completion time. Normal Crash Normal Crash Activity Pred Time Time Cost Cost A 3 1 1,200 2,000 B 5 3 2,500 3,500 C 2 1 500 750 A, B D 6 3 300 450 C E 4 3 6,000 8,400 D F 3 3 9,000 9,000 D G 3 2 4,400 5,500 E, F H 3 3 3,000 3,000 F I 4 2 4,000 6,000 G, H J 2 2 3,200 3,200 I K 2 2 1,800 1,800 J How much does the project cost if it is completed as quickly as possible? a. $35,900 b. $43,600 c. $58,300 d. $58,800 ANSWER: d 42. A construction project has a fixed cost of $800 per day; that is, every day the workers are on site until the project is complete costs $800. The activities (in days, in the table) also have costs for completion in what is considered a normal duration and a crash cost that would be incurred to expedite the activity’s completion time. Normal Crash Normal Crash Activity Pred Time Time Cost Cost A 3 1 1,200 2,000 B 5 3 2,500 3,500 C 2 1 500 750 A, B D 6 3 300 450 C E 4 3 6,000 8,400 D F 3 3 9,000 9,000 D G 3 2 4,400 5,500 E, F H 3 3 3,000 3,000 F I 4 2 4,000 6,000 G, H J 2 2 3,200 3,200 I K 2 2 1,800 1,800 J What is the least expensive completion cost for the project? Copyright Cengage Learning. Powered by Cognero.

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Ch 19: Project Management a. $54,900 b. $58,300 c. $58,800 d. $66,000 ANSWER: a 43. A construction project has a fixed cost of $800 per day; that is, every day the workers are on site until the project is complete costs $800. The activities (in days, in the table) also have costs for completion in what is considered a normal duration and a crash cost that would be incurred to expedite the activity’s completion time. Normal Crash Normal Crash Activity Pred Time Time Cost Cost A 3 1 1,200 2,000 B 5 3 2,500 3,500 C 2 1 500 750 A, B D 6 3 300 450 C E 4 3 6,000 8,400 D F 3 3 9,000 9,000 D G 3 2 4,400 5,500 E, F H 3 3 3,000 3,000 F I 4 2 4,000 6,000 G, H J 2 2 3,200 3,200 I K 2 2 1,800 1,800 J What is the lowest completion cost if the project is completed in 21 days? a. $52,400 b. $59,550 c. $65,300 d. $71,600 ANSWER: b 44. A house flipper has found a diamond in the rough and, after buying it at a sheriff’s auction, has identified six systems that need significant work. The estimated completion times (in weeks) and costs are identified in the table alongside a set of expedited completion times and the crash costs. Normal Normal Crash Predecessor Activity time Crash time Cost Cost 5,000 7,200 A 10 7 10,000 15,000 A B 15 10 18,000 24,000 B C 20 15 20,000 26,000 D 20 17 12,000 14,700 D E 15 12 7,200 12,700 E F 12 7 What is the duration of this project if it is not expedited? a. 45 weeks b. 46 weeks c. 47 weeks d. 48 weeks Copyright Cengage Learning. Powered by Cognero.

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Ch 19: Project Management ANSWER: c 45. A house flipper found a diamond in the rough and, after buying it at a sheriff’s auction, has identified six systems that need significant work. The estimated completion times (in weeks) and costs are identified in the table alongside a set of expedited completion times and the crash costs. Normal Normal Crash Predecessor Activity time Crash time Cost Cost 5,000 7,200 A 10 7 10,000 15,000 A B 15 10 18,000 24,000 B C 20 15 20,000 26,000 D 20 17 12,000 14,700 D E 15 12 7,200 12,700 E F 12 7 What is the shortest time to complete this project? a. 33 weeks b. 34 weeks c. 35 weeks d. 36 weeks ANSWER: d 46. A house flipper found a diamond in the rough and, after buying it at a sheriff’s auction, has identified six systems that need significant work. The estimated completion times (in weeks) and costs are identified in the table alongside a set of expedited completion times and the crash costs. Normal Normal Crash Predecessor Activity time Crash time Cost Cost 5,000 7,200 A 10 7 10,000 15,000 A B 15 10 18,000 24,000 B C 20 15 20,000 26,000 D 20 17 12,000 14,700 D E 15 12 7,200 12,700 E F 12 7 What is the lowest cost to complete this project in 40 days? a. $83,500 b. $89,300 c. $95,400 d. $99,600 ANSWER: a 47. A house flipper found a diamond in the rough and, after buying it at a sheriff’s auction, has identified six systems that need significant work. The estimated completion times (in weeks) and costs are identified in the table alongside a set of expedited completion times and the crash costs. Normal Normal Crash Predecessor Activity time Crash time Cost Cost 5,000 7,200 A 10 7 10,000 15,000 A B 15 10 18,000 24,000 B C 20 15 20,000 26,000 D 20 17 Copyright Cengage Learning. Powered by Cognero.

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Ch 19: Project Management 12,000 14,700 E 15 12 7,200 12,700 F 12 7 What is the lowest cost to complete this project as quickly as possible? a. $92,400 b. $94,800 c. $97,200 d. $99,600 ANSWER: b

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48. A house flipper found a diamond in the rough and, after buying it at a sheriff’s auction, has identified six systems that need significant work. The estimated completion times (in weeks) and costs are identified in the table alongside a set of expedited completion times and the crash costs. Normal Normal Crash Predecessor Activity time Crash time Cost Cost 5,000 7,200 A 10 7 10,000 15,000 A B 15 10 18,000 24,000 B C 20 15 20,000 26,000 D 20 17 12,000 14,700 D E 15 12 7,200 12,700 E F 12 7 The flipper doesn’t want to spend any more than absolutely necessary in order to make the house ready for tenants but wants to do so as quickly as possible. Which activities should NOT be fully crashed? a. All activities should be fully crashed. b. C, D c. C d. D ANSWER: c 49. What tradeoff is a project manager making when electing to crash a project? a. Time and quality b. Cost and quality c. Flexibility and cost d. Time and cost ANSWER: d 50. A short project is defined by activities with three time estimates (in days) as shown in the table. Activity Optimistic Most Likely Pessimistic Predecessor A 4 6 8 B 5 9 13 C 10 12 15 A, B D 9 12 16 B E 6 9 15 D F 10 13 18 C What is the variance of activity E? a. 2.25 Copyright Cengage Learning. Powered by Cognero.

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Ch 19: Project Management b. 3.36 c. 4.25 d. 5.16 ANSWER: a 51. A short project is defined by activities with three time estimates (in days) as shown in the table. Activity Optimistic Most Likely Pessimistic Predecessor A 4 6 8 B 5 9 13 C 10 12 15 A, B D 9 12 16 B E 6 9 15 D F 10 13 18 C What is the standard deviation of activity B? a. 1.17 b. 1.33 c. 1.78 d. 2.25 ANSWER: b 52. A short project is defined by activities with three time estimates (in days) as shown in the table. Activity Optimistic Most Likely Pessimistic Predecessor A 4 6 8 B 5 9 13 C 10 12 15 A, B D 9 12 16 B E 6 9 15 D F 10 13 18 C What is the expected duration of this project? a. 32.5 days b. 33.5 days c. 34.5 days d. 35.5 days ANSWER: c 53. A short project is defined by activities with three time estimates (in days) as shown in the table. Activity Optimistic Most Likely Pessimistic Predecessor A 4 6 8 B 5 9 13 C 10 12 15 A, B D 9 12 16 B E 6 9 15 D F 10 13 18 C What is the expected duration of activity C? a. 9.57 days Copyright Cengage Learning. Powered by Cognero.

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Ch 19: Project Management b. 10.17 days c. 11.67 days d. 12.17 days ANSWER: d 54. A short project is defined by activities with three time estimates (in days) as shown in the table. Activity Optimistic Most Likely Pessimistic Predecessor A 4 6 8 B 5 9 13 C 10 12 15 A, B D 9 12 16 B E 6 9 15 D F 10 13 18 C What is the standard deviation of the project’s completion time? a. 2.06 b. 3.33 c. 3.67 d. 4.25 ANSWER: a 55. A short project is defined by activities with three time estimates (in days) as shown in the table. Activity Optimistic Most Likely Pessimistic Predecessor A 4 6 8 B 5 9 13 C 10 12 15 A, B D 9 12 16 B E 6 9 15 D F 10 13 18 C What is the probability that the project will be completed in less than 32 days? a. 0.07 b. 0.11 c. 0.15 d. 0.19 ANSWER: b 56. A short project is defined by activities with three time estimates (in days) as shown in the table. Activity Optimistic Most Likely Pessimistic Predecessor A 4 6 8 B 5 9 13 C 10 12 15 A, B D 9 12 16 B E 6 9 15 D F 10 13 18 C What is the probability that the project will take longer than 36 days to complete? a. 0.15 Copyright Cengage Learning. Powered by Cognero.

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Ch 19: Project Management b. 0.19 c. 0.23 d. 0.27 ANSWER: c 57. Commencement is right around the corner, and with four ceremonies over two days, Paige is in charge of a complex project that functions as the face of the university for most of the attendees. Each event is its own project, with eight activities she affectionately refers to as A-H. She has made three time estimates (in days) for each activity, and this information appears in the table. Activity Optimistic Most Likely Pessimistic Predecessor A 4 6 8 B 5 9 13 C 10 12 15 A, B D 7 10 14 B E 6 9 15 D F 10 13 18 C G 15 19 25 D H 18 23 30 E, F What is the expected duration of this project? a. 54.33 b. 55.63 c. 56.13 d. 57.83 ANSWER: d 58. Commencement is right around the corner, and with four ceremonies over two days, Paige is in charge of a complex project that functions as the face of the university for most of the attendees. Each event is its own project, with eight activities she affectionately refers to as A−H. She has made three time estimates (in days) for each activity, and this information appears in the table. Activity Optimistic Most Likely Pessimistic Predecessor A 4 6 8 B 5 9 13 C 10 12 15 A, B D 7 10 14 B E 6 9 15 D F 10 13 18 C G 15 19 25 D H 18 23 30 E, F What is the probability that this project will be completed in less than 60 days? a. 0.77 b. 0.67 c. 0.57 d. 0.47 ANSWER: a

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Ch 19: Project Management 59. Commencement is right around the corner, and with four ceremonies over two days, Paige is in charge of a complex project that functions as the face of the university for most of the attendees. Each event is its own project, with eight activities she affectionately refers to as A−H. She has made three time estimates (in days) for each activity, and this information appears in the table. Activity Optimistic Most Likely Pessimistic Predecessor A 4 6 8 B 5 9 13 C 10 12 15 A, B D 7 10 14 B E 6 9 15 D F 10 13 18 C G 15 19 25 D H 18 23 30 E, F What is the probability that this project will take longer than 62 days to complete? a. 0.053 b. 0.073 c. 0.093 d. 0.113 ANSWER: b

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Ch 20: Building Resilience and Continuity in Operations and Supply Chains True / False 1. In order to be considered a true disruption, two or more sites must experience a disturbance, violent change, or crisis that interrupts the normal course of operations. a. True b. False ANSWER: False 2. Tier 1 suppliers are located farther upstream from the producer than tier 2 suppliers. a. True b. False ANSWER: False 3. A power plant operator is demonstrating adaptive resilience by implementing stronger security protocols and a daily off-site backup following a cyberattack on the plant. a. True b. False ANSWER: True 4. A thunderstorm knocked out the server and took down all online classes at State University. Fortunately, the university had a recovery strategy, which, per the definition, enabled it to restore all functionality in the system fully. a. True b. False ANSWER: False 5. A true disaster, as defined by FEMA, cannot be man-made. a. True b. False ANSWER: False 6. When the 138-story Glass Tower had a catastrophic fire in 1974, the specialist firefighters and paramedics that came to the scene were categorized as first responders. a. True b. False ANSWER: True 7. The supply chain is where all aspects of operations come together for the benefit of stakeholders. a. True b. False ANSWER: True Multiple Choice 8. Any disturbance, violent change or crisis that interrupts an event, activity, process, or supply chain from continuing its normal course of operation is a(n) a. disruption. Copyright Cengage Learning. Powered by Cognero.

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Ch 20: Building Resilience and Continuity in Operations and Supply Chains b. emergency. c. catastrophe. d. discontinuity. ANSWER: a 9. When a printing and copying services company recently had files stolen by hackers, it was able to continue printing thanks to a backup system and cloud storage, thus demonstrating business a. resistance. b. continuity. c. resilience. d. strength. ANSWER: b 10. The speed with which a company can respond to a disruption is mainly based on a. marketing plans. b. accounting controls. c. supply chain capabilities. d. human resources policies. ANSWER: c 11. In a supply chain diagram, which function is performed by demand nodes? a. Producing services b. Shipping goods c. Storing goods d. Signaling for services ANSWER: d 12. Which of these pairs of supply chain participants is in the order of upstream−downstream? a. Distributor−Customer b. Tier 1 supplier−Tier 2 supplier c. Producer−Tier 1 supplier d. Customer−Distributor ANSWER: a 13. Which of these flows in a supply chain is primarily upstream? a. Product b. Cash c. Information d. Human resources ANSWER: b 14. Exploring strategies for restoring operations to a minimum acceptable level following a disruption is performed in which part of the business continuity four-step process? a. Testing and exercises Copyright Cengage Learning. Powered by Cognero.

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Ch 20: Building Resilience and Continuity in Operations and Supply Chains b. Business impact analysis c. Recovery strategies d. Plan development ANSWER: c 15. The actual step of writing down the business continuity and IT disaster recovery procedures is performed during the a. recovery strategies step. b. testing and exercising step. c. business impact analysis step. d. plan development step. ANSWER: d 16. Which of these strategies for recovering from the disruption of manufacturing operations requires the least amount of input from the operations manager? a. Purchasing business interruption insurance b. Retooling production from one item to another c. Increasing manufacturing output at facilities still operating d. Maintaining higher raw materials, work-in-process, or finished goods inventory ANSWER: a 17. When recovery team members meet in informal classroom settings to discuss their roles and responses to a particular emergency, they are participating in a. functional exercises. b. tabletop exercises. c. walkthroughs. d. workshops. ANSWER: b 18. The resources and supply chain support needed to rescue citizens and restore basic services are all laid out in a a. business impact analysis. b. resilience review. c. disaster plan. d. recovery strategy. ANSWER: c 19. Which step comes last in FEMA’s four phases of emergency management? a. Response b. Preparedness c. Mitigation d. Recovery ANSWER: d 20. Hazardous materials, communications, and health and medical are all a. community lifelines. Copyright Cengage Learning. Powered by Cognero.

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Ch 20: Building Resilience and Continuity in Operations and Supply Chains b. different types of disasters. c. operations resilience examples. d. types of engineering resilience. ANSWER: a 21. Which organizational performance model emphasizes the importance of resilience and business continuity across the framework? a. Balanced Scorecard b. Malcolm Baldrige Performance Excellence c. Value Chain Model d. Service-Profit Chain ANSWER: b 22. Which of these pairs of models helps define the jobs of first responders? a. Cost-volume model and transportation model b. Breakeven analysis and regression analysis c. Services encounter design and job design d. Statistical forecasting and single-period inventory models ANSWER: c 23. The act of locating inventory and assets in storage facilities to reduce the response time just in case an emergency happens is called a. staging. b. telescoping. c. siting. d. prepositioning. ANSWER: d 24. The voice at the other end of the phone reassured me that my cable installer would arrive at my house sometime between the hours of 8 a.m. and 3 p.m., thereby providing me a a. service window. b. resource reservation. c. business reservation. d. time estimate. ANSWER: a 25. The disaster management process takes place a. during and after a disaster. b. before, during, and after a disaster. c. during a disaster. d. after a disaster. ANSWER: b 26. In the detailed view of the supply chain diagram, the customers, distributors, and tier 1 and tier 2 suppliers are Copyright Cengage Learning. Powered by Cognero.

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Ch 20: Building Resilience and Continuity in Operations and Supply Chains a. links. b. flows. c. nodes. d. players. ANSWER: c 27. The foundation of an organization’s ability to provide goods and services to the customer is a. senior leadership. b. the operations function. c. mission, vision, and values. d. the supply chain. ANSWER: d 28. The supply chain is where all aspects of operations come together for the benefit of stakeholders. Who are the stakeholders of an organization? a. Communities, customers, stockholders, and suppliers b. Stockholders c. Customers d. Suppliers and customers ANSWER: a 29. Which of these questions speaks to the business continuity of a firm? a. Will the next franchise McDonald’s to open in Jacksonville be successful? b. Can Entergy Electric utility continue to operate and provide power after Hurricane Ida strikes New Orleans? c. Will the freezers at Alcor still be at −20C after the weekend is over? d. Will the National Basketball Association still exist in the twenty-second century? ANSWER: b 30. Which of these would be considered a disruption in business continuity? a. Hiring a customer-facing worker b. Hiring a back-office worker c. Merger or acquisition d. An unusually large order for products or services ANSWER: c 31. A computer virus hijacked office software and used clever social engineering tricks to propagate itself to fifty recipients in each victim’s address list. From a business continuity perspective, this virus is a(n) a. natural disaster. b. annoyance. c. pandemic. d. disruption. ANSWER: d 32. The sophisticated engine monitored the sounds it made and the frequency with which fluids were changed. Copyright Cengage Learning. Powered by Cognero.

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Ch 20: Building Resilience and Continuity in Operations and Supply Chains Periodically, it would signal to the driver to change consumables or flash an error code and report to the nearest service center for a thorough diagnosis. This engine is demonstrating a. engineering resilience. b. adaptive resilience. c. operational resilience. d. supply chain resilience. ANSWER: a 33. The $1,500 toaster was equipped with sensors that could detect a spike in electricity, the moisture and density of the bread, and the relative humidity. It also scanned each piece of toast it made and compared it to the ideal and the customer setting. It became smarter with each piece of toast produced, stopping just short of becoming self-aware. The improvement capability built into this device is an example of a. sentient resilience. b. adaptive resilience. c. engineering resilience. d. operational resilience. ANSWER: b 34. An F-5 tornado swept across the great plains, literally lifting a university building off its foundation and tossing it somewhere over the rainbow. The associate dean was unfazed and immediately sent out an email instructing faculty to hold class outside for the foreseeable future and to bring a change of work clothes so they could help in the rebuilding. What type of resilience is this? a. Supply chain b. Adaptive c. Operational d. Engineering ANSWER: c 35. At the end of the year, it is not unusual to see a fleet of Amazon delivery vans supplemented by plain white cargo vans, personal vehicles, and rental cars to accommodate the spike in shipping. This adjustment is an example of a. adaptive resilience. b. engineering resilience. c. capacity resilience. d. supply chain resilience. ANSWER: d 36. “What would happen if a nefarious student injected superglue in all the classroom door locks during finals week?” the associate dean pondered on the way to a meeting. The halls would be overrun with students who were saddened at their inability to demonstrate their mastery of the course material. After a quick Internet search, the associate dean removed all the door locks until a supply of acetone could be ordered, which counteracts superglue. The associate dean has conducted a a. business impact analysis. b. recovery strategy. c. preparedness exercise. d. tabletop exercise. ANSWER: a Copyright Cengage Learning. Powered by Cognero.

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Ch 20: Building Resilience and Continuity in Operations and Supply Chains 37. A recovery strategy should be developed a. before the business impact analysis. b. before the recovery plan. c. after the training for the business continuity team. d. before identifying and documenting the resource requirements. ANSWER: b 38. Which of these situations would be considered a capability gap? a. The pumping stations that move water out of New Orleans can handle 1 inch in the first hour and a half-inch each hour thereafter. One rainy Tuesday the city received a steady drizzle that amounted to 12 inches of rain in 24 hours. b. The Slauson Cutoff is a four-lane artery that runs east to west through Los Angeles. It was designed with passenger cars in mind, but UPS drivers favor it over the interstates. c. The walk-in clinic had two nurses who could administer a shot in five minutes. During flu season when vaccinations are free, an average of thirty patients show up each hour to receive a shot. d. The supply chain faculty are gifted teachers, and the major is popular among students. The elective courses frequently have to be moved to a larger room to accommodate demand. ANSWER: c 39. The Covid-19 virus made trips to campus unappealing for students and faculty alike. Which recovery strategy is best for a university concerned about enrollment numbers and tuition revenue? a. Using a satellite campus b. Suggesting students attend a community college for a semester or two then transferring the credit hours c. Suggesting students take a gap year or two d. Telecommuting and Zoom classes ANSWER: d 40. The ISOM department decided to establish professorial backups in every class for the upcoming academic year. Before each semester, each professor identified a colleague that could take over their courses, secured their assent, and added them to the learning management system in an instructor role so they had full access to all materials including the grade book. This way, if the primary professor fell ill, the backup would be able to seamlessly continue the class. The continuity plan task described here involves a. people assigned to execute recovery plans. b. emergency operating center locations. c. office space, furniture, and equipment. d. production and service center facilities. ANSWER: a 41. One essential element of a business continuity plan that ensures everyone takes the appropriate action when a disruption occurs is a. a reward system. b. training. c. a policy. d. a punishment system. Copyright Cengage Learning. Powered by Cognero.

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Ch 20: Building Resilience and Continuity in Operations and Supply Chains ANSWER: b 42. What is the distinction between a disaster and a disruption? a. A disaster must be a natural catastrophe brought about by weather, earthquake, or naturally occurring fire. A disruption can have any cause other than weather, earthquake, or naturally occurring fire. b. A disruption interferes with business operations, but a disaster does not. c. A disaster is always a disruption, but a disruption isn’t necessarily a disaster. d. A disruption affects one business, but if two or more businesses are affected, then the same force by definition is a disaster. ANSWER: c 43. Which is the most effective way to deliver the needed supplies and people skills to a disaster area? a. Self-driving vehicles and drones b. Air drops by planes or helicopters c. Supplies and people should not be moved into a disaster area, as it is more effective to move people out of that area. d. Re-establishing pre-disaster supply chains ANSWER: d 44. FEMA’s framework for emergency and disaster management uses which four phases? a. Response, mitigation, recovery, and preparedness b. Forming, storming, norming, and performing c. Plan, do, check, and act d. Identification, planning, training, and monitoring ANSWER: a 45. After an early-winter ice storm knocked the power out to Matthew’s rural home for eight days, his friend suggested that he invest in a whole-house generator that would run the entire service panel. Doing so is an example of disaster a. prevention. b. mitigation. c. preparedness. d. response. ANSWER: b 46. One way to frame effective disaster response is by reestablishing and rebuilding a. civic pride. b. everyone’s day to day schedule. c. community lifelines. d. infrastructure that was damaged before the disaster. ANSWER: c 47. CARE International operates relief planning in over sixty countries, provisioning equipment, materials, and supplies, for victims of emergencies. Their capability is known as a. a Samaritan supply chain. b. rapid iterative procurement. Copyright Cengage Learning. Powered by Cognero.

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Ch 20: Building Resilience and Continuity in Operations and Supply Chains c. CARE sharing. d. humanitarian logistics. ANSWER: d 48. What is the difference between disaster response and disaster recovery? a. Response occurs immediately after the disaster; recovery begins when efforts to rebuild infrastructure begin and insurance is being paid out. b. Response is the federal government’s responsibility, while recovery is the local government’s responsibility. c. Response refers to the efforts of the government on any level, and recovery refers to the efforts to companies and private citizens. d. Response is any repair effort considered permanent, but recovery is any repair effort considered temporary or stopgap. ANSWER: a 49. Which of these would be considered disaster preparedness? a. Constructing a building to handle 10 degrees of deflection in the event of an earthquake b. A fire drill c. Adding 2 feet of height to a levee that prevents flooding d. Requiring all residents in a flood plain to purchase flood insurance ANSWER: b 50. How does the Malcolm Baldrige Criteria emphasize the importance of resilience and business continuity? a. It establishes minimum scores for preparedness drills for each type of disaster identified in the application. b. It requires a resilience section of the values component of the applicant’s mission-vision-values document. c. It asks how senior leaders cultivate resilience throughout the organization and how strategic planning processes address its need. d. It establishes minimum counts for preparedness drills for each type of disaster identified in the application. ANSWER: c 51. When determining the necessary levels for key stock-keeping units in the event of a disaster, which component of inventory should be considered? a. Goods in transit b. Work in process c. Reorder point d. Safety stock ANSWER: d 52. If a producer runs out of raw materials or purchases modules during an emergency, which action would help mitigate the stockout? a. Using air freight rather than container ships b. Raising the reorder point c. Lowering the reorder point d. Not including work-in-process in any in-stock calculations ANSWER: a Copyright Cengage Learning. Powered by Cognero.

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Ch 20: Building Resilience and Continuity in Operations and Supply Chains 53. During the Covid-19 pandemic, the Long Beach California port of entry had almost 100 cargo ships from Asia waiting to be unloaded. Why were so many ships waiting? a. There was insufficient crane capacity to offload the containers from the ships. b. There was a shortage of truck drivers. c. The workdays had been shortened too much. d. There was insufficient space on the ground to store all the shipping containers arriving. ANSWER: b 54. Painting specific areas and zones of the Long Beach seaport yard to pinpoint the location of equipment and safe pathways through the yard is an application of a. 5S. b. kanban. c. poka-yoke. d. andon. ANSWER: c 55. The Voluntary Hospitals of America has updated their emergency preparedness to include a strategic stockpile of surgical gloves located at five different warehouses around the United States. If there is ever a dramatic increase in the demand for surgical gloves, a member hospital can resupply from the nearest warehouse. This policy is an example of a. warehousing. b. delayed procurement. c. forward buying. d. prepositioning. ANSWER: d 56. An IBM survey asked supply chain executives about processes and supply chain performance. What percentage of the survey respondents reported that they had to manually call each supplier to determine whether they were locked down? a. About 10% b. About 30% c. About 50% d. About 70% ANSWER: d 57. An IBM survey asked supply chain executives about processes and supply chain performance. The highest-performing companies that responded to the survey indicated much greater investment in a. Internet 4.0. b. safety stock. c. alternatives to JIT/TPS methods. d. disaster planning. ANSWER: a 58. The amount of time in which a service must be created and delivered to the customer is a(n) a. lead time. b. service window. c. due date. Copyright Cengage Learning. Powered by Cognero.

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Ch 20: Building Resilience and Continuity in Operations and Supply Chains d. artificial deadline. ANSWER: b 59. The disaster management process can be visualized as a a. batch process. b. continuous flow process. c. project. d. queue. ANSWER: c 60. In the short term, emergency supplies are ________, while over the long term, a ________ supply chain might be used as a better understanding of what resources are needed. a. rigid, agile b. constant, flexible c. needed, longer d. pushed, pull ANSWER: d

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