Operations Management Creating Value Along the Supply Chain, 7th Edition Test Bank

Operations Management Creating Value Along the Supply Chain, 7th Edition By

Salvatore

File: ch01, Chapter 1: Operations Management

True/False

1. Operations management is concerned only with the day-to-day operations of a firm’s productive systems.

Ans: False Difficulty: Easy Feedback: The Operations Function

2. A warehouse operation is an example of a physical transformation process.

Ans: False Difficulty: Easy Feedback: The Operations Function

3. A retail operation is an example of an exchange transformation process.

Ans: True Difficulty: Easy Feedback: The Operations Function

4. Operations management designs, operates, and improves productive systems.

Ans: True Difficulty: Easy Feedback: The Operations Function

5. To be effective an operations manager needs an integrated view of business organizations.

Ans: True Difficulty: Easy Feedback: Evolution of Operations

6. The systematic analysis of work methods is known as scientific management.

Ans: True Difficulty: Easy Feedback: Evolution of Operations

7. Operations research is concerned with the systematic analysis of work methods.

Ans: False Difficulty: Moderate Feedback: Evolution of Operations

8. Mass production refers to high-volume production of a standardized product.

Ans: True Difficulty: Easy Feedback: Evolution of Operations

9. Emphasizing the strategic role of operations enhances the competitiveness of U.S. companies.

Ans: True Difficulty: Easy Feedback: Operations Strategy

10. The adaptation of mass production to emphasize efficiency, rather than quality is known as lean production.

Ans: False Difficulty: Moderate Feedback: Evolution of Operations

11. The set of activities that create and deliver products to the customer is known as the supply chain.

Ans: True Difficulty: Moderate Feedback: Evolution of Operations Management

12. The four primary functional areas of a firm are marketing, finance, operations, and human resources.

Ans: True Difficulty: Easy Feedback: The Operations Function

13. The process of producing high-volume, standardized products for a large market is known as craft production.

Ans: False Difficulty: Moderate Feedback: Globalization

14. The European Union requires that strict quality and environmental standards be met before companies can do business with member countries.

Ans: True Difficulty: Moderate Feedback: Globalization

15. Productivity increases enable a nation to raise its standard of living.

Ans: True Difficulty: Easy Feedback: Productivity and Competitiveness

16. A nation’s productivity is unrelated to its standard of living.

Ans: False Difficulty: Easy Feedback: Productivity and Competitiveness

17. Globalization has affected both manufacturing and service operations.

Ans: True Difficulty: Easy Feedback: Globalization

18. A transformation process is a series of activities from supplier to customer that add value to a product or service.

Ans: False.

Difficulty: Moderate Feedback: The Operations Function

19. U.S. companies can become globally competitive by emphasizing the strategic importance of operations.

Ans: True Difficulty: Moderate Feedback: Operations Strategy

20. Many companies now find it necessary to have some global presence to remain competitive.

Ans: True Difficulty: Easy Feedback: Operations Strategy

21. Productivity is the most common measure of competitiveness.

Ans: True Difficulty: Easy Feedback: Productivity and Competitiveness

22. Single factor productivity measures compare output to an individual input.

Ans: True Difficulty: Moderate Feedback: Productivity and Competitiveness

23. Human resources management provides demand estimates that are used in production decisions.

Ans: False Difficulty: Moderate Feedback: The Operations Function

24. Ensuring good quality underlies all operational decisions.

Ans: True Difficulty: Easy Feedback: Operations Strategy

25. Two-thirds of today’s businesses operate globally Ans: True Difficulty: Moderate Feedback: Globalization

26. China is reshaping the way firms compete globally Ans: True Difficulty: Easy Feedback: Globalization

27. Deployment is a step in strategy formualtion that evaluates the alignment between core competencies and order winners.

Ans: False Difficulty: Easy Feedback: Operations Strategy

28. Positioning is a step in strategy formualtion that compares core competencies and order winners.

Ans: True Difficulty: Moderate Feedback: Operations Strategy

29. Order qualifiers are the characteristics of a product that have to be satisfied just to be considered for purchase by a customer.

Ans: True Difficulty: Easy Feedback: Operations Strategy

30. An order qualifier is a customer criteria that wins the order.

Ans: False Difficulty: easy Feedback: Operations Strategy

31. Core competencies tend to be processes and not products or technologies.

Ans: True Difficulty: Easy Feedback; Operations Strategy

32. Strategy formulation starts with determining a firm’s order winners and order qualifiers.

Ans: False Difficulty: Easy Feedback: Operations Strategy

33. Order winners and order qualifiers change over time in response to the dynamics of changing market conditions.

Ans: True Difficulty: Moderate Feedback: Operations Strategy

34. To be competitive firms must create and sustain core competencies that are in tune with their customer’s order winners.

Ans: True Difficulty: Moderate Feedback: Operations Strategy

35. Firms compete in the marketplace based on cost, speed, quality and flexibility.

Ans: True Difficulty: Easy Feedback: Operations Strategy

36. Globalization requires that firms compete on cost and not quality, speed or flexibility.

Ans: False Difficulty: Mode Feedback: Globalization

37. Globalization of the supply chain for many products has many pros and few, if any, cons.

Ans: False Difficulty: Moderate Feedback: Globalization

38. A major challenge and opportunity for many firms is the globalization of the supply chain.

Ans: True Difficulty: Easy Feedback: Globalization

Multiple Choice

39. Operations management is concerned with a. the design of a firm’s productive systems. b. the operation of a firm’s productive systems. c. the improvement of a firm’s productive systems. d. all of the above.

Ans: d Difficulty: Easy Feedback: The Operations Function

40. The transformation process associated with health care is best described as a. locational b. exchange c. physiological d. informational Ans: c Difficulty: Easy Feedback: The Operations Function

41. Which of the following is not one of the four primary functional areas of a firm? a. human resources b. legal c. marketing

d.

operations

Ans: B Difficulty: Easy Feedback: The Operations Function

42. The production system that prizes flexibility over efficiency and quality over quantity is known as a. mass production b. craft production c. lean production d. electronic commerce Ans: c Difficulty: Moderate Feedback: Productivity and Competitiveness

43. Dividing a job into a series of small tasks each performed by a different worker is known as a. craft production b. scientific management c. division of labor d. interchangeable parts Ans: c.

Difficulty: Moderate Feedback: Productivity and Competitiveness

44. Linear programming, simulation, and waiting line theory are most closely associated with which era in the historical development of operations management? a. human relations b. operations research c. globalization d.

Internet revolution Ans: b Difficulty: Moderate Feedback: Evolution of Operations

45. The ratio of a firm’s monthly output to the number of labor hours used in the same month would be a measure of a. labor productivity b. capital productivity c. machine productivity d. multifactor productivity Ans: a Difficulty: Moderate Feedback: Productivity and Competitiveness

46. The degree of competitiveness in an industry can affect a. product innovation b. technological investment c. operating strategy d. all of the above Ans: d Difficulty: Easy Feedback: Productivity and Competitiveness

47. Which of the following is not an event or concept associated with the quality revolution? a.

TQM (total quality management) b.

PERT/CPM c.

Business process reengineering d.

JIT Ans: b Difficulty: Moderate Feedback: Evolution of Operations

48. Japanese firms used the concept of ___________ to convert from mass production to lean production. a. division of labor b. scientific management c. just-in-time d. interchangeable parts

Ans: c Difficulty: Moderate Feedback: Productivity and Competitiveness

49. Mass production is well suited to all of the following except a. producing large volumes of goods quickly b. adapting quickly to changes in market demand c. producing standardized products for a large market d. all of the above Ans: b Difficulty: Easy Feedback: Productivity and Competitiveness

50. All of the following are characteristics of today’s consumer market except a. longer product life cycles b. shorter product life cycles c. more customized products d. product proliferation Ans: a.

Difficulty: Moderate Feedback: Productivity and Competitiveness

51. All of the following are responsibilities of operations managers except a. acquiring financial resources b. managing inventories c. planning production d. scheduling production Ans: a Difficulty: Easy Feedback: The Operations Function

52. The work of W. Edwards Deming is most closely associated with a.

MRP b.

TQM c. supply chain management

d.

time and motion studies

Ans: b Difficulty: Easy Feedback: Evolution of Operations

53. All of the following are transformation processes except: a. physiological b. locational c. exchange d. optimal Ans: d Difficulty: Easy Feedback: The Operations Function

54. Linear programming, waiting line, simulation, and PERT/CPM are all parts of which era of operations management? a) Quality Research b) Operations Research c) Internet Revolution d) Globalization Ans: b Difficulty: Moderate Feedback: Evolution of Operations

55. A firm who is adept at recognizing global windows of opportunity, acting on those very quickly, with tight linkages can be said to be competing on: a) flexibility b) speed c) quality d) cost Ans: b Difficulty: Hard Sectioned: Operations Strategy

56. The major factors impacting globalization of the supply chain include all the following except a. Creation of the WTO b. Regional Trade Agreements c. Fall of communism d. Advances in information and transportation technology Ans: c Difficulty: Hard Feedback: Globalization

57. Companies go global to a. Take advantage of favorable costs b. To keep abreast of trends and access new technologies c. To build reliable sources of supply d. All the above.

Ans: d Difficulty: Moderate Feedback: Globalization

58. A manager of a global supply chain is concerned with all the following except? a. Timeliness b. Quality c. Social issues d. All the above are concerns Ans: d Difficulty: Moderate Feedback: Globalization

Short Answer

59. Briefly describe how operations can be viewed as a transformation process.

Operations is often defined as a transformation process. Inputs such as raw materials, labor, equipment, and capital are transformed into outputs (goods and services).

Customer feedback is used to adjust the transformation process. An objective of the

operations manager is to ensure that the transformation process operates efficiently and the outputs of the process have greater value than the sum of the inputs. In this way the transformation process creates value, making it possible to view the transformation process as a value chain extending from supplier to customer.

60. Briefly describe the four primary functional areas of a firm. How is operations related to them?

The four primary functional areas of a firm are marketing, finance, operations, and human resources. For most firms, operations is the technical core or “hub” of the organization, interacting with the other functional areas and suppliers to produce goods and services for customers. For example, marketing provides sales forecasts to operations and operations provides marketing with product availability information, lead time estimates and delivery schedules. Operations provides finance with inventory and production data, capital budgeting and equipment requests, and technology plans.

Finance provides the capital resources for financing inventory and securing more capital equipment. Operations relies on human resources to meet its personnel needs—hiring, training, and evaluating workers.

61. What is electronic commerce?

Trade that occurs over the Internet (or any other computer network) is called electronic commerce, e-commerce, or e-business. Electronic commerce can take the form of trade between businesses (B2B), between consumers, or between business and consumers (B2C). B2B trade typically involves companies and their suppliers while B2C trade can take the form of online retailing. Companies that integrate both B2B and B2C are said to have a fully integrated value chain.

67. What is productivity and how is it measured?

Productivity is the ratio of output to input. Output can be expressed in units or dollars.

Single factor productivity compares output to individual inputs, such as labor hours, investment in equipment, or material usage. Multifactor productivity relates output to a combination of inputs, such as labor + capital. Total factor productivity compares the quantity of goods and services produced with all the inputs used to produce them.

68. What can lead to increases in productivity?

Productivity increases when firms become more efficient, expand, achieve breakthroughs that enable output increases to occur with reduced inputs, downsize while maintaining

output with fewer inputs, and retrench with output and inputs decreasing but inputs decreasing at a faster rate than output.

File: chS1, Supplement 1: Operational Decision-Making Tools: Decision Analysis

True/False

1. In a decision making situation the events that may occur in the future are known as states of nature.

Ans: True Difficulty: Easy Feedback: Decision Analysis

2. When probabilities are assigned to states of nature the situation is referred to as decision making under uncertainty.

Ans: False Difficulty: Easy Feedback: Decision Analysis

3. The outcome of a decision in referred to as a payoff.

Ans: True Difficulty: Easy Feedback: Decision Analysis

4. The most widely used decision-making criterion for situations with risk is expected value.

Ans: True Difficulty: Easy Feedback: Decision Analysis

5. A decision criterion in which the decision payoffs are weighted by a coefficient of optimism is known as the Hurwicz criterion.

Ans: True

Difficulty: Moderate Feedback: Decision Analysis

6. The LaPlace criterion is a decision criterion in which each state of nature is weighted equally.

Ans: True Difficulty: Moderate Feedback: Decision Analysis

7. A sequential decision tree is a graphical method for analyzing decision situations that require a sequence of decisions over time.

Ans: True Difficulty: Easy Feedback: Decision Analysis

8. A decision criterion that results in the maximum of the minimum payoffs is called a maximin criterion.

Ans: True Difficulty: Moderate Feedback: Decision Analysis

9. Quantitative methods are tools available to operations managers to help make a decision or recommendation.

Ans: True Difficulty: Moderate Feedback: Decision Analysis

10. Quantitative methods are tools available to operations managers to help make a decision but not a recommendation.

Ans: False Difficulty: Moderate

Feedback: Decision Analysis

11. Decision analysis is a quantitative technique supporting decision making with uncertainty.

Ans: True Difficulty: Moderate Feedback: Decision Analysis

12. A payoff table is a quantitative technique supporting decision making under uncertainty.

Ans: True Difficulty: Moderate Feedback: Decision Analysis

Multiple Choice

13. When probabilities can be assigned to the occurrence of states of nature in the future, the situation is referred to as a. decision making under risk b. decision making under certainty c. decision making under uncertainty d. none of the above Ans: a Difficulty: Easy Feedback: Decision Analysis

14. Which of the following techniques is the most widely used decision-making criterion under risk? a. maximax criterion b. minimax regret criterion c. expected value criterion d. Hurwicz criterion

Ans: c Difficulty: Moderate Feedback: Decision Analysis

15. The maximum value of perfect information to the decision maker is known as a. the expected value of perfect information b. the expected value of imperfect information c. the minimum of the minimax regret d. none of the above Ans: a Difficulty: Easy Feedback: Decision Analysis

17. A family business is considering making an investment in its manufacturing operation. Three decisions are under consideration: (1) a large investment; (2) a medium investment; and (3) a small investment. The business believes that there are three possible future outcomes for its product: (1) increasing demand; (2) stable demand; and (3) decreasing demand. The following payoff table describes the decision situation.

Decision Large Investment Medium Investment Small Investment

States of Nature Increasing Demand Stable Demand $1,000,000 500,000 250,000

$400,000 300,000 125,000

Decreasing Demand -$600,000 -200,000 25,000

The best decision for the business using the maximax criterion would be to a. make the large investment b. make the medium investment c. make the small investment d. choose increasing demand Ans: a Difficulty: Moderate Feedback: Decision Analysis

18. A family business is considering making an investment in its manufacturing operation. Three decisions are under consideration: (1) a large investment; (2) a medium investment; and (3) a small investment. The business believes that there are three possible future outcomes for its product: (1) increasing demand; (2) stable

demand; and (3) decreasing demand. The following payoff table describes the decision situation.

Decision Large Investment Medium Investment Small Investment

States of Nature Increasing Demand Stable Demand $1,000,000 500,000 250,000

$400,000 300,000 125,000

Decreasing Demand -$600,000 -200,000 25,000

The best decision for the business using the maximin criterion would be to a. make the large investment b. make the medium investment c. make the small investment d. choose stable demand Ans: c Difficulty: Moderate Feedback: Decision Analysis

19. A family business is considering making an investment in its manufacturing operation. Three decisions are under consideration: (1) a large investment; (2) a medium investment; and (3) a small investment. The business believes that there are three possible future outcomes for its product: (1) increasing demand; (2) stable demand; and (3) decreasing demand. The following payoff table describes the decision situation.

Decision Large Investment Medium Investment Small Investment

States of Nature Increasing Demand Stable Demand $1,000,000 500,000 250,000

$400,000 300,000 125,000

Decreasing Demand -$600,000 -200,000 25,000

The best decision for the business using the minimax regret decision criterion would be to a. make the large investment b. make the medium investment c. make the small investment d. choose decreasing demand Ans: b Difficulty: Moderate Feedback: Decision Analysis

20. A family business is considering making an investment in its manufacturing operation. Three decisions are under consideration: (1) a large investment; (2) a medium investment; and (3) a small investment. The business believes that there are three possible future outcomes for its product: (1) increasing demand; (2) stable demand; and (3) decreasing demand. The following payoff table describes the decision situation.

Decision Large Investment Medium Investment Small Investment

States of Nature Increasing Demand Stable Demand $1,000,000 500,000 250,000

$400,000 300,000 125,000

Decreasing Demand -$600,000 -200,000 25,000

The best decision for the business using the Hurwicz criterion with a coefficient of optimism equal to 0.80 would be to a. make the large investment b. make the medium investment c. make the small investment d. choose stable demand Ans: a Difficulty: Moderate Feedback: Decision Analysis

21. A family business is considering making an investment in its manufacturing operation. Three decisions are under consideration: (1) a large investment; (2) a medium investment; and (3) a small investment. The business believes that there are three possible future outcomes for its product: (1) increasing demand; (2) stable demand; and (3) decreasing demand. The following payoff table describes the decision situation.

Decision Large Investment Medium Investment Small Investment

States of Nature Increasing Demand Stable Demand $1,000,000 500,000 250,000

$400,000 300,000 125,000

Decreasing Demand -$600,000 -200,000 25,000

The best decision for the business using the equal likelihood criterion would be to a. make the large investment b. make the medium investment c. make the small investment d. choose increasing demand Ans: a

Difficulty: Moderate Feedback: Decision Analysis

22. A family business is considering making an investment in its manufacturing operation. Three decisions are under consideration: (1) a large investment; (2) a medium investment; and (3) a small investment. The business believes that there are three possible future outcomes for its product: (1) increasing demand; (2) stable demand; and (3) decreasing demand. The business believes that the probability for increasing, stable and decreasing product demand are 0.4, 0.5, and 0.1, respectively.

The following payoff table describes the decision situation.

Decision Large Investment Medium Investment Small Investment

States of Nature Increasing Demand Stable Demand (0.4) (0.5) $1,000,000 500,000 250,000

$400,000 300,000 125,000

Decreasing Demand (0.1) -$600,000 -200,000 25,000

The expected value for the large investment decision is a. $700,000 b. $540,000 c. $330,000 d. $165,000 Ans b Difficulty: Moderate Feedback: Decision Analysis

23. A family business is considering making an investment in its manufacturing operation. Three decisions are under consideration: (1) a large investment; (2) a medium investment; and (3) a small investment. The business believes that there are three possible future outcomes for its product: (1) increasing demand; (2) stable demand; and (3) decreasing demand. The business believes that the probability for increasing, stable and decreasing product demand are 0.4, 0.5, and 0.1, respectively.

The following payoff table describes the decision situation.

Decision Large Investment Medium Investment Small Investment

States of Nature Increasing Demand Stable Demand (0.4) (0.5) $1,000,000 500,000 250,000

$400,000 300,000 125,000

Decreasing Demand (0.1) -$600,000 -200,000 25,000

The expected value for the small investment decision is a. $540,000 b. $400,000 c. $330,000 d. $165,000 Ans: d Difficulty: Moderate Feedback: Decision Analysis

24. A family business is considering making an investment in its manufacturing operation. Three decisions are under consideration: (1) a large investment; (2) a medium investment; and (3) a small investment. The business believes that there are three possible future outcomes for its product: (1) increasing demand; (2) stable demand; and (3) decreasing demand. The business believes that the probability for increasing, stable and decreasing product demand are 0.4, 0.5, and 0.1, respectively.

The following payoff table describes the decision situation.

Decision Large Investment Medium Investment Small Investment

States of Nature Increasing Demand Stable Demand (0.4) (0.5) $1,000,000 500,000 250,000

$400,000 300,000 125,000

Decreasing Demand (0.1) -$600,000 -200,000 25,000

The expected value for the medium investment decision is a. $600,000 b. $540,000 c. $330,000 d. $165,000 Ans: c Difficulty: Moderate Feedback: Decision Analysis

25. A family business is considering making an investment in its manufacturing operation. Three decisions are under consideration: (1) a large investment; (2) a medium investment; and (3) a small investment. The business believes that there are three possible future outcomes for its product: (1) increasing demand; (2) stable demand; and (3) decreasing demand. The business believes that the probability for increasing, stable and decreasing product demand are 0.4, 0.5, and 0.1, respectively.

The following payoff table describes the decision situation.

Decision Large Investment Medium Investment Small Investment

States of Nature Increasing Demand Stable Demand (0.4) (0.5) $1,000,000 500,000 250,000

$400,000 300,000 125,000

Decreasing Demand (0.1) -$600,000 -200,000 25,000

If the expected value criterion is used then the best decision would be to a. make the large investment b. make the medium investment c. make the small investment d. choose the stable demand Ans: a Difficulty: Moderate Feedback: Decision Analysis

26. A family business is considering making an investment in its manufacturing operation. Three decisions are under consideration: (1) a large investment; (2) a medium investment; and (3) a small investment. The business believes that there are three possible future outcomes for its product: (1) increasing demand; (2) stable demand; and (3) decreasing demand. The business believes that the probability for increasing, stable and decreasing product demand are 0.4, 0.5, and 0.1, respectively.

The following payoff table describes the decision situation.

Decision Large Investment Medium Investment Small Investment

States of Nature Increasing Demand Stable Demand (0.4) (0.5) $1,000,000 500,000 250,000

$400,000 300,000 125,000

Decreasing Demand (0.1) -$600,000 -200,000 25,000

The expected value of perfect information for the family business is a. $602,500 b. $540,000 c. $62,500 d. $25,000 Ans: c Difficulty: Hard Feedback: Decision Analysis

27. A small parts manufacturer has just engineered a new product for the automotive industry. In order to produce the part the company can expand existing facilities, acquire a competitor, or subcontract production. The company believes the product will either experience high market demand or low market demand. The following payoff table describes the company’s decision situation.

Decision Expand Facilities Acquire Competitor Subcontract Production

States of Nature High Demand Low Demand $2,000,000 750,000 250,000

-1,250,000 -500,000 25,000

The best decision for the manufacturer using the maximax decision criterion is to a. expand facilities b. acquire competitor c. subcontract production d. select high demand Ans: a Difficulty: Moderate Feedback: Decision Analysis

28. A small parts manufacturer has just engineered a new product for the automotive industry. In order to produce the part the company can expand existing facilities, acquire a competitor, or subcontract production. The company believes the product will either experience high market demand or low market demand. The following payoff table describes the company’s decision situation.

Decision Expand Facilities Acquire Competitor Subcontract Production

States of Nature High Demand Low Demand $2,000,000 750,000 250,000

-1,250,000 -500,000 25,000

The best decision for the manufacturer using the maximin decision criterion is to a. expand facilities b. acquire competitor c. subcontract production d. select high demand Ans: c Difficulty: Moderate Feedback: Decision Analysis

29. A small parts manufacturer has just engineered a new product for the automotive industry. In order to produce the part the company can expand existing facilities, acquire a competitor, or subcontract production. The company believes the product will either experience high market demand or low market demand. The following payoff table describes the company’s decision situation.

Decision Expand Facilities Acquire Competitor Subcontract Production

States of Nature High Demand Low Demand $2,000,000 750,000 250,000

-1,250,000 -500,000 25,000

The best decision for the manufacturer using the minimax regret decision criterion is to a. expand facilities b. acquire competitor c. subcontract production d. select high demand Ans: b Difficulty: Moderate Feedback: Decision Analysis

30. A small parts manufacturer has just engineered a new product for the automotive industry. In order to produce the part the company can expand existing facilities, acquire a competitor, or subcontract production. The company believes the product will either experience high market demand or low market demand. The following payoff table describes the company’s decision situation.

Decision Expand Facilities Acquire Competitor Subcontract Production

States of Nature High Demand Low Demand $2,000,000 750,000 250,000

-1,250,000 -500,000 25,000

The regret that is associated with the decision to acquire competitor when demand is low is a. $0 b. $525,000 c. $1,250,000 d. $1,275,000 Ans: b Difficulty: Moderate Feedback: Decision Analysis

31. A small parts manufacturer has just engineered a new product for the automotive industry. In order to produce the part the company can expand existing facilities, acquire a competitor, or subcontract production. The company believes the product will either experience high market demand or low market demand. The following payoff table describes the company’s decision situation.

Decision Expand Facilities Acquire Competitor Subcontract Production

States of Nature High Demand Low Demand $2,000,000 750,000 250,000

-1,250,000 -500,000 25,000

The best decision for the manufacturer using the Hurwicz decision criterion with a coefficient of optimism equal to 0.3 is to a. expand facilities b. acquire competitor c. subcontract production d. make no decision Ans c Difficulty: Moderate Feedback: Decision Analysis

32. A small parts manufacturer has just engineered a new product for the automotive industry. In order to produce the part the company can expand existing facilities, acquire a competitor, or subcontract production. The company believes the product will either experience high market demand or low market demand. The following payoff table describes the company’s decision situation.

Decision Expand Facilities Acquire Competitor Subcontract Production

States of Nature High Demand Low Demand $2,000,000 750,000 250,000

-1,250,000 -500,000 25,000

The value of the Hurwicz decision criterion for subcontract production when the coefficient of optimism is 0.30 is a. $92,500 b. $182,500 c. $250,000 d. $275,000

Ans: a Difficulty: Moderate Feedback: Decision Analysis

33. A small parts manufacturer has just engineered a new product for the automotive industry. In order to produce the part the company can expand existing facilities, acquire a competitor, or subcontract production. The company believes the product will either experience high market demand or low market demand. The following payoff table describes the company’s decision situation.

Decision Expand Facilities Acquire Competitor Subcontract Production

States of Nature High Demand Low Demand $2,000,000 750,000 250,000

-1,250,000 -500,000 25,000

The best decision for the manufacturer using the equal likelihood criterion is to a. expand facilities b. acquire competitor c. subcontract production d. select high demand Ans: a Difficulty: Moderate Feedback: Decision Analysis

34. A small parts manufacturer has just engineered a new product for the automotive industry. In order to produce the part the company can expand existing facilities, acquire a competitor, or subcontract production. The company believes the product will either experience high market demand or low market demand, with probabilities of 0.6 and 0.4, respectively. The following payoff table describes the company’s decision situation.

Decision Expand Facilities Acquire Competitor Subcontract Production

States of Nature High Demand Low Demand (0.6) (0.4) $2,000,000 750,000 250,000

The expected value for the expand facilities decision is a. $250,000 b. $160,000

-1,250,000 -500,000 25,000

c. $700,000 d. $1,200,000 Ans: c Difficulty: Moderate Feedback: Decision Analysis

35. A small parts manufacturer has just engineered a new product for the automotive industry. In order to produce the part the company can expand existing facilities, acquire a competitor, or subcontract production. The company believes the product will either experience high market demand or low market demand, with probabilities of 0.6 and 0.4, respectively. The following payoff table describes the company’s decision situation.

Decision Expand Facilities Acquire Competitor Subcontract Production

States of Nature High Demand Low Demand (0.6) (0.4) $2,000,000 750,000 250,000

-1,250,000 -500,000 25,000

The expected value for the acquire competitor decision is a. $250,000 b. $160,000 c. $700,000 d. $1,200,000 Ans: a Difficulty: Moderate Feedback: Decision Analysis

36. A small parts manufacturer has just engineered a new product for the automotive industry. In order to produce the part the company can expand existing facilities, acquire a competitor, or subcontract production. The company believes the product will either experience high market demand or low market demand, with probabilities of 0.6 and 0.4, respectively. The following payoff table describes the company’s decision situation.

Decision Expand Facilities Acquire Competitor

States of Nature High Demand Low Demand (0.6) (0.4) $2,000,000 750,000

-1,250,000 -500,000

Subcontract Production

250,000

25,000

The expected value for the subcontract production decision is a. $250,000 b. $160,000 c. $700,000 d. $1,200,000 Ans: b Difficulty: Moderate Feedback: Decision Analysis

37. A small parts manufacturer has just engineered a new product for the automotive industry. In order to produce the part the company can expand existing facilities, acquire a competitor, or subcontract production. The company believes the product will either experience high market demand or low market demand, with probabilities of 0.6 and 0.4, respectively. The following payoff table describes the company’s decision situation.

Decision Expand Facilities Acquire Competitor Subcontract Production

States of Nature High Demand Low Demand (0.6) (0.4) $2,000,000 750,000 250,000

-1,250,000 -500,000 25,000

The best decision according to the expected value criterion is: a. Acquire Competitor b. Expand Facilities c. Subcontract Production d. High Demand Ans: b Difficulty: Moderate Feedback: Decision Analysis

38. A small parts manufacturer has just engineered a new product for the automotive industry. In order to produce the part the company can expand existing facilities, acquire a competitor, or subcontract production. The company believes the product will either experience high market demand or low market demand, with probabilities of 0.6 and 0.4, respectively. The following payoff table describes the company’s decision situation.

Decision Expand Facilities Acquire Competitor Subcontract Production

States of Nature High Demand Low Demand (0.6) (0.4) $2,000,000 750,000 250,000

-1,250,000 -500,000 25,000

The expected value of perfect information for the small parts manufacturer is a. $1,210,000 b. $700,000 c. $510,000 d. $312,500 Ans c Difficulty: Hard Feedback: Decision Analysis

Short Answer

39. What is decision analysis?

Ans: Decision analysis is a set of quantitative techniques for decision-making situations in which uncertainty exists. Decision analysis is a generic technique that can be applied to a number of different types of operational decision-making areas. The study of decision analysis is useful because it provides a structured, systematic approach to decision making that many decision makers follow intuitively without ever consciously thinking about it. Thus, decision analysis represents not only a collection of decisionmaking techniques but also an analysis of the logic underlying decision making.

Difficulty: Moderate Feedback: Decision Analysis

File: ch02, Chapter 2: Quality Management

True/False

1. Six Sigma quality is a statistical measure that equates to only 3.4 defects per million.

Ans: True Difficulty: Moderate Feedback: Six Sigma

2. Before Six Sigma quality levels in the United States were generally measured in defects per hundred.

Ans: True Difficulty: Moderate Feedback: Six Sigma

3. Six Sigma is a recognized quality program based strictly on statistical process control.

Ans: False Difficulty: Easy Feedback: Six Sigma

4. Companies that have adopted Six Sigma view it as a short-term strategy for quality improvement.

Ans: False Difficulty: Easy Feedback: Six Sigma

5. The fundamental objective of Six Sigma is to focus on improvement through by reducing process variation.

Ans: True Difficulty: Moderate

Feedback: Six Sigma

6. Globalization and foreign competition began to change consumer’s attitudes towards quality in the 1950s.

Ans: False Difficulty: Easy Feedback: The Focus of Quality Management

7. Toyota achieved high product quality by adapting many of the quality management principles that had first been developed in the United States.

Ans: True Difficulty: Moderate Feedback: Quality Management Systems

8. From the producer’s perspective quality is determined by what the consumer wants and is willing to pay for.

Ans: False Difficulty: Easy Feedback: Quality Management Systems

9. How well the product or service does what it is intended to do is known as quality of design.

Ans: False Difficulty: Easy Feedback: What is Quality?

10. The degree to which quality characteristics are designed into the product is known as quality of design.

Ans: True Difficulty: Easy Feedback: What is Quality?

11. Quality of performance relates to the basic operating characteristics of a product.

Ans: True Difficulty: Easy Feedback: What is Quality?

12. The degree to which a product meets preestablished standards is known as quality of conformance.

Ans: True Difficulty: Easy Feedback: What is Quality?

13. The courtesy and competence of the repair person can be one aspect of maintainability.

Ans: False Difficulty: Easy Feedback: What is Quality?

14. The probability that a product will operate properly within an expected time frame is known as quality of performance.

Ans: False Difficulty: Moderate Feedback: What is Quality?

15. The dimension of quality related to the life-span of a product before replacement is known as durability.

Ans: True Difficulty: Moderate Feedback: What is Quality?

16. Service quality is more directly related to the interaction between customer and employee than is manufacturing quality.

Ans: True Difficulty: Moderate Feedback: Quality in Services

17. Training, supervision, and control are important elements in achieving quality of conformance.

Ans: True Difficulty: Easy Feedback: What is Quality?

18. The consumer makes the final judgment regarding quality.

Ans: True Difficulty: Easy Feedback: What is Quality?

19. Quality characteristics included in the product’s design must be balanced against production costs.

Ans: True Difficulty: Moderate Feedback: The Focus of Quality Management

20. Deming advocated continuous process improvement to reduce variability and achieve conformance to design specifications.

Ans: True Difficulty: Moderate Feedback: Quality Management Systems

21. Deming emphasized final product inspection as a way to improve process quality.

Ans: False Difficulty: Easy Feedback: Quality Management Systems

22. Deming advocated the elimination of both common cause and special cause variation as a way to improve a process.

Ans: True Difficulty: Moderate Feedback: Quality Management Systems

23. Deming emphasized the use of statistical quality control techniques to reduce variability in the output of a process..

Ans: True Difficulty: Easy Feedback: Quality Management Systems

24. Deming believed that only employees are responsible for improving quality.

Ans: False Difficulty: Easy Feedback: Quality Management Systems

25. The Deming Wheel is also known as the plan-do-check-act (PDCA) cycle.

Ans: True Difficulty: Easy Feedback: Quality Management Systems

26. Total quality management represents a set of management principles that focus on quality improvement in all the functional areas within a company.

Ans: True Difficulty: Easy Feedback: TQM and QMS

27. The training and education of all employees on quality improvement is a basic principle of total quality management.

Ans: True Difficulty: Easy Feedback: The Role of Employees

28. One principle of total quality management (TQM) is that middle management is solely responsible for providing the leadership for quality.

Ans: False Difficulty: Moderate Feedback: The Role of Employees

29. With Six Sigma the project team leader is known as a Black Belt Ans: True Difficulty: Hard Feedback: Six Sigma

30. With Six Sigma a teacher and mentor is known as a Green Belt Ans: False Difficulty: Moderate Feedback: Six Sigma

31. The cost of measuring, testing, and analyzing are collectively known as appraisal costs.

Ans: True Difficulty Hard Feedback: The Cost of Quality

32. Customer complaint costs are an example of external failure costs .Ans: True Difficulty: Moderate Feedback: The Cost of Quality

33. ISO 9000 certification is a major consideration for doing business within the United States.

Ans: False Difficulty: Moderate Feedback: ISO 9000

35. Statistical process control monitors and controls quality for both qualitative and quantitative variables.

Ans: True Difficulty: Hard Feedback: Quality Tools

36. Today total quality management has been displaced by quality management systems.

Ans: True Difficulty: Hard Feedback: TQM and QMS

37. Six Sigma is a one of several well known quality management systems.

Ans: True Difficulty: Easy Feedback: TQM and QMS

38. Companies that satisfy its customer quality requirements often require the commitment of their suppliers.

Ans: True Difficulty: Hard Feedback: The Focus of Quality Management

39. Most members of a supply chain understand the importance of high quality because they are both customers and suppliers.

Ans: True Difficulty: Moderate Feedback: The Focus of Quality Management

40. Some companies enter into long term relationships with suppliers who in return commit to meeting only delivery deadlines.

Ans: False Difficulty: Easy Feedback: The Focus of Quality Management

41. Employees’ role in quality management is becoming less important because of the implementation of strong quality management systems.

Ans: False Difficulty: Moderate Feedback: The Role of Employees

42. Two team approaches to improvement are quality circles and process improvement teams.

Ans: True Difficulty: Moderate Feedback: The Role of Employees

43. Benchmarking involves comparing a company’s quality to the best level of quality achieved by another company in the same industry.

Ans: True

Difficulty: Moderate Feedback: Quality in Services

44. McDonald’s has a reputation for high-quality service resulting from the application of quality management principles.

Ans: True Difficulty: Moderate Feedback: Quality in Services

45. Quality management principles often do not apply to services because the customer has lower quality expectations.

Ans: False Difficulty: Moderate Feedback: Quality in Services

Multiple Choice

34. Which of the following is not a dimension of quality for a manufactured good? a. performance b. reliability c. courtesy d. durability Ans: c Difficulty: Easy Feedback: What is Quality?

35. The probability that a product will operate properly within an expected time frame is the dimension of quality known as a. durability b. reliability c. performance d. serviceability

Ans: b Difficulty: Easy Feedback: What is Quality?

36. The degree to which a product meets preestablished standards is known as a. conformance b. performance c. reliability d. none of the above Ans: a Difficulty: Easy Feedback: What is Quality?

37. Making sure that the product meets the design specifications during production is referred to as a. quality of design b. process capability c. fitness for use d. quality of conformance Ans: d Difficulty: Easy Feedback: What is Quality?

38. __________________ advocated continuous improvement to the production process to achieve conformance to specifications and reduce variability. a. W. Edwards Deming b. Philip Crosby c. Kaoru Ishikawa d. Frederick Taylor Ans: a Difficulty: Moderate Feedback: Quality Management System

39. W. Edwards Deming believed that primary responsibility for quality improvement rested with

a. b. c. d.

the firm’s employees only the form’s management only research engineers and consulting statisticians only both the employees and management of the firm

Ans: d Difficulty: Moderate Feedback: Quality Management System

40. W. Edwards Deming’s overall philosophy for achieving quality is embodied in a. his 14 points b. his statement of purpose c. his use of statistical control d. none of the above Ans: a Difficulty: Easy Feedback: Quality Management Systems

41. A relationship between a firm and its supplier where the supplier agrees to meet the firms’ quality standards and the firm enters into a long-term purchasing agreement with the supplier is known as a. outsourcing. b. vertical integration. c. partnering. d. conformance.

Ans: c Difficulty: Moderate Feedback: The Focus of Quality Management - Customers

42. Directly involving employees in the quality-management process is referred to as a. partnering b. a quality circle c. Six Sigma d. participative problem solving Ans: d Difficulty: Easy Feedback: The Role of Employees in Quality Improvement

43. A production process consists of the following four stages with the average percentage of good quality at each stage as shown Stage 1 2 3 4

Average Percentage of Good Quality 0.92 0.95 0.96 0.93

What is the daily production yield for the company if daily input is 200 units? a. 192 units b. 188 units c. 184 units d. 156 units Ans: d Difficulty: Hard Feedback: The Effect of Quality Management on Productivity

44. A production process consists of the following four stages with the average percentage of good quality at each stage as shown Stage 1 2 3 4

Average Percentage of Good Quality 0.92 0.95 0.96 0.93

How many units must the company put into production each day to achieve a daily yield of 100 good units? a. approximately 128 units b. approximately 108 units c. approximately 106 units d. approximately 104 units Ans: a Difficulty: Hard Feedback: The Effect of Quality Management on Productivity

45. A production process consists of the following four stages with the average percentage of good quality at each stage as shown Stage 1 2 3 4

Average Percentage of Good Quality 0.95 0.95 0.93 0.97

What is the daily production yield for the company if daily input is 500 units? a. 485 units b. 465 units c. 407 units d. 400 units Ans: c Difficulty: Hard Feedback: The Effect of Quality Management on Productivity

46. A production process consists of the following four stages with the average percentage of good quality at each stage as shown Stage 1 2 3 4

Average Percentage of Good Quality 0.95 0.95 0.93 0.97

How many units must the company put into production each day to achieve a daily yield of 350 good units? a. approximately 430 units b. approximately 415 units c. approximately 468 units d. approximately 361 units Ans: a Difficulty: Hard Feedback: The Effect of Quality Management on Productivity

47. All of the following are dimensions of quality for manufactured products, except: a. Conformance b. Reliability c. Durability d. Feasibility Ans: d.

Difficulty: Moderate Feedback: What is Quality?

48. All of the following are parts of DMAIC, except: a) Define b) Measure c) Analyze d) Improvise Ans: d.

Difficulty: Moderate Feedback: Six Sigma

49. All of the following are part of DMAIC except: a) Improve b) Control c) Measure d) Implement Ans: d.

Difficulty: Moderate Feedback: Six Sigma

50. The costs associated with developing a quality management system are known as: a) Training costs b) Design costs c) Quality planning costs d) Information costs Ans: c.

Difficulty: Moderate Feedback: The Cost of Quality

51. ______ failure costs include scrap, rework, and downtime. a) External b) Internal c) Process d) System Ans: b.

Difficulty: Moderate Feedback: The Cost of Quality

52. Which of the following quality tools display major causes of poor quality on a graph? a. Process flow chart b. Fishbone diagram c. Histogram d. Scatter diagram Ans: b Difficulty: Moderate Feedback: Quality Tools

53. Which of the following quality tools display the frequency of data related to a quality problem? a. Fishbone diagram b. Histogram c. Scatter diagram d. Process flow chart

Ans: b Difficulty: Moderate Feedback: Quality Tools

54. Which of the following quality tools display the relationship between two variables on a graph a. Process flow chart b. Fishbone diagram c. Histogram d. Scatter diagram

Ans: d Difficulty: Moderate Feedback: Quality Tools

55. Which of the following quality tools display the steps in a process on a graph a. Process flow chart b. Fishbone diagram c. Histogram d. Scatter diagram Ans: a Difficulty: Moderate Feedback: Quality Tools

Short Answer

56. Briefly discuss four dimensions of quality a consumer looks for in manufactured products.

Student answers will vary depending of the dimensions they select. Among the dimensions that could be discussed are: a. Performance: the basic operating characteristics of a product. b. Features: the extra items added to the basic features c. Reliability: the probability that a product will operate properly within an expected time frame. d. Conformance: the degree to which a product meets preestablished standards. e. Durability: how long the product lasts before it must be replaced. f. Serviceability: the ease, speed, and facility of the repair process. g. Aesthetics: how the product looks, feels, smells, sounds, or tastes. h. Safety: assurance that the customer will not suffer injury or harm from a product. i. Other: subjective perceptions based on brand name, advertising, etc.

57. What is quality of conformance from the producer’s perspective and how can it be achieved?

Once the product design has been determined, the producer perceives quality to be how effectively the production process is able to conform to the specifications

required by the design. This is referred to as quality of conformance. What this means is quality during production focuses on making sure that the product meets the specifications required by the design. From the producer’s perspective, good-quality products conform to specifications—they are well made. Achieving quality of conformance depends on a number of factors, including the design of the production process (distinct from product design), the performance level of machinery, equipment and technology, the materials used, the training and supervision of employees and the degree to which statistical quality- control techniques are used.

58. Briefly discuss the principles associated with total quality management (TQM).

Total quality management represents a set of management principles that focus on quality improvement as the driving force in all functional areas and at all levels in a company. These principles are: a. the customer defines quality and customer satisfaction is the top priority, b. top management must provide the leadership for quality, c. quality is a strategic issues and requires a strategic plan, d. quality is the responsibility of all employees in the organization, e. all functions of the company must focus on continuous quality improvement to achieve strategic goals, f. quality problems are solved through cooperation among employees and management, g. problem solving and continuous quality improvement use statistical quality control methods, and h. training and education of all employees are the basis for continuous quality improvement.

59. What is Kaizen and what role do employees play in Kaizen?

Kaizen is the Japanese word for continuous improvement, not only in the workplace but also in one’s personal life. Ion the workplace kaizen means involving everyone in a process of gradual, organized, and continuous improvement. Every employee in the organization should be involved in working together to make improvements. If an improvement is not a part of a continuous, ongoing process it is not considered kaizen.

Employees are most directly involved in kaizen when they are determining solutions to their own problems. Employees are the real experts in their immediate workspace. In its most basic form kaizen is a system in which employees identify many small improvements on a continual basis and implement these improvements themselves. Every employee is encouraged to be involved in the improvement process so that all employees fell that they are participating in quality improvements and remain excited about their jobs. All six sigma and TQM programs need this level of involvement to be successful.

60. What is a Six Sigma quality program?

A Six Sigma program is fundamentally a very organized and detailed process for improving quality. There is little doubt that Six Sigma is a direct descendant of the philosophy and principles of TQM. In its simplest form Six Sigma is based on Deming’s PDCA cycle and Juran’s assertion that “all quality improvement occurs on a project-byproject basis”. Six Sigma is a process for developing and delivering near perfect products and services. The main idea is that if the number of defects in a process can be measured then it can be systematically determined how to eliminate them and get as close to zero defects as possible. In Six Sigma “as close to zero as possible” translates into a statistically-based numerical goal of 3.4 defects per million opportunities (DPMO), which means defects have been nearly eliminated. Through the reduction of variation of all processes, the overall performance of the company will be improved and significant cost savings will be realized.

61. Briefly discuss the costs are associated with achieving good quality.

The costs of a quality management program are prevention costs and appraisal costs.

Prevention costs are the costs of trying to prevent poor-quality products from reaching the customer. Prevention reflects the quality philosophy of “do it right the first time”, the goal of a quality management program. Examples of prevention costs include quality planning costs, product design costs, process costs, training costs, and information costs.

Appraisal costs are the costs of measuring, testing, and analyzing materials, parts, products, and the production process to ensure that product quality specifications are being met. Examples of appraisal costs include inspection and testing, test equipment costs, and operator costs.

62. Briefly discuss the cost of poor quality.

Costs associated with poor quality are also referred to as the cost of nonconformance, or failure costs. The cost of poor quality can be categorized as internal failure costs or external failure costs. Internal failure costs are incurred when poor-quality products are discovered before they are delivered to the customer. Examples of internal failure costs include scrap costs, rework costs, process failure costs, process downtime costs, pricedowngrading costs. External failure costs are incurred after the customer has received a poor-quality product and are primarily related to customer service. Examples of external failure costs include customer complaint costs, product return costs, warranty claims costs, product liability costs, and lost sales costs.

63. Briefly describe various six sigma tools and give an example of the use of each.

QFD, Cause and Effect Matrix, FMEA, SPC, T-Tests, and DOE should all be discussed and related to quality management in particular and as a critical part of contemporary operations and supply chain management

File: ch03, chapter 3: Statistical Quality Control

True/False

1. Statistical process control involves monitoring and controlling a process to prevent poor quality.

Ans: True Difficulty: Easy Feedback: The Basics of Statistical Process Control

2. Statistical process control can prevent poor quality before it occurs if a pattern is evident in the plotted points.

Ans: True Difficulty: Moderate Feedback: Control Chart Patterns

3. Process control is achieved by taking periodic samples from a process and plotting the sample points on a chart to determine if the process is within control limits.

Ans: True Difficulty: Moderate Feedback: Control Charts

4. All processes contain a certain amount of variation in their output.

Ans: True Difficulty: Easy Feedback: Control charts

5. Unique or special cause variation reflects the random variation associated with the output of a process.

Ans: False Difficulty: Moderate Feedback: The Basics of Statistical Process Control

6.

Special cause variation can be identified using statistical process control.

Ans: True Difficulty: Moderate Feedback: Control charts

7.

Process control charts are rarely useful for monitoring and controlling the output of service processes.

Ans: False Difficulty: Easy Feedback: The Basics of Statistical Process Control

8. Process control charts are often used at a critical point after which it is difficult to correct or rework the process output.

Ans: True Difficulty: Moderate Feedback: Control charts

9. Control charts visually show when a process is not within statistical control limits.

Ans: True Difficulty: Easy Feedback: Control Charts

10. A c-chart monitors the number of defects in small samples.

Ans: True Difficulty: Moderate Feedback: Control Charts for Attributes

11. A p-chart is used to monitor the proportion defective in the output of a process.

Ans: True Difficulty: Easy Feedback: Control Charts for Attributes

12. Variable control charts are used for quantitative measures such as weight or time.

Ans: True Difficulty: Moderate Feedback: Control Charts for Variables

13. When monitoring a process’s output with a quantitative variable either an R−−

chart or an x -) chart is used, but never both.

Ans: False Difficulty: Moderate Feedback: Control Charts for Variables −−

14. Construction and use of an x -chart is based on an assumption that the sample points are normally distributed around the centerline.

Ans: True Difficulty: Hard Feedback: Control Charts for Variables

15. The range is the difference between the smallest and largest values in a sample.

Ans: True Difficulty: Easy Feedback: Control Charts for Variables

16. The range measures the variation within samples versus the variation between samples.

Ans: True Difficulty: Moderate Feedback: Control Charts for Variables

17. The R-chart is used for monitoring and controlling variation within samples.

Ans: True Difficulty: Easy Feedback: Control Charts for Variables

18. It is possible to have low variation within samples while at the same time having high variation between sample means.

Ans: True Difficulty: Moderate Feedback: Control Charts for Variables

19. A sequence of sample points that display a pattern is known as a run.

Ans: True Difficulty: Easy Feedback: Control Chart Patterns

20. A pattern test can identify an out-of-control process even if all sample points are within control limits.

Ans: True Difficulty: Moderate

Feedback: Control Chart Patterns

21. Statistical process control is a subset of statistical quality control.

Ans: True Difficulty: Easy Feedback: The Basics of Statistical Process Control

22. Statistical process control is based on a philosophy of inspection as opposed to prevention.

Ans: False Difficulty: Moderate Feedback: The Basics of Statistical Process Control

23. One reason some companies fail in their attempt to apply statistical process control is lack of training.

Ans: True Difficulty: Easy Feedback: The Basics of Statistical Process Control

24. One goal of statistical process control is to prevent a process from producing items that have to be scrapped or reworked.

Ans: True Difficulty: Easy Feedback: The Basics of Statistical Process Control

25. Two types of variation associated with the output of a process are common (random) cause and special cause.

Ans: True Difficulty: Easy Feedback: The Basics of Statistical Process Control

26. Control limits are based on the special cause variation inherent in a process.

Ans: False Difficulty: Moderate Feedback: The Basics of Statistical Process Control

27. A process that is determined to be in control contains no variation.

Ans: False Difficulty: Easy Feedback: The Basics of Statistical Process Control

28. Common cause (random) variation provides evidence that the process is not in control.

Ans: False Difficulty: Easy Feedback: The Basics of Statistical Process Control

29. Employee training in statistical process control is a fundamental principle in total quality management programs.

Ans: True Difficulty: Moderate Feedback: The Basics of Statistical Process Control

30. Statistical process control is a tool used to monitor and improve quality.

Ans: True Difficulty: Easy Feedback: The Basics of Statistical Process Control

31. Statistical process control is only effective for service processes.

Ans: False Difficulty: Easy Feedback: The Basics of Statistical Process Control

32. After special cause variation is detected, the focus changes to identifying the root cause of the variation and eliminating it.

Ans: True Difficulty: Hard Feedback: The Basics of Statistical Process Control

33. The individual that detects special cause variation in a process is not allowed to diagnose the root cause and correct it.

Ans: False Difficulty: Hard Feedback: Control Charts

34. A quantitative variable classifies while a qualitative variable (attribute) measures.

Ans: False Difficulty: Moderate Feedback: Control Charts

35. The formula used to determine the upper and lower control limits are based on specification limits.

Ans: False Difficulty: Easy Feedback: Control Charts

36. When calculating control limits for a process, the number of standard deviations (Z value) is typically six.

Ans: False

Difficulty: Hard Feedback: Control Charts

37. When constructing a control chart for the first time, all points should be within the control limits indicating the process is in control.

Ans: True Difficulty: Moderate Feedback: Control Charts

38. If the points plotted on a control chart display a pattern, it is called a run.

Ans: True Difficulty: Moderate Feedback: Control Chart Patterns 39. Control charts are never implemented until special cause variation has been detected in a process.

Ans: False Difficulty: Easy Feedback: Control Charts

40. It is sometimes not necessary to determine new control limits after special cause variation has been identified if the source has been eliminated without changing the process.

Ans: True Difficulty: Hard Feedback: Control Charts

41. Attribute (qualitative) control charts are used to monitor descriptive characteristics of the output of a process.

Ans: True Difficulty: Easy Feedback: Control Charts for Attributes

42. Variable (quantitative) control charts are used to monitor measurable characteristics of a process’s outputs.

Ans: True Difficulty: Easy Feedback: Control Charts for Variables

43. Defect and defective mean the same thing for attribute (qualitative) control charts.

Ans: False Difficulty: Moderate Feedback: Control Charts for Attributes

44. With a c-chart, the sample size is small and often contains only one item.

Ans: True Difficulty: Easy Feedback: Control Charts for Attributes

45. When a control chart detects no special cause variation in a process, the upper and lower control limits are the same value.

Ans: False Difficulty: Moderate Feedback: Control Charts

46. When special cause variation is detected it is normally eliminated by increasing the number of standard deviations (Z value) used to calculate the control limits.

Ans: False Difficulty: Hard

Feedback: Control Charts

47. Information from an R-chart can be used to construct the control limits for an xbar-chart.

Ans: True Difficulty: Easy Feedback: Control Charts for Variables

48. An x-bar and R-chart constructed to monitor and control a process use same raw data.

Ans: True Difficulty: Moderate Feedback: Control Charts for Variables

49. An R-chart monitors the robustness of a process.

Ans: False Difficulty: Hard Feedback: Control Charts for Variables

50. In some cases, the xbar-chart is used without the R-chart because the within sample variation is not of concern.

Ans: True Difficulty: Hard Feedback: Control Charts for Variables

51. A control chart is in control when the plot of the sample points exhibits a pattern.

Ans: False Difficulty: Moderate

Feedback: Control Char Patterns

52. The process centerline for both xbar and R charts are both the same value because they are based on the same raw data.

Ans: False Difficulty: Moderate Feedback: Control Charts for Variables

53. In some cases, the xbar-chart is used without an R-chart because there is no variation between the samples.

Ans: False Difficulty: Hard Feedback: Control Charts for Variables

54. If a pattern is evident in the points plotted on a control chart, the points are always considered evidence that the process is in control.

Ans: False Difficulty: Easy Feedback: Control Chart Patterns

55. One advantage of using a pattern test is that special cause variations may be identified before any points are plotted outside the control limits.

Ans: True Difficulty: Moderate Feedback: Control Chart Patterns

56. Control chart sample sizes are becoming smaller because it is easier to detect a pattern with Excel or other data analysis software.

Ans: False Difficulty: Moderate Feedback: SPC with Excel and OM Tools

57. The smaller the historical proportion defective reported for a process, the larger the sample size required to detect special cause variation with a p-chart.

Ans: True Difficulty: Moderate Feedback: Control Charts for Attributes

58. Using Excel to construct control charts should be avoided because most people believe using software results in too many errors.

Ans: False Difficulty: Easy Feedback: SPC with Excel and OM Tools

59. Only certified statisticians should use Excel to construct a control chart for a process.

Ans: False Difficulty: Easy Feedback: SPC with Excel and OM Tools

60. The popularity of Excel and other data analysis software has been a major factor in the increased use of statistical process control.

Ans: True Difficulty: Moderate Feedback: SPC with Excel and OM Tools

61. Tolerances and specifications limits report similar information for a given product design.

Ans: True Difficulty: Moderate Feedback: Process Capability

62. Tolerances reflect the amount of common cause variation allowed in a process.

Ans: False Difficulty: Moderate Feedback: Process Capability

63. Design specification limits should always be wider than the control limits for a given process.

Ans: True Difficulty: Hard Feedback: Process Capability

64. The goal of statistical process control is to ensure that the control limits and specifications limits for a process always remain the same.

Ans: False Difficulty: Moderate Feedback: Process Capability

65. For a given process, the process capability ratio is NOT related to its control limits.

Ans: False Difficulty: Moderate Feedback: Process Capability

66. A process capability ratio greater than one shows that a process is capable of producing output within its specification limits.

Ans: True Difficulty: Moderate Feedback: Process Capability

67. A process capability ratio reflects the number of (Z) sigmas included in the range between the upper and lower control limits.

Ans: True Difficulty: Moderate Feedback: Process Capability

68. Some companies that strive to provide extremely high quality use Z=6 (six sigma) vs. Z=3 (three sigma) when constructing control limits.

Ans: True Difficulty: Hard Feedback: Process Capability

69. The process capability ratio measures the specification limits over the control limits.

Ans: True Difficulty: Moderate Feedback: Process Capability

70. The process capability index is used only for p and c charts while the process capability ratio is used only for xbar and R charts.

Ans: False Difficulty: Easy Feedback: Process Capability

71. The process capability index indicates how much a process mean differs from the target specification value.

Ans: True Difficulty: Moderate Feedback: Process Capability

72. Excel can be used to increase the efficiency and accuracy of determining the process capability ratio and the process capability index.

Ans: True Difficulty: Easy Feedback: Process Capability

Multiple Choice Questions

73. Which of the following statements concerning control chart limits is true? a. the smaller the value of z, the more narrow the control limits are and the more sensitive the chart is to changes in the production process b. the larger the value of z, the more narrow the control limits are and the more sensitive the chart is to changes in the production process c. the smaller the value of z, the wider the control limits are and the less sensitive the chart is to changes in the production process d. the larger the value of z, the more narrow the control limits are and the less sensitive the chart is to changes in the production process Ans: a Difficulty: Hard Feedback: Control Charts

74. A process is generally considered to be in control when a. there are no sample points outside the control limits b. most points are near the center line, without many being close to the control limits c. sample points are randomly distributed equally above and below the center line d. all of the above are true Ans: d Difficulty: Moderate

Feedback: Process Capability

75. A control chart that uses the actual number of defects per item to monitor a process is known as a a. p-chart b. c-chart c. R-chart −−

d.

x -chart

Ans: b Difficulty: Moderate Feedback: Control Charts for Attributes

76. A control chart that reflects the amount of dispersion, or spread, present within each sample is known as a(n) a. p-chart b. c-chart c. R-chart −−

d.

x -chart

Ans: c Difficulty: Easy Feedback: Control Charts for Variables

77. For the process to be capable of meeting design specification the process capability index must be a. less than one (1.0) b. equal to or greater than one (1.0) c. smaller than Six Sigma d. larger than Six Sigma Ans: b Difficulty: Moderate Feedback: Process Capability

78. A company produces a product which is designed to weigh 10 oz., with a tolerance of + 0.5 oz. The process produces products with an average weight of

9.95 oz. and a standard deviation of 0.10 oz. The process capability ratio for this process is with z = 3. a. 1.67 b. 0 c. 0.8333 d. -1.67 Ans: a Difficulty: Hard Feedback: Process Capability

79. A company produces a product which is designed to weigh 10 oz., with a tolerance of + 0.5 oz. The process produces products with an average weight of 9.95 oz. and a standard deviation of 0.10 oz. According to the process capability ratio is the process capable of meeting design specifications? a. No, the process capability ratio is less than 1.0 b. Yes, the process capability ratio is less than 1.0 c. No, the process capability ratio is greater than 1.0 d. Yes, the process capability ratio is greater than 1.0 Ans: d Difficulty: Hard Feedback: Process Capability

80. A company produces a product which is designed to weigh 10 oz., with a tolerance of + 0.5 oz. The process produces products with an average weight of 9.95 oz. and a standard deviation of 0.10 oz. The process capability index for this process with z = 3 is a. 1.50 b. -1.50 c. 1.83 d. -1.83 Ans: a Difficulty: Hard Feedback: Process Capability

81. A company produces a product which is designed to weigh 10 oz., with a tolerance of + 0.5 oz. The process produces products with an average weight of

9.95 oz. and a standard deviation of 0.10 oz. According to the process capability index a. the process mean is off center and defects will be produced b. the process is capable of meeting design specifications c. the process mean is centered on the design target d. none of the above Ans: Difficulty: Moderate Feedback: Process Capability

82. A company manufactures a product that has a design (nominal) target width of 5 inches with tolerances of + .05 inch. The process that produces the product has a mean of 4.995 inches and a standard deviation of 0.01 inch. The process capability ratio for this process is a. -1.67 b. -1.5 c. 1.5 d. 1.67 Ans: d Difficulty: Hard Feedback: Process Capability

83. A company manufactures a product that has a design (nominal) target width of 5 inches with tolerances of + .05 inch. The process that produces the product has a mean of 4.995 inches and a standard deviation of 0.01 inch. The process capability index for this process is a. 1.67 b. 1.5 c. -1.5 d. -1.67 Ans: b Difficulty: Hard Feedback: Process Capability

84. If a sample of 40 units of output found 500 defects, then the center line for monitoring the average number of defects per unit of output would be −

a. c = 40

−

b. c = 0.08 −

c. c = 12.5 −

d. c = 20,000 Ans: c Difficulty: Moderate Feedback: Control Charts for Attributes

85. If a sample of 40units of output found 500 defects, then the 3-sigma upper −

control limit for the c chart would be a. 12.5 b. 23.11 c. 37.5 d. 75.0 Ans: b Difficulty: Moderate Feedback: Control Charts for Attributes

86. A company randomly selects 100 light bulbs every day for 40 days from its production process. If 600 defective light bulbs are found in the sampled bulbs then the estimate for the process average defective would be a. 6.667 b. 0.167 c. 0.150 d. 0.250 Ans: c Difficulty: Moderate Feedback: Control Charts for Attributes

87. A company randomly selects 100 light bulbs every day for 40 days from its production process. If 600 defective light bulbs are found in the sampled bulbs then the 3-sigma lower control limit would be a. 0.0357 b. 0.0429 c. 0.15 d. 0.1857

Ans: b Difficulty: Moderate Feedback: Control Charts for Attributes

88. To monitor the number of blemishes on a polished surface a company randomly selects 10 units of output from its process and counts the number of blemishes on each unit. The sample results are shown below Sample No. No. of Blemishes

1 17

2 19

3 15

4 18

5 16

6 14

7 15

8 16

9 15

10 15

Given the sample information above, the average number of defects per unit for this process would be a. 160 b. 80 c. 16 d. 10 Ans: c Difficulty: Moderate Feedback: Control Charts for Attributes

89. To monitor the number of blemishes on a polished surface a company randomly selects 10 units of output from its process and counts the number of blemishes on each unit. The sample results are shown below Sample No. No. of Blemishes

1 17

2 19

3 15

4 18

5 16

6 14

7 15

8 16

9 15

10 15

Given the sample information above, the standard deviation of the number of defects for this process would be a. 16 b. 10 c. 4 d. 0 Ans: c Difficulty: Moderate Feedback: Control Charts for Attributes

a. b. c. d.

90. Possible root causes of special cause variation include all of the following except: operator error process out of adjustments over producing defective materials

Ans: c Difficulty: Moderate Feedback: The Basics of Statistical Process Control

a. b. c. d.

91. Which of the following is NOT a primary purpose of statistical process control? to establish control limits to detect special cause variations to identify specification limits to determine when a process is not in control

Ans: c Difficulty: Easy Feedback: Control Charts

a. b. c. d.

92. Four common types of control charts include all of the following EXCEPT: xbar-chart t-chart p-chart c-chart

Ans: b Difficulty: Easy Feedback: Control Charts

a. b. c. d.

93. Which of the following is NOT a characteristic of a control chart? the centerline is determined using special cause variations. the upper and lower control limits are based on special cause variation. the centerline is determined by using the target value. none of the above are true.

Ans: d Difficulty: Hard

Feedback: Control Charts

94. Which of the following statements is TRUE? a.

With wider control limits (larger Z), the process is more likely to be in control. b.

With narrower control limits, (smaller Z), the process is more likely to be in control. c.

With wider control limits (larger Z), the process is less likely to be in control. d. none of the above are true.

Ans: a Difficulty: Hard Feedback: Control Charts

a. b. c. d.

95. Special cause variation in a process is more likely to be detected with wider control limits narrow control limits wider specification limits narrow specification limits

Ans: b Difficulty: Moderate Feedback: Control Charts

a. b. c. d.

96. In general, a process is considered to be in control for all the following conditions except no points are outside the control limits all points are above the centerline the points are randomly distributed following a normal population no pattern exists in the plotted points (no evidence of a run)

Ans: b Difficulty: Easy Feedback: Control Chart Patterns

a. b.

97. Which of the following control charts is based on the number of defects within a sample? xbar R

c. d.

c p

Ans: c Difficulty: Moderate Feedback: Control Charts for Attributes

a. b. c. d.

98. Which of the following control charts is used to monitor the number of defective items within a sample? xbar R c p

Ans: d Difficulty: Easy Feedback: Control Charts for Attributes

a. b. c. d.

99. If the quality of a process’s output is determined by the number of defects within a small sample, use a(n) _______ control chart. xbar R c p

Ans: c Difficulty: Moderate Feedback: Control Charts for Attributes

a. b. c. d.

100.

If the quality of a process’s output is determined by the difference between the largest and smallest values in a sample, use a(n) _______control chart. xbar R c p

Ans: b Difficulty: Easy Feedback: Control Charts for Variables

a. b. c. d.

101.

If the quality of a process’s output is determined by the average value of a sample, use a(n) ___________control chart. xbar R c p

Ans: a Difficulty: Easy Feedback: Control Charts for Variables

a. b. c. d.

102.

Which of the following control charts is used to control the variation within samples? xbar R c p.

Ans: b Difficulty: Moderate Feedback: Control Charts for Variables

a. b. c. d.

103.

Which of the following control charts is used to control the variation between samples? xbar R c p

Ans: a Difficulty: Moderate Feedback: Control Charts for Variables

a. b.

104.

If the quality of a process’s output is determined by classifying the output as being defective or not defective, use a(n) ________control chart. xbar R

c. d.

c p

Ans: d Difficulty: Moderate Feedback: Control Charts for Attributes

a. b. c. d.

105.

Which of the following control charts are based on sample sizes as small as one? xbar R c p

Ans: c Difficulty: Moderate Feedback: Control Charts for Attributes

a. b. c. d.

106.

Which of the following control charts are often based on sample sizes larger than one hundred? xbar R c p

Ans: d Difficulty: Moderate Feedback: Control Charts for Attributes

a. b. c. d.

107.

Which of the following charts are frequently used together to monitor and control quality? p/xbar R/p c/R R/xbar

Ans: d Difficulty: Easy Feedback: Control Charts for Variables

Short Answer Questions

108.

Briefly discuss attribute and qualitative variable quality measures.

The quality of a product or service can be evaluated using either an attribute of the product or service or a variable measure. An attribute is a product characteristic such as color, surface texture, or perhaps smell or taste. Attributes can be evaluated quickly with a discrete response such as good or bad, acceptable or unacceptable, or yes or no. Even if quality specifications are complex and extensive, a simple attribute test might be used to determine if a product or service is or is not defective. A variable measure is a product characteristic that is measured on a continuous scale such as length, width, time, or temperature. Because a variable evaluation is the result of a measurement it is sometimes referred to as a quantitative classification method. An attribute evaluation is sometimes referred to as a qualitative classification, since the response is not measured. Because it is a measurement, a variable typically provides more information about the product that does an attribute.

109.

Using control charts, how do we evaluate whether a process is in control?

Sample points are plotted on the control chart and the chart is examined to determine if the process is in control. Generally, a process will be considered to be in control if (a) there are no sample points outside the control limits, (b) most points are near the process average or center line, without too many close to the control limits, (c) approximately equal numbers of sample points occur above and below the center line, and (d) the points appear to be randomly distributed around the center line. If any of these conditions are violated, the process may be out of control.

110.

What is a c-chart and when is it used?

A c-chart is a type of attribute control chart. A c-chart uses the actual number of defects per item in a sample. A c-chart is used when it is not possible to compute a proportion defective and the actual number of defects must then be used. For example, it is possible to count the number of blemishes on a painted surface but we cannot compute a proportion

because the total number of possible blemishes is not known. In such a situation the number of blemishes would be monitored using a c-chart.

_

111.

Why are x and R-charts used together?

When monitoring a variables characteristic, that is one that can be measured, it is possible for the process to lose control in terms of its central tendency (mean) and in terms of its variability (range). IN order for the process to be in control it must be in control with respect to its average and its variability. The two charts measure the process differently. It is possible for samples to have very narrow ranges, suggesting little process variability, but the sample averages might be beyond the control limits.

Conversely, it is possible for sample averages to be in control, but the ranges might be very large. IN order to monitor both the mean and the variability of a process using a variable measured on a continuous scale the two charts must be used together.

112.

What is the process capability ratio and how is it calculated?

Process capability refers to the natural variation of a process relative to the variation allowed by the design specifications. In other words, how capable is the process of producing acceptable units according to the design specifications? Process control charts are used for process capability to determine if an existing process is capable of meeting design specifications. There are three main elements associated with process capability—process variability (the natural range of variation of the process), the process center line (mean), and the design specifications.

File: chS3, Supplement 3: Operational Decision-Making Tools: Acceptance Sampling

True/False

Feedback: Single-Sample Attribute Plan

1. Acceptance sampling is consistent with TQM’s philosophy of zero defects.

Ans: False Difficulty: Easy

2. A sampling plan provides a set of guidelines for accepting a lot.

Ans: True Difficulty: Easy

3. With acceptance sampling, a lot is either rejected or accepted depending on the number of defects found in a sample.

Ans: True Difficulty: Moderate

4. Six Sigma companies report defective parts per million (PPM) versus the more traditional defective parts per hundred.

Ans: True Difficulty: Moderate

5. The simplest form of a sampling plan is a single-sample attribute plan.

Ans: True Difficulty: Easy

6. The probability of rejecting a lot that has an acceptable quality level is referred to as the a. producer’s risk. b. consumer’s risk. c. lot tolerance percent defective. d. acceptable quality level.

Ans: a Difficulty: Easy

7. The probability of accepting a lot that has a higher percentage of defective items than the lot tolerance percent defective is referred to as the a. producer’s risk. b. sampling plan. c. consumer’s risk. d. average outgoing quality.

Ans: c Difficulty: Easy

8. Acceptance sampling involves the inspection of a non-random sample of units selected from a lot.

Ans: False Difficulty: Moderate

9. Acceptance sampling is based on the premise that a lot contains some acceptable number of defective items.

Ans: True Difficulty: Hard

10. With a single-sample attribute plan only one of the items randomly sampled from a lot is inspected.

Ans: False Difficulty: Moderate

11. A lot is rejected if the number of defective units found in a random sample exceeds a predetermined acceptable number of defective units.

Ans: True Difficulty: Moderate

12. Six Sigma companies report a. defective parts per million. b. defective parts per thousand. c. defective parts per hundred. d. no defective parts.

Ans: a Difficulty: Easy

13. Acceptance sampling is still used today for all the following reasons except a. government regulations. b. contractual requirements. c. industry standards. d. total quality management principles.

Ans: d Difficulty: Moderate

14. . Is acceptance sampling consistent with TQM? Ans: Acceptance sampling is a historical approach to quality control based on the premise that some acceptable number of defective items will result from the production process. The producer and consumer agree on the number of acceptable defects. The notion of a producer or consumer agreeing to any defects is contrary to the philosophy of TQM. The goal of companies that have adopted TQM is to achieve zero defects.

Acceptance sampling identifies defective items after the product is already finished, whereas TQM strives to prevent defects altogether. TQM companies do not believe that acceptance sampling is helpful in preventing poor quality or in ensuring good quality in the future.

Difficulty: Moderate

The Operating Characteristic Curve

15. An operating characteristics (OC) curve is a graph that measures the probability of accepting a lot with no defective items.

Ans: False Difficulty: Moderate

16. A(n) ________________ curve is a graph showing the probability of accepting a lot for different quality levels with a specific sampling plan. a. operating characteristic (OC) b. average outgoing quality c. lot tolerance percent defective d. single-sample attribute Ans: a Difficulty: Moderate

Feedback: Average Outgoing Quality

17. The consumer’s risk is the probability of rejecting a lot that meets the acceptable quality level (AQL).

Ans: False Difficulty: Moderate

18. The consumer’s risk is the probability of accepting a lot in which the fraction of defective items exceeds the lot tolerance percent defective (LTPD).

Ans: True Difficulty: Moderate

19. The average outgoing quality (AOQ) is a measure of the expected number of defective items that will pass on to the customer with the sampling plan selected.

Ans: True Difficulty: Moderate

20. The consumer’s willingness to accept lots with a small proportion of defective items is known as the acceptable a. sampling plan. b. quality level. c. consumer’s risk. d. producer’s risk.

Ans: b Difficulty: Easy

21. The _________________ is the maximum number of defective items a customer will accept in a lot. a. producer’s risk b. consumer’s risk c. average outgoing quality d. lot tolerance percent defective Ans: d Difficulty: Moderate

22. An operating characteristic (OC) curve is a graph that measures a. the acceptable proportion of defects in a lot to the consumer. b. the probability of accepting a lot for different quality levels with a specific sampling plan. c. the probability of accepting a lot in which the fraction of defectives exceeds the lot tolerance percent defective. d. the maximum number of defective items a consumer will accept in a lot.

Ans: b Difficulty: Moderate

23. The expected number of defective items that will pass on to the customer with a sampling plan is known as the a. lot tolerance percent defective. b. acceptable quality level. c. average outgoing quality. d. sampling plan.

Ans: c Difficulty: Moderate

Double- and Multiple-Sampling Plans

24. Double-sampling plans are often less costly than single-sampling plans.

Ans: True Difficulty: Easy

25. A multiple-sampling plan uses the smallest sample size of any sampling plan.

Ans: True Difficulty: Moderate

26. A multiple-sampling plan uses the smallest sample size of any sampling plan.

Ans: True Difficulty: Moderate

27. Choosing among a single-, double- and multiple-sampling plans is a strategic versus an economic decision.

Ans: False Difficulty: Moderate

28. What is the advantage of a multiple-sampling plan?

Ans: A multiple-sampling plan also referred to as a sequential sampling plan, generally employs the smallest sample size of many of the sampling plans used in acceptance sampling. In its most extreme form, individual items are inspected sequentially, and the decision to accept or reject a lot is based on the cumulative number of defective items. A multiple-sampling plan can result in small samples and, consequently, can be the least expensive of the sampling plans.

Difficulty: Moderate

File: ch04, Chapter 4: Product Design

True/False

1. Product design has a tremendous impact on the quality of a manufactured good or service.

Ans: True Difficulty: Easy Feedback: The Design Process

2. An effective design process matches product characteristics with customer requirements.

Ans: True Difficulty: Easy Feedback: The Design Process

3. The design process begins with understanding the customer and identifying customer needs.

Ans: True Difficulty: Easy Feedback: The Design Process

4. Comparing a product or process against the best-in-class is known as benchmarking.

Ans: True Difficulty: Easy Feedback: The Design Process

5. Comparing a product or process against the best-in-class is known as reverse engineering.

Ans: False

Difficulty: Easy Feedback: The Design Process

6. Dismantling and inspecting a competitor’s product to identify design features that might be used to improve your own product is known as reverse engineering.

Ans: True Difficulty: Moderate Feedback: Concurrent Design

7. Creating preliminary design models that are quickly tested and either discarded or further refined is known as rapid prototyping.

Ans: True Difficulty: Moderate Feedback: The Design Process

8. Form design refers to the physical appearance of a product.

Ans: True Difficulty: Easy Feedback: The Design Process

9. Reliability is the probability that a given part or product will perform its intended function for a specified length of time under adverse operating conditions.

Ans: False Difficulty: Moderate Feedback: Design for Robustness

10. A product’s reliability is a function of the reliabilities of its component parts but not a function of how those parts are arranged.

Ans: False Difficulty: Moderate Feedback: The Design Process

11. To increase system reliability redundant parts can be built in to back up a failure.

Ans: True Difficulty: Easy Feedback: The Design Process

12. Products assembled in modules can be easier to repair and maintain.

Ans: True Difficulty: Easy Feedback: The Design Process

13. One quantitative measure of maintainability is mean time to repair (MTTR).

Ans: True Difficulty: Easy Feedback: The Design Process

14. Modular design is one way to gain the benefits of standardization without losing the advantage of variety and uniqueness.

Ans: True Difficulty: Moderate Feedback: The Design Process

15. Establishing multifunctional design teams can help reduce the time-to-market.

Ans: True Difficulty: Easy Feedback: Concurrent Design

16. Concurrent design may involve simultaneously designing products and their production processes.

Ans: True Difficulty: Easy Feedback: Concurrent Design

17. Design for manufacture (DFM) is the process of designing a product so that it can be produced more easily and economically.

Ans: True Difficulty: Easy Feedback: Design for Robustness

18. Computer-aided design (CAD) produces better products but always increases the time to design them.

Ans: False Difficulty: Easy Feedback: Design Reviews

19. Employing a systematic approach to analyzing the causes and effects of product failures is known as design for manufacture (DFM).

Ans: False Difficulty: Easy Feedback: Design Reviews

20. Extended producer responsibility (EPR) is a concept that holds companies responsible for their products following the products’ useful lives.

Ans: True Difficulty: Moderate Feedback: Design for the Environment

21. Incorporating the voice of the customer into technical product design requirements is known as quality function deployment (QFD).

Ans: True Difficulty: Easy Feedback: Quality Function Deployment

22. Products designed to withstand variations in operating conditions are said to be robust.

Ans: True Difficulty: Easy Feedback: Design for Robustness

23. The quality loss function measures the cost of designing robust products.

Ans: False Difficulty: Easy Feedback: Design for Robustness

24. Modular design combines standardized building blocks, or modules, to create unique finished products.

Ans: True Difficulty: Moderate Feedback: Product Design

25. The final design consists of detailed drawings and specifications for the new product.

Ans: True Difficulty: Moderate Feedback: The Design Process

26. Using a cross-functional team to design new products is known as concurrent design.

Ans: True Difficulty: Moderate Feedback: Concurrent Design

27. Quality Function Deployment (QFD) translates the voice of the customer into technical design requirements.

Ans: True Difficulty: Moderate Feedback: Quality Function Deployment

28. Tolerances are allowable ranges of customer requirements.

Ans: False Difficulty: Moderate Feedback: Design for Robustness

29. Concurrent design is often aided by the use of technology.

Ans: True Difficulty: Moderate Feedback: Concurrent Design

30. One of the factors supporting the increase in new products has been advances in the technology available for designing products.

Ans: True Difficulty: Moderate Feedback: Technology in Design

31. Product design technology has decreased the time to market for many new products whereby decreasing overall competition in the market.

Ans: False Difficulty: Moderate Feedback: Technology in Design

32. Product life cycle (PLM) systems maintain design data from product conception to retirement excluding minor design updates.

Ans: False Difficulty: Moderate Feedback: Technology in Design

33. Computer-aided manufacturing (CAM) has replaced computer-aided design (CAD) in the product design process.

Ans: False Difficulty: Easy Feedback: Technology in Design

34. Collaborative product design (CPD) software provides interconnectivity among members of a product’s supply chain.

Ans: True Difficulty: Moderate Feedback: Technology in Design

35. Design review involves identifying possible defects and the value added by each part or component, Ans: True Difficulty: Easy Feedback: Design Review

36. Value analysis is often utilized by a multifunctional product design team as part of design review.

Ans: True Difficulty: Moderate Feedback: Design Review

37. Design for the environment (DFE) is an important factor influencing product design for all U.S. products.

Ans: False Difficulty: Easy Feedback: Design for the Environment

38. Worldwide, extended producer responsibility (EPR) is becoming an important factor influencing product design for personal computers and some household appliances.

Ans: True Difficulty: Moderate Feedback: Design for the Environment

39. Quality function deployment (QFD) consists of a series of matrix diagrams that define product design changes and the ramifications of implementing those changes.

Ans: True Difficulty: Hard Feedback: Quality Function Deployment

40. The house of quality, the most popular quality function deployment (QFD) matrix, converts customer requirements into product design specifications.

Ans: False Difficulty: Hard Feedback: Quality Function Deployment

41. The allowable range of the variation in a part’s design specification is called the signal-to-noise ratio.

Ans: False Difficulty: Hard Feedback: Design For Robustness

Multiple Choice

42. Which of the following is not a characteristic of an effective product design process? a. matches product characteristics with customer requirements b. maximizes the revisions necessary to make a design workable c. ensures that customer requirements are met in the least costly and simplest manner d. reduces the time required to design a new product or service Ans: b Difficulty: Moderate Feedback: The Design Process

43. All of the following are characteristics of an effective design process except a. increasing the design time for new products and services b. meeting customer requirements in the least costly manner c. matching product or service characteristics with customer requirements d. minimizing the number of revisions needed to make the design workable Ans: a Difficulty: Moderate Feedback: The Design Process

44. The design process begins with a. a feasibility study b. a form design c. understanding the customer and identifying customer needs d. pilot runs and final tests Ans: c Difficulty: Easy Feedback: The Design Process

45. Carefully dismantling and inspecting a competitor’s product to look for design features that can be incorporated into your own product is known as a. concurrent design b. design for manufacturability c. benchmarking

d. reverse engineering Ans: d Difficulty: Easy Feedback: The Design Process

46. Creating a preliminary design that can be quickly tested and then either discarded or further refined is referred to as a. benchmarking b. rapid prototyping c. concurrent design d. perceptual mapping Ans: b Difficulty: Moderate Feedback: The Design Process

47. The probability that a product will perform its intended function for a specified length of time under normal conditions is called a. b. c. d.

benchmarking perceptual mapping maintainability reliability

Ans: d Difficulty: Easy Feedback: The Design Process

48. Which of the following is a quantitative measure of maintainability? a. design for manufacture (DFM) b. mean time to repair (MTTR) c. mean time between failures (MTBF) d. quality function deployment (QFD) Ans: b Difficulty: Hard Feedback: Design for Robustness

49. Which of the following is a quantitative measure of reliability? a. Reliability bar b. maintainability c. mean time between failures (MTBF) d. mean time to repair (MTTR) Ans: c Difficulty: Moderate Feedback: The Design Process

50. All of the following can improve a product’s reliability except a. simplifying product design b. improving individual component reliability c. changing the product warranty d. adding redundant components.

Ans: c Difficulty: Hard Feedback: The Design Process

51. Simultaneously designing new products and the processes to produce them is known as a. concurrent design b. functional design c. modular design d. standardization Ans: a Difficulty: Easy Feedback: Concurrent Design

52. Combining standardized building blocks in different ways to create unique finished products is known as a. rapid prototyping b. robust design c. modular design d. concurrent design Ans: c

Difficulty: Easy Feedback: The Design Process

53. Failure mode and effects analysis (FMEA) is a. a software systems that uses computer graphics to assist in designing products b. a systematic approach to analyzing the causes and effects of product failures c. a visual method for analyzing the interrelationships among failures d. a structured process that translates the voice of the customer into technical design requirements Ans: b Difficulty: Moderate Feedback: Design Reviews

54. Quality function deployment(QFD) is a. a software systems that uses computer graphics to assist in designing products b. a systematic approach to analyzing the causes and effects of product failures c. a visual method for analyzing the interrelationships among failures d. a structured process that translates the voice of the customer into technical design requirements

Ans: d Difficulty: Moderate Feedback: Quality Function Deployment

55. A structured process that translates the voice of the customer into technical design requirements is known as a. quality function deployment (QFD) b. failure mode and effects analysis (FMEA) c. concurrent design d. robust product design Ans: a Difficulty: Moderate Feedback: Quality Function Deployment

56. Fault tree analysis (FTA) is

a. b. c. d.

a software systems that uses computer graphics to assist in designing products a systematic approach to analyzing the causes and effects of product failures a visual method for analyzing the interrelationships among failures a structured process that translates the voice of the customer into technical design requirements

Ans: c Difficulty: Moderate Feedback: Design Reviews

57. A company produces a product consisting of two components arranged as follows: 0.95

0.93

If both components must function for the product to function, then the product’s overall reliability is a. 0.950 b. 0.940 c. 0.930 d. 0.884 Ans: d Difficulty: Moderate Feedback: The Design Process

58. A company produces a product consisting of two components arranged as follows: 0.97

0.90

Both components must function for the product to function. To achieve an overall reliability of at least 0.95 without changing the reliability of the 1st component, the reliability of the 2nd component would need to be a. at least 0.925 b. at least 0.95 c. at least 0.97 d. at least 0.98 Ans: d Difficulty: Moderate Feedback: The Design Process

59. A company produces a product consisting of two components arranged as follows: R1

R2

If both components must function for the product to function, then the two components would need individual reliabilities of _______ to achieve an overall reliability of 0.90. a. R1 = 0.90 and R2 = 0.90 b. R1 = 0.95 and R2 = 0.95 c. R1 = 0.80 and R2 = 0.80 d. R1 = 0.85 and R2 = 0.85 Ans: b Difficulty: Moderate Feedback: The Design Process

60. A product consists of three components arranged as follows: R1 = 0.95

R2 = 0.90

R3 = 0.95

If all three components must function for the product to function then the product’s overall reliability is approximately a. 0.812 b. 0.90 c. 0.933 d. 0.95 Ans: a Difficulty: Moderate Feedback: The Design Process

61. The overall reliability of the following system is 0.90

0.95

a. b. c. d.

0.95

0.95

greater than 1.00 0.95 0.90 0.898

Ans: d Difficulty: Hard Feedback: The Design Process

62. For the overall reliability of the following system to be 0.975 or greater the reliability of the backup component, Rb, must be Rb =?

0.99

a. b. c. d.

0.95

0.99

at least 1.00 at least 0.896 at least 0.736 at least 0.534

Ans: b Difficulty: Hard Feedback: The Design Process

63. The overall reliability of the following system is 0.85

0.90

0.89

0.94

0.93

a. b. c. d.

0.787 0.85 0.89 0.919

Ans: d Difficulty: Hard Feedback: The Design Process

64. A product consists of three components arranged as follows: R1 = ?

R2 = 0.94

R3 = 0.98

If all three components must function for the product to function, and the product’s overall reliability must be at least 0.92, then the reliability of the first component, R1, must be a. at least 0.999 b. at least 0.84 c. at least 0.96 d. at least 0.972 Ans: a Difficulty: Hard Feedback: The Design Process

65. If a product fails 10 times in 500 hours of operation, then its mean time between failures (MTBF) is a. 0.02 hour b. 0.10 hour c. 20 hours d. 50 hours Ans: d Difficulty: Moderate Feedback: The Design Process

66. If a piece of equipment has a mean time between failures (MTBF) of 500 hours with a mean time to repair (MTTR) of 10 hours, then its uptime or average availability would be a. 0.020 or 2.00% b. 0.980 or 98.00% c. 0.500 or 50.00% d. 1.000 or 100.00% Ans: b Difficulty: Hard Feedback: The Design Process

67. The system availability for a system with a mean time between failures (MTBF) of 1000 hours and a mean time to repair (MTTR) of 50 hours would be a. 100.00% b. 97.50% c. 95.24% d. 4.76% Ans: c Difficulty: Hard Feedback: The Design Process

68. Which of the following will not improve design for manufacture and assembly? a. minimizing the number of parts and subassemblies. b. using standard parts when possible c. designing parts for limited, unique uses d. designing parts for many, varied uses Ans: c Difficulty: Easy Feedback: The Design Process

69. Which of the following techniques would most likely be used to systematically analyze product failures? a. concurrent design b. quality function deployment c. failure mode and effects analysis d. value analysis

Ans: c Difficulty: Easy Feedback: Design Reviews

70. The Taguchi Quality Loss Function implies that a a. customer’s dissatisfaction increases geometrically as the actual value deviates from the target value b. customer’s satisfaction increases geometrically as the actual value deviates from the target value c. customer’s dissatisfaction decreases geometrically as the actual value deviates from the target value d. customer’s preferences are strongly oriented towards conforming to specifications Ans: a Difficulty: Moderate Feedback: Design for Robustness

71. As a part of design for robustness Taguchi believes that a. consistent errors can be more easily corrected than random errors b. parts within tolerance limits may produce assemblies that are not within limits c. consumers have a strong preference for product characteristics near their ideal value d. all of the above Ans: d Difficulty: Easy Feedback: Design for Robustness

72. The ability to meet present needs without compromising those of future generations is a. concept in product design known as: a. Reusability b. Maintainability c. Reliability d. Sustainability Ans: d Difficulty: Moderate Feedback: Design for Environment

73. All of the following are principles of green product design except: a) Use new materials b) Use less materials c) Involve the entire supply chain d) Change the paradigm of design Ans: a Difficulty: Hard Feedback: Design for Environment

74. When a product is designed to withstand variations in environmental and operating conditions it is known as: a) Robust design b) Design for change c) Design for modification d) Design for tolerance Ans: a Difficulty: Moderate Feedback: Design for Robustness

75. Design for the environment includes all the following except a. Design for disposal or reuse b. Sustainability c. Extended producer responsibility (EPR) d. Environmentally safe pollutants (ESP) Ans. d Difficulty: Moderate Feedback: Design for Environment

76. Functional design includes all the following except a. Reliability b. Usability c. Form design d. Maintainability Ans: c Difficulty: Moderate

Feedback: Design Review

Short Answer Questions

82. Briefly discuss the characteristics of an effective design process.

An effective design process (1) matches product or service characteristics with customer requirements; (2) ensures that customer requirements are met in the simplest and least costly manner; (3) reduces the time required to design a new product or service; and (4) minimizes the revisions necessary to make a design workable.

83. What does a feasibility study consist of and how is it related to the design process?

Once marketing has taken the ideas that are generated and the customer needs that are identified from the first stage of the design process and formulated alternative product and service concepts, the promising concepts undergo a feasibility study that includes several types of analyses beginning with a market analysis. Market researchers use customer surveys, interviews, focus groups, and market tests to determine whether there is enough demand for the proposed product to justify further investment in it. If the demand potential exists, then there is an economic analysis that looks at estimates of production and development costs and compares them to estimated sales volume. A price range for the product that is compatible with the market segment and image of the new product is discussed. Quantitative techniques may be used to evaluate the profit potential of the project. Finally, there are technical and strategic analyses that answer such questions as: “does the new product require new technology?”; “does the company have the capability to support the new product?”; “is the new product compatible with the core business of the firm?”

84. Briefly discuss three performance characteristics considered during the functional design phase of a product.

Functional design is concerned with how the product performs. Three performance characteristics considered during the functional design phase are reliability, maintainability, and usability. Reliability is the probability that a given part or product will perform its intended function for a specified length of time under normal conditions of use. Maintainability, also called serviceability, refers to the ease and/or cost with which a product or service is maintained or repaired. Usability is what makes a product or service easy to use and a good fit for its targeted customer.

85. What role does simplification play in the design process?

Production design is concerned with how the product will be made. Designs that are difficult to make often result in poor-quality products. Engineers tend to overdesign products, with too many features, options, and parts. Design simplification attempts to reduce the number of parts, subassemblies, and options in a product. It also means avoiding tools, separate fasteners, and adjustments. By employing simplification, designers hope to make it easier to build and assemble higher quality products faster and less costly than they otherwise could.

87. List at least four design for manufacture guidelines that promote good design practice.

Design for manufacture guidelines that promote good design practice include: (1) minimizing the number of parts and subassemblies; (2) avoiding tools, separate fasteners, and adjustments; (3) using standard parts; (4) designing parts for many uses; (5) designing for ease of assembly and minimal handling; and (6) allowing for efficient and adequate testing and replacement of parts.

88. List five ways that design quality can be improved.

Design quality can be improved by (1) reviewing designs to prevent failures and ensure value; (2) designing for the environment; (3) measuring design quality; (using quality function deployment (QFD); and (5) designing for robustness.

89. What are some of the questions/inquiries one would ask regarding every material, every part, and every operation in Value Analysis?

The writer should address can we live without it? Does it do more than is required?

Does it cost more than it is worth? Can something else do a better job? Can it be made by a less costly method? Can it be made cheaper, better, faster by someone else?

File: ch5, Chapter 5: Service Design

True/False

1. The tradeoff between the cost of improved service and the cost of making customers wait provides the basis of waiting line analysis.

Ans: True Difficulty: Easy Feedback: Waiting Line Analysis for Service Improvement

2. A single waiting line model can be applied to every type of waiting line system.

Ans: False Difficulty: Easy Feedback: Waiting Line Analysis for Service Improvement

3. Waiting lines form only when service operations are understaffed.

Ans: False Difficulty: Easy Feedback: Waiting Line Analysis for Service Improvement

4. Waiting lines form because customers arrival times and service times are not always equal.

Ans: True Difficulty: Easy Feedback: Waiting Line Analysis for Service Improvement

5. The calling [population is the source of customers used in waiting line analysis.

Ans: True Difficulty: Easy Feedback: Waiting Line Analysis for Service Improvement

6. The number of arrivals per unit time to a service facility is often described by a Poisson distribution.

Ans: True Difficulty: Moderate Feedback: Waiting Line Analysis for Service Improvement

7. Balking occurs when a customer waiting in a line moves from one line to another because he believes it is moving faster.

Ans: False Difficulty: Moderate Feedback: Waiting Line Analysis for Service Improvement

8. The negative exponential distribution is the probability distribution s most commonly used to describe service times.

Ans: True Difficulty: Moderate Feedback: Tools for service design

9. If service times are exponentially distributed then service rates are normally distributed.

Ans: False Difficulty: Moderate Feedback: Waiting Line Analysis for Service Improvement

10. If the average service rate is smaller than the average arrival rate an infinitely large waiting line (queue) will form.

Ans: True Difficulty: Easy Feedback: Waiting Line Analysis for Service Improvement

11. Queue discipline specifies the order in which waiting customers are served.

Ans: True Difficulty: Moderate Feedback: Waiting Line Analysis for Service Improvement

12. The number of parallel servers in waiting line analysis is referred to as the number of phases.

Ans: False Difficulty: Moderate Feedback: Waiting Line Analysis for Service Improvement

Mathematical formulas used in waiting line analysis provide only optimal solutions.

Ans: False Difficulty: Moderate Feedback: Waiting Line Analysis for Service Improvement

13. The constant average values of operating characteristics that a system attains after a long time is referred to as a steady state.

Ans: True Difficulty: Moderate Feedback: Waiting Line Analysis for Service Improvement

14. Aas the level of service improves in a waiting line system the cost of service usually increases.

Ans: True Difficulty: Easy Feedback: Waiting Line Analysis for Service Improvement

15. Service quality in waiting line systems sometimes depends on the psychological of waiting.

Ans: True Difficulty: Moderate Feedback: Waiting Line Analysis for Service Improvement

16. A waiting line system is said to have a finite calling population if the size of the population of customers from which arrivals originate is known.

Ans: True Difficulty: Moderate Feedback: Waiting Line Analysis for Service Improvement

17. Waiting line analysis should be applied only to situations with an infinite calling population.

Ans: False Difficulty: Moderate Feedback: Waiting Line Analysis for Service Improvement

18. Channels refers to the number of parallel servers in a waiting line system.

Ans: True Difficulty: Moderate Feedback: Waiting Line Analysis for Service Improvement

19. In general, as the level of service improves the cost of service increases.

Ans: True Difficulty: Moderate Feedback: Waiting Line Analysis for Service Improvement

20. One of the basic assumptions for the single server model is that the calling population is finite.

Ans: False Difficulty: Moderate Feedback: Waiting Line Analysis for Service Improvement

21. The mixture of physical items, sensual benefits, and psychological benefits provided to a customer with a service is known as quality function deployment.

Ans: False Difficulty: Moderate Feedback: The Service Design Process

22. The mixture of physical items, sensual benefits, and psychological benefits provided to a customer with a service is known as the service package.

Ans: True Difficulty: Moderate Feedback: The Service Design Process

23. The service sector accounts for over 80 percent of the employment in the United States.

Ans: True Difficulty: Moderate Feedback: The Service Economy

24. Service design and improvement techniques cannot be applied to societal problems, such as education health care and government services.

Ans: False Difficulty: Easy Feedback: The Service Economy

25. It is widely accepted that the effective design and the efficient operation of services are paramount to the health of the U.S. economy.

Ans: True Difficulty: Moderate Feedback: The Service Economy

26. In general, services are acts, deeds or performances that provide a customer time, place, form or psychological utility, Ans: True Difficulty: Moderate Feedback: Characteristics of Services

27. Almost all consumer products consist of some combination of facilitating goods and facilitating services.

Ans: True Difficulty: Easy Feedback: Characteristics of Services

28. Service companies are centralized and geographically concentrated.

Ans: False Difficulty: Easy Feedback: Characteristics of Services

29. In general, a service and its delivery system are inseparable.

Ans: True Difficulty: Easy Feedback: Characteristics of Services

30. A service package defines the target market and the desired customer experience.

Ans: False

Difficulty: Easy Feedback: The Service Design Process

31. The service concept also defines how a service differs from other similar products and how it will compete in the marketplace.

Ans: True Difficulty: Hard Feedback: The Service Design Process

32. When designing a service performance specifications are converted into design specifications, and finally, delivery specifications, Ans: True Difficulty: Hard Feedback: The Service Design Process

33. Service processes can be classified by the degree of labor intensity and customization.

Ans: True Difficulty: Moderate Feedback: The Service Design Process

34. The service-process matrix is based on two characteristics: labor intensity and volume.

Ans: False Difficulty: Moderate Feedback: The Service Design Process

Multiple Choice

35. Which of the following is not a characteristic of a service? a. Intangible

b. Variable output c. Difficult to emulate d. Perishable Ans: c Difficulty: Easy Feedback: Characteristics of Services

36. Which of the following is not a characteristic of a service? a. Tangible b. Variable output c. Difficult to emulate d. Perishable Ans: a Difficulty: Easy Feedback: Characteristics of Services

37. A dentist office is an example of a a. Service factory b. Mass service c. Service shop d. Professional services Ans: d Difficulty: Easy Feedback: The Service Design Process

38. An airline is an example of a a. Service factory b. Mass service c. Service shop d. Professional services Ans: a Difficulty: Easy Feedback: The Service Design Process

39. A grocery store is an example of a a. Service factory b. Mass service c. Service shop d. Professional services Ans: b Difficulty: Easy Feedback: The Service Design Process

40. A teacher is an example of a a. Service factory b. Mass service c. Service shop d. Professional services Ans: c Difficulty: Easy Feedback: The Service Design Process

42. Which of the following in not a basic element of a waiting line? a. arrivals b. servers c. cost of waiting d. waiting line structure Ans: c Difficulty: Easy Feedback: Waiting Line Analysis for Service Improvement

43. The ________________ is the source of customers for a waiting line system. a. calling population b. arrival rate c. service line channel d. service line phase Ans: a Difficulty: Easy Feedback: Waiting Line Analysis for Service Improvement

44. The number of arrivals per unit of time at a service facility can frequently be described by a a. normal distribution. b. Poisson distribution. c. binomial distribution. d. beta distribution.

Ans: b Difficulty: Moderate Feedback: Waiting Line Analysis for Service Improvement

45. The ______________ refers to the order in which waiting customers are served. a. calling population b. queue discipline c. number of channels d. service rate

Ans: b Difficulty: Moderate Feedback: Waiting Line Analysis for Service Improvement

46. The number of channels in a queuing process a. denotes the number of servers in sequence a customer must go through. b. denotes the size of the calling population. c. denotes the number of parallel servers for servicing arriving customers. d. denotes the average queue length.

Ans: c Difficulty: Moderate Feedback: Waiting Line Analysis for Service Improvement

47. In general, as the number of servers in a waiting line system increases a. service cost increases and waiting cost decreases. b. service cost decreases and waiting cost increases. c. both service cost and waiting cost increase. d. both service cost and waiting cost decrease.

Ans: a Difficulty: Easy Feedback: Waiting Line Analysis for Service Improvement

48. If the average time to serve a customer is 3 minutes, then the service rate, µ, is ___________. a. 3 per hour b. 12 per hour c. 16 per hour d. 20 per hour Ans: d Difficulty: Moderate Feedback: Waiting Line Analysis for Service Improvement

49. If, on average, it takes 90 seconds to serve a customer then the hourly service rate, µ, is __________. a. 90 per hour b. 40 per hour c. 30 per hour d. 1.5 per hour Ans: b Difficulty: Moderate Feedback: Waiting Line Analysis for Service Improvement

51. In a waiting line system, the ___________ reflects the probability that the server is busy and the customer must wait. a. utilization factor b. queue discipline c. average number of customers in the system d. probability the system is idle Ans: a Difficulty: Easy Feedback: Characteristics of Services

52. Consider an espresso stand with a single baristro. Customers arrive at the rate of 20 per hour according to a Poisson distribution. Service times are exponentially distributed with a mean service time of 2 minutes per customer. What is the service rate per hour for the espresso stand? a. 30 customers b. 20 customers c. 15 customers d. 2 customers Ans: a Difficulty: Moderate Feedback: Waiting Line Analysis for Service Improvement

53. Consider an espresso stand with a single barista. Customers arrive to the stand at the rate of 28 per hour according to a Poisson distribution. Service times are exponentially distributed with a service rate of 35 customers per hour. The probability that the server is busy is a. 0.20 b. 0.60 c. 0.80 d. 1.00 Ans: c Difficulty: Moderate Feedback: Waiting Line Analysis for Service Improvement

54. Consider an espresso stand with a single barista. Customers arrive to the stand at the rate of 28 per hour according to a Poisson distribution. Service times are exponentially distributed with a service rate of 35 customers per hour. The probability that the server is idle is a. 0.20 b. 0.60 c. 0.80 d. 1.00 Ans: a Difficulty: Moderate Feedback: Waiting Line Analysis for Service Improvement

55. Consider an espresso stand with a single barista. Customers arrive to the stand at the rate of 28 per hour according to a Poisson distribution. Service times are exponentially distributed with a service rate of 35 customers per hour. The probability that there are exactly 3 customers in the system is a. 0.0000 b. 0.1024 c. 0.4096 d. 0.5120 Ans: b Difficulty: Moderate Feedback: Waiting Line Analysis for Service Improvement

56. Consider an espresso stand with a single barista. Customers arrive to the stand at the rate of 28 per hour according to a Poisson distribution. Service times are exponentially distributed with a service rate of 35 customers per hour. The probability that there are more than 2 customers in the system is a. 0.128 b. 0.488 c. 0.512 d. 0.640 Ans: c Difficulty: Hard Feedback: Waiting Line Analysis for Service Improvement

57. Consider an espresso stand with a single barista. Customers arrive to the stand at the rate of 28 per hour according to a Poisson distribution. Service times are exponentially distributed with a service rate of 35 customers per hour. The average number of customers waiting in line for service is a. 4.0 b. 3.8 c. 3.5 d. 3.2 Ans: d Difficulty: Moderate Feedback: Waiting Line Analysis for Service Improvement

58. Consider an espresso stand with a single barista. Customers arrive to the stand at the rate of 28 per hour according to a Poisson distribution. Service times are exponentially distributed with a service rate of 35 customers per hour. The average number of customers in the system (i.e., waiting and being served) is a. 4.0 b. 3.8 c. 3.2 d. 2.0 Ans: a Difficulty: Moderate Feedback: Waiting Line Analysis for Service Improvement

59. Consider an espresso stand with a single barista. Customers arrive to the stand at the rate of 28 per hour according to a Poisson distribution. Service times are exponentially distributed with a service rate of 35 customers per hour. The average time in minutes a customer spends waiting in line for service is a. 0.114 minute b. 0.143 minute c. 6.84 minutes d. 8.58 minutes Ans: c Difficulty: Hard Feedback: Waiting Line Analysis for Service Improvement

60. Consider an espresso stand with a single barista. Customers arrive to the stand at the rate of 28 per hour according to a Poisson distribution. Service times are exponentially distributed with a service rate of 35 customers per minute. The average time in minutes a customer spends in the system (i.e., waiting and being served) is a. 0.114 minute b. 0.143 minute c. 6.84 minutes d. 8.58 minutes Ans: d Difficulty: Moderate Feedback: Waiting Line Analysis for Service Improvement

61. Consider an espresso stand with a single barsita. Customers arrive to the stand at the rate of 28 per hour according to a Poisson distribution. Service times are exponentially distributed with a service rate of 35 customers per minute. If the arrival rate remains at 28 customers per hour and the stand’s manager wants to have the average time a customer spends in the system (i.e., wait time line and service time) to be a maximum of 6 minutes on average, then the service rate must a. decrease by 2 to 33 customers per hour b. decrease by 3 to 32 customers per hour c. increase by 3 to 38 customers per hour d. increase by 2 to 37 customers per hour Ans: c Difficulty: Hard Feedback: Waiting Line Analysis for Service Improvement

62. A small diner has one employee and a counter with seating for 8 customers. The diner does not package food for takeout. Customers arrive at the diner at the rate of 20 per hour (Poisson distributed). Service times are exponentially distributed and average 24 per hour. Customers that arrive when all seats are taken do not enter the diner. What is the probability that there are no customers in the diner? a. 0.2067 b. 0.7933 c. 0.8333 d. 0.1667 Ans: a Difficulty: Moderate Feedback: Waiting Line Analysis for Service Improvement

63. A small diner has one employee and a counter with seating for 8 customers. The diner does not package food for take out. Customers arrive at the diner at the rate of 20 per hour (Poisson distributed). Service times are exponentially distributed and average 24 per hour. Customers that arrive when all seats are taken do not enter the diner. What is thehe probability that the diner is full and an arriving customer does not enter? a. 0.8333 b. 0.1667 c. 0.2067 d. 0.0481 Ans: d Difficulty: Hard

Feedback: Waiting Line Analysis for Service Improvement

64. A small diner has one employee and a counter with seating for 8 customers. The diner does not package food for takeout. Customers arrive at the diner at the rate of 20 per hour (Poisson distributed). Service times are exponentially distributed and average 24 per hour. Customers that arrive when all seats are taken do not enter the diner. What is the average number of customers in the diner? a. 2.0432 b. 2.8364 c. 3.7536 d. 5.4837 Ans: b Difficulty: Moderate Feedback: Waiting Line Analysis for Service Improvement

65. A small diner has one employee and a counter with seating for 8 customers. The diner does not package food for takeout. Customers arrive at the diner at the rate of 20 per hour (Poisson distributed). Service times are exponentially distributed and average 24 per hour. Customers that arrive when all seats are taken do not enter the diner. What is the average number of customers waiting (average queue length)? a. 2.0432 b. 2.8364 c. 3.9785 d. 5.9782 Ans: a Difficulty: Hard Feedback: Waiting Line Analysis for Service Improvement

66. A small diner has one employee and a counter with seating for 8 customers. The diner does not package food for takeout. Customers arrive at the diner at the rate of 20 per hour (Poisson distributed). Service times are exponentially distributed and average 24 per hour. Customers that arrive when all seats are taken do not enter the diner. What is the average time a customer spends in the diner? a. 3 minutes b. 5.975 minutes c. 6.44 minutes d. 8.94 minutes

Ans: d Difficulty: Moderate Feedback: Waiting Line Analysis for Service Improvement

67. A small diner has one employee and a counter with seating for 8 customers. The diner does not package food for takeout. Customers arrive at the diner at the rate of 20 per hour (Poisson distributed). Service times are exponentially distributed and average 24 per hour. Customers that arrive when all seats are taken do not enter the diner. What is the average time a customer spends waiting? a. 2.5 minutes b. 3.0 minutes c. 6.44 minutes d. 24 minutes Ans: c Difficulty: Hard Feedback: Waiting Line Analysis for Service Improvement

70. A service counter employs two servers. On average a server requires 8 minutes to process a customer and service times follow an exponential distribution.

Customers arrive at the counter at the rate of 12 per hour according to a Poisson distribution. The service rate per server for this system is a. 3.75 customers per hour b. 7.5 customers per hour c. 8 customers per hour d. 16 customers per hour Ans: b Difficulty: Moderate Feedback: Waiting Line Analysis for Service Improvement

71. A service counter employs two servers. On average a server requires 8 minutes to process a customer and service times follow an exponential distribution.

Customers arrive at the counter at the rate of 12 per hour according to a Poisson distribution. The probability that there are no customers in the system is a. 0.800 b. 0.536 c. 0.369 d. 0.111

Ans: d Difficulty: Hard Feedback: Waiting Line Analysis for Service Improvement

72. A service counter employs two servers. On average a server requires 8 minutes to process a customer and service times follow an exponential distribution.

Customers arrive at the counter at the rate of 12 per hour according to a Poisson distribution. The probability that an arriving customer must wait for service is a. 0.7111 b. 0.8000 c. 0.8576 d. 0.9327 Ans: a Difficulty: Hard Feedback: Waiting Line Analysis for Service Improvement

73. A service counter employs two servers. On average a server requires 8 minutes to process a customer and service times follow an exponential distribution.

Customers arrive at the counter at the rate of 12 per hour according to a Poisson distribution. On average, the total number of customers in the system (i.e., waiting and being served) would be a. 1.600 b. 2.844 c. 3.200 d. 4.444 Ans: d Difficulty: Hard Feedback: Waiting Line Analysis for Service Improvement

74. A service counter employs two servers. On average a server requires 8 minutes to process a customer and service times follow an exponential distribution.

Customers arrive at the counter at the rate of 12 per hour according to a Poisson distribution. The average number of customers waiting to be served would be a. 4.444 b. 2.844 c. 1.600 d. 0.893

Ans: b Difficulty: Hard Feedback: Waiting Line Analysis for Service Improvement

75. A service counter employs two servers. On average a server requires 8 minutes to process a customer and service times follow an exponential distribution.

Customers arrive at the counter at the rate of 12 per hour according to a Poisson distribution. The average amount of time, in minutes, spent in the system (i.e., waiting and being served) is approximately a. 0.237 minutes b. 14.22 minutes c. 22.20 minutes d. 33.30 minutes Ans: c Difficulty: Hard Feedback: Waiting Line Analysis for Service Improvement

76. A service counter employs two servers. On average a server requires 8 minutes to process a customer and service times follow an exponential distribution.

Customers arrive at the counter at the rate of 12 per hour according to a Poisson distribution. The average amount of time spent by a customer waiting in line is approximately a. 0.370 minutes b. 2.844 minutes c. 14.22 minutes d. 22.20 minutes Ans: c Difficulty: Hard Feedback: Waiting Line Analysis for Service Improvement

Short Answer

77. Do waiting lines only form when the service operation is understaffed? Explain?

Ans: No. Waiting lines form because people or things arrive at the servicing function, or server, faster than they can be served. This does not mean that the service operation is understaffed or does not have the capacity to handle the influx of customers. Most businesses and organizations have sufficient serving capacity available to handle its customers in the long run. Waiting lines result because customers do not arrive at a constant rate, nor are they all served in an equal amount of time. Customers arrive at random times, and the time required to serve each individually is not the same. A waiting line is continuously increasing and decreasing in length and in the long-run approaches an average length and waiting time.

Difficulty: Moderate Feedback: Waiting Line Analysis for Service Improvement

78. What are the basic elements of a waiting line? Define each.

Ans: The basic elements of a waiting line are the arrivals, the servers, and the waiting line structure. The simplest type of waiting line system is a single server with a single queue.

Difficulty: Moderate Feedback: Waiting Line Analysis for Service Improvement

79. What is a calling population in terms of a waiting line system?

Ans: The calling population is the source of the customers to the waiting line system.

The calling population can be either infinite or finite. An infinite calling population assumes such a large number of potential customers that it is always possible for one more customer to arrive and be served. A grocery store is an example of an infinite calling population. A finite calling population has a specific, countable number of potential customers. All the customers are waiting in line at the same time; that is, it may occur that there is not one more customer to serve.

Difficulty: Hard Feedback: Waiting Line Analysis for Service Improvement

80. What is queue discipline and queue length?

Ans: The queue discipline is the order in which waiting customers are served. The most common type of queue discipline is first come, first served. However, other disciplines are possible. Sometimes customers are scheduled according to a predetermined appointment, or parts are run through a machine center on a last in first out basis. In manufacturing jobs are sometimes run with the shortest processing time first. Queues can be of an infinite or finite size or length. An infinite queue can be of

any size, with no upper limit, and is the most common queue structure. A finite queue is limited in size.

Difficulty: Moderate Feedback: Waiting Line Analysis for Service Improvement

81. Briefly describe the traditional cost relationship in waiting line analysis.

Ans: There is generally an inverse relationship between the cost of providing service and the cost of making customers wait. As the level of service, reflected by the number of servers, goes up, the cost of service increases, whereas waiting cost decreases. In the traditional view of waiting line analysis, the level of service should coincide with the minimum point of the total cost curve.

Difficulty: Easy Feedback Waiting Line Analysis for Service Improvement

82. How are waiting line costs and service quality related?

Ans: The contemporary approach to quality management is to assume that the traditional quality-cost relationship is a short-run perspective that understates the potential long-term loss of business from poor quality service. In the long run, a higher level of quality will gain market share and increase business and thus is more cost effective. Further, as the company focuses on improving service quality, the cost of achieving good quality will be less because of innovations in processes and work design that will result. This is the philosophy of “zero defects” which in waiting line analysis means “no waiting”. This level of better-quality, quicker service, will, in the ling run increase business and be more profitable that the traditional view implies.

Difficulty: Moderate Feedback: Waiting Line Analysis for Service Improvement

83. How can psychology be used to improve waiting lines? Provide an example.

Ans: In some instances, it is not possible to reduce waiting times. When these situations occur, the problem of providing quality service often depends more on psychological solutions. In other words, the organization will try to make waiting more palatable. For example, providing distractions while customers wait to make the wait seem shorter, providing accurate estimates of wait times when a customer joins the queue, making it possible for waiting customers to view television, listen to music, look in a mirror, read magazines, or purchase snacks can all make waits seems shorter. For especially long lines, line layout can make the wait seem shorter by keeping the line moving. Thus, some amusement parks use lines that “snake” around

in order to keep moving which gives the customer the impression that they are getting closer to the server (ride).

Difficulty: Moderate Feedback: Waiting Line Analysis for Service Improvement

File: ch06, Chapter 6: Processes and Technology

True/False

1.

A process is a group of unrelated tasks with specific inputs and outputs.

Ans: False Difficulty: Easy Feedback: Process Planning

2.

Process design specifies what tasks need to be done and how they are to be coordinated among functions, people, and organizations.

Ans: True Difficulty: Easy Feedback: Process Planning

3.

Planning, analyzing, and improving processes is the purpose of operations management.

Ans: True Difficulty: Easy Feedback: Process Planning

4.

The organization’s overall approach for producing goods and providing services is its process strategy.

Ans: True Difficulty: Easy Feedback: Process Planning

5.

Process strategy defines what tasks need to be done and how they are to be coordinated among functions, people, and organizations.

Ans: False Difficulty: Easy Feedback: Process Planning

6.

A firm’s process strategy rarely defines its capital intensity.

Ans: False Difficulty: Easy Feedback: Process Analysis

7.

A firm’s process strategy defines the extent of customer involvement in providing a service.

Ans: True Difficulty: Easy Feedback: Process Planning

8.

Process planning determines how a manufactured good is produced or a service is provided.

Ans: True Difficulty: Easy Feedback: Process Planning

9.

Companies that control the production of virtually all of the parts that go into a product are said to be horizontally integrated.

Ans: False Difficulty: Moderate Feedback: Process Planning

10.

Companies that control the production of virtually all of the parts that go into a product are said to be vertically integrated.

Ans: True Difficulty: Moderate

Feedback: Process Planning

11.

Outsourcing occurs when a company cannot or will not make all the parts that go into a product.

Ans: True Difficulty: Easy Feedback: Process Planning

12.

Supplier speed is rarely an important consideration in outsourcing decisions.

Ans: False Difficulty: Easy Feedback: Process Planning

13.

Supplier reliability is often an important consideration in outsourcing decisions.

Ans: True Difficulty: Easy Feedback: Process Planning

14.

One-of-a-kind production of a product based on a customer’s unique specifications is a called a project.

Ans: True Difficulty: Easy Feedback: Process Planning

15.

Customers are rarely involved in a project that takes an extended period of time to complete Ans: False Difficulty: Easy Feedback: Process Planning

16.

Subcontracting is rarely a source of human resources for a project.

Ans: False Difficulty: Easy Feedback: Process Planning

17.

Batch production is characterized by small volumes and high product variety.

Ans: True Difficulty: Easy Feedback: Process Analysis

18.

One characteristic of batch production is variable demand.

Ans: True Difficulty: Easy Feedback: Process Analysis

19.

Producing a high volume of a single product is a characteristic of batch production.

Ans: False Difficulty: Easy Feedback: Process Planning

20.

Most of the operations in batch production involve the assembly rather than fabrication.

Ans: False Difficulty: Easy Feedback: Process Planning

21.

Most of the operations in batch production involve fabrication rather than assembly.

Ans: True Difficulty: Easy Feedback: Process Analysis

22.

Batch production is also known as a job shop because it creates more jobs than any of the other process choices Ans: False Difficulty: Easy Feedback: Process Planning

23.

Mass production is characterized by high volumes of a customized product for a mass market.

Ans: False Difficulty: Easy Feedback: Process Planning

24.

Mass production is characterized by high volumes of a standard product for a mass market.

Ans: True Difficulty: Easy Feedback: Process Planning

25.

Mass production is often associated with assembly lines.

Ans: True Difficulty: Easy Feedback: Process Planning

26.

Mass production is characterized by the use of general equipment and highly skilled labor.

Ans: False Difficulty: Easy

Feedback: Process Planning

27.

Mass production is characterized by the use of specialized equipment and workers with limited skills.

Ans: True Difficulty: Easy Feedback: Process Planning

28.

Continuous production is characterized by very high volumes of commodity products.

Ans: True Difficulty: Easy Feedback: Process Planning

29.

Break-even analysis examines the cost tradeoffs associated with demand volume when selecting a process.

Ans: True Difficulty: Easy Feedback: Process Planning

30.

A process flowcharts is a useful tool for analyzing a process because it often highlights nonproductive activities.

Ans: True Difficulty: Easy Feedback: Process Analysis

31.

Process innovation reflects the total redesign of a process for a breakthrough improvement.

Ans: True Difficulty: Easy Feedback: Process Innovation

32.

Vertical integration is the degree to which a firm produces the parts that go into its products.

Ans: True Difficulty: Easy Feedback: Process Planning

33.

The best process strategy is usually found on the diagonal of the product-process matrix.

Ans. True Difficulty: Moderate Feedback: Process Planning

34.

Process plans are a set of documents that detail the steps in process selection

Ans. False Difficulty: Moderate Feedback: Process Planning

35.

Process analysis yields a set of documents detailing manufacturing and service delivery specifications.

Ans. False Difficulty: Moderate Feedback: Process Analysis

36.

The basic tools of process analysis include process flowcharts, diagrams and maps.

Ans. True Difficulty: Moderate Feedback: Process Analysis

37.

Two approaches to process improvement include continuous and breakthrough.

Ans. True Difficulty: Moderate Feedback: Process Innovation

38.

Process innovation is most successful in organizations that view their systems as a set of functional areas vying for limited resources.

Ans. False Difficulty: Moderate Feedback: Process Innovation

39.

Capital budgeting techniques are often one of the inputs used for technology decisions.

Ans. True Difficulty: Moderate Feedback: Technology Decisions

40.

Technology decisions that involve the outlay of funds is considered a capital investment.

Ans. True Difficulty: Moderate Feedback: Technology Decisions

41.

Technology decisions are often a significant factor in process planning.

Ans. True Difficulty: Moderate

Feedback: Technology Decisions

42.

A high-level process map is a useful tool in beginning the redesign of a process.

Ans. True Difficulty: Moderate Feedback: Process Innovation

43.

Breakthrough improvement is often implemented when opportunities for continuous improvement have been exhausted.

Ans. True Difficulty: Moderate Feedback: Process Innovation

44.

In general, processes should be analyzed for continuous improvement only after a breakthrough improvement.

Ans. False Difficulty: Moderate Feedback: Process Analysis

Multiple Choice

45. A firm’s process strategy defines all of the following except its a. capital intensity. b. process flexibility. c. vertical integration. d. process selection.

Ans: d Difficulty: Hard Feedback: Process Planning

Formatted: Tab stops: Not at 0"

46.

The extent to which the firm will produce the inputs and control the outputs of each stage of the production process is known as a. vertical integration. b. process flexibility. c. process planning. d. capital intensity.

Ans: a Difficulty: Moderate Feedback: Process Planning

47.

The ease of adjusting resources in response to changes in demand defines firm’s a. vertical integration b. process flexibility c. customer involvement d. capital intensity

Ans: b Difficulty: Easy Feedback: Process Planning

48.

Which of the following is not a potential risk associated with a project? a. huge swings in resource requirements b. extensive learning curve benefits c. limited learning curve benefits d. small swings in resource requirements

Ans: b Difficulty: Moderate Feedback: Process Planning

49.

Variable demand and small to moderate quantities produced to order are characteristics usually associated with a. mass production b. continuous production c. projects d. batch production Ans: d Difficulty: Moderate Feedback: Process Planning

50.

Most of the operations in batch production involve a. fabrication b. assembly c. continuous processing d. outsourcing

Ans: a Difficulty: Easy Feedback: Process Planning

51.

A print shop is an example of which of the following process choices? a. project b. batch production c. continuous production d. mass production

Ans: b Difficulty: Easy Feedback: Process Planning

52.

Which of the following is not an advantage of batch production? a. frequent changes in product mix b. flexibility c. customization of output d. quality reputation

Ans: a Difficulty: Moderate Feedback: Process Planning

53.

Ans: c

Disadvantages of batch production include all of the following except a. high per-unit costs. b. frequent changes in product mix. c. flexibility. d. scheduling problems.

Difficulty: Moderate Feedback: Process Planning

54.

Complex scheduling problems are most likely to occur with which process type? a. mass production systems b. batch production systems c. continuous production systems d. repetitive manufacturing systems

Ans: b Difficulty: Moderate Feedback: Process Planning

55.

Which of the following is not a characteristic of mass production? a. made-to-stock b. stable demand c. high product variety d. high product volume

Ans: c Difficulty: Easy Feedback: Process Planning

56.

Mass production systems tend to employ a. specialized equipment and limited labor skills. b. specialized equipment and specialized labor skills. c. general purpose equipment and limited labor skills. d. general purpose equipment and specialized labor skills.

Ans: a Difficulty: Easy Feedback: Process Planning

57.

One disadvantage of mass production is its a. efficiency. b. speed of production. c. low per-unit costs. d. lack of responsiveness.

Ans: d Difficulty: Easy Feedback: Process Planning

58.

Steel, paper, paints, and chemicals are examples of products that use a. batch production. b. repetitive production. c. continuous production. d. mass production.

Ans: c Difficulty: Moderate Feedback: Process Planning

59.

As process selection moves up the diagonal from project to continuous production a. demand volume increases. b. product variety increases. c. capital intensity decreases. d. flexibility increases.

Ans: a Difficulty: Moderate Feedback: Process Planning

60.

A company is considering producing a product for a new market. The fixed costs required for manufacturing and delivering the product is $50,000. Labor and material costs are estimated to be approximately $25.00 per product. If the product is sold for $35.00 each, the firm’s break-even volume would be a. 50,000 units b. 5,000 units c. 2500 units d. 500 units Ans: b Difficulty: Hard Feedback: Process Planning

61.

If a firm can sell a product for $40.00 each, then what is the volume needed to break-even if the fixed cost of production is $125,000.00 and labor and material costs are $30.00 per item? a. 125,000 b. 12,500 c. 4,167 d. 3,250 Ans: b Difficulty: Hard Feedback: Process Planning

62.

A company is evaluating which of two alternatives should be used to produce a product that will sell for $35.00 per unit. The following cost information describes the two alternatives Process A Fixed Cost $500,000 Variable Cost per Unit $25.00

Process B $750,000 $23.00

The break-even volume for Process A is a. 50,000 units b. 62,500 units c. 30,000 units d. 20,000 units Ans: a Difficulty: Hard Feedback: Process Planning

63.

A company is evaluating which of two alternatives should be used to produce a product that will sell for $35.00 per unit. The following cost information describes the two alternatives Process A Fixed Cost $500,000 Variable Cost per Unit $25.00 The break-even volume for Process B is a. 50,000 units b. 62,500 units

Process B $750,000 $23.00

c. 30,000 units d. 20,000 units Ans: b Difficulty: Hard Feedback: Process Planning

64.

A company is evaluating which of two alternatives should be used to produce a product that will sell for $35.00 per unit. The following cost information describes the two alternatives Process A Fixed Cost $500,000 Variable Cost per Unit $25.00

Process B $750,000 $23.00

If total demand (volume) is 120,000 units, then the company should a. select Process A with a profit of $940,000 to maximize profit b. select Process B with a profit of $450,000 to maximize profit c. select Process A with a profit of $700,000 to maximize profit d. select Process B with a profit of $690,000 to maximize profit Ans: c Difficulty: Hard Feedback: Process Planning

65.

A company is evaluating which of two alternatives should be used to produce a product that will sell for $35.00 per unit. The following cost information describes the two alternatives Process A Fixed Cost $500,000 Variable Cost per Unit $25.00

Process B $750,000 $23.00

If total demand (volume) is 150,000 units, then the company should a. select Process A with a profit of $1,300,000 to maximize profit b. select Process B with a profit of $750,000 to maximize profit c. select Process A with a profit of $1,000,000 to maximize profit d. select Process B with a profit of $1,050,000 to maximize profit Ans: d Difficulty: Hard Feedback: Process Planning

66.

A company is evaluating which of two alternatives should be used to produce a product that will sell for $35.00 per unit. The following cost information describes the two alternatives Process A Fixed Cost $500,000 Variable Cost per Unit $25.00

Process B $750,000 $23.00

For what level of volume (output) would the firm prefer Process A to Process B? a. for all volume levels greater than 75,000 b. for all volume levels greater than 97,500 c. for all volume levels greater than 117,500 d. for all volume levels greater than 125,000 Ans: d Difficulty: Hard Feedback: Process Planning

67.

A company is considering producing an item that can be sold for $37.50 per unit.

If the fixed costs for setting up production are $225,000 and the variable cost per unit for the item is $35.00 then the break-even volume for this item is a. 6,000 units b. 6,429 units c. 72,500 units d. 90,000 units Ans: d Difficulty: Hard Feedback: Process Planning

68. a. b. c. d.

All the following are factors influencing the outsourcing decision except capacity. expertise. quality. product variety.

Ans. d Difficulty: Moderate Feedback: Process Planning

69. a. b. c. d.

The product-process matrix includes all the following process types except mass production. stable production. continuous production. batch production.

Ans. b Difficulty: Moderate Feedback: Process Planning

70. a. b. c. d.

Which of the following is NOT associated with the sourcing continuum?

Joint venture In-house production Strategic alliance Single contract

Ans. b Difficulty: Hard Feedback: Process Planning

71.

Technology decisions typical in operations management include all the following areas except a. information technology. b. product technology. c. process technology. d. communication technology.

Ans. d Difficulty: Hard Feedback: Technology Decisions

Short Answer Questions

72. What is a process strategy and how does it affect the firm?

Ans: A process strategy is an organization’s overall approach for physically producing goods and providing services. Process decisions should reflect how the firm has chosen to compete in the marketplace, reinforce product decisions, and facilitate the achievement of corporate goals. A firm’s process strategy defines its: (1) capital intensity, or mix of capital and labor; (2) process flexibility; (3) degree of vertical integration; and (4) level of customer involvement in the production process.

Difficulty: Hard Feedback: Process Planning

73. List some non-economic factors that can influence a firm’s outsourcing decision.

Ans: There are several noneconomic factors which can influence or dominate the economic considerations of a outsourcing decision. Among these are (1) the level of capacity at which the company is operating; (2) the capability to provide quality parts consistently; (3) the speed with which goods can be provided by a supplier; (4) the reliability of suppliers; and (5) the expertise of the firm and its willingness to release valuable product information to a supplier.

Difficulty: Moderate Feedback: Process Planning

File: ch07, chapter 7: Capacity and Facilities

True/False

1. Facility layout refers to the arrangement of machines, processes, departments, and other areas within a facility.

Ans: True Difficulty: Easy Feedback: Basic Layouts

2. The basic objective of the facility layout decision is to ensure a smooth flow of inventory through the system.

Ans: False Difficulty: Easy Feedback: Basic Layouts

3. A process layout arranges activities sequentially.

Ans: False Difficulty: Moderate Feedback: Basic Layouts

4. A process layout groups similar activities together according to the functions they perform.

Ans: True Difficulty: Moderate Feedback: Basic Layouts

5. General as opposed to specific purpose equipment is typically found in a process layout.

Ans: True Difficulty: Easy Feedback: Basic Layouts

6. An important advantage of a process layout over a product layout is efficiency.

Ans: False Difficulty: Easy Feedback: Basic Layouts

7. Material storage and movement are directly affected by facility layout decisions.

Ans: True Difficulty: Easy Feedback: Basic Layouts

8. Product layouts have a higher degree of flexibility than process layouts.

Ans: False Difficulty: Easy Feedback: Basic Layouts

9. Fixed-position layouts are used for projects when the product cannot be moved.

Ans: True Difficulty: Easy Feedback: Basic Layouts

10. Shipbuilding is an example of production system requiring a process layout.

Ans: False Difficulty: Easy Feedback: Basic Layouts

11. Equipment utilization is typically very high in processes with a fixed-position layout.

Ans: False Difficulty: Easy Feedback: Basic Layouts

12. Minimizing material handling cost is an important objective for a process layout.

Ans: True Difficulty: Moderate Feedback: Basic Layouts

13. A relationship diagram provides a standard format for displaying manager preferences for department locations.

Ans: True Difficulty: Moderate Feedback: Designing Process Layouts

14. Most service facilities utilize fixed-position layouts.

Ans: False Difficulty: Easy Feedback: Designing Service Layouts

15. The majority of service facilities utilize process layouts.

Ans: True Difficulty: Easy Feedback: Designing Service Layouts

16. With a product layout the purpose of line balancing is to equalize the amount of work at each workstation.

Ans: True Difficulty: Moderate

Feedback: Designing Product Layouts

17. Precedence requirements reflect physical restrictions on the order in which operations are performed in a product layout.

Ans: True Difficulty: Moderate Feedback: Designing Product Layouts

18. The maximum amount of time a product spends at any workstation is known as the bottleneck time.

Ans: False Difficulty: Moderate Feedback: Designing Product Layouts

19. The cycle time refers to the maximum amount of time a product is allowed to spend at each workstation.

Ans: True Difficulty: Moderate Feedback: Designing Product Layouts

20. The balance delay is calculated by subtracting efficiency in percent from one hundred.

Ans: True Difficulty: Moderate Feedback: Designing Product Layouts

21. The line-balancing procedure uses heuristics to specify which work elements are allocated to each workstation.

Ans: True Difficulty: Moderate Feedback: Designing Product Layouts

22. Cellular layouts combine the flexibility of process layouts with the efficiency of product layouts.

Ans: True Difficulty: Moderate Feedback: Hybrid Layouts

23. Cellular layouts reduce transit time and increase set-up.

Ans: False Difficulty: Moderate Feedback: Hybrid Layouts

24. A flexible manufacturing system (FMS) combines flexibility with higher efficiency.

Ans: True Difficulty: Easy Feedback: Hybrid layouts

25. The efficiency of a flexible manufacturing system (FMS) comes from reductions in setup and waiting times.

Ans: True Difficulty: Hard Feedback: Hybrid Layouts

26. A mixed-model assembly line processes each model in large batch sizes.

Ans: False Difficulty: Easy Feedback: Hybrid Layouts

27. The time to complete a task in a mixed-model assembly line can vary from model to model.

Ans: True Difficulty: Easy Feedback: Hybrid Layouts

28. A schematic diagram using weighted lines to denote location preference is called a relationship diagram.

Ans: True Difficulty: Moderate Feedback: Designing Process Layouts.

29. Line balancing is constrained by precedence requirements and cycle time restrictions.

Ans: True Difficulty: Hard Feedback: Designing Product Layouts

30. Line balancing is a procedure that requires cycle time to be the same as flow time.

Ans: False Difficulty: Easy Feedback: Designing Product Layouts

31. Capacity can be increased in one large step or incrementally.

Ans: True Difficulty: Easy Feedback: Capacity Planning

32. The best operating level is the percent of capital cushion that minimizes unit cost.

Ans: False Difficulty: Easy

Feedback: Capacity Planning

33. For a given facility the best operating level equals the percent of capacity utilization that minimizes unit cost.

Ans: True Difficulty: Easy Feedback: Capacity Planning

34. The capacity cushion for a facility equals one minus utilization.

Ans: True Difficulty: Moderate Feedback: Capacity Planning

35. Increasing capacity utilization beyond the best operating level results in diseconomies of scale.

Ans: True Difficulty: Hard Feedback: Capacity Planning

36. Product layouts are sometimes referred to as functional layouts.

Ans: False Difficulty: Easy Feedback: Basic Layouts

37. The major layout concern for a process layout is where to locate departments or functional areas relative to each other.

Ans: True Difficulty: Moderate Feedback: Basic Layouts

38. The major advantage of a process layout over a product layout is efficiency.

Ans: False Difficulty: Moderate Feedback: Basic Layouts

39. Line balancing strives to minimize bottlenecks in a process layout.

Ans: False Difficulty: Moderate Feedback: Basic Layouts

40. Block diagramming is a design tool for process layouts that takes into account the number of adjacent and non-adjacent moves.

Ans: True Difficulty: Moderate Feedback: Designing Process Layouts

41. Single model and mixed model assembly lines are similar in layout and operation.

Ans: False Difficulty: Moderate Feedback: Hybrid Lay

Multiple Choice

42. Which of the following is NOT an objective of effective layouts? a. reduce material handling costs b. increase the number of bottlenecks c. eliminate waste and redundant activities d. improve communication and interaction among workstations

Ans: b Difficulty: Easy Feedback: Basic Layouts

43. Similar activities are grouped together in departments or work centers according to the function with a __________ layout. a. process b. fixed-position c. hybrid Ans: a Difficulty: Easy Feedback: Designing Process Layouts

44. Which of the following describes a process layout? a. equipment is general purpose and the workers are unskilled b. equipment is specialized and the workers are highly skilled c. equipment is general purpose and the workers are highly skilled d. equipment is specialized and the workers are unskilled Ans: c Difficulty: Moderate Feedback: Designing Process Layouts

45. The material storage space required for in-process inventory is typically larger in a. a cellular manufacturing layout. b. a product layout. c. a fixed-position layout. d. a process layout.

Ans: d Difficulty: Easy Feedback: Designing Process Layouts

46. With a ___________ layout activities arranged in a line according to the sequence of operations. a. product. b. process

c. fixed-position d. cellular Ans: a Difficulty: Easy Feedback: Designing Process Layouts

47. Which of the following statements is most true? a. product layouts are flexible; process layouts are efficient b. product layouts are efficient; process layouts are flexible c. product and process layouts are equally flexible; neither are efficient d. product and process layout are equally efficient; neither are flexible Ans: b Difficulty: Easy Feedback: Basic Layouts

48. A ____________ provides historical data on the movement of parts and materials between departments. a. manufacturing chart b. block diagram c. relationship diagram d. load summary chart Ans: d Difficulty: Easy Feedback: Designing Process Layouts

49. Two techniques used to design process layouts are a. block diagramming and assembly line balancing. b. relationship diagramming and assembling line balancing. c. relationship diagramming and assembly line balancing. d. block diagramming and relationship diagramming.

Ans: d Difficulty: Moderate Feedback: Designing Process Layouts

50. A format for displaying manager preferences for departmental locations is known as a a. relationship diagram. b. process diagram. c. block diagram. d. hybrid diagram.

Ans: a Difficulty: Moderate Feedback: Designing Process Layouts

51. One of the best known computerized packages available for designing process layouts is CRAFT. CRAFT stands for a. computerized relationship activity and flow technique. b. computerized relative allocation of facilities technique. c. computerized relative assembly and flow technology. d. computerized relationship assembly flow time.

Ans: b Difficulty: Moderate Feedback: Designing Process Layouts

52. Most service organizations use a. product layouts. b. fixed-position layouts. c. process layouts. d. cellular layouts.

Ans: c Difficulty: Easy Feedback: Designing Service Layouts

53. A type of service layout designed to encourage browsing and increase impulse purchasing is known as a a. freeflow layout. b. grid layout. c. loop layout. d. spine layout.

Ans: a

Difficulty: Moderate Feedback: Designing Service Layouts

54. Material handling equipment that can follow multiple paths, move in any direction, and carry large loads of in-process inventory is most likely to be associated with a _________ layout a. process b. product c. fixed-position d. hybrid Ans: a Difficulty: Easy Feedback: Designing Process Layouts

55. A ________layout encourages customer familiarity, has low costs, and is easy to clean, a. freeflow layout b. grid layout c. spine layout d. loop layout Ans: b Difficulty: Easy Feedback: Designing Service Layouts

56. A schematic diagram that uses weighted lines to denote location preference is known as a a. block grid b. block diagram c. a relationship grid d. a relationship diagram Ans: d Difficulty: Moderate Feedback: Service Layouts

57. The process of equalizing the amount of work at each workstation in a product layout is known as a. block diagramming. b. precedence requirements. c. line balancing. d. cycle time analysis.

Ans: c Difficulty: Easy Feedback: Designing Product Layouts

58. With line balancing the maximum amount of time the product is allowed to spend at each workstation is known as the a. cycle time. b. flow time. c. efficiency of the line. d. balance delay.

Ans: a Difficulty: Easy Feedback: Designing Product Layouts

59. To maximize an assembly line’s efficiency a. the line’s balance delay must be minimized. b. the line’s balance delay must be maximized. c. the cycle time must be less than the flow time. d. the flow time must be less than the cycle time.

Ans: a Difficulty: Moderate Feedback: Designing Product Layouts

60. A company has a target output rate of 40 units every five (5) hours when its line is fully operational. To achieve this target the firm must have a cycle time of a. more than 12.50 minutes b. more than 10.00 minutes c. 7.5 minutes or less d. 8 minutes or less Ans: c

Difficulty: Moderate Feedback: Designing Product Layouts

61. A company wants to produce 150 units during a 7-hour day. The desired cycle time needed to achieve this level of output is a. 3.5 minutes b. 3.25 minutes c. 3.00 minutes d. 2.8 minutes Ans: d Difficulty: Moderate Feedback: Designing Product Layouts

62. A company hopes to achieve a daily output of 200 units during 6 hours of production time. Assuming there is no lost time during the 6 hours of production, the desired cycle time to achieve the targeted level of output is a. 3.0 minutes b. 1.8 minutes c. 1.5 minutes d. 0.03 minutes Ans: b Difficulty: Moderate Feedback: Service Layouts

63. In a product layout, the process of assigning tasks to work stations is referred to as _________ balancing. a. station b. product c. line d. work Ans: c Difficulty: Easy Feedback: Designing Product Layouts

64. Cycle time refers to a. the time required for a product to go through a process layout. b. the time between finished units coming off an assembly line. c. the time needed to complete the tasks at a work station. d. the difference between task time and work station time.

Ans: b Difficulty: Moderate Feedback: Designing Product Layouts

65. An assembly line consists of three workstations (WS) with each station’s activity time as shown.

WS 1 5 minutes

WS 2 3 minutes

WS 3 4 minutes

The flow time for items on this line would be a. 5 minutes b. 3 minutes c. 4 minutes d. 12 minutes Ans: d Difficulty: Moderate Feedback: Designing Product Layouts

66. An assembly line consists of three workstations (WS) with each station’s activity time as shown.

WS 1 5 minutes

WS 2 3 minutes

The cycle time for this line is a. 5 minutes b. 3 minutes c. 4 minutes d. 12 minutes Ans: a

WS 3 4 minutes

Difficulty: Moderate Feedback: Designing Product Layouts 67. An assembly line consists of three workstations (WS) with each station’s activity time as shown.

WS 1 5 minutes

WS 2 3 minutes

WS 3 4 minutes

When fully operational this line could assemble _______ completed items every 60 minutes. a. 20 b. 15 c. 12 d. 5 Ans: c Difficulty: Moderate Feedback: Designing Product Layouts

68. An assembly line consists of three workstations (WS) with each station’s activity time as shown.

WS 1 5 minutes

WS 2 3 minutes

WS 3 4 minutes

When fully operational the maximum output for this line in 8 hours of production time would be a. 40 units b. 96 units c. 120 units d. 160 units Ans: b Difficulty: Hard Feedback: Designing Product Layouts

69. . If the line currently assembles 10 units every hour when fully functional, then the line’s balance delay at this rate of output is WS 1 5 minutes a. b. c. d.

WS 2 3 minutes

WS 3 4 minutes

66.67 % 33.33% 80.00% 20.00%

Ans: b Difficulty: Hard Feedback: Designing Product Layouts

70.

___________ is a group technology technique that reorders part routing matrices to identify families of parts with similar processing requirements. a) Process flow analysis b) Production flow analysis c) Cycle analysis d) Group analysis Ans: b.

Difficulty: Moderate Feedback: Hybrid Layouts

71.

Which of the following is NOT an advantage of cellular layouts? a) easier to automate b) easier to control c) increased work-in-process inventory d) reduced setup time Ans: c.

Difficulty: Moderate Feedback: Hybrid Layouts

72.

Which of the following is not a capacity expansion strategy? a. Capacity lead strategy b. Capacity lag strategy

c. Capacity stability strategy d. Average capacity Ans: c Difficulty: Easy Feedback: Capacity Planning

73. Which one of the following is NOT an example of a basic facility layout? a. Fixed-position b. Mixed-model c. Product d. Process Ans: b Difficulty: Moderate Feedback: Capacity Planning

74. Which one of the following is NOT an example of a hybrid facility layout? a. Fixed-position b. Mixed-model c. Cellular d. Flexible manufacturing Ans: a Difficulty: Moderate Feedback: Capacity Planning

75. Which of the following is not an “area” of advantage of cellular layouts? a. material handling b. setup time c. capital investment d. control Ans: c Difficulty: Moderate Feedback: Hybrid Layouts

76. Which of the following is not an “area” of disadvantage of cellular layouts? a. cell balance b. work-in-process inventory c. capital investment d. training and scheduling Ans: c Difficulty: Moderate Feedback: Hybrid Lay

77. Which one of the following factors is not important to the design and operation of a mixed-model assembly line? a. model sequencing b. line balancing c. u-shaped lines d. all are factors Ans: d Difficulty: Moderate Feedback: Hybrid Lay

Short Answer Questions

78. Briefly describe facility layout and the different objectives involved with facility layout decision.

Ans: Facility layout refers to the arrangement of machines, processes, departments, workstations, storage areas, aisles, and common areas within an existing or proposed facility. The basic objective of the layout decision is to ensure a smooth flow of work, material, people, and information through the system. Effective layouts also: minimize material handling costs, utilize space and labor efficiently, eliminate bottlenecks, facilitate communication, eliminate waste, incorporate safety and security measures, promote product and service quality, encourage proper maintenance, provide for visual control, provide for greater flexibility, and increase capacity.

Difficulty: Hard Feedback: Process Layouts

79. Briefly compare the storage and movement of material in a process layout and in a product layout.

Ans: Storage space in a process layout is large to accommodate the large amount of inprocess inventory. In-process inventory is high because material moves from work center to work center in batches waiting to be processed. Finished goods inventory, however, is low because the goods are being made for a particular customer and are shipped out to that customer on completion. A product layout needs material moved in one direction along the assembly line and always in the same pattern. Conveyors are the most common material handling equipment for product layouts. Storage space is quite small along the assembly line because in-process inventory is consumed in the assembly of the product as it moves down the assembly line. However, finished goods inventory may require a separate warehouse for storage before they are shipped to dealers or stores to be sold.

Difficulty: Hard Feedback: Product Layouts and Process Layouts

80. What type of layout is commonly used in services? What are some of the objectives associated with service layouts?

Ans: Most service organizations use process layouts because of the variability in customer requests for service. While service layouts are designed in must the same way as process layouts in manufacturing firms, the objectives are often different. For example, instead of minimizing the flow of materials through the system, services may seek to minimize the flow of paperwork, or maximize customer exposure to as many goods as possible. Service layouts are also concerned with the circulation of customer traffic through the facility, the allocation of space to departments, the location of special displays, the efficiency of checkout procedures, and protection from pilferage.

Difficulty: Moderate Feedback: Service Layouts

81. Briefly describe the two constraints under which assembly line balancing must operate.

Ans: Assembly line balancing operates under two constraints: precedence requirements and cycle time restrictions. Precedence requirements are physical restrictions on the order in which operations are performed on the assembly line. Cycle time refers to the maximum amount of time the product is allowed to spend at each workstation if the targeted production rate is to be reached. Cycle time can also be viewed as the time between completed items coming off the assembly line.

Difficulty: Hard Feedback: Hybrid Layouts

82. Briefly describe a cellular layout and its objectives.

Ans: Cellular layouts are based on the concept of group technology whereby dissimilar machines or activities are grouped into work centers called cells to process families of parts or customers with similar requirements. The cells are arranged in relation to each other so that material movement is minimized. Large machines that cannot be split between cells are located near to the cells that use them. The layout of machines within each cell resembles a small assembly line. The objective of cellular layouts is to combine the flexibility of a process layout with the efficiency of a product layout.

Difficulty: Moderate Feedback: Process Layouts

83. What are the advantages of a cellular layout?

Ans: Among the advantages of a cellular layout are: (1) reduced material handling and transit time; (2) reduced setup times; (3) reduced work-in-process inventories; (4) better use of human resources; (5) easier to control; and (6) easier to automate.

Difficulty: Moderate Feedback: Hybrid Layouts

84. Briefly list the disadvantages of a cellular layout.

Among the disadvantages of cellular layouts are: (1) inadequate part families; (2) poorly balanced cells; (3) expanded training and scheduling of workers; and (4) increased capital investment.

85. Describe a flexible manufacturing system (FMS).

A flexible manufacturing system (FMS) consists of numerous programmable machine tools connected by an automated material handling system and controlled by a common computer network. It is different from traditional automation which is fixed or “hard-wired” for a specific task. An FMS combines flexibility with efficiency. The flexibility comes from the ability to change tools automatically while the efficiency is derived from reductions in setup and queue times.

File: chS7, Supplement 7: Decision-Making Tools: Facility Location Models

True/False

1. The factors used to evaluate location of a manufacturing plant are usually different from the factors used in locating a service facility.

Ans: True Difficulty: Easy Feedback: Site Selection: Where to Locate

2. Railroad access is frequently a factor in locating a manufacturing plant.

Ans: True Difficulty: Easy Feedback Site Selection: Where to Locate

3. Service facilities are usually the largest and most expensive type of facility.

Ans: False Difficulty: Easy Feedback Site Selection: Type of Facility

4. For a service operation being in the right place usually means being in a location that is convenient and easily accessible.

Ans: True Difficulty: Easy Feedback Site Selection: Where to Locate

5. Service operations tend to make location decisions more frequently than manufacturing facilities.

Ans: True

Difficulty: Easy Feedback Types of Facilities

6. One reason foreign firms locate facilities in the United States is to reduce their supply chain costs.

Ans: True Difficulty: Easy Feedback Global Supply Chain Factors

7. The cost and availability of labor is an important factor in a location decision.

Ans: True Difficulty: Easy Feedback Site Selection: Where to Locate

8. A location’s collection of physical support systems is known as its infrastructure.

Ans: True Difficulty: Moderate Feedback Types of Facilities

9. Inadequate infrastructure at a given location increases supply chain costs and decreases customer service.

Ans: True Difficulty: Moderate Feedback Types of Facilities

10. Transportation costs are generally a function of distance, weight, and time.

Ans: True Difficulty: Easy Feedback Site Selection: Where to Locate

11. The center of gravity technique outlines a method for identifying and weighing important location factors.

Ans: False Difficulty: Moderate Feedback: Location Analysis Techniques

12. The load-distance technique evaluated different locations based on load and transport distance.

Ans: False Difficulty: Moderate Feedback: Location Analysis Techniques

13. Facility location is often overlooked because it is not an important aspect of a firm’s strategic plan.

Ans: False Difficulty: Moderate Feedback: Site Selection: Where to Locate

Multiple Choice

14. Which of the following is not a primary factor in location decisions for manufacturing plants? a. proximity to raw materials b. proximity to customers c. proximity to different modes of transportation d. proximity to significant labor pools Ans: b Difficulty: Moderate Feedback: Site Selection: Where to Locate

15. Common location incentives include all of the following except

a. b. c. d.

tax credits. job training. fixed exchange rates. improvements to infrastructure.

Ans: c Difficulty: Moderate Feedback: Site Selection: Where to Locate

16. A company is deciding where to locate a new warehouse that will receive shipments from three suppliers: 1, 3, and 3. The locations of the suppliers (xi, yi) and the annual number of shipments from supplier i (Wi) are provided below: 1 2 3 x1 = 250 x2= 100 x3= 500 y1 = 250 y2= 400 y3= 300 W1 = 240 W2=205 W3= 300 The coordinates for the new warehouse suggested by the center of gravity method are a. x = 311.4 and y = 309.4 b. x = 309.4 and y = 311.4 c. x = 291.2 and y =198.9 d. x = 193.2 and y = 219.4 Ans: b Difficulty: Hard Feedback: Location Analysis Techniques

17. A package delivery service wants to build a new distribution center in Boise, Idaho.

The location of the center needs to be in the vicinity of Interstate-84,/Highway-55 and the Boise Airport. The following table provides the coordinates of these three sites and the number of weekly packages.

I-84 x = 20 y = 35 W = 16,000

Highway-55 x = 26 y = 13 W = 11,000

Airport x = 36 y = 19 W = 8,000

The suggested coordinates for the new warehouse using the center of gravity method are a. x = 36.0 and y = 35.0 b. x = 27.3 and y = 22.3

c. x = 25.54 and y =24.4 d. x = 27.5 and y = 35.5 Ans: c Difficulty: Hard Feedback: Location Analysis Techniques

18. Which type of facility is large and expensive? a. light-industry facilities b. retail and service facilities c. heavy-manufacturing facilities d. medium-site facilities Ans: c Difficulty: Easy Feedback: Types of Facilities

19. The region experiencing the most growth in manufacturing facilities is currently the a. Northeast. b. West. c. South. d. Midwest.

Ans d Difficulty: Easy Feedback: Site Selection: Where to Locate

20. ___________ attracts manufacturing facilities because of its transportation, skilled labor, strong work ethic, incentive programs and social services? a) Kansas b) Arkansas c) Ohio d) Idaho Ans: c Difficulty: Easy Feedback: Site Selection: Where to Locate

21. A technique based on transport weight and distance used for locating a facility at the center of movement in a geographic area is known as the a) load-distance technique. b) center of gravity technique. c) location factor rating. d) location factor technique.

Ans: b Difficulty: Moderate Feedback: Location Analysis Techniques

22. Which of the following is a type of facility addressed by the facility location decision? a. heavy manufacturing b. light manufacturing c. retail facilities d. all the above Ans: d Difficulty: Moderate Feedback: Types of Facilities

23. Which of the following is not a facility location factor important in selecting a country? a. Government stability b. Export and import tariffs c. Customer service d. Culture Ans: c Difficulty: Moderate Feedback: Global Supply Chain Factors

File: 08, Chapter 8: Human Resources

True/False

1.For most industrialized countries the difference between a company’s success or failure is dependent on the capability of its human resources.

Ans: True Difficulty: Easy Feedback: Contemporary Trends in Human Resources Management

2.Because services are labor intensive, human resources is becoming a more important strategic factor for service companies.

Ans: True Difficulty: Easy Feedback: Contemporary Trends in Human Resources Management

3.Successful quality-oriented firms recognize the importance of their employees when developing a competitive strategy.

Ans: True Difficulty: Easy Feedback: Human Resources and Quality Management

4.With total quality management, employees are usually given precise directions to achieve narrowly defined objectives.

Ans: False Difficulty: Moderate Feedback: Human Resources and Quality Management

5.With total quality management, employees receive broad job training making them more flexible in where they can work

Ans: True Difficulty: Moderate Feedback: Human Resources and Quality Management

6.Companies with a quality focus generally give their employees the power to make decisions that will improve quality.

Ans: True Difficulty: Easy Feedback: Human Resources and Quality Management

7.Achieving strategic quality goals for quality and customer satisfaction often requires teamwork and group participation.

Ans: True Difficulty: Moderate Feedback: Human Resources and Quality Management

8.Scientific management divides jobs into their most elemental activities to simplify job design.

Ans: True Difficulty: Easy Feedback: The Changing Nature of Human Resources Management

9.Flexibility has traditionally been used as a measure of job efficiency.

Ans: True Difficulty: Easy Feedback: The Changing Nature of Human Resources Management

10. In a piece-rate wage system, pay is based on the efficiency of the overall process.

Ans: False Difficulty: Easy Feedback: Employee Compensation

11. Among the disadvantages of task specialization are high output, high costs, and extensive training.

Ans: True Difficulty: Easy Feedback: The Changing Nature of Human Resources Management

12. Motivation refers to the willingness of an employee to perform as needed to attain a goal or objective.

Ans: True Difficulty: Moderate Feedback: The Changing Nature of Human Resources Management

13. Studies have shown that the success of Japanese companies is due to cultural factors.

Ans: False Difficulty: Moderate Feedback: The Changing Nature of Human Resources Management

14. Studies have shown that the success of Japanese companies is due to management practices.

Ans: True Difficulty: Moderate Feedback: The Changing Nature of Human Resources Management

15. Job rotation often requires cross training of employees.

Ans: True Difficulty: Moderate Feedback: Contemporary Trends in Human Resource Management

16. Empowerment involves giving employees the authority and responsibility to innovate and act on their own.

Ans: True Difficulty: Easy Feedback: Contemporary Trends in Human Resource Management

17. An alternative workplace is a combination of nontraditional work locations and practices that supplements or replaces the traditional office.

Ans: True Difficulty: Moderate Feedback: Contemporary Trends in Human Resource Management

18. The motivation for companies to create alternative workplaces is primarily financial.

Ans: True Difficulty: Easy Feedback: Contemporary Trends in Human Resource Management

19. A piece-rate wage plan rewards employees for attaining company goals and objectives.

Ans: False Difficulty: Moderate Feedback: Employee Compensation

20. One advantage of an individual piece-rate system is that it provides strong incentives to ensure high quality.

Ans: False Difficulty: Easy Feedback: Employee Compensation

21. Job design includes determining the characteristics a worker needs to meet the job requirements.

Ans: True Difficulty: Moderate Feedback: Job Design

22. The objective of ergonomics is to make the best use of employees’ capabilities while maintaining the employees’ health and well-being.

Ans: True Difficulty: Moderate Feedback: the Changing Nature of Human Resources Management

23. The interface of workers with machines is probably the least important aspect of job design.

Ans: False Difficulty: Easy Feedback: Job Design

24. A process flowchart is a graph showing the steps of a job or how a set of jobs fit together into the overall flow of the production process.

Ans: True Difficulty: Moderate Feedback: Job Analysis

25. A worker-machinechart illustrates the amount of time a worker and a machine are working or idle.

Ans: True Difficulty: Easy Feedback: Job Analysis

26. The formal study of the individual human motions used to perform a task was developed by Frank and Lillian Gilbreth.

Ans: True Difficulty: Moderate Feedback: Job Analysis

27. A graph that reflects the fact that repetition of tasks improves worker performance is referred to as a learning curve.

Ans: True.

Difficulty: Easy Feedback: Learning Curves

28. An 80% learning curve describes an improvement rate of 80% each time production doubles.

Ans: False Difficulty: Moderate Feedback: Learning Curves

29. Learning curves are useful for measuring work improvement for repetitive, simple jobs requiring short times to complete.

Ans: False Difficulty: Moderate Feedback: Learning Curves

30. Learning curves have limited application for assembly-lines with short, repetitive jobs.

Ans: True Difficulty: Easy Feedback: Learning Curves

31. Scientific Management involves breaking down jobs into elemental activities.

Ans: True Difficulty: Moderate

Feedback: The Changing Nature of Human Resource Management.

32. Fitting the task to the person in a work environment is known as job analysis.

Ans: False Difficulty: Moderate Feedback: Job Design

33. Determining worker capabilities and responsibilities for a job is known as worker analysis.

Ans: True Difficulty: Moderate Feedback: Job Design

34. A worker-machine chart determines whether worker and machine tasks are strategically aligned.

Ans: False Difficulty: Moderate Feedback: Job Analysis

35. One of the prerequisites to job rotation is cross training.

Ans: True Difficulty: Moderate Feedback: Contemporary Trends in Human Resource Management

36. While still an important issue, diversity issues in U.S. companies is on the decline.

Ans: False Difficulty: Moderate Feedback: Managing Diversity in the Workplace

37. According to the U.S. Bureau of Statistics very few people entering the workforce over the past decade are members of minority groups.

Ans: False Difficulty: Moderate Feedback: Managing Diversity in the Workplace

38. Globalization has resulted in an overall reduction in diversity related issues in the workplace.

Ans: False Difficulty: Moderate Feedback: Managing Diversity in the Workplace

39. In the U.S, affirmative action and equal opportunity are basically the same.

Ans: False Difficulty: Moderate Feedback: Managing Diversity in the Workplace

40. By managing diversity a company can gain a competitive edge because all employees are given an opportunity to do their best.

Ans: True Difficulty: Moderate Feedback: Managing Diversity in the Workplace

Multiple Choice

41. The gradual shift from treating employees as a replaceable part to embracing them as a valuable resource was primarily brought about by the trend toward a. globalization. b.quality management. c. scientific management. d.customization.

Ans: b

Difficulty: Easy Feedback: Job Analysis

42. In a piece-rate wage system pay a worker’s pay is based on a. total output. b. job rating. c. job classification. d.total time.

Ans: a Difficulty: Easy Feedback: Job Analysis

43. ___________ illustrate the improvement rate of workers as a job is repeated. a) Learning curves b) Process curves c) Learning charts d) Process charts Ans: a Difficulty: Moderate Feedback: Job Analysis

44. Assigning a worker a complete unit of work with clearly defined start and end points is referred to as a. vertical job enlargement. b.job rotation. c. horizontal job enlargement. d.empowerment.

Ans: c Difficulty: Moderate Feedback: Contemporary Trends in Human Resource Management

45. All of the following are advantages of task specialization except a. increased output. b.lower labor costs. c. reduced boredom.. d.minimal training.

Ans: c Difficulty: Moderate Feedback: The Changing Nature of Human Recourses Management

46. ______________ involves the horizontal movement or a worker between two or more jobs. a. Cross training b.Empowerment c. Alternative workplace d. Job rotation Ans: d Difficulty: Moderate Feedback: Job Analysis

47. Allowing employees more control over their own work and some of the supervisory responsibilities is known as a. vertical job enlargement. b.empowerment. c. horizontal job enlargement. d.cross training.

Ans: a Difficulty: Moderate Feedback: Contemporary Trends in Human Resources Management

48. ______________ gives employees the responsibility and authority to make decisions. a. Cross training b.Empowerment c. Job rotation d.Horizontal job enlargement Ans: b Difficulty: Easy Feedback: Contemporary Trends in Human Resources Management

49. Advantages of empowerment include all of the following except

a. more attention to product quality. b.higher productivity. c. abuse of power. d.more satisfying work.

Ans: c Difficulty: Easy Feedback: Contemporary Trends in Human Resources Management

50. Advantages of telecommuting include all of the following except a. reduced turnover. b.decreased absenteeism and leave usage. c. flexible work schedules. d.direct visual surveillance of employees.

Ans: d Difficulty: Moderate Feedback: Contemporary Trends in Human Resources Management

51. An incentive plan that encourages employees to achieve a company’s goals and objectives is referred to as a. a piece-rate wage plan. b.gainsharing. c. profit sharing. d.overtime.

Ans: b Difficulty: Moderate Feedback: Employee Compensation

52. The elements of job design include a. task analysis. b.worker analysis. c. environmental analysis. d.all of the above.

Ans: d Difficulty: Easy Feedback: Job Design

53. Determining how tasks fit together to form a job is referred to as a. worker analysis. b.task analysis. c. environmental analysis. d.ergonomics.

Ans: b Difficulty: Easy Feedback: Job Design

54. Fitting the task to the employee in a work environment is known as a. motivation. b.worker analysis. c. ergonomics. d.task analysis.

Ans: c Difficulty: Moderate Feedback: Job Design

55. _________________ refers to the physical location of a job and the requisite surroundings. a. Task analysis b. Worker analysis c. Methods analysis d. Environmental analysis Ans: d Difficulty: Moderate Feedback: Job Design

56. Which of the following would most likely be used to redesign or improve existing jobs? a. methods analysis b technology analysis

c environmental analysis d task analysis Ans: a Difficulty: Moderate Feedback: Job Analysis

57. A(n) __________________ is used to graphically analyze how the steps of a job fit together into the overall flow of the production process. a. methods analysis b.process flowchart c. task analysis d.environmental analysis Ans: b Difficulty: Moderate Feedback: Job Analysis

58. Motion study, the study of the individual human motions used in a task, was developed by a. Henry Ford. b.F. W. Taylor. c. Frank and Lillian Gilbreth. d.Frederick Herzberg.

Ans: c Difficulty: Moderate Feedback: Job Analysis

59. The amount of time a worker and a machine are working or idle on a job is illustrated by a a. process flowchart b.worker analysis c. task analysis d.worker-machine chart Ans: d Difficulty: Moderate Feedback: Job Analysis

60. The principles of motion study relate to all of the following categories except a. the human body. b.the efficient use of capital. c. the workplace. d.the efficient use of equipment and machinery.

Ans: b Difficulty: Moderate Feedback: Job Analysis

61. A graph that illustrates the improvement rate of workers as a job is repeated is known as a a) learning curve. b) process flowchart. c) worker-machine chart. d) task analysis chart.

Ans: a Difficulty: Moderate Feedback: Learning Curves

62. A learning curve illustrates that increasing the number of cumulative units produced ________ the labor required per unit. a) increases b) eliminates c) decreases d) does not impact Ans: c Difficulty: Moderate Feedback: Learning Curves

63. A learning curve reflects the fact that a) each time the number of units produced doubles, the processing time per unit decreases by a constant percentage. b) each time the number of units produced doubles, the processing time per unit increases by a constant percentage.

c) each time the number of units produced doubles, the processing time per unit increases by 10%. d) each time the number of units produced doubles, the processing time per unit remains the same.

Ans: a Difficulty: Moderate Feedback: Learning Curves

64. A 90% learning curve indicates a) a 90% increase in processing time per unit as output doubles. b) a 90% decrease in processing time per unit as output doubles. c) a 10% increase in processing time per unit as output doubles. d) a 10% decrease in processing time per unit as output doubles.

Ans: d Difficulty: Moderate Feedback: Learning Curves

65. The direct labor time required to produce the first sailboat of a particular model was 3000 hours. If the company believes that an 80% learning curve applies to the production of this model sailboat then the direct labor time required to produce the 2nd boat is estimated to be a. 600 hours. b.2,400 hours. c. 3,600 hours. d.4,000 hours.

Ans: b Difficulty: Moderate Feedback: Learning Curves

66. A company has accepted a contract to produce a special electric motor. The number of direct labor hours required to produce the first motor is 250. If an 85% learning curve applies to the production of motors then the number of labor hours needed to produce the 4th motor is a) 212.5 hours. b) 180.6 hours. c) 153.5 hours.

d0 37.5 hours Ans: b Difficulty: Hard Feedback: Learning Curves

67. The direct labor times required to produce the first four units of a new product are shown below: Unit Number Direct Labor Hours 1 1,200 2 1,020 3 927.5 4 867 Based on this data the estimated learning or improvement rate is a. 100%. b.90%. c. 85%. d.80%.

Ans: c Difficulty: Hard Feedback: Learning Curves

68. The direct labor hours required to produce the first two units of a new product are 2,000 and 1,800, respectively. Using a 90% learning rate the company would estimate the direct labor hours for the 5th unit to be a) 1692.4 hours. b. 1620.0 hours. c. 1566.0 hours. d. 1523.2 hours.

Ans: c Difficulty: Hard Feedback: Learning Curves

69. Which of the following is not a true statement regarding learning curves? a. learning curves can help managers project labor requirements b. learning curves are not affected by product modifications c. learning curves are useful in developing production scheduling plans d. learning curves can help make overall product cost estimates

Ans: b Difficulty: Moderate Feedback: Learning Curves

Short Answer Questions

70. How has the trend toward quality management changed the way companies view their employees?

Ans: The traditional view of employees or labor was not so much as a valuable resource, but as a replaceable part of the production process that had to be closely controlled and managed. The trend toward quality management changed this perspective. W. E. Deming emphasized that good employees who are always improving are the key to successful quality management and a company’s ultimate survival. Deming pointed out that if a company hopes to attain its quality goals and have good customer service; its employees must be committed and involved. Moreover, the company must make a commitment to its employees and provide them with the training and skills necessary to succeed. To be successful companies must view their employees as a key component in their strategic design.

Difficulty: Hard Feedback: Human Resources and Quality Management

71. In what ways have advances in information technologies changed the working environment?

Ans: Advances in information technology have greatly changed the working environment, especially in services. Because services rely heavily on information technology and communication, services need employees who are technically skilled and can communicate effectively with customers. They also need flexible employees who can apply these skills to a variety of tasks and who are continually trained to keep up with rapid advances in information technology. Increasing technological advances in equipment and machinery have also resulted in manufacturing work that is more technically sophisticated. Employees are required to be better educated, have greater skills, and have greater technical expertise.

Difficulty: Hard Feedback: Contemporary Trends in Human Resources Management

72. Briefly describe the principles of scientific management.

Ans: Scientific management broke down a job into its simplest elements and motions, eliminating unnecessary motions, and then divided the tasks among several workers so that each would require only minimal skill. This system enabled companies to hire large numbers of cheap, unskilled laborers, who were basically interchangeable and easily replaced. In this system the timing of job elements by a stopwatch enabled management to develop standard times for producing one unit of output. Workers were then paid according to their total output in a piece-rate system.

Difficulty: Moderate Feedback: The Changing Nature of Human Resource Management

73. Briefly discuss the advantages and disadvantages of scientific management.

Ans: The advantages of scientific management were essentially increased output and lower labor costs. Workers could easily be replaced and trained at low cost, taking advantage of a large pool of cheap labor. Because of low-cost mass production, the U.S. standard of living was increased enormously. It also allowed unskilled, uneducated workers to gain employment based solely on their willingness to work hard physically at jobs that were mentally undemanding. Among the serious disadvantages of scientific management was the fact that workers frequently became bored and dissatisfied with the numbing repetition of simple job tasks that required little thought. The low skill level that was required meant that workers did not have the opportunity to advance in their jobs.

Furthermore, repetitive tasks requiring the same monotonous physical motions resulted in physical injuries and mental fatigue.

Difficulty: Moderate Feedback: The Changing Nature of Human Resource Management

74. What is the difference between cross training and job rotation?

Ans: In cross training an employee learns more than one job in the company. This provides a safety measure for the company providing more job coverage in the event of employee resignations and absenteeism, or sudden increases in a specific job activity.

Job rotation is not exactly the same as cross training. Job rotation requires cross training, but is also includes the horizontal movement between two or more jobs according to a plan or schedule.

Difficulty: Moderate Feedback: Contemporary Trends in Human Resources Management

75. What is empowerment and why is it important to total quality management (TQM)?

Ans: Empowerment is giving employees responsibility and authority to make decisions.

For TQM programs to work, it is generally conceded that employees must be empowered so that they are willing to innovate and act on their own in an atmosphere of trust and respect. Five of W. E. Deming’s 14 points for quality improvement relate to employee empowerment.

Difficulty: Hard Feedback: Contemporary Trends in Human Resources Management

76. List 5 of the attributes of good job design identified by Frederick Herzberg.

Ans: Student answers will vary but should include 5 of the following attributes identified

by Frederick Herzberg.

An appropriate degree of repetitiveness An appropriate degree of attention and mental absorption Some employee responsibility for decisions and discretion Employee control over their own job Goals and achievement feedback A perceived contribution to a useful product or service Opportunities for personal relationships and friendships Some influence over the way work is carried out in groups Use of skills Difficulty: Moderate Feedback: Job Design

77. Define the three categories of the elements of job design.

Ans: Task analysis determines how to do each task and how all the tasks fit together to form a job. It includes defining the individual tasks, and determining their most efficient sequence, their duration, their relationship with other tasks, and their frequency. Worker analysis determines the characteristics the worker must possess to meet the job requirements, the responsibilities the worker will have in the job and how the worker will be rewarded. Environmental analysis refers to the physical location of the job in the production or service facility and the environmental conditions that must exist. These conditions include things such as proper temperature, lighting, ventilation and noise.

Difficulty: Moderate Feedback: Job Design

78. List the three categories of the principles of motion study and give two rules for each category.

Ans: Student answers will vary but the three categories and the rules of each are as follows: a. Efficient use of the human body i. Work should be simplified, rhythmic, and symmetric ii. Hand/arm motions should be coordinated and simultaneous iii. The full extent of physical capabilities should be employed; al part of the body should perform; the hand should never be idle iv. Energy should be conserved by letting machines perform tasks when possible, minimizing the distance of movements, and physical momentum should be in favor of the worker v. Tasks should be simple, requiring minimal eye contact and minimal muscular effort, with no unnecessary motions, delays, or idleness b.Efficient Arrangement of the Workplace i. All tools, materials, and equipment should have a designated, easily accessible location that minimizes the motions required to get them ii. Seating and the general work environment should be comfortable and healthy c. Efficient Use of Equipment i. Equipment and mechanized tools enhance work abilities ii. The use of foot-operated mechanized equipment that relieves the hand/arms of work should be maximized iii. Equipment should be constructed and arranged to fit worker use Difficulty: Hard Feedback: Job Analysis

79. Briefly discuss the advantages and disadvantages of using learning curves.

Ans: Learning curves can help managers project labor and budgeting requirements when developing production scheduling plans. Also, knowing how many labor hours are required over a production schedule can aid in determining the number of workers to employ. When managers are able to estimate the number of labor hours required for a product can improve product cost estimates used in bidding for jobs, as well as helping to set final product selling prices. However, managers must remember that modifications to products can negate learning curve effects and improvement rates can also be derived from sources other than learning. Finally, relying on an industry-derived learning rate may be inappropriate for a particular company.

Difficulty: Hard Feedback: Learning Curves

File: chS8, Supplement 8: Operational Decision-Making Tools: Work Measurement

True/False

1. Determining the length of time it takes to do a job is known as work measurement.

Ans: True Difficulty: Easy Feedback: Time Studies

2. Under normal circumstances and conditions, the time required by an “average” worker to perform a job once is referred to as the cycle time.

Ans: False Difficulty: Easy Feedback: Time studies

3. The basic principle underlying an incentive piece-rate wage system is that workers produced more if they were paid for the additional ouput.

Ans: True Difficulty: Easy Feedback: Time Studies

4. The normal time to perform a job is calculated by dividing the elemental average by the standard time.

Ans: False Difficulty: Moderate Feedback: Time Studies

5. The allowance factor is a percentage increase in the normal cycle time.

Ans: True

Difficulty: Moderate Feedback: Time studies

6. A time study is a statistical sample distribution, where the number of cycles is the sample size.

Ans: True Difficulty: Moderate Feedback: Time studies

7. Workers often do not like to be the subject of a time study and are sometimes unwilling to cooperate.

Ans: True Difficulty: Easy Feedback: Time Studies

8. Rating worker performance is typically an objective, easy task that can be done by any employee.

Ans: False Difficulty: Easy Feedback: Time Studies

9. Work sampling is a technique for determining the proportion of time a worker or machine is idle.

Ans: False Difficulty: Moderate Feedback: Work Sampling

10. Work sampling is an easier, cheaper, and quicker approach to work measurement than time study.

Ans: True Difficulty: Easy

Feedback: Work Sampling

11. Work sampling tends to be more disruptive on the workplace than time studies.

Ans: False Difficulty: Moderate Feedback: Work Sampling

Multiple Choice

12. _____________ time is the time required by an “average” worker to perform a job under normal circumstances and conditions. a. Stopwatch b. Standard c. Allowance d. Average Ans: b Difficulty: Moderate Feedback: Time Studies

13. In a time study, the normal time is computed as a. the elemental average time multiplied by the rating factor b. the elemental average time divided by the rating factor c. the elemental average time minus the rating factor d. the elemental average time plus the rating factor Ans: a Difficulty: Hard Feedback: Time studies

15. In a time study the standard time is calculated as a. the normal cycle time plus the allowance factor b. the normal cycle time minus the allowance factor c. the normal cycle time divided by (1 + allowance factor) d. the normal cycle time multiplied by (1 + allowance factor)

Ans: d Difficulty: Hard Feedback: Time studies

16. The normal times for basic, generic micro motions developed by an outside organization in a laboratory-type environment are referred to as a. standard times b. normal times c. predetermined motion times d. elemental times Ans: c Difficulty: Moderate Feedback: Time studies

17. Advantages of using a predetermined motion time system include all of the following except a. worker cooperation and compliance are not required b. ignores job context within which a single motion takes place c. workplace is not disrupted d. eliminates the need for subjectively determining performance ratings Ans: b Difficulty: Moderate Feedback: Time studies

18. As part of its quality-improvement program a company is conducting a time study for a particular job. The time study encompassed 10 job cycles, and the results include the following cumulative times and performance rating factors for each element.

Element 1 2 3 4 5

t (min) 3.33 4.5 2.85 5.05 1.53

RF 1.10 1.00 1.05 1.10 0.90

The standard time for this job using an allowance factor of 16% is: a. 1.809 minutes b. 2.098 minutes c. 1.530 minutes

d. 2.233 minutes Ans: b Difficulty: Hard Feedback: Time studies

19. As part of its quality-improvement program a company is conducting a time study for a particular job. The time study encompassed 10 job cycles, and the results include the following cumulative times and performance rating factors for each element. An allowance factor of 16% is assumed.

Element 1 2 3 4 5

t (min) 3.33 4.5 2.85 5.05 1.53

RF 1.10 1.00 1.05 1.10 0.90

The normal cycle time for this job would be: a. 1.809 minutes b. 2.098 minutes c. 1.530 minutes d. 2.233 minutes Ans: a Difficulty: Hard Feedback: Time studies

20. As part of a time study a particular job was analyzed. The study included 20 job cycles and the following cumulative times and performance rating factors for each element were reported: Element 1 2 3 4

t (min) 12.22 9.55 14.5 11.21

RF 1.10 1.05 0.90 0.95

Assuming an allowance factor of 15% the standard time for this job would be a. b. c. d.

4.35 minutes 3.67 minutes 2.712 minutes 2.358 minutes

Ans: c Difficulty: Hard Feedback: Time studies

21. How many cycles should be used in a time study in order to be 95% confident that the time-study average job cycle time is within 5% of the true average job cycle time.

Assume that the average job cycle time was 2.67 minutes and the standard deviation of the sample was 0.72 minutes. a. 36 cycles b. 72 cycles c. 98 cycles d. 112 cycles Ans: d Difficulty: Moderate Feedback: Time studies

22. How many cycles should be used in a time study in order to be 98% confident that the time-study average job cycle time is within 4% of the true average job cycle time.

Assume that the average job cycle time was 4.25 minutes and the standard deviation of the sample was 0.65 minutes. a. 55 cycles b. 70 cycles c. 80 cycles d. 95 cycles Ans: c Difficulty: Moderate Feedback: Time studies

23. For a particular time study a company would like to be 95% confident that the average job cycle time is within 2% of the true average job cycle time. Assume that the average job cycle time was 6.53 minutes and the standard deviation of the sample was 1.26 minutes. The number of cycles that should be used in this time study would be a. 174 b. 358 c. 463 d. 864

Ans: b Difficulty: Moderate Feedback: Time studies

24. A work sampling study is being conducted on a loading machine in a warehouse.

How many observations should be taken if management wants to be 95% confident the estimate is within + 6% of the actual proportion of time the loader is busy if management believes the loading machine is in use 70% of the time? a. 125 observations b. 175 observations c. 225 observations d. 275 observations Ans: c Difficulty: Moderate Feedback: Work sampling

25. Management believes a critical piece of equipment is busy 85% of the time. How many observations should be taken if management wants to be 98% confident the estimate is within + 2.5% of the actual proportion of time the equipment is in use? a. 250 observations b. 525 observations c. 757 observations d. 1,108 observations Ans: d Difficulty: Moderate Feedback: Work sampling

26. How many observations should be taken to be 95% confident of being within + 5% of the actual time a machine is busy if it is believed that the machine is in use 75% of the time? a. 1,200 observations b. 772 observations c. 364 observations d. 289 observations Ans: d Difficulty: Moderate

Feedback: Work sampling

27. For a particular time study a company would like to be 90% confident that the average job cycle time is within 5% of the true average job cycle time. Assume that the average job cycle time was 15.76 minutes and the standard deviation of the sample was 3.2 minutes. The number of cycles that should be used in this time study would be a. 45 b. 93 c. 127 d. 236 Ans: a Difficulty: Moderate Feedback: Work sampling

28. How many observations should be taken to be 90% confident of being within + 2% of the actual time a machine is busy if it is believed that the machine is in use 70% of the time? e. 2,021 observations f. 1,421 observations g. 789 observations h. 365 observations Ans: b Difficulty: Moderate Feedback: Work sampling

29. As part of a time study a particular job was analyzed. The study included 20 job cycles and the following cumulative times and performance rating factors for each element were reported: Element 1 2 3 4

t (min) 54.64 49.67 42.98 51.37

RF 1.05 1.10 0.95 0.95

Assuming an allowance factor of 20% the standard time for this job would be i. 10.08 minutes j. 12.10 minutes

k. 14.73 minutes l. 16.58 minutes Ans: b Difficulty: Hard Feedback: Work sampling

Short Answer Questions

30. Briefly discuss the advantages and disadvantages of a predetermined motion time system.

Ans: There are several advantages of using a predetermined motion time system. It enables a standard time to be developed for a new job before the job is even part of the production process. Worker cooperation and compliance are not necessary, and the workplace is not disrupted. Performance ratings are included in the motion times, eliminating this subjective part of developing standard times. There are also disadvantages with a predetermined motion time system. It ignores the job context within which a single motion takes place. It is also possible that the predetermined motion times may not reflect the skill level, training, or abilities of workers in a specific industry.

Difficulty: Moderate Feedback: Time studies

31. List the steps in work sampling.

Ans: The steps in work sampling are a. define the job activities b. determine the number of observations in the work sample c. determine the length of the sampling period d. conduct the work sampling study and record the observations e. periodically recompute the number of observations Difficulty: Moderate Feedback: Work sampling

32. What is work sampling and what is its primary use?

Ans: Work sampling is a technique for determining the proportion of time a worker or machine spends on various activities. A work sample can indicate the proportion of time a worker is busy or idle or performing a task or how frequently a machine is idle or in use. The primary uses of work sampling are to determine the ratio delay, which is the percentage of time a worker or machine is delayed or idle, and to analyze jobs that have nonrepetitive tasks. The information from a work sample can be useful in designing or redesigning jobs, developing job descriptions, and determining the level of work output that can be expected from a worker for use in planning.

Difficulty: Moderate Feedback: Work sampling

File: ch09, chapter 9: Project Management

True/False

1. A unique, one-time operational activity or effort is referred to as a process.

Ans: False Difficulty: Easy Feedback: Project Planning

2. In general, projects are subject to less uncertainty than other types of processes.

Ans: False Difficulty: Easy Feedback: Project Planning

3. The three major components of project management include planning, scheduling, and costing.

Ans: False Difficulty: Easy Feedback: Project Planning

4. A project team is typically cross-functional consisting of members throughout an organization.

Ans: True Difficulty: Easy Feedback: Project Planning

5. A work breakdown structure provides a common understanding of and justification for a project.

Ans: False

Difficulty: Moderate Feedback: Project Planning

6. Issues of cultural diversity in project management should only be addressed if and when they arise.

Ans: False Difficulty: Moderate Feedback: Global and Diversity Issues

7. Slack represents the amount of time an activity can be delayed without delaying the project completion time.

Ans: True Difficulty: Moderate Feedback: CPM/PERT

8. A Gantt chart provides a visual display of the project schedule that includes scheduled start times, finish times and available slack.

Ans: True Difficulty: Moderate Feedback: Project Scheduling

9. Managing quality is not an important part of project management.

Ans: False Difficulty: Easy Feedback: Project Control

10. The principles of total quality management (TQM) cannot be applied to project management.

Ans: False Difficulty: Moderate Feedback: Project Control

11. Earned value analysis reports a project’s performance by tracking its forecasted completion date and anticipated budget variations.

Ans: True Difficulty: Moderate Feedback : Project Control

12. Management and control of a companywide portfolio of projects is known as enterprise project management.

Ans: True Difficulty: Easy Feedback: Project Control

13. PERT stands for program enterprise and resource technique.

Ans: False Difficulty: Easy Feedback: CPM/PERT

14. With an activity-on-node (AON) network diagram, the nodes indicate the precedence relationships and the arrows represent the project’s activities.

Ans: False Difficulty: Moderate Feedback: CPM/PERT

15. A dummy variable is an activity inserted into the network diagram to show a precedence relationship, but does not represent any passage of time.

Ans: True Difficulty: Moderate Feedback: CPM/PERT

16. The critical path is the shortest path through the project’s network.

Ans: False Difficulty: Moderate Feedback: CPM/PERT

17. Activities that are not on a project’s critical path have zero slack.

Ans: False Difficulty: Moderate Feedback: CPM/PERT

18. Crashing activates with positive slack reduces a project’s duration.

Ans: False Difficulty: Moderate Feedback: Project Crashing

19. A project’s duration can be reduced by crashing activities on the critical path.

Ans: True Difficulty: Moderate Feedback: Project Crashing

20. In general, crashing costs decrease as a project’s duration is shortened.

Ans: False Difficulty: Moderate Feedback: Project Crashing

21. The earliest start time for an activity is at time zero.

Ans: True Difficulty: Moderate Feedback: CPM/PERT

22. Indirect costs always increase as a project’s duration decreases.

Ans: False Difficulty: Moderate Feedback: Project Crashing CPM/PERT

23. Project planning involves a set of procedures for monitoring and evaluating progress and performance.

Ans: False Difficulty: Moderate Feedback: Project Planning

24. Project scope involves a set of procedures for anticipating and assessing uncertainties that might increase the risk of delaying the project.

Ans: False Difficulty: Moderate Feedback: Project Planning

25. The upper level of a work breakdown structure for a project highlights summary activities and/or major components.

Ans: True Difficulty: Moderate Feedback: Project Planning

26. Global projects rarely are concerned with cultural differences among team members because English is the universal business language.

Ans: False Difficulty: Easy Feedback: Global and Diversity Issues

27. Asian cultures tend to embrace project management’s methodical approach more than western cultures.

Ans: True Difficulty: Moderate Feedback: Global and Diversity Issues

28. Project scheduling is recognized as the most critical element in the project management process.

Ans: True Difficulty: Moderate Feedback: Project Scheduling

29. Project control involves monitoring a project and measuring its progress toward a successful completion.

Ans: True Difficulty: Moderate Feedback: Project Control

30. Two key elements of project control are time management and cost management.

Ans: True Difficulty: Moderate Feedback: Project Control

31. Enterprise project management refers to the management and control of a large, complex project.

Ans: False Difficulty: Moderate Feedback: Project Control

32. Unlike PERT, CPM incorporates probabilistic time estimates into the project management process.

Ans: False Difficulty: Moderate Feedback: CPM/PERT

33. Because the critical path is the shortest path through a network it defines the minimum project completion time.

Ans: False Difficulty: Moderate Feedback: CPM/PERT

34. Microsoft Project is a software package that supports PERT but not CPM. Ans: False Difficulty: Moderate Feedback: Microsoft Project

Multiple Choice

35. Which of the following is not a general characteristic of a project? a. a project has a unique purpose b. a project has more certainty c. a project has more uncertainty d. a project often draws resources from various areas in the organization Ans: b Difficulty: Easy Feedback: Project Planning

36. Which of the following is not used to calculate probabilistic time estimates? a) optimistic b) most likely c) least likely

d) pessimistic Ans: c.

Difficulty: Moderate Feedback: CPM/PERT

37. The project management process encompasses a. planning. b. scheduling. c. control. d. All of the above.

Ans: d Difficulty: Easy Feedback: Project Planning

38. A(n) _______________ is a project team structure that includes members from different functional areas. a. matrix organization b. project network c. organizational breakdown structure d. work breakdown structure Ans: a Difficulty: Moderate Feedback: Project Planning

39. The _______________ is a document that provides a common understanding, justification, and expected result for a project. a. statement of work b. work breakdown structure c. scope statement. d. responsibility assignment matrix Ans: c.

Difficulty: Moderate Feedback: Project Planning

40. A ______________ breaks down a project into components, subcomponents, activities, and tasks. a. work breakdown structure (WBS) b. scope statement c. responsibility assignment matrix (RAM) d. organizational breakdown structure (OBS) Ans: a Difficulty: Moderate Feedback: Project Planning

41. In project management the term slack refers to the amount of time a. to complete an activity without delaying the project. b. an activity can be delayed without delaying the project. c. needed to complete the entire project. d. required to complete the project’s critical activities.

Ans: b Difficulty: Moderate Feedback: CPM/PERT

42. A bar graph displaying when activities are scheduled to start, when they will be finished, and where extra time is available is known as a a. PERT chart. b. work breakdown structure (WBS). c. Gantt chart. d. responsibility assignment matrix (RAM).

Ans: c Difficulty: Easy Feedback: Project Scheduling

43. A standard procedure for numerically measuring a project’s progress is referred to as a(n) a. program evaluation and review technique (PERT). b. critical path method (CPM). c. Gantt chart. d. earned value analysis.

Ans: d

Difficulty: Moderate Feedback: Project Control

44. One disadvantage of Gantt charts, especially for large projects, is that it does not a. clearly show precedence relationships. b. indicate activity start times. c. indicate activity finish times. d. use bars to represent activities.

Ans: a Difficulty: Moderate Feedback: Project Scheduling

45. For an activity-on-node (AON) network a. arrows represent activities and nodes represent events. b. nodes represent activities and arrows indicate precedence relationships. c. arrows represent events and nodes indicate precedence relationships. d. nodes indicate precedence relationships and arrows indicates the length of the activity time.

Ans: b Difficulty: Moderate Feedback: CPM/PERT

46. The longest path through a project network is referred to as the a. activity-on-node path. b. path of greatest slack. c. critical path. d. noncritical path.

Ans: c Difficulty: Easy Feedback: CPM/PERT

47. In general, the earliest finish time for an activity is equal to a. earliest start time + activity time estimate. b. earliest start time – activity time estimate. c. earliest start time – slack time.

d. earliest start time + slack time.

Ans: a Difficulty: Moderate Feedback: CPM/PERT

48. In general, the latest finish time for an activity is equal to a. latest finish time minus the activity time estimate. b. the minimum of the latest start times for the activities that immediately follow. c. the maximum of the latest start times for the activities that immediately follow. d. the average of the latest start times for the activities that immediately follow.

Ans: b Difficulty: Hard Feedback: CPM/PERT

49. For activities on a project’s critical path a. earliest start time (ES) equals latest start time (LS). b. earliest start time (ES)is greater than latest start time (LS). c. earliest start time (ES) is less than latest start time (LS). d. earliest start time (ES) equals latest finish time (LF).

Ans: a Difficulty: Moderate Feedback: CPM/PERT

50. The slack time for an activity can be computed as a. latest start time (LS) – latest finish time (LF). b. earliest start time (ES) + earliest finish time (EF). c. latest start time (LS) – earliest start time (ES). d. latest finish time (LF) + earliest finish time (EF).

Ans: c Difficulty: Moderate Feedback: CPM/PERT

51. The _______________ probability distribution is typically used to describe uncertain activity times in a project.

a. b. c. d.

beta normal binomial exponential

Ans: a Difficulty: Moderate Feedback: CPM/PERT

52. The estimated mean time for an activity with a most likely time (m) equal to 11 days, the optimistic time (a) equal to 6 days, and the pessimistic time (b) equal to 18 days is a. 9.67 days. b. 11 days. c. 11.33 days. d. 11.67 days.

Ans: c Difficulty: Moderate Feedback: CPM/PERT

53. The estimated variance for an activity with a most likely time (m) equal to 11 days, the optimistic time (a) equal to 6 days , and the pessimistic time (b) equal to 18 days is a. 2 days. b. 4 days. c. 6 days. d. 11 days.

Ans: b Difficulty: Moderate Feedback: CPM/PERT

54. The estimated mean time for an activity with a most likely time (m) equal to 12 weeks, an optimistic time (a) equal to 9 weeks, and a pessimistic time (b) equal to 18 weeks is a. 13.0 weeks. b. 12.75 weeks. c. 12.5 weeks. d. 9.0 weeks.

Ans: c

Difficulty: Moderate Feedback: CPM/PERT

55. The estimated variance for an activity with a most likely time (m) equal to 12 weeks, an optimistic time (a) equal to 9 weeks, and a pessimistic time (b) equal to 18 weeks is a. 3.75 weeks. b. 1.50 weeks. c. 5.25 weeks. d. 2.25 weeks.

Ans: d Difficulty: Moderate Feedback: CPM/PERT

A project consists of the following activities: Activity A B C D E F

Activity Predecessor --A A B C D,E

Time (weeks) 5 8 3 7 6 10

Table 9.1 56. Using Table 9.1, the earliest finish (EF) time for activity D is a. 7 weeks. b. 13 weeks. c. 20 weeks. d. 30 weeks.

Ans: c Difficulty: Moderate Feedback: CPM/PERT

57. Using Table 9.1, the earliest start time for activity F is a. 30 weeks. b. 20 weeks. c. 14 weeks.

d. 13 weeks.

Ans: b Difficulty: Moderate Feedback: CPM/PERT

58. Using Table 9.1, the latest start (LS) time for activity B is a. 5 weeks. b. 8 weeks. c. 13 weeks. d. 14 weeks.

Ans: a Difficulty: Moderate Feedback: CPM/PERT

59. Using Table 9.1, the critical path for this project consists of activities a. b. c. d.

A-B-C-D-E-F. A-C-E-F. A-B-C-F. A-B-D-F.

Ans: d Difficulty: Moderate Feedback: CPM/PERT

60. Using Table 9.1, the time complete the entire project is a. 20 weeks. b. 30 weeks. c. 36 weeks. d. 39 weeks.

Ans: b Difficulty: Moderate Feedback: CPM/PERT

61. Using Table 9.1, the amount of slack associated with activity C is

a. b. c. d.

0 weeks.

3 weeks.

6 weeks. cannot be calculated

Ans: c Difficulty: Moderate Feedback: CPM/PERT

The following table of probabilistic time estimates (in weeks) and activity predecessors are provided for a project.

Activity A B C D E

Time Estimates (weeks) a m b 3 4 2 6 5

5 8 3 9 9

7 10 5 12 15

Activity Predecessor -A A B, C D

Table 9.2 62. Using Table 9.2, the expected time to complete activity A is a. 5.00 weeks. b. 7.33 weeks. c. 7.67 weeks. d. 8.00 weeks.

Ans: a Difficulty: Moderate Feedback: CPM/PERT

63. Using Table 9.2, the variance for activity E is a. 1.291. b. 1.667. c. 2.582. d. 2.778.

Ans: d Difficulty: Moderate Feedback: CPM/PERT

64. Using Table 9.2, the earliest start (ES) time for activity D is a. 8.17 weeks. b. 12.67 weeks. c. 18.33 weeks. d. 21.67 weeks.

Ans: b Difficulty: Hard Feedback: CPM/PERT

65. Using Table 9.2, the earliest finish time for activity C is a. 5.00 weeks. b. 8.17 weeks. c. 9.50 weeks. d. 12.67 weeks.

Ans: b Difficulty: Hard Feedback: CPM/PERT

66. Using Table 9.2, the critical path for the project consists of activities a. A-B-C-D-E. b. A-B-C-E. c. A-B-D-E. d. A-B-C-D. Ans: c Difficulty: Hard Feedback: CPM/PERT

67. Using Table 9.2, how much slack is associated with activity C? a. 0 weeks. b. 4.50 weeks. c. 12.67 weeks.

d. 31.00 weeks.

Ans: b Difficulty: Hard Feedback: CPM/PERT

68. Using Table 9.2, the expected time to complete the project is a. 34.17 weeks. b. 33.23 weeks. c. 31.00 weeks. d. 21.67 weeks.

Ans: c Difficulty: Hard Feedback: CPM/PERT

69. Using Table 9.2, the variance of the project’s total completion time is a. 5.472 . b. 5.222 . c. 4.872 . d. 3.752 .

Ans: b Difficulty: Hard Feedback: CPM/PERT

70. Using Table 9.2, the probability that the project could be completed in 34 weeks or less is approximately a. 0.86. b. 0.89. c. 0.91. d. 0.96.

Ans: c Difficulty: Hard Feedback: CPM/PERT

71. Using Table 9.2, the probability that the project will take longer than 33 weeks to complete is approximately a. 0.19. b. 0.32. c. 0.68. d. 0.81.

Ans a Difficulty: Hard Feedback: CPM/PERT

A project consists of the following four activities with activity times in days: Activity Predecessor Time A 6 B A 5 C A 4 D B,C 8 Table 9.3 72. Using Table 9.3, the earliest finish (EF) time for activity C is a. 4 days. b. 6 days. c. 10 days. d. 11 days.

Ans: c Difficulty: Moderate Feedback: CPM/PERT

73. Using Table 9.3, the earliest start (ES) time for activity B is a. 5 days. b. 6 days. c. 11 days. d. 14 days.

Ans: b Difficulty: Moderate Feedback: CPM/PERT

74. Using Table 9.3, the latest start (LS) time for activity D is

a. b. c. d.

8 days.

11 days.

19 days.

12 days.

Ans: b Difficulty: Moderate Feedback: CPM/PERT

75. Using Table 9.3, the critical path for this project is a. A-B-C. b. A-C-D. c. A-B-D. d. A-B-C-D. Ans: c Difficulty: Moderate Feedback: CPM/PERT

76. Using Table 9.3, the time to complete the entire project would be a. 23 days. b. 19 days. c. 17 days. d. 11 days.

Ans: b Difficulty: Moderate Feedback: CPM/PERT

77. Using Table 9.3, the amount of slack associated with activity C is a. 4 days. b. 3 days. c. 2 days. d. 1 day.

Ans: d Difficulty: Moderate Feedback: CPM/PERT

78. Which of the following statements is generally true regarding the relationship between project crashing costs and indirect costs? a. both crashing costs and indirect costs are highest when the project is shortened b. only indirect costs increase when the project is shortened c. both are unaffected by the length of the project d. crashing costs increase when the project is shortened while indirect costs decrease when the project is shortened Ans: d Difficulty: Moderate Feedback: Project Crashing CPM/PERTCPM/PERT

79. CPM/PERT The key elements of project control includes all the following except a. time management. b. cost management. c. material management. d. communication.

Ans: c Difficulty: Moderate Feedback: Project Control

80. Which of the following is the universal business language most often utilized managing global projects? a. French b. Spanish c. English d. Chinese Ans: d Difficulty: Moderate Feedback: Global and Diversity Issues

81. Which of the following is NOT a basic element in a project plan? a. Objectives b. Personnel

c. Contract requirements d. All the above are basic elements Ans: d Difficulty: Moderate Feedback: Project Planning

Short Answer

82. Briefly discuss project management and what it involves.

Ans: Project management is the management of the work to develop and implement an innovation or change in an existing operation. It encompasses planning the project and controlling the project activities, subject to resource and budget constraints, to keep the project on schedule.

Difficulty: Easy Feedback: Project Planning

83. Why have projects taken on a more crucial role in operations management?

Ans: In recent years projects have become more pervasive in organizations. The nature of the global business environment is such that new machinery and equipment, as well as new production processes and computer support systems, are constantly evolving. This provides the capability of developing new products and services, which generates consumer demand for even greater product diversity. As a result, a larger proportion of total organizational effort now goes toward project-oriented activities than in the past.

Thus, the planning and management of projects has taken on a more crucial role in operations management.

Difficulty: Moderate Feedback: Project Control

84. Briefly describe the makeup of the project management team.

Ans: The project management team is typically cross-functional, consisting of a group of individuals selected from other areas in the organization or from outside the organization because of their special skills, expertise, and experience related to the project activities.

Members of the engineering staff are often assigned to project work because of their technical skills, especially if the project is related to production processes or equipment.

The project team may also include managers and staff personnel from specific areas related to the project. Workers can also be involved on the project team if their job is a function of the project activity.

Difficulty: Easy Feedback: Project Planning

85. What is a scope statement?

Ans: The scope statement is a document that provides a common understanding of a project. It includes a justification for the project that describes which factors created a need within the company for the project. It also includes an indication of what the expected results of the project will be and what will constitute project success. The scope statement might also include a list of the types of planning reports and documents that are part of the project management process.

Difficulty: Moderate Feedback: Project Planning

File: ch10, Chapter 10: Supply Chain Management: Strategy and Design

True/False

1. Globalization and advances in information technology are primary reasons why supply chain management has become a competitive priority for companies.

Ans: True Difficulty: Easy Feedback: Supply Chains

2. A supply chain encompasses only the activities associated with the flow of goods and services.

Ans: False Difficulty: Easy Feedback: The Management of Supply Chains

3. Suppliers are upstream members of a supply chain.

Ans: True Difficulty: Easy Feedback: The Management of Supply Chains

4. Final end-use customers are upstream members of a supply chain.

Ans: False Difficulty: Easy Feedback: The Management of Supply Chains

5. A supply chain consists of an integrated group of processes to source, make, and store products.

Ans: False

Difficulty: Easy Feedback: Supply Chain Integration

6. Supply chains for services are easier to define than supply chains for manufactured goods.

Ans: False Difficulty: Easy Feedback: Supply Chains

7. Traditionally, each supply chain member was viewed as a separate, stand-alone entity focused on its own goals.

Ans: True Difficulty: Moderate Feedback: The Management of Supply Chains

8. Supply chain uncertainty and variability may result in incomplete and late orders.

Ans: True Difficulty: Moderate Feedback: The Management of Supply Chains

9. Companies address uncertainty in their supply chains by holding extra inventory.

Ans: True Difficulty: Moderate Feedback: The Management of Supply Chains

10. The bullwhip effect occurs when slight to moderate demand variability becomes magnified as demand information is transmitted back upstream.

Ans: True Difficulty: Moderate Feedback: The Management of Supply Chains

11. Increasing supply chain transparency only magnifies the bullwhip effect.

Ans: False Difficulty: Moderate Feedback: The Management of Supply Chains

12. One way to cope with the bullwhip effect is for supply chain members to share demand information.

Ans: True Difficulty: Moderate Feedback: The Management of Supply Chains

13. Information is the essential link for coordination among all supply chain members.

Ans: True Difficulty: Easy Feedback: Information Technology: A Supply Chain Enabler

14. E-business replaces physical exchange processes with electronic ones.

Ans: True Difficulty: Easy Feedback: Information Technology: A Supply Chain Enabler

15. A computer-to-computer exchange of business documents in a standard format is known as electronic data interchange (EDI).

Ans: True Difficulty: Easy Feedback: Information Technology: A Supply Chain Enabler

16. Use of radio frequency identification (RFID) technology makes it possible for a customer to determine production schedules.

Ans: False Difficulty: Moderate Feedback: Information Technology: A Supply Chain Enabler

17. Collaborative planning, forecasting, and replenishment (CPFR) is a useful tool supporting supply chain integration.

Ans: True Difficulty: Moderate Feedback: The Management of Supply Chains

18. Enterprise Resource Planning (ERP) is software that helps integrate many of the supply chain components by sharing and organizing information and data among supply chain members.

Ans: True Difficulty: Moderate Feedback: Information Technology: A Supply Chain Enabler

19. Fill rate is one or the three key performance indicators in measuring supply chain performance.

Ans: True Difficulty: Moderate Feedback: Measuring Supply Chain Performance

20. The supply chain operations reference (SCOR) model reports the fraction of orders filled by a distribution center in a specific time period.

Ans: False Difficulty: Easy Response: Measuring Supply Chain Performance

21. The supply chain for a service tends to be more compacted and less extended that a supply chain for a manufactured good.

Ans: True Difficulty: Moderate Feedback: Supply Chains

22. Because value chain and supply chain have similar meanings they are often used interchangeably.

Ans: True Difficulty: Moderate Feedback: Supply Chains

23. Supply chain management focuses on integrating and managing the flow of manufactured goods, services and related information.

Ans: True Difficulty: Moderate Feedback: The Management of Supply Chains

24. Suppliers and customers rarely participate in the design of a supply chain.

Ans: False Difficulty: Moderate Feedback: The Management of Supply Chains

Multiple Choice

25. All of the following are performance metrics in the SCOR system, except a) perfect order fulfillment. b) production flexibility. c) value-added productivity.

d) asset fulfillment.

Ans: d.

Difficulty: Hard Feedback: Measuring Supply Chain Performance

26. The suppliers in a supply chain are referred to as ______________ supply chain members. a. downstream b. midstream c. upstream d. none of the above.

Ans: c Difficulty: Easy Feedback: The Management of Supply Chains

27. Distributors, warehouses, and retailers are referred to as _____________ supply chain members. a. downstream b. upstream c. procurement d. none of the above.

Ans: a Difficulty: Easy Feedback: The Management of Supply Chains

28. Which of the following is not a key to effective supply chain management? a. communication among members b. independence among members c. collaboration among members d. trust among members Ans: b Difficulty: Easy Feedback: The Management of Supply Chains

29. Increased uncertainty and variability in a supply chain typically results in a. faster deliveries. b. more accurate order fulfillment. c. larger inventories. d. lower costs.

Ans: c Difficulty: Moderate Feedback: Measuring Supply Chain Performance

30. One way to reduce the bullwhip effect is for supply chain members to a. make ordering decisions independently of each other. b. create demand forecasts independently of other supply chain members. c. share demand forecasts with other supply chain members. d. restrict information flows between supply chain members.

Ans: c Difficulty: Moderate Feedback: Measuring Supply Chain Performance

31. A computer-to-computer exchange of business documents in a standard format is known as a. e-business. b. electronic data interchange (EDI). c. radio frequency identification (RFID). d. point-of-sale data.

Ans: b Difficulty: Easy Feedback: Information Technology: A Supply Chain Enabler

32. Information sharing among supply chain members will typically result in all of the following except a. faster response times. b. early problem detection. c. an increased bullwhip effect. d. greater trust and confidence among supply chain members.

Ans: c Difficulty: Easy Feedback: The Management of Supply Chains

33. Which of the following is not one of the three key performance indicators (KPI) used to measure supply chain performance? a. inventory turnover b. postponement rate c. inventory days of supply d. fill rate Ans: b Difficulty: Moderate Feedback: The Management of Supply Chains

34. Inventory turnover is computed by a. dividing the cost of goods sold by the average aggregate inventory value. b. dividing the average aggregate inventory value by costs of goods sold. c. multiplying the average aggregate inventory value by cost of goods sold. d. subtracting cost of goods sold from the average aggregate inventory value.

Ans: a Difficulty: Hard Feedback: Measuring Supply Chain Performance

35. A company that produces small electric motors for treadmills had cost of goods sold last year of $241,000,000. The average value of inventory for raw materials, workin-process, and finished goods are shown in the table below: Raw Materials Work-In-Process Finished Goods

a. b. c. d.

$12,379,000 $7,631,000 $9,275,000

If the company operates 365 days a year the days of supply being held in inventory is 44.35 27.39 8.23 0.1215

Ans: a Difficulty: Hard

Feedback: Measuring Supply Chain Performance

36. A company that produces specialized video equipment had cost of goods sold last year of $127,000,000. The average value of inventory for raw materials, work-inprocess, and finished goods are shown in the table below: Raw Materials Work-In-Process Finished Goods

a. b. c. d.

$6,189,000 $2,541,000 $3,710,000

If the company operates 50 weeks per year then the number of inventory turns would be 0.0979 4.3795 8.9784 10.2090

Ans: d Difficulty: Hard Feedback: Measuring Supply Chain Performance

37. A company that produces specialized video equipment had cost of goods sold last year of $127,000,000. The average value of inventory for raw materials, work-inprocess, and finished goods are shown in the table below: Raw Materials Work-In-Process Finished Goods

$6,189,000 $2,541,000 $3,710,000

If the company operates 50 weeks per year then the weeks of supply in inventory would be a. 4.898 b. 0.098 c. 10.209 d. 35.75 Ans: a Difficulty: Hard Feedback: Measuring Supply Chain Performance

38. A company that produces printer cartridges had cost of goods sold last year of $629,462,423. The average value of inventory for raw materials, work-in-process, and finished goods are shown in the table below: Raw Materials Work-In-Process Finished Goods

$7,367,528 $22,893,232 $16,523,451

If the company operates 50 weeks per year then the number of inventory turns would be a. 3.720 b. 2.493 c. 13.4546 d. 28.33 Ans: c Difficulty: Hard Feedback: Measuring Supply Chain Performance

39. A company that produces printer cartridges had cost of goods sold last year of $629,462,423. The average value of inventory for raw materials, work-in-process, and finished goods are shown in the table below: Raw Materials Work-In-Process Finished Goods

$7,367,528 $22,893,232 $16,523,451

If the company operates 50 weeks per year then the weeks of supply in inventory would be a. 3.716 b. 2.493 c. 13.4546 d. 28.33 Ans: a Difficulty: Hard Feedback: Measuring Supply Chain Performance

40. The fraction of orders filled by a distribution center or warehouse within a specific time period is referred to as the a. inventory turnover. b. inventory supply time. c. fill rate. d. aggregate orders processed.

Ans: c Difficulty: Moderate Feedback: Measuring Supply Chain Performance

41. Supply chain processes include a. procurement. b. production. c. distribution d. all of the above.

Ans: d Difficulty: Moderate Feedback: Supply Chains

42. Supply chain management focuses on integrating and managing the flow of a. services. b. information. c. goods. d. all the above.

Ans: d Difficulty: Moderate Feedback: The Management of Supply Chains

43. The bullwhip effect can a. increase inventories. b. increase demand. c. increase customer service levels. d. increase capacity.

Ans: a Difficulty: Moderate Feedback: The Management of Supply Chains

44. All the following are approaches used in risk pooling within a supply chain except a. reducing the number and variety of parts. b. creating flexible capacity. c. encouraging large orders. d. combining inventories from multiple locations into one location.

Ans: c Difficulty: Moderate Feedback: The Management of Supply Chains

45. All the following are enablers of efficient supply chain management except a. bar codes. b. price tags. c. RFID tags. d. the Internet.

Ans: b Difficulty: Moderate Feedback: Information Technology: A Supply Chain Enabler

46. Companies resist establishing green supply chains for all the following reasons except that a. the market is soft for products with green attributes. b. green manufacturing requires costly new equipment and practice. c. green initiatives lower costs because fewer resources are consumed. d. green practices face additional government, societal and social pressures.

Ans: c Difficulty: Moderate Feedback: Green Supply Chains

47. _______________________ is not a perceived advantage of radio frequency identification (RFID) technology. a. Loss of personal privacy b. Reduced stock-outs c. Prevention of fraud or theft d. Lower distribution costs

Ans: a Difficulty: Moderate Feedback: Information Technology: A Supply Chain Enabler

48. Supply chain integration does not involve __________________ among supply chain members. a. providing information b. collaborating on replenishment c. reducing competition d. coordinating work flows Ans: c Difficulty: Moderate Feedback: Supply Chain Integration

49. Which of the following is not a key performance indicator used in supply chain management? a. Fill rate b. Days of supply c. Cost of goods d. Inventory turns.

Ans: c Difficulty: Moderate Feedback: Measuring Supply Chain Performance

Short Answer Questions

55. What is a supply chain?

Ans: A supply chain encompasses all activities associated with the flow and transformation of goods and services from the raw materials stage through to the end user (customer), as well as the associated information flows. In essence, it is all the assets, information and processes that provide “supply”.

Difficulty: Easy Feedback: The Management of Supply Chains

56. Who are the upstream and downstream supply chain members?

Ans: The supply chain begins with suppliers. These suppliers are referred to as upstream supply chain members while the distributors, warehouses, and eventual end-use customers are referred to as downstream supply chain members.

Difficulty: Moderate Feedback: The Management of Supply Chains

57. What processes comprise the supply chain and how are the processes integrated?

Ans: The supply chain can be viewed as an integrated group of business processes and activities with the same goal—providing customer satisfaction. These processes include the procurement of services, materials, and components from suppliers; production of the products and services; and distribution of products to the customer including taking and filling orders. Information and information technology tie these processes together and integrates them into the supply chain.

Difficulty: Moderate Feedback: The Management of Supply Chains

58.

What is the bullwhip effect and how does it occur?

Ans: The bullwhip effect is created when supply chain members making ordering decisions with an eye to their own self-interest and/or they do not have accurate demand information from adjacent supply chain members. Distorted information or the lack of information, such as inaccurate demand data of forecasts, from the customer can ripple back upstream through the supply chain and magnify demand variability at each stage.

This can result in high buffer inventories, poor customer service, missed production schedules, wrong capacity plans, inefficient shipping, and high costs. This phenomenon is known as the bullwhip effect. It occurs when slight to moderate demand variability becomes magnified as demand information is transmitted back upstream in the supply chain.

Difficulty: Moderate Feedback: Bullwhip effect

59. What is the role of information and information technology in managing the supply chain?

Ans: Information is the essential link that ties together all supply chain members and processes. Computers and information technology enable real-time, on-line communications throughout the supply chain enabling the efficient flow of products and services through the supply chain. Supply chain experts like to use the phrase: “in modern supply chain management, information replaces inventory.” While not literally true, some inventory is needed in the supply chain, information does change the way the supply chain is managed which can reduce the need for high levels of inventory.

Difficulty: Moderate Feedback: Information Technology: A Supply Chain Enabler

60. List and define four information technology supply chain enablers.

Ans: Some of the more important supply chain enablers include: a. Electronic data interchange (EDI) which links supply chain members for order processing, accounting, inventory control and distribution. b. Radio frequency identification (RFI) which uses radio waves to transfer data between a scanner and an item such as a package or shipping container. c. Bar codes which contain identifying information about products as they flow through the supply chain including product description, item number, source and destination, handling procedures, etc.

d. Internet which allows companies to communicate with suppliers, customers, shippers and other businesses around the world, instantaneously.

Difficulty: Moderate Feedback: The Management of Supply Chains

61. List and explain the three key supply chain performance indicators.

Ans: Students should address inventory turns, average aggregate value of inventory, and fill rates.

Difficulty: Moderate Feedback: The Management of Supply Chains

CH. 11: Chapter 11, Global Supply Chain Procurement and Distribution

True/False

1. Postponement involves moving some of the manufacturing into the distribution center.

Ans: True Difficulty: Moderate Feedback: Distribution

2. Cross docking is one of the reasons Wal-Mart has such an efficient supply chain.

Ans: True Difficulty: Moderate Feedback: Distribution

3. The combination of several modes of transportation is called intermodal transportation.

Ans: True Difficulty: Moderate Feedback: Transportation

4. Package delivery is best suited to fast and reliable shipments of large, bulky items.

Ans: False Difficulty: Moderate Feedback: Transportation

5. A value-added tax is based on the total cost of producing a product and not the value added by the supply chain partner.

Ans: False Difficulty: Moderate Feedback: The Global Supply Chain

6. Outsourcing is a relatively new phenomenon used strictly by multinationals.

Ans: False Difficulty: Moderate Feedback: Procurement

7. Outsourcing and sourcing have the same meaning and are often used interchangeably.

Ans: False Difficulty: Easy Feedback: Procurement

8. Outsourcing involves sourcing from a supplier goods and services that were previously produced in-house.

Ans: True Difficulty: Easy Feedback: Procurement

9. Companies use outsourcing as a strategic move to transfer their core competencies to their suppliers.

Ans: False Difficulty: Moderate Feedback: Procurement

10. One of the advantages of outsourcing is that firms can focus on what they do best.

Ans: True Difficulty: Moderate

Feedback: Procurement

11. Outsourcing supports vertical integration of a firm's supply chain.

Ans: False Difficulty: Moderate Feedback: Procurement

12. Many companies are outsourcing in countries where higher prices for supply are offset by higher quality.

Ans: False Difficulty: Moderate Feedback: Procurement

13. Procurement involves the selection of a supplier.

Ans: False Difficulty: Moderate Feedback: Procurement

14. Purchasing from a supplier is called procurement.

Ans: True Difficulty: Easy Feedback: Procurement

15. E-procurement is mostly used to purchase indirect products that support production.

Ans: True Difficulty: Moderate Feedback: E-procurement

16. Purchasing can be classified according to two broad categories: direct (manufacturing inputs) and indirect (operating inputs).

Ans: True Difficulty: Hard Feedback: Procurement

17. In a reverse auction a supplier posts on the Internet products available for bids from potential customers.

Ans: False Difficulty: Moderate Feedback: E- procurement

18. E-marketplaces are sites on the Internet where companies can find new business partners.

Ans: True Difficulty: Moderate Feedback: E- procurement

19. Distribution includes both warehousing and transportation functions.

Ans: True Difficulty: Moderate Feedback: Distribution

20. Logistics includes distribution and transportation activities within a supply chain.

Ans: True Difficulty: Easy Feedback: Distribution

21. In today's competitive environment speed is often the most important factor in logistics.

Ans: True Difficulty: Moderate Feedback: Distribution

22. Box retailers are some of the largest facilities in the United States.

Ans: False Difficulty: Moderate Feedback: Distribution

23. Distributors deal only in very large quantities providing infrequent deliveries.

Ans: False Difficulty: Moderate Feedback: Distribution

24. Warehouse management systems are often used to run the day-to-day operations of a distribution center.

Ans: True Difficulty: Easy Feedback: Distribution

25. Postponement involves delaying shipments from suppliers until demand is more certain.

Ans: False Difficulty: Moderate Feedback: Distribution

26. A transportation management system controls activities at a facility's dock and schedules appointments.

Ans: False Difficulty: Hard Feedback: Distribution

27. Cross-docking allows a distribution center to direct incoming shipments straight to a shipping dock to fill outgoing orders.

Ans: True Difficulty: Moderate Feedback: Distribution

28. Distribution outsourcing allows companies to focus on their core competencies.

Ans: True Difficulty: Easy Feedback: Distribution

29. Transportation involves the movement of a product within a warehouse or distribution center.

Ans: False Difficulty: Moderate Feedback: Distribution

30. Information technology is an enabler of globalization for middle-tier companies.

Ans: True Difficulty: Moderate Feedback: Distribution

31. Globalization decreases the need for a well-planned domestic supply chains.

Ans: False Difficulty: Easy Feedback: Distribution

32. International trading is viewed as "business as usual" for any sized firm.

Ans: False Difficulty: Moderate Feedback: The Global Supply Chain

33. The proliferation of nation trading groups has increased tariffs and decreased duties.

Ans: False Difficulty: Moderate Feedback: The Global Supply Chain

34. Most favored-nation (MFN) status is an agreement where members of the WTO extend to other members the most favorable treatment given to any trade partner.

Ans: True Difficulty: Easy Feedback: The Global Supply Chain

35. Landed cost includes the cost of storing and transporting a product but not the cost of producing it.

Ans: False Difficulty: Moderate Feedback: The Global Supply Chain

36. International trade specialists help firms overcome obstacles associated with importing products.

Ans: False Difficulty: Hard Feedback: The Global Supply Chain

37. Mexico has replaced China as the U.S.'s top trade partner.

Ans: False Difficulty: Easy

Feedback: The Global Supply Chain

38. Quality has been a problem in Mexico where it can vary dramatically between companies.

Ans: True Difficulty: Moderate Feedback: The Global Supply Chain

Multiple Choice Questions

39. What a company does best is often referred as the firm’s core a) capabilities b) activities. c) competencies. d) competitiveness.

Ans: C. Difficulty: Easy Feedback: Procurement

40. _________ are web sites where companies and suppliers conduct business-tobusiness activities:. a) E-procurements b) E-Marketplaces c) E-Marketspaces d) Reverse Auctions Ans: B Difficulty: Moderate Feedback: E-Procurement

41. Which mode of transportation transports products in liquid form? a) Pipeline b) Ocean c) Both a and b are correct

d) Airline Ans: c.

Difficulty: Moderate Feedback: Transportation

42. In an attempt to minimize inventory levels companies frequently require their suppliers to use a(n) ___________ inventory management system. a. periodic delivery b. continuous c. on-demand d. All of the above.

Ans: c Difficulty: Moderate Feedback: Procurement

43. Partnerships require suppliers to provide a) higher quality. b) prompt delivery. c) lower prices. d) all of the above.

Ans: d Difficulty: Moderate Feedback: Procurement

44. The selection of suppliers is called a) outsourcing. b) procurement. c) sourcing. d) none of the above.

Ans: c Difficulty: Easy Feedback: Procurement

45. Companies often outsource to

a) b) c) d)

focus on core competencies. achieve greater flexibility. reduce costs.

All of the above.

Ans: d Difficulty: Moderate Feedback: Procurement

46. Benefits of e-procurement include all of the following except a) lower prices. b) faster delivery. c) fewer transactions. d) reduced labor.

Ans: c Difficulty: Moderate Feedback: E- procurement

47. E-procurement is most often used for a) domestic goods. b) indirect goods. c) finished goods. d) international goods.

Ans: b Difficulty: Moderate Feedback: E- procurement

48. Distribution includes all of the following activities except a) packaging. b) storing. c) shipping. d) sourcing.

Ans: d Difficulty: Moderate Feedback: Distribution

49. Distribution centers usually ship product to a) retailers. b) customers. c) suppliers. d) warehouses.

Ans: a Difficulty: Easy Feedback: Distribution

50. Which of the following is not a feature of a warehouse management system? a) Warehouse optimization b) Order management c) Vendor management d) Custom labeling and packaging Ans: c Difficulty: Moderate Feedback: Distribution

51. With vendor-managed inventory a) distributors generate orders. b) retailers place orders. c) customers place orders. d) manufacturers place orders.

Ans: d Difficulty: Moderate Feedback: Distribution

52. The most common mode of transporting products is a) rail. b) trucking. c) package delivery. d) water.

Ans: b Difficulty: Easy Feedback: Transportation

53. The mode of transportation that utilizes the most containers is a) water. b) intermodal. c) trucking. d) rail.

Ans: b Difficulty: Easy Feedback: Transportation

54. Long life, high capital cost and low operating costs are associated with which mode of transportation? a) pipeline b) canal c) barges d) water Ans: a Difficulty: Moderate Feedback: Transportation

55. Factors driving globalization of the supply chain include all of the following except a) international trade agreements. b) advances in information technology. c) lower cost transportation. d) government intervention .

Ans: d Difficulty: Moderate Feedback: The Global Supply Chain

56. Landed cost includes a) value added tax. b) duties. c) customs. d) all of the above.

Ans: d Difficulty: Moderate Feedback: The Global Supply Chain

57. Which of the following is not an obstacle to global supply chain management? a) increased documentation b) differences in communication technology c) decreased delivery times d) different business practices Ans: c Difficulty: Easy Feedback: The Global Supply Chain

58. International trade specialists include all of the following except a) export packers. b) finance brokers. c) purchasing agents. d) duty specialists.

Ans: b Difficulty: Hard Feedback: The Global Supply Chain

59. Which of the following countries is not an important U.S. trading partner? a) Canada b) Mexico c) Japan d) Russia Ans: d Difficulty: Easy Feedback: The Global Supply Chain

60. The focus of distribution, what it accomplishes, is referred to as a) logistics b) order fulfillment c) customer service

d) maintaining inventories Ans: b Difficulty: Moderate Feedback: Distribution

61. Partnerships between customers and suppliers are beneficial because they a) provide security and stability. b) reduce the need for global suppliers. c) enhance competition in the supply chain. d) require suppliers to build facilities near the customer.

Ans: a Difficulty: Moderate Feedback: Procurement

Short Answers

62. Explain the difference between procurement and sourcing? Between sourcing and outsourcing?

Ans: Procurement involves purchasing and sourcing the selection of a supplier.

Outsourcing involves shifting in-house production to an out-of-house supplier.

Difficulty: Moderate Feedback: Procurement

63. What are the advantages associated with e-procurement?

Ans: The advantages include faster transactions, lower transaction cost, lower prices for goods, reduced labor, reduced paper and faster delivery.

Difficulty: Moderate Feedback: E-procurement

64. List several of the advantages associated with outsourcing.

Ans: Outsourcing allows firms to focus on core competencies, reduce costs, increase flexibility, improve quality and to access to expertise and technology.

Difficulty: Moderate Feedback: Procurement

65. List and explain the major components of a warehouse management system.

Ans: Order management - orders received on-line, added, modified, or canceled in real time Labor management - plans, manages and reports on performance of warehouse personnel Warehouse optimization - optimizes placement of items Transportation management system - consolidates and builds economical loads and select carriers Order tracking - track inbound and outbound shipments yard management - schedules dock appointments Custom labeling and packaging - special packaging; bar coding Difficulty: Moderate Feedback: Distribution

66. List and discuss the seven different modes of transportation.

Ans: Rail - low value, high-density, bulk products, raw materials and intermodal containers: not as economical for small loads, slower less flexible than trucking Trucking - main mode of transport in the US, small loads based on point to point service, flexible; more reliable less damage than rails, more expensive than rails for long distance Air - most expensive and fastest mode, lightweight and small packages, high value, perishable goods, less theft Package delivery - small packages, fast and reliable, increased as result of e-business Water - low cost shipping mode, primary means of international shipping, slowest Intermodal - combines truck, water and rail; uses containers Pipeline - transports products in liquid form; high capital cost and economical use, long life and low operating cost Difficulty: Moderate Feedback: Transportation

67. List and discuss some of the forces driving globalization.

Ans: Improvements in transportation information technology

Internet World Trade Organization Regional Trade Agreements (NAFTA, EU) Dissolution of communism Spread of free-market systems Difficulty: Moderate Feedback: The Global Supply Chain

68. Identify some of the obstacles to global supply chain management.

Ans: increased documentation duties, tariffs, high landed costs, limited shipping modes differences in communication technology, different business practices and language barriers, numerous players, security issues since 9/11 Difficulty: Moderate Feedback: The Global Supply Chain

69. Explain the concept of landed cost and discuss how it is used to make global sourcing decisions.

Ans: landed cost - the total cost of producing, storing, shipping, transporting, duties and value added taxes, customs, etc. knowing landed cost allows a firm to make more informed decisions and help avoid sticker shock, compare to domestic source Difficulty: Moderate Feedback: The Global Supply Chain

File: ch12, Chapter 12: Forecasting

True/False

1. Forecasts based on mathematical formulas are referred to as qualitative forecasts.

Ans: False Difficulty: Easy Feedback: The Strategic Role of Forecasting

2. One way to deal with the bullwhip effect is to develop and share the forecasts with other supply chain members.

Ans: True Difficulty: Easy Feedback: The Strategic Role of Forecasting

3. Continuous replenishment systems rely heavily on extremely accurate long-term forecasts.

Ans: False Difficulty: Easy Feedback: Forecast Accuracy

4. Forecasting customer demand is rarely a key to providing good quality service.

Ans: False Difficulty: Easy Feedback: The Strategic Role of Forecasting

5. The type of forecasting method used depends entirely whether the supply chain is continuous replenishment or not.

Ans: False

Difficulty: Moderate Feedback: Time Series Methods

6. A gradual, long-term up or down movement of demand is referred to as a trend.

Ans: True Difficulty: Moderate Feedback: The Strategic Role of Forecasting

7. A seasonal pattern is an oscillating movement in demand that occurs periodically over the short-run and is repetitive.

Ans: True Difficulty: Moderate Feedback: The Strategic Role of Forecasting

8. Time series methods use historical data to predict future demand.

Ans: True Difficulty: Moderate Feedback: Time Series Methods

9. The most common type of forecasting method for long-term strategic planning is based on quantitative modeling Ans: False Difficulty: Moderate Feedback: Time Series Methods

10. The Delphi method generates forecasts based on informed judgments and opinions from knowledgeable individuals.

Ans: True Difficulty: Moderate Feedback: Components of Forecasting Demand

11. One reason time series methods are popular for forecasting is that they are relatively easy to use and understand.

Ans: True Difficulty: Moderate Feedback: Time Series Methods

12. Exponential smoothing is an averaging method for forecasting that reacts more strongly to recent changes in demand.

Ans: True Difficulty: Moderate Feedback: Times Series Methods

13. A linear regression model that relates demand to time is known as a linear trend line.

Ans: True Difficulty: Moderate Feedback: Regression Methods

14. The average, absolute difference between the forecast and demand is a popular measure of forecast error.

Ans: True Difficulty: Moderate Feedback: Forecast Accuracy

15. The larger the mean absolute deviation (MAD) the more accurate the forecast.

Ans: False Difficulty: Moderate Feedback: Forecast Accuracy

16. Forecast bias is measured by the per-period average of the sum of the forecast errors.

Ans: True Difficulty: Moderate Feedback: Forecast Accuracy

17. Linear regression relates two variables using a linear model.

Ans: True Difficulty: Moderate Feedback: Regression Methods

18. A correlation coefficient is a measure of the strength of the linear relationship between an independent and a dependent variable.

Ans: True Difficulty: Moderate Feedback: Regression Methods

19. Qualitative forecasts use mathematical techniques and statistical formulas.

Ans: False Difficulty: Moderate Feedback: The Strategic Role of Forecasting

20. A gradual, long-term up or down movement of demand is called a trend.

Ans: True Difficulty: Moderate Feedback: Components of Forecasting Demand

21. Movements in demand that do not follow a given pattern are referred to as random variations.

Ans: True Difficulty: Easy Feedback: Components of Forecasting Demand

22. Multiple regression analysis can be used to relate demand to two or more dependent variables.

Ans: False Difficulty: Moderate Feedback: Regression Methods

23. Because of globalization of markets, managers are finding it increasingly more difficult to create accurate demand forecasts.

Ans: True Difficulty: Moderate Feedback: The Strategic Role of Forecasting

24. In today competitive environment, effective supply chain management requires accurate demand forecasts.

Ans: True Difficulty: Moderate Feedback: The Strategic Role of Forecasting

25. Sharing demand forecasts with supply chain members has resulted in an increased bullwhip effect.

Ans: False Difficulty: Moderate Feedback: The Strategic Role of Forecasting

26. The trend toward continuous replenishment in supply chain design has shifted the need for accurate forecasts from short-term to long-term.

Ans: False Difficulty: Moderate Feedback: The Strategic Role of Forecasting

27. Because of advances in technology, many service industries no longer require accurate forecasts to provide high quality service.

Ans: False Difficulty: Moderate Feedback: The Strategic Role of Forecasting

28. The type of forecasting method selected depends on time frame, demand behavior and causes of behavior.

Ans: True Difficulty: Hard Feedback: The Strategic Role of Forecasting

29. Many companies are shifting from long-term to short-term forecast for strategic planning.

Ans: False Difficulty: Moderate Feedback: Components of Forecasting Demand

30. The demand behavior for skis is considered cyclical.

Ans: False Difficulty: Moderate Feedback: Components of Forecasting Demand

31. The long-term strategic planning process is dependent upon qualitative forecasting methods.

Ans: True Difficulty: Moderate Feedback: Components of Forecasting Demand

32. Time series methods assume that demand patterns in the past is a good predictor of demand in the future.

Ans: True Difficulty: Moderate Feedback: Times Series

33. The moving average method is used for creating forecasts when there is no variation in demand.

Ans: False Difficulty: Moderate Feedback: Times Series

34. Because of ease of use and simplicity, exponential smoothing is preferred over smoothing average.

Ans: False Difficulty: Moderate Feedback: Times Series

35. Because of the development of advanced forecasting models managers no longer track forecast error.

Ans: False Difficulty: Moderate Feedback: Forecast Accuracy

36. Regression is used for forecasting when there is a relationship between the dependent variable, demand, and one or more independent (explanatory) variables.

Ans: True Difficulty: Moderate Feedback: Regression Methods

37. Correlation in linear regression is a measure of the strength of the relationship between the dependent variable, demand, and an independent (explanatory) variable.

Ans: True Difficulty: Moderate Feedback: Regression Methods

38. Short-midrange forecasts tend to use quantitative models that forecast demand based on historical demand.

Ans: True Difficulty: Moderate Feedback: Components of Forecasting Demand

39. Because of the heightened competition resulting from globalization most companies find little strategic value in long-range forecast.

Ans: True Difficulty: Moderate Feedback: Components of Forecast Demand

40. Long-range qualitative forecasts are used to determine future demand for new products, markets and customers.

Ans: True Difficulty: Moderate Feedback: The Strategic Role of Forecasting

Multiple Choice

41.

Forecast methods based on judgment, opinion, past experiences, or best guesses are known as ___________ methods. a. quantitative b. qualitative c. time series d. regression

Ans: b Difficulty: Easy Feedback: The Strategic Role of Forecasting in supply chain management

42.

Regression forecasting methods relate _________to other factors that cause demand behavior. a) Supply b) Demand c) Time d) Money e) Efficiency Ans: b.

Difficulty: Moderate Feedback: Forecasting Methods

43. The _______ method uses demand in the first period to forecast demand in the next period. a) naïve b) moving average c) exponential smoothing. d) linear trend Ans: a Difficulty: Moderate Feedback: Times Series Methods

44. The _________________ forecast method consists of an exponentially smoothed forecast with a trend adjustment factor added to it. a) Exponentially smoothed b) Adjusted exponentially smoothed c) Time series d) Moving average Ans: b.

Difficulty: Moderate Feedback: Time Series Methods

45. The per period average of cumulative error is called a) cumulative forecast variation. b) absolute error. c) average error. d) noise.

Ans: c.

Difficulty: Easy Feedback: Forecast Accuracy

46. Selecting the type of forecasting method to use depends on a. the time frame of the forecast. b. the behavior of demand and demand patterns. c. the causes of demand behavior. d. all of the above.

Ans: d Difficulty: Easy Feedback: Time Series Methods

47. A long-range forecast would normally not be used to a. design the supply chain. b. implement strategic programs. c. determine production schedules. d. plan new products for changing markets Ans: c Difficulty: Moderate Feedback: The Strategic Role of Forecasting

48. Which of the following is not a type of predictable demand behavior? a. trend b. random variation c. cycle d. seasonal pattern Ans: b Difficulty: Moderate Feedback: Components of Forecasting Demand

49. A ___________ is an up-and-down movement in demand that repeats itself over a lengthy time period of more than a year. a. trend b. seasonal pattern c. random variation d. cycle Ans: d Difficulty: Easy Feedback: Components in Forecasting Demand

50. A qualitative procedure used to develop a consensus forecast is known as a. exponential smoothing. b. regression methods. c. the Delphi technique. d. naïve forecasting.

Ans: c Difficulty: Moderate Feedback: The Strategic Role of Forecasting

51. A forecast where the current period’s demand is used as the next period’s forecast is known as a a. moving average forecast. b. naïve forecast. c. weighted moving average forecast. d. Delphi forecast.

Ans: b Difficulty: Moderate Feedback: The Strategic Role of Forecasting

52. The sum of the weights in a weighted moving average forecast a. must equal the number of periods being averaged. b. must equal 1.00. c. must be less than 1.00. d. must be greater than 1.00.

Ans: b

Difficulty: Easy Feedback: Components of Forecasting Demand

53. An exponential smoothing forecasting technique requires all of the following except a. the forecast for the current period. b. the actual demand for the current period. c. a smoothing constant. d. large amounts of historical demand data.

Ans: d Difficulty: Moderate Feedback: Components of Forecasting Demand

54. The smoothing constant, α, in the exponential smoothing forecast a. must always be a value greater than 1.0. b. must always be a value less than 0.10. c. must be a value between 0.0 and 1.0. d. should be equal to the time frame for the forecast.

Ans: c Difficulty: Moderate Feedback: Components of Forecasting Demand

55. The closer the smoothing constant, α, is to 1.0 a. the greater the reaction to the most recent demand. b. the greater the dampening, or smoothing, effect. c. the more accurate the forecast. d. the less accurate the forecast.

Ans: a Difficulty: Moderate Feedback: Components of Forecasting Demand

56. The exponential smoothing model produces a naïve forecast when the smoothing constant, α, is equal to a. 0.00. b. 1.00. c. 0.50.

d. 2.00 Ans: b Difficulty: Moderate Feedback: Components of Forecasting Demand

57. Given the following demand data for the past five months, the three period moving average forecast for June is Period January February March April May

a. b. c. d.

Demand 120 90 100 75 110

103.33.

99.00.

95.00.

92.50

Ans: c Difficulty: Moderate Feedback: Time Series Methods

58. Given the following demand data for the past five months, the four period moving average forecast for June is Period January February March April May

a. b. c. d.

96.25.

99.00.

110.00.

93.75.

Ans: d Difficulty: Moderate Feedback: Time Series Methods

Demand 120 90 100 75 110

59. A company wants to product a weighted moving average forecast for April with the weights 0.40, 0.35, and 0.25 assigned to March, February, and January, respectively.

If the company had demands of 5,000 in January, 4,750 in February, and 5,200 in March, then April’s forecast is a. 4983.33. b. 4992.50. c. 4962.50. d. 5000.00.

Ans: b Difficulty: Moderate Feedback: Time Series Methods

60. The weighted moving average forecast for the fifth period with weights of 0.15 for period 1, 0.20 for period 2, 0.25 for period 3, and 0.40 for period 4, using the demand data shown below is Period Demand 1 3500 2 3800 3 3500 4 4000 a. 3760 b. 3700 c. 3650 d. 3325 Ans: a Difficulty: Moderate Feedback: Time Series Methods

61. Given the demand and forecast values below, the naïve forecast for September is Period Demand Forecast April 100 97 May 105 103 June 97 98 July 102 105 August 99 102 September a. 100.6. b. 99.0. c. 102.0. d. cannot be determined.

Ans: b Difficulty: Moderate Feedback: Regression Methods

62. A forecasting model has produced the following forecasts: Period January February March April May

Demand 120 110 115 125 130

Forecast 110 115 120 115 125

Error

The forecast error for February is a. 10. b. -10. c. -15. d. -5 Ans: d Difficulty: Moderate Feedback: Regression Methods

63. A forecasting model has produced the following forecasts: Period January February March April May

Demand 120 110 115 125 130

Forecast 110 115 120 115 125

The mean absolute deviation (MAD) for the end of May is a. 7.0. b. 7.5. c. 10.0 d. 3.0 Ans: a Difficulty: Hard Feedback: Forecasting Accuracy

Error

64. A forecasting model has produced the following forecasts: Period January February March April May

Demand 120 110 115 125 130

Forecast 110 115 120 115 125

Error

The mean absolute percentage deviation (MAPD) for the end of May is a. 0.0250. b. 0.0583. c. 0.5830. d. 0.6670.

Ans b Difficulty: Hard Feedback: Forecasting Accuracy

65. A forecasting model has produced the following forecasts: Period January February March April May

Demand 120 110 115 125 130

Forecast 110 115 120 115 125

Error

At the end of May the average error would be a. 7. b. 5. c. 3. d. 1.

Ans: c Difficulty: Moderate Feedback: Forecasting Accuracy

66. A forecasting model has produced the following forecasts: Period January

Demand 120

Forecast 110

Error

February March April May

110 115 125 130

115 120 115 125

At the end of May the tracking signal would be a. 0.000. b. 0.667. c. 1.333. d. 2.143.

Ans: d Difficulty: Hard Feedback: Forecasting Accuracy

67. The mean absolute percentage deviation (MAPD) measures the absolute error as a percentage of a. all errors. b. per period demand. c. total demand. d. the average error.

Ans: c Difficulty: Moderate Feedback: Forecasting Accuracy

68. A large positive cumulative error indicates that the forecast is probably a. higher than the actual demand. b. lower than the actual demand. c. unbiased. d. biased.

Ans: b Difficulty: Moderate Feedback: Forecasting Accuracy

69. Which of the following statements concerning average error is true? a. a positive value indicates high bias, and a negative value indicates low bias b. a positive value indicates zero bias, and a negative value indicates low bias c. a negative value indicates zero bias, and a negative value indicates high bias

d. a positive value indicates low bias, and a negative value indicates high bias Ans: d Difficulty: Moderate Feedback: Forecasting Accuracy

70. Which of the following is a reason why a forecast can go “out of control?” a. a change in trend b. an irregular variation such as unseasonable weather c. a promotional campaign d. all of the above Ans: d Difficulty: Moderate Feedback: Forecast Accuracy

71. Which of the following can be used to monitor a forecast to see if it is biased high or low? a. a tracking signal b. the mean absolute deviation (MAD) c. the mean absolute percentage deviation (MAPD) d. a linear trend line model Ans: a Difficulty: Moderate Feedback: Forecast Accuracy

72. A tracking signal is computed by a. multiplying the cumulative error by MAD b. multiplying the absolute error by MAD c. dividing MAD by the cumulative absolute error d. dividing the cumulative error by MAD Ans: d Difficulty: Moderate Feedback: Forecast Accuracy

73. If forecast errors are normally distributed then

a. b. c. d.

1 MAD = 1σ 1 MAD ≈ 0.8 σ 0.8 MAD ≈ 1σ 1 MAD ≈ 1.96 σ

Ans: b Difficulty: Moderate Feedback: Components of Forecasting Demand

74. A mathematical technique for forecasting that relates the dependent variable to an independent variable is a. correlation analysis. b. exponential smoothing. c. linear regression. d. weighted moving average.

Ans: c Difficulty: Easy Feedback: Regression Methods

75. Correlation is a measure of the strength of the a. nonlinear relationship between two dependent variables. b. nonlinear relationship between a dependent and independent variable. c. linear relationship between two dependent variables. d. linear relationship between a dependent and independent variable.

Ans: d Difficulty: Moderate Feedback: Components of Forecasting Demand

76. For the demand values and the January forecast shown in the table below the exponential smoothing forecast for March using α = 0.30 is Period January February March April

a. 489. b. 486.

Demand 500 476 503

Forecast 480

c. 483. d. 480.

Ans: a Difficulty: Hard Feedback: Regression Methods

77. For the demand values and the January forecast shown in the table below the exponential smoothing forecast for March using α = 0.40 is Period January February March

a. b. c. d.

Demand 1250 1225

Forecast 1200

1200.

1220.

1222.

1225.

Ans: c Difficulty: Hard Feedback: Regression Methods

78. If the forecast for July was 3300 and the actual demand for July was 3250, then the exponential smoothing forecast for August using α = 0.20 is a. 3300. b. 3290. c. 3275. d. 3250.

Ans: b Difficulty: Moderate Feedback: Regression Methods

79. Given the demand and forecast values shown in the table below: Period June July August September

Demand 495 515 519 496

Forecast 484 506 528 506

October

557

550

The three-period moving average forecast for November is a. 516. b. 528. c. 524. d. 515.

Ans: c Difficulty: Moderate Feedback: Regression Methods

80. Given the demand and forecast values shown in the table below: Period June July August September October

Demand 495 515 519 496 557

Forecast 484 506 528 506 550

The exponential smoothing forecast for November using α = 0.35 is a. b. c. d.

552.45.

553.50.

554.55.

557.50.

Ans: a Difficulty: Moderate Feedback: Regression Methods

81. Given the demand and forecast values shown in the table below: Period June July August September October

The forecast error for September is a. 10.00. b. -10.00. c. 1.00. d. 39.00.

Demand 495 515 519 496 557

Forecast 484 506 528 506 550

Ans: b Difficulty: Moderate Feedback: Forecast Accuracy

82. Given the demand and forecast values shown in the table below: Period June July August September October

Demand 495 515 519 496 557

Forecast 484 506 528 506 550

The MAD through the end of October would be a. 9.20 b. -9.20 c. 1.00 d. 7.00 Ans: a Difficulty: Hard Feedback: Forecast Accuracy

Short Answer

83. Explain the difference between qualitative and quantitative forecasting methods.

Ans: Qualitative forecasting methods are based on judgment, opinion, past experience, or best guesses. They are most useful for predicting the future when there is no past historical data to model or when the need exists to predict for the very long-term.

Quantitative forecasting methods are based on mathematical formulas. Examples of quantitative forecasting methods are time series and regression analysis.

Difficulty: Moderate Feedback: Components of Forecasting Demand

84. Discuss the importance of accurate forecasts in supply chain management.

Ans: A company’s supply chain encompasses all of the facilities, functions, and activities involved in producing a product or service from suppliers to customers. Supply chain functions such as purchasing, inventory, production, scheduling, and transportation are all

affected in the short run by product demand and in the long run by new products and processes. Forecasts of product demand determine how much inventory is needed, how much product to make, and how much material to purchase from suppliers to meet forecasted customer needs. This in turn determines the kind of transportation that will be needed and where plants, warehouses and distribution centers will be located. Without accurate forecasts, large costs of costly inventory must be kept at each stage of the supply chain to compensate for the uncertainties of customer demand. If there are insufficient inventories, customer service suffers because of late deliveries and stock outs. This can be quite damaging to customer service and the need to have on-time delivery to compete in today’s competitive environment.

Difficulty: Hard Feedback: The Strategic Role of Forecasting

85. Compare and contrast short-mid-range forecasts and long-range forecasts.

Ans: Forecasts are either short-to mid-range, or long-range. Short-range (to mid-range) forecasts are typically for daily, weekly, or monthly sales demand for up to approximately two years into the future, depending on the company and the type of industry. They are primarily used to determine production and delivery schedules and to establish inventory levels. A long-range forecast is usually for a period longer than two years into the future. A long-range forecast is normally used for strategic planning—to establish long-term goals, plan new products for changing markets, enter new markets, develop new facilities, develop technology, design the supply chain and implement strategic programs, such as TQM. It is important to remember that these classifications are generalizations and the line between short-and long-range forecasts is not always so distinct.

Difficulty: Moderate Feedback: Components of Forecasting Demand

86. Explain how and why time series and regression forecasting methods differ.

Ans: Time series methods are statistical techniques that use historical data to predict future demand. Time series techniques assume that what has occurred in the past will continue to occur in the future. Regression (or causal) forecasting methods attempt to develop a mathematical relationship (in the form of a regression model) between demand and factors that cause demand to behave the way it does.

Difficulty: Moderate Feedback: Time Series Methods, Regression Methods

File: ch13, Chapter 13: Inventory Management

True/False

1. Inventory management is concerned with how much to order and when to order.

Ans: True Difficulty: Moderate Feedback: The Elements of Inventory Management

2. Dependent demand items are typically products for use by the final customer.

Ans: False Difficulty: Moderate Feedback: The Elements of Inventory Management

3. Dependent demand items consist of component parts or materials used in the production process to produce a final product..

Ans: True Difficulty: Moderate Feedback: The Elements of Inventory Management

4. As the level of inventory increases to provide better customer service quality-related customer service costs decreases.

Ans: True Difficulty: Moderate Feedback: Inventory Control Systems

5. The three basic costs associated with inventory are holding costs, ordering costs and shortage costs.

Ans: True

Difficulty: Moderate Feedback: The Elements of Inventory Management

6. Product deterioration, spoilage, breakage, and obsolescence are examples of shortage costs.

Ans: False Difficulty: Moderate Feedback: The Elements of Inventory Management

7. Shortage costs are easier to determine than carrying costs or ordering costs.

Ans: False Difficulty: Moderate Feedback: The Elements of Inventory Management

8. Continuous inventory systems often incorporate information technology to improve the speed and accuracy of data entry and retrieval.

Ans: True Difficulty: Moderate Feedback: Inventory Control Systems

9. The ABC classification system is a method for classifying inventory based on the percentage of total value and the percentage of total quantity.

Ans: True Difficulty: Moderate Feedback: Inventory Control Systems

10. Class A items in the ABC classification system require less monitoring and control than Class C items.

Ans: False Difficulty: Moderate Feedback: Inventory Control Systems

11. The economic order quantity (EOQ) model determines the optimal order size that minimizes total annual inventory costs.

Ans: True Difficulty: Moderate Feedback: Economic Order Quantity Models

12. A quantity discount is a price discount available if a predetermined number of units is ordered.

Ans: True Difficulty: Moderate Feedback: Quantity Discounts

13. The reorder point is the level of inventory that promts a new order to be placed in a continuous inventory system.

Ans: True Difficulty: Moderate Feedback: Inventory Control Systems

14. The time between orders is variable and the order quantity is constant in the periodic inventory system.

Ans: False Difficulty: Moderate Feedback: Inventory Control Systems

15. Seasonal inventory allows a firm to maintain a smooth production flow throughout the year.

Ans: True Difficulty: Easy Feedback: The Role of Inventory in Supply Chain Management

16. Hedging involves buying larger amounts of inventory in anticipation of future price increases.

Ans: True Difficulty: Moderate Feedback: The Role of Inventory in Supply Chain Management

17. Inventory can take the form of tools and equipment.

Ans: True Difficulty: Moderate Feedback: The Role of Inventory in Supply Chain Management

18. Buffer inventories provide independence between different stages of the production process.

Ans: True Difficulty: Moderate Feedback: The Role of Inventory in Supply Chain Management.

19. The conventional approach to inventory management is to maintain a level of inventory that reflects a compromise between inventory cost and customer service.

Ans: True Difficulty: Moderate Feedback: Inventory and Quality Management in the Supply Chain

20. Dependent demand is determined by external market conditions.

Ans: False Difficulty: Moderate Feedback: The Elements of Inventory Management

21. Finished product is an example of a dependent demand item.

Ans: False Difficulty: Easy Feedback: The Elements of Inventory Management

22. Carry costs and ordering costs are inversely related.

Ans: True Difficulty: Moderate Feedback: The Elements of Inventory Management

23. For a given annual demand, total annual ordering cost is independent of order size.

Ans: False Difficulty: Hard Feedback: Economic Order Quantity Models

24. Carrying costs are more difficult to determine than ordering or shortage costs.

Ans: False Difficulty: Easy Feedback: The Elements of Inventory Management

25. Continuous inventory systems are primarily intended for lower cost items because they are easier to use requiring fewer resources.

Ans: False Difficulty: Moderate Feedback: Inventory Control Systems

26. Continuous inventory systems are also referred to as a fixed-order-quantity system.

Ans: True Difficulty: Moderate Feedback: Inventory Control Systems

27. Periodic inventory systems initiate a new order when the level of inventory falls to the reorder to point.

Ans: False Difficulty: Moderate Feedback: Inventory Control Systems

28. In ABC analysis, each class of inventory requires different levels of inventory monitoring and control.

Ans: True Difficulty: Moderate Feedback: Inventory Control Systems

29. The EOQ model determines the optimal order size that minimizes the sum of carrying cost and shortage costs.

Ans: False Difficulty: Easy Feedback: Economic Order Quantity Models

30. The order cycle is the time between receipts of orders in an inventory cycle..

Ans: True Difficulty: Easy Feedback: Economic Order Quantity Models

31. The number of orders can be calculated by dividing the daily demand rate, d, by the order quantity, Q. Ans: False Difficulty: Moderate Feedback: Economic Order Quantity Models

32. The average inventory can be calculated by dividing the annual demand, D, by 2.

Ans: False Difficulty: Easy Feedback: Economic Order Quantity Models

33. The economic order quantity occurs when the annual carrying cost is equal to the annual ordering cost.

Ans: True Difficulty: Easy Feedback: Economic Order Quantity Models

34. With the economic order quantity (EOQ) model ,the number of orders increases as the order size decreases.

Ans: True Difficulty: Moderate Feedback: Economic Order Quantity Models

35. With the economic order quantity (EOQ) model, increasing the order quantity reduces inventory carrying cost.

Ans: False Difficulty: Moderate Feedback: Economic Order Quantity Models

36. The production quantity model, a variation of the basic EOQ model, assumes noninstantaneous replenishment.

Ans: True Difficulty: Hard Feedback: Economic Order Quantity Models

37. The quantity discount model evaluates whether using an order size that qualifies for a price discount is always less cost effective than using the economic order quantity.

Ans: False Difficulty: Easy Feedback: Economic Order Quantity Models

38. When demand is uncertain, a safety stock is often added to the expected demand during lead time to prevent a stockout.

Ans: True Difficulty: Moderate Feedback: Reorder Point

39. Maintaining a desired service level influencing the level of safety stock.

Ans: True Difficulty: Moderate Feedback: Reorder Point

40. The order quantity for a periodic inventory system remains constant.

Ans: False Difficulty: Easy Feedback: Inventory Control Systems

41. The periodic inventory system is often preferred for high quantity, low value items.

Ans: True Difficulty: Easy Feedback: Inventory Control Systems

Multiple Choice

42. Which of the following is NOT an assumption of the EOQ model? a) demand rate is known and constant b) shortages are allowed c) lead time is constant d) order quantity is received all at once Ans: b.

Difficulty: Moderate Feedback: Economic Order Quantity Models

43. ___________ demand items are used in the process of producing a final product. a. Dependent b. Independent c. Seasonal d. Cyclical Ans: a Difficulty: Moderate Feedback: The Elements of Inventory Management

44. Inventory costs _________________ when higher levels of inventory are needed to improve customer service. a. decrease b. stay the same c. increase d. cannot be estimated Ans: c Difficulty: Moderate Feedback: Inventory and Quality Management

45. Receiving, handling and shipping costs are examples of a. shortage costs. b. carrying costs. c. ordering costs. d. none of the above.

Ans: c Difficulty: Moderate Feedback: The Elements of Inventory Management

46. In general, as the order size increases a. ordering costs decrease and carrying costs increase. b. ordering costs increase and carrying costs decrease. c. both ordering and carrying costs increase. d. both ordering and carrying costs decrease.

Ans: a Difficulty: Moderate Feedback: The Elements of Inventory Management

47. The _______________ classification system classifies inventory according to its dollar value to the firm. a. periodic b. continuous c. ABC d. EOQ Ans: c Difficulty: Moderate Feedback: Inventory Control Systems

48. A service level of 95% means there is a 0.95 probability a. of meeting all demand. b. of a stockout. c. that supply will exceed demand. d. that demand will be met during the lead time.

Ans: d Difficulty: Moderate Feedback: Inventory Control Systems

49. A restaurant currently uses 62,500 boxes of napkins each year at a constant daily rate.

If the cost to order napkins is $200.00 per order and the annual carrying cost for one box of napkins is $1.00, then the economic order quantity for napkins is a. 62,500 boxes. b. 10,000 boxes. c. 5,000 boxes.

d. 2,500 boxes.

Ans: c Difficulty: Moderate Feedback: Economic Order Quantity Models

50. A restaurant currently uses 62,500 boxes of napkins each year at a constant daily rate.

The cost to order napkins is $200.00 per order and the annual carrying cost for one box of napkins is $1.00. If the restaurant orders the economic order quantity each time an order is placed, then ______orders are placed during the year. is a. 13 b. 15 c. 20 d. 25 Ans: a Difficulty: Moderate Feedback: Economic Order Quantity Models

51. A restaurant currently uses 62,500 boxes of napkins each year at a constant daily rate over the 365 days that it is open. The cost to order napkins is $200.00 per order and the annual carrying cost for one box of napkins is $1.00. If the restaurant orders the economic order quantity then the time between orders (order cycle) is a. 125 days. b. 75.3 days. c. 32.8 days. d. 29.2 days.

Ans: d Difficulty: Moderate Feedback: Economic Order Quantity Models

52. A restaurant currently uses 62,500 boxes of napkins each year at a constant daily rate.

The cost to order napkins is $200.00 per order and the annual carrying cost for one box of napkins is $1.00. If the restaurant orders the economic order quantity then the total annual inventory cost for napkins is a. $62,500. b. $5,000. c. $2,500. d. $1250.

Ans: b Difficulty: Moderate Feedback: Economic Order Quantity Models

53. A restaurant currently uses 62,500 boxes of napkins each year at a constant daily rate.

The cost to order napkins is $200.00 per order and the annual carrying cost for one box of napkins is $1.00. If the restaurant orders the economic order quantity then the average inventory for napkins is a. 62500 boxes. b. 31,250 boxes. c. 5,000 boxes. d. 2,500 boxes.

Ans: d Difficulty: Moderate Feedback: Economic Order Quantity Models

54. The demand for an electronic component is normally distributed with an average daily demand of 500 units and a standard deviation of 50. The lead-time for the component is 9 days. If a service level of 95% is desired then the company’s reorder point for this component is approximately a. 3785 units. b. 4500 units. c. 4627units. d. 4747units.

Ans: d Difficulty: Moderate Feedback: Reorder Point

55. The demand for an electronic component is normally distributed with an average daily demand of 500 units and a standard deviation of 50. The lead time for the component is 9 days. If a service level of 95% is desired, then the company’s safety stock for this component is approximately a. 150 units. b. 247 units. c. 336 units. d. 740 units.

Ans: b Difficulty: Moderate Feedback: Reorder Point

56. The demand for an electronic component is normally distributed with an average daily demand of 500 units and a standard deviation of 50. The lead time for the component is 9 days. If the company sets a reorder point of 4650 for this component then its service level is approximately a. 50 percent. b. 84 percent. c. 92 percent. d. 98 percent..

Ans: b Difficulty: Moderate Feedback: Reorder Point

57. A product’s usage is normally distributed with a weekly average demand of 2,000 units and a weekly standard deviation of 125. The lead time for the product is 4 weeks. If the company would like to have a service level of 90% for this product then the reorder point is approximately a. 8320 units. b. 9218 units. c. 10134 units. d. 11244 units.

Ans: a Difficulty: Moderate Feedback: Reorder Point

58. A product’s usage is normally distributed with a weekly average demand of 2,000 units and a weekly standard deviation of 125. The product’s lead time is 4 weeks.

Currently, the reorder point for this product is 8,200. If the company would like to have a service level of 95% for this product then a. it must decrease its safety stock by approximately 412 units. b. it must decrease its safety stock by approximately 212 units. c. it must increase its safety stock by approximately 412 units. d. it must increase its safety stock by approximately 212 units.

Ans: d

Difficulty: Moderate Feedback: Reorder Point

59. Annual demand for a product is 40,000 units. The product is used at a constant rate over the 365 days the company is open every year. The annual holding cost for the product is estimated to be $2.50 per unit and the cost of placing each order is $125.00. If the company orders according to the economic order quantity (EOQ) formula then its optimal order size for this product would be a. 2,000 units. b. 4,000 units. c. 20,000 units. d. 40,000 units.

Ans: a Difficulty: Moderate Feedback: Economic Order Quantity Models

60. Annual demand for a product is 40,000 units. The product is used at a constant rate over the 365 days the company is open every year. The annual holding cost for the product is estimated to be $2.50 per unit and the cost of placing each order is $125.00. If the company orders according to the economic order quantity (EOQ) formula then ________ orders are placed annually. a. 5 b. 10 c. 15 d. 20 Ans: d Difficulty: Moderate Feedback: Economic Order Quantity Models

61. Annual demand for a product is 40,000 units. The product is used at a constant rate over the 365 days the company is open every year. The annual holding cost for the product is estimated to be $2.50 per unit and the cost of placing each order is $125.00. If the company orders according to the economic order quantity (EOQ) formula then the time between orders (order cycle time) is a. 18.25 days. b. 24.33 days. c. 36.5 days. d. 73 days.

Ans: a Difficulty: Moderate Feedback: Economic Order Quantity Models

62. Annual demand for a product is 40,000 units. The product is used at a constant rate over the 365 days the company is open every year. The annual holding cost for the product is estimated to be $2.50 per unit and the cost of placing each order is $125.00. If the company orders according to the economic order quantity (EOQ) formula then its total annual inventory cost for this product would be a. $100,000. b. $50,000. c. $5,000. d. $2,500.

Ans: c Difficulty: Moderate Feedback: Economic Order Quantity Models

63. Annual demand for a product is 40,000 units. The product is used at a constant rate over the 365 days the company is open every year. The annual holding cost for the product is estimated to be $2.50 per unit and the cost of placing each order is $125.00. If the company orders according to the economic order quantity (EOQ) formula then its average inventory level for this product would be a. 20,000 units. b. 10,000 units. c. 2,500 units. d. 1,000 units.

Ans: d Difficulty: Moderate Feedback: Economic Order Quantity Models

64. A company may purchase larger amounts of inventory for all the following reasons except a. to reduce inventory carrying costs. b. to take advantage of quantity discounts . c. as a hedge against future price increases. d. to obtain lower prices purchasing in volume.

Ans: a Difficulty: Moderate Feedback: The Role of Inventory in Supply Chain Management

65. Inventory management includes all the following activities except determining a. the amount of inventory to keep in stock. b. customer demand . c. how much to order. d. when to order.

Ans: b Difficulty: Easy Feedback: Inventory and Quality Management in the Supply Chain

66. Which of the following is not considered a form of inventory? a. items being transported b. tools and equipment c. supplies d. backorders Ans: d Difficulty: Easy Feedback: The Elements of Inventory Management

67. Which of the following is not an example of inventory carried to satisfy independent demand? a. spare parts b. finished product c. raw materials d. All the above satisfy independent demand.

Ans: c Difficulty: Moderate Feedback: The Elements of Inventory Management

68. A continuous inventory system is also known as a a. fixed-time period system b. fixed-order quantity system

c. d.

fixed-lead time system fixed-amount system

Ans: b Difficulty: Easy Feedback: The Elements of Inventory Management

69. A periodic inventory system is also known as a a. fixed-time period system. b. fixed-order quantity system. c. fixed-lead time system. d. fixed-amount system.

Ans: a Difficulty: Easy Feedback: The Elements of Inventory Management

70. Which of the following is not an assumption of the EOQ model? a. demand is known and constant. b. no shortages allowed. c. lead time is determined by quantity ordered. d. order quantity is received all at once.

Ans: c Difficulty: Moderate Feedback: Economic Order Quantity Models

71. The economic order quantity is most widely used for determining how much to order in a. a periodic inventory system. b. a continuous inventory system. c. an on-demand inventory system. d. none of the above.

Ans: b Difficulty: Moderate Feedback: Economic Order Quantity Models

72. The quantity discount model considers a. purchase price. b. carrying cost. c. ordering cost. d. all the above.

Ans: d Difficulty: Easy Feedback: Economic Order Quantity Models

Short Answer

73. Explain the relationship between ordering costs and carrying costs in the economic order quantity (EOQ) model.

Ans: Ordering costs react inversely to carrying costs. As the size of the order increases, fewer orders are required, reducing ordering costs. However, ordering larger amounts results in higher inventory levels and higher carrying costs. In general, as the order size increases, ordering costs decrease and carrying costs increase.

Difficulty: Moderate Feedback: The Elements of Inventory Management

74. Briefly compare and contrast a continuous inventory system to a periodic inventory system listing the advantages and disadvantages of each.

Ans: There are two basic types of inventory systems: a continuous (or fixed-orderquantity) system and a periodic (or fixed-time-period) system. In a continuous system, an order is placed for the same constant amount whenever the inventory on hand decreases to a certain level, whereas in a periodic system, an order is placed for a variable amount after the passage of a specific period of time. A positive feature of a continuous system is that the inventory is continuously monitored, so management always knows the inventory status. This is advantageous for critical items such as replacement parts or supplies.

However, maintaining a continual record of the inventory on hand can also be costly. In the periodic inventory system the inventory level is not monitored at all during the time interval between orders, so it has the advantage of little or or required record keeping.

The disadvantage is less direct control which typically results in larger inventory levels for a periodic inventory system than in a continuous system to guard against unexpected stockouts early in the fixed period.

Difficulty: Moderate Feedback: Inventory Control Systems

75. List several types of uncertainty that may contribute to higher inventory levels.

Ans: -receive poor quality materials from supplier -produce quality defects in the production system -unanticipated changes in demand -poor forecasts -variations in delivery times -variations in lead times -uncertain production schedules

76. List and discuss the costs used to determine carrying cost., holding cost and shortage cost.

Ans: -facility storage (rent, depreciation, utilities, security, taxes, insurance) material handling equipment -labor -record keeping -cost of working capital product deterioration (spoilage, breakage, obsolescence, pilferage)

77. Explain when it is better to use the continuous inventory system and when it is better to use the periodic inventory system. Discuss how the ABC classification system provides guidance in selecting one versus the other.

Ans: The continuous inventory system provides for greater monitoring and control. If the economic order quantity is used total annual inventory cost is minimized. This system is best suited for high value, low quantity items. The periodic inventory system provides no monitoring and minimal control. It requires almost no record keeping. This system is best suited for low value, high quantity items.

78. Make a list of the basic steps involved in using the quantity discount model and discuss each.

Ans: First calculate the economic order quantity. Based on this quantity determine the price based on this order size. Calculate the total annual inventory cost which includes carrying cost, ordering costs and purchasing cost. Determine the minimal quantity that qualifies for the next price discount. Using this quantity and the new price calculate the total annual inventory cost which includes carrying cost, ordering costs and purchasing cost. Repeat the last step for all quantity/price options. Select the order size, Q, with the lowest total annual cost.

File: ch. S13, Chapter 13 Supplement: Operational Decision-Making Tools: Simulation

True/False

1. Simulation is a popular decision-making tool that provides a solution to any type of problem Ans: False Difficulty: Easy Feedback: Monte Carlo Simulation

2. Simulation is often viewed as the technique of last resort because it can be applied to situations when there is no applicable quantitative model.

Ans: True Difficulty: Moderate Feedback: Monte Carlo Simulation

3. Because simulation is used to analyze probabilistic problems it provides information that is used to make a decision versus an optimal solution.

Ans: True Difficulty: Easy Feedback: Monte Carlo Simulation

4. Simulation is the preferred technique for problems with random variables represented by probability distributions.

Ans: True Difficulty: Easy Feedback: Monte Carlo Simulation

5. The Monte Carlo technique selects numbers randomly from a probability distribution for use in a quantitative model.

Ans: False Difficulty: Moderate Feedback: Monte Carlo Simulation

6. The Monte Carlo technique is a mathematical model used within a simulation.

Ans: True Difficulty: Moderate Feedback: Monte Carlo Simulation

7. A random number’s likelihood of being selected is based on a normal distribution.

Ans: False Difficulty: Easy Feedback: Monte Carlo Simulation

8. A steady state results when a simulation is repeated enough times that the random variable being investigated reaches an average result that remains constant.

Ans: True Difficulty: Hard Feedback: Monte Carlo Simulation

9. As a simulation model becomes more complex, using a computer application is virtually impossible.

Ans: False Difficulty: Easy Feedback: Computer Simulation with Excel

10. An advantage of using a computer versus a manual approach when performing a simulation is that it often takes only seconds versus hours to reach a steady-state result.

Ans: True

Difficulty: Easy Feedback: Computer Simulation with Excel

11. At a Wal-Mart store, simulation can be used to analyze waiting lines at check-out stands to determine the required staffing levels.

Ans: True Difficulty: Easy Feedback: Areas of Simulation Application

12. Simulation analysis is the preferred method used at hospitals to determine the type of treatment a patient requires.

Ans: False Difficulty: Easy Feedback: Areas of Simulation Application

Multiple Choice

13. Simulation analysis is useful for operational problems that a. are easy to solve analytically. b. can’t be solved analytically. c. require an optimal solution. d. meet specific analytical criteria.

Ans: b Difficulty: Easy Feedback: Monte Carlo Simulation

14. The ______________ technique selects numbers randomly from a probability distribution for use in a trial run of a simulation. a. Computer World b. Monaco c. steady-state d. None of the above.

Ans: d Difficulty: Easy Feedback: Monte Carlo Simulation

15. After a sufficient number of simulation runs a steady state results when the variable being investigated reaches an _________ value that remains constant. a. optimal b. average c. expected d. estimated Ans: b Difficulty: Moderate Feedback: Monte Carlo Simulation

16. The weekly demand for a company’s product follows the probability distribution below: Weekly Demand Probability 100 0.20 125 0.15 150 0.40 175 0.25 The expected value, or average, weekly demand is a. 137.50. b. 142.50. c. 153.75. d. 165.75 Ans: b Difficulty: Moderate Feedback: Monte Carlo Simulation

17. The weekly demand for a company’s product follows the probability distribution below: Weekly Demand Probability 100 0.20 125 0.15 150 0.40 175 0.25

Use the following random numbers to simulate the product’s demand for the next five weeks: 72, 27, 93, 17, 47.

If the first random number interval begins with 1 then the total demand for the simulated five week period is a. 700. b. 650. c. 625. d. 550.

Ans: a Difficulty: Moderate Feedback: Monte Carlo Simulation

18. The weekly demand for a company’s product follows the probability distribution below: Weekly Demand Probability 100 0.20 125 0.15 150 0.40 175 0.25 Use the following random numbers to simulate the product’s demand for the next five weeks: 72, 27, 93, 17, 47.

If the first random number interval begins with 1 then the average weekly demand for the simulated five week period is a. 137.50. b. 140.00. c. 142.50. d. 152.50.

Ans: b Difficulty: Moderate Feedback: Monte Carlo Simulation

19. The number of daily calls received by a help desk between the hours of 9:00 a.m. to 10:00 a.m. can be described by the following probability distribution: Calls 50 55 60

Probability 0.10 0.10 0.20

65 0.35 70 0.20 75 0.05 Based on the distribution of calls above, the expected value, or average, number of calls to the help desk between 9:00 and 10:00 a.m. is a. 61.5. b. 62.0. c. 62.5. d. 63.0.

Ans: d Difficulty: Moderate Feedback: Monte Carlo Simulation

20. The number of daily calls received by a help desk between the hours of 9:00 a.m. to 10:00 a.m. can be described by the following probability distribution: Calls Probability 50 0.10 55 0.10 60 0.20 65 0.35 70 0.20 75 0.05 Use the following random numbers to simulate the number of calls to the help desk between 9:00 and 10:00 a.m. for the next five days: 39, 55, 18, 16, 70.

If the first random number interval begins with 1, then the number of calls that would be simulated for day 3 is a. 50. b. 55. c. 60. d. 65.

Ans: b Difficulty: Moderate Feedback: Monte Carlo Simulation

21. The number of daily calls received by a help desk between the hours of 9:00 a.m. to 10:00 a.m. can be described by the following probability distribution: Calls

Probability

50 0.10 55 0.10 60 0.20 65 0.35 70 0.20 75 0.05 Use the following random numbers to simulate the number of calls to the help desk between 9:00 and 10:00 a.m. for the next five days: 39, 55, 18, 16, 70.

If the first random number interval begins with 1, then the total number of calls received over the simulated five day period is a. 375. b. 350. c. 325. d. 300.

Ans: d Difficulty: Moderate Feedback: Monte Carlo Simulation

22. The number of daily calls received by a help desk between the hours of 9:00 a.m. to 10:00 a.m. can be described by the following probability distribution: Calls Probability 50 0.10 55 0.10 60 0.20 65 0.35 70 0.20 75 0.05 Use the following random numbers to simulate the number of calls to the help desk between 9:00 and 10:00 a.m. for the next five days: 39, 55, 18, 16, 70.

If the first random number interval begins with 1, then the average number of calls received over the simulated five day period is a. 63. b. 62. c. 61. d. 60.

Ans: d Difficulty: Moderate Feedback: Monte Carlo Simulation

23. The weekly capacity measured in machine hours for a small machine shop follows the probability distribution shown below: Weekly Capacity Probability 400 0.05 440 0.30 480 0.20 520 0.30 560 0.10 600 0.05 Based on the probability distribution above, the expected value, or average hours of weekly capacity for the machine shop is a. 500 hours. b. 490 hours. c. 480 hours. d. 475 hours.

Ans: b Difficulty: Moderate Feedback: Monte Carlo Simulation

24. The weekly capacity measured in machine hours for a small machine shop follows the probability distribution shown below: Weekly Capacity Probability 400 0.05 440 0.30 480 0.20 520 0.30 560 0.10 600 0.05 Use the following random numbers to simulate weekly capacity for the machine shop for the next five weeks: 93, 31, 71, 8, 6.

If the first random number interval begins with 1, then the minimum capacity for the simulated five week period is a. 560. b. 520. c. 440. d. 400.

Ans: c Difficulty: Moderate Feedback: Monte Carlo Simulation

Short Answer Questions

25. In what ways is simulation relevant to analyzing production problems?

Ans: Simulation is often applied to production problems, such as production scheduling, production sequencing, assembly line balancing, plant layout, and plant location analysis.

Many production processes can be viewed as queuing systems that can be analyzed only by using simulation. Because machine breakdowns typically occur according to some probability distribution, maintenance problems are also frequently analyzed using simulation. Recently, several software packages for personal computers have been developed to simulate all aspects of manufacturing operations.

Difficulty: Moderate Feedback: Areas of Simulation Application

26. What is simulation and why is it a popular decision-making tool?

Ans: Simulation is a modeling approach primarily used to analyze probabilistic problems.

It does not normally provide an optimal solution. Instead it provides information that is used to make a decision. Simulation is popular because it can be applied to virtually any type of problem. It can frequently be used when there is no other applicable quantitative method; it is the technique of last resort for many problems.

Difficulty: Moderate Feedback: Areas of Simulation Application

File: ch14, Chapter 14: The Sales and Operations Planning Process

True/False

1. Sales and operations planning is an aggregate planning process that determines the capacity needed to meet immediate demand.

Ans: False Difficulty: Moderate Feedback: The Sales and Operations Planning Process

2. An aggregate operations plan specifies the production quantities for an entire product family or product line.

Ans: True Difficulty: Moderate Feedback: The Sales and Operations Planning Process

3. One objective of sales and operations planning is to develop a companywide game plan to satisfy production.

Ans: False Difficulty: Moderate Feedback: The Sales and Operations Planning Process

4. An operations plan is an input into the sales and operations planning process.

Ans: True Difficulty: Moderate Feedback: The Sales and Operations Planning Process

5. Financial constraints are one of the major inputs of the sales and operations planning process.

Ans: True Difficulty: Moderate Feedback: The Sales and Operations Planning Process

6. Adjusting capacity and managing demand are two economic strategies for meeting demand.

Ans: True Difficulty: Moderate Feedback: Strategies for Adjusting Capacity

7. Overtime and undertime are common strategies for adjusting demand.

Ans: False Difficulty: Easy Feedback: Strategies for Adjusting Capacity

8. A chase demand strategy is one of several alternatives available for managing demand.

Ans: False Difficulty: Moderate Feedback: Strategies for Managing Demand

9. Inventory holding costs are an important consideration for the level production strategy.

Ans: True Difficulty: Moderate Feedback: Strategies for Adjusting Capacity

10. When demand fluctuations are extreme using overtime and undertime is a feasible strategy for adjusting capacity.

Ans: False Difficulty: Moderate

Feedback: Strategies for Adjusting Capacity

11. Subcontracting is a feasible alternative for adjusting capacity provided the supplier can reliably meet quality and time requirements.

Ans: True Difficulty: Moderate Feedback: Strategies for Adjusting Capacity

12. One of several strategies for managing demand is to shift it into other time periods using incentives, sales promotions, and advertising.

Ans: True Difficulty: Moderate Feedback: Strategies for Managing Demand

13. A mixed strategy for adjusting capacity is simpler and easier to implement than any pure strategy.

Ans: False Difficulty: Moderate Feedback: Strategies for Managing Demand

14. Most companies use mixed strategies for managing demand.

Ans: True Difficulty: Moderate Feedback: Strategies for Managing Demand

15. The transportation method is used for aggregate planning when the strategy for adjusting capacity is hiring and firing workers.

Ans: False Difficulty: Moderate Feedback: Quantitative Techniques for Aggregate Planning Quantitative Techniques for Aggregate Planning

16. Disaggregation is the process of breaking a sales and operations plan into more detailed plans.

Ans: True Difficulty: Moderate Feedback: The Hierarchical Nature of Planning

17. Sharing information and synchronizing production across the supply chain is known as disaggregation.

Ans: False Difficulty: Moderate Feedback: The Hierarchical Nature of Planning

18. Yield management seeks to maximize profit from time-sensitive products and services.

Ans: True Difficulty: Hard Feedback: Aggregate Planning for Services

19. Implementing a companywide game plan for allocating resources addresses the longstanding battle between operations and marketing.

Ans: True Difficulty: Hard Feedback: The Sales and Operations Planning Process

20. An economic strategy for adjusting demand can include adjusting capacity or managing demand.

Ans: True Difficulty: Moderate Feedback: The Sales and Operations Planning Process

21. The level strategy for adjusting capacity is only appropriate when there is no variation in demand.

Ans: False Difficulty: Moderate Feedback: Strategies for Adjusting Capacity

22. A chase strategy involves hiring and firing workers so that production matches demand.

Ans: True Difficulty: Moderate Feedback: Strategies for Adjusting Capacity

23. Reconciliation of the sales plan and the operations plan may include adjusting capacity and/or managing demand.

Ans: True Difficulty: Moderate Feedback: The Sales and Operations Planning Process

Multiple Choice

24. All of the following are inputs to the aggregate production planning process except a. demand forecasts. b. financial constraints. c. sales plans. d. capacity constraints.

Ans:c Difficulty: Moderate Feedback: The Sales and Operations Planning Process

25. Adjusting available capacity by hiring and firing workers to match demand is an example of a(n) ________ strategy.

a. b. c. d.

level production chase demand mixed production. optimal production.

Ans:b Difficulty: Easy Feedback: Strategies for Adjusting Capacity

26. The primary cost associated with the level production strategy is the cost of a. holding inventory. b. hiring and firing workers. c. overtime. d. outsourcing (subcontracting) Ans: a Difficulty: Moderate Feedback: Strategies for Adjusting Capacity

27. Problems associated with using a part-time workers strategy for adjusting capacity include all of the following except a. high turnover. b. accelerated training requirements c. scheduling difficulties d. high retirement costs Ans: d Difficulty: Easy Feedback: Strategies for Adjusting Capacity

28. Strategies for proactive demand management would not include a. shifting demand into other time periods b. offering products or services with countercyclical demand patterns c. partnering with suppliers to reduce information distortion along the supply chain d. using subcontracting to meet unexpected high demand levels Ans: d Difficulty: Moderate Feedback: The Sales and Operations Planning Process

29. The most effective aggregate planning strategy depends on a. the demand distribution b. the competitive position c. the firm’s cost structure d. all of the above Ans:d Difficulty: Moderate Feedback: Sales and Operations planning

30. An optimizing technique originally developed for aggregate planning in the paint factory is the a. linear decision rule. b. search decision rule. c. management coefficients model. d. transportation technique.

Ans:a Difficulty: Moderate Feedback: Quantitative Techniques for Aggregate Planning

31. The search decision rule (SDR) is an algorithm that a. solves a set of four quadratic equations. b. finds the minimum cost for combinations of different workforce levels and production rates. c. uses regression analysis to improve the consistency of production planning decisions d. requires that a linear cost function be used.

Ans:b Difficulty: Moderate Feedback: Quantitative Techniques for Aggregate Planning

32. The process of breaking an aggregate plan into more detailed plans is referred to as a. collaborative planning. b. hierarchical planning. c. disaggregation. d. rough-cut planning.

Ans: a Difficulty: Hard Feedback: The Hierarchical Nature of Planning

33. The difference between planned production and customer orders is known as a. the master production schedule. b. available-to-promise. c. capable-to-promise. d. the disaggregate plan.

Ans: b Difficulty: Moderate Feedback: The Hierarchical Nature of Planning

34. Which of the following is not a characteristic of aggregate planning for services? a. labor is usually the most constraining resource for services b. service capacity must be provided at the appropriate place and time c. demand for services is easy to predict d. capacity for services is difficult to predict Ans: c Difficulty: Moderate Feedback: Aggregate Planning for Services

35. Yield management can be used to address all of the following problems except a. overbooking. b. portioning demand into fare classes. c. single order quantities. d. backorders.

Ans: d Difficulty: Easy Feedback: Aggregate Planning for Services

36. The following information relates to a company’s aggregate production planning activities: Quarter Demand Forecast 1 75,000

2 100,000 3 75,000 4 125,000 Beginning Workforce = 35 workers Production per Employee = 1,250 units per quarter Hiring Cost = $500 per worker Firing Cost = $1,000 per worker Inventory Carrying Cost = $20 per unit per quarter If a chase demand strategy is used then the number of workers hired at the start of quarter 2 is a. 10 b. 20 c. 35 d. 80 Ans:b Difficulty: Moderate Feedback: Quantitative Techniques for Aggregate Planning

37. The following information relates to a company’s aggregate production planning activities: Quarter Demand Forecast 1 75,000 2 100,000 3 75,000 4 125,000 Beginning Workforce = 35 workers Production per Employee = 1,250 units per quarter Hiring Cost = $500 per worker Firing Cost = $1,000 per worker Inventory Carrying Cost = $20 per unit per quarter If a chase demand strategy is used then the total firing cost for the plan is a. $10,000 b. $15,000 c. $20,000 d. $25,000 Ans: c Difficulty: Moderate Feedback: Quantitative Techniques for Aggregate Planning

38. The following information relates to a company’s aggregate production planning activities: Quarter Demand Forecast 1 75,000 2 100,000 3 75,000 4 125,000 Beginning Workforce = 35 workers Production per Employee = 1,250 units per quarter Hiring Cost = $500 per worker Firing Cost = $1,000 per worker Inventory Carrying Cost = $20 per unit per quarter If a level production strategy is used then the required quarterly output is a. 75,000 b. 87,350 c. 93,750 d. 125,000 Ans:c Difficulty: Moderate Feedback: Quantitative Techniques for Aggregate Planning

39. The following information relates to a company’s aggregate production planning activities: Quarter Demand Forecast 1 75,000 2 100,000 3 75,000 4 125,000 Beginning Workforce = 35 workers Production per Employee = 1,250 units per quarter Hiring Cost = $500 per worker Firing Cost = $1,000 per worker Inventory Carrying Cost = $20 per unit per quarter If a level production strategy is used then the number of workers required for the plan is a. 35 b. 75 c. 100 d. 125 Ans: b

Difficulty: Moderate Feedback: Quantitative Techniques for Aggregate Planning

40. The following information relates to a company’s aggregate production planning activities: Quarter Demand Forecast 1 75,000 2 100,000 3 75,000 4 125,000 Beginning Workforce = 35 workers Production per Employee = 1,250 units per quarter Hiring Cost = $500 per worker Firing Cost = $1,000 per worker Inventory Carrying Cost = $20 per unit per quarter If a level production strategy is used then the inventory at the end of quarter 3 is a. 18,750 b. 12,500 c. 25,650 d. 31,250 units Ans: d Difficulty: Moderate Feedback: Quantitative Techniques for Aggregate Planning

41. The following information relates to a company’s aggregate production planning activities: Quarter Demand Forecast 1 75,000 2 100,000 3 75,000 4 125,000 Beginning Workforce = 35 workers Production per Employee = 1,250 units per quarter Hiring Cost = $500 per worker Firing Cost = $1,000 per worker Inventory Carrying Cost = $20 per unit per quarter If a level production strategy is used then the cost of the level production plan (inventory costs plus hiring and firing costs) is a. $20,000

b. $645,000 c. $1,250,000 d. $1,270,000 Ans: d Difficulty: Moderate Feedback: Quantitative Techniques for Aggregate Planning

42. A company is developing a linear programming model for its aggregate production plan. If It = units in inventory at the end of period t, Pt = units produced in period t, and Dt = demand in period t, then the company’s demand constraint to ensure that demand is met in quarter 3 is a. D3 = I2 – I3 + P3 b. D3 = I3 + P3 c. D3 = I3 – I2 + P3 d. D3 = I2 – I3 + P2 Ans: a Difficulty: Hard Feedback: Quantitative Techniques for Aggregate Planning

43. A company is developing a linear programming model for its aggregate production plan. If Wt = workforce size for period t, Ht = number of workers hired for period t, and Ft = number of workers fired for period t, then the company’s workforce constraint for period 2 is a. W2 = W1 + F2 – H2 b. W2 = H2 – F2 c. W2 = W1 + H2 – F2 d. W2 = H2 – F2 – W1 Ans: c Difficulty: Moderate Feedback: Quantitative Techniques for Aggregate Planning

44. A company is developing a linear programming model for its aggregate production plan. If It = units in inventory at the end of period t, Pt = units produced in period t, and Dt = demand in period t, then the company’s demand constraint to ensure that demand is met in quarter 2 is a. D2 = I2 – I1 + P2 b. D2 = I1 + P2

c. D2 = I2 + I1 + P2 d. D2 = I1 + P2 – I2 Ans: d Difficulty: Moderate Feedback: Quantitative Techniques for Aggregate Planning

45. A company is developing a linear programming model for its aggregate production plan. If Wt = workforce size for period t, Ht = number of workers hired for period t, and Ft = number of workers fired for period t, then the company’s workforce constraint for period 4 is a. W4 = W3 – H4 + F4 b. W4 = W3 + H4 – F4 c. W4 = W3 + H3 – F3 d. W4 = W3 + H4 Ans: b Difficulty: Moderate Feedback: Quantitative Techniques for Aggregate Planning

46. A company is developing a linear programming model for its aggregate production plan. Each worker can produce 500 units per quarter. If Wt = workforce size in period t and Pt = number of units produced in period t, then the production constraint for period 3 is a. W3 = 500P3 b. P3 = W3 - 500 c. P3 = 500W3 d. P3 = W3/500 Ans: c Difficulty: Moderate Feedback: Quantitative Techniques for Aggregate Planning

47. In capacity planning, the feasibility of the sales and operations production plan is verified by a a. resource requirements plan. b. rough-cut capacity plan. c. capacity requirements plan. d. master production schedule.

Ans: a Difficulty: Moderate Feedback: The Hierarchical Nature of Production Planning

48. Given the information below, the number of available-to-promise units in period 2 is Period On Hand = 100 1 2 3 4 5 6 Forecast 200 250 200 300 200 200 Customer Orders 150 125 100 250 150 250 Master Production Schedule 400 400 400 Available-to-Promise a. b. c. d.

400 150 50 0

Ans: d Difficulty: Moderate Feedback: The Hierarchical Nature of Production Planning

49. Given the information below, the number of available-to-promise units in period 4 is Period On Hand = 100 1 2 3 4 5 6 Forecast 200 250 200 300 200 200 Customer Orders 150 125 100 250 150 250 Master Production Schedule 400 400 400 Available-to-Promise a. b. c. d.

400 150 50 0

Ans: d Difficulty: Moderate Feedback: The Hierarchical Nature of Production Planning

50. Given the information below, the number of available-to-promise units in period 6 is Period

On Hand = 100 Forecast Customer Orders Master Production Schedule Available-to-Promise a. b. c. d.

1 200 150 400

2 250 125

3 200 100 400

4 300 250

5 200 150 400

6 200 250

400 150 50 0

Ans: d Difficulty: Moderate Feedback: The Hierarchical Nature of Production Planning

51. Given the information below, the number of available-to-promise units in period 4 is Period On Hand = 200 1 2 3 4 5 6 Forecast 300 250 300 300 200 200 Customer Orders 250 200 250 200 150 250 Master Production Schedule 500 700 Available-to-Promise a. b. c. d.

500 100 200 350

Ans: b Difficulty: Moderate Feedback: The Hierarchical Nature of Production Planning

52. Given the information below, the number of available-to-promise units in period 1 is Period On Hand = 200 1 2 3 4 5 6 Forecast 300 250 300 300 200 200 Customer Orders 250 200 250 200 150 250 Master Production Schedule 500 700 Available-to-Promise a. 700 b. 500

c. 250 d. 0 Ans: d Difficulty: Moderate Feedback: The Hierarchical Nature of Production Planning

53. A bagel company bakes a specialty bagel that it sells by the dozen every day. These specialty bagels can only be baked early in the morning before the store opens for business. The company estimates that the daily demand (in dozens) for its specialty bagel is distributed as follows: Demand (dozens) Probability 1 0.10 2 0.20 3 0.15 4 0.25 5 0.30 Specialty bagels are sold by the dozen only at a cost of $9.00 per dozen. The cost to bake each bagel is $0.50. Leftover specialty bagels are sold by the dozen the next day for a 50% discount. The bagel company’s cost of underestimating demand, Cu, is a. $9.00 b. $6.00 c. $4.50 d. $3.00 Ans: d Difficulty: Moderate Feedback: Aggregate Planning for Services

54. A bagel company bakes a specialty bagel that it sells by the dozen every day. These specialty bagels can only be baked early in the morning before the store opens for business. The company estimates that the daily demand (in dozens) for its specialty bagel is distributed as follows: Demand (dozens) Probability 1 0.10 2 0.20 3 0.15 4 0.25 5 0.30

Specialty bagels are sold by the dozen only at a cost of $9.00 per dozen. The cost to make one bagel is $0.50. Leftover specialty bagels are sold by the dozen the next day for a 50% discount. The bagel company’s cost of overestimating demand, Co, is a. $1.50 b. $3.00 c. $4.50 d. $6.00 Ans: a Difficulty: Moderate Feedback: Aggregate Planning for Services Quantitative Techniques for Aggregate Planning

55. A bagel company bakes a specialty bagel that it sells by the dozen every day. These specialty bagels can only be baked early in the morning before the store opens for business. The company estimates that the daily demand (in dozens) for its specialty bagel is distributed as follows: Demand (dozens) Probability 1 0.10 2 0.20 3 0.15 4 0.25 5 0.30 Specialty bagels are sold by the dozen only at a cost of $9.00 per dozen. The cost to make one bagel is $0.50. Leftover specialty bagels are sold by the dozen the next day for a 50% discount. The optimal number of specialty bagels that should be baked tomorrow (in dozens) is a. 5 dozen b. 4 dozen c. 3 dozen d. 2 dozen Ans: b Difficulty: Moderate Feedback: Aggregate Planning for Services Quantitative Techniques for Aggregate Planning

56. The following information relates to a company’s aggregate production planning activities: Quarter Demand Forecast 1 25,000

2 50,000 3 35,000 4 60,000 Beginning Workforce = 50 workers Production per Employee = 250 units per quarter Hiring Cost = $1000 per worker Firing Cost = $1,500 per worker Inventory Carrying Cost = $15 per unit per quarter If a chase demand strategy is used then the number of workers hired at the start of quarter 2 is a. 0 b. 50 c. 100 d. 200 Ans: c Difficulty: Moderate Feedback: Quantitative Techniques for Aggregate Planning

57. The following information relates to a company’s aggregate production planning activities: Quarter Demand Forecast 1 25,000 2 50,000 3 35,000 4 60,000 Beginning Workforce = 50 workers Production per Employee = 250 units per quarter Hiring Cost = $1000 per worker Firing Cost = $1,500 per worker Inventory Carrying Cost = $15 per unit per quarter If a chase demand strategy is used then the number of workers fired at the start of quarter 3 is a. 0 b. 50 c. 60 d. 100 Ans: c Difficulty: Moderate Feedback: Quantitative Techniques for Aggregate Planning

58. The following information relates to a company’s aggregate production planning activities: Quarter Demand Forecast 1 25,000 2 50,000 3 35,000 4 60,000 Beginning Workforce = 50 workers Production per Employee = 250 units per quarter Hiring Cost = $1000 per worker Firing Cost = $1,500 per worker Inventory Carrying Cost = $15 per unit per quarter If a chase demand strategy is used then the total hiring and firing cost of the plan is a. $340,000 b. $250,000 c. $125,000 d. $90,000 Ans: a Difficulty: Moderate Feedback: Quantitative Techniques for Aggregate Planning

59. The following information relates to a company’s aggregate production planning activities: Quarter Demand Forecast 1 25,000 2 50,000 3 35,000 4 60,000 Beginning Workforce = 50 workers Production per Employee = 250 units per quarter Hiring Cost = $1000 per worker Firing Cost = $1,500 per worker Inventory Carrying Cost = $15 per unit per quarter If a level production strategy is used then the required output per quarter is a. 60,000 units b. 42,500 units c. 35,000 units d. 25,000 units

Ans: b Difficulty: Moderate Feedback: Quantitative Techniques for Aggregate Planning

60. The following information relates to a company’s aggregate production planning activities: Quarter Demand Forecast 1 25,000 2 50,000 3 35,000 4 60,000 Beginning Workforce = 50 workers Production per Employee = 250 units per quarter Hiring Cost = $1000 per worker Firing Cost = $1,500 per worker Inventory Carrying Cost = $15 per unit per quarter If a level production strategy is used then the inventory at the end of quarter 3 is a. 0 b. 5,000 c. 10,000 d. 17,500 Ans: d Difficulty: Moderate Feedback: Quantitative Techniques for Aggregate Planning

61. The following information relates to a company’s aggregate production planning activities: Quarter Demand Forecast 1 25,000 2 50,000 3 35,000 4 60,000 Beginning Workforce = 50 workers Production per Employee = 250 units per quarter Hiring Cost = $1000 per worker Firing Cost = $1,500 per worker Inventory Carrying Cost = $15 per unit per quarter If a level production strategy is used then the number of workers required is a. 125

b. 170 c. 250 d. 325 Ans: b Difficulty: Moderate Feedback: Quantitative Techniques for Aggregate Planning

62. The following information relates to a company’s aggregate production planning activities: Quarter Demand Forecast 1 25,000 2 50,000 3 35,000 4 60,000 Beginning Workforce = 50 workers Production per Employee = 250 units per quarter Hiring Cost = $1000 per worker Firing Cost = $1,500 per worker Inventory Carrying Cost = $15 per unit per quarter If a level production strategy is used then the total cost of the plan (hiring cost, firing cost and inventory carrying cost) is a. $120,000 b. $377,500 c. $675,000 d. $795,000 Ans: d Difficulty: Moderate Feedback: Quantitative Techniques for Aggregate Planning

63. A hot dog vendor must decide on Monday how many hot dogs to have available for the coming Saturday’s football game. Each hot dog costs the vendor $3.00 and is sold for $5.00. After the game any unsold hot dogs are discounted and sold to the university cafeteria for $1.75. The vendor believes that the demand for hot dogs follows the probability distribution shown below: Demand for Hot Dogs 1000 1500 2000

Probability 0.30 0.20 0.30

2500 3000

0.15 0.05

The vendor’s cost of underestimating demand, Cu, is a. $3.00 b. $1.75 c. $2.00 d. $3.25 Ans: c Difficulty: Moderate Feedback: Aggregate Planning for Services

64. A hot dog vendor must decide on Monday how many hot dogs to have available for the coming Saturday’s football game. Each hot dog costs the vendor $3.00 and is sold for $5.00. After the game any unsold hot dogs are discounted and sold to the university cafeteria for $1.75. The vendor believes that the demand for hot dogs follows the probability distribution shown below: Demand for Hot Dogs 1000 1500 2000 2500 3000

Probability 0.30 0.20 0.30 0.15 0.05

The vendor’s cost of overestimating demand, Co, is a. $5.00 b. $3.00 c. $1.75 d. $1.25 Ans: d Difficulty: Moderate Feedback: Aggregate Planning for Services

65. A hot dog vendor must decide on Monday how many hot dogs to have available for the coming Saturday’s football game. Each hot dog costs the vendor $3.00 and is sold for $5.00. After the game any unsold hot dogs are discounted and sold to the university cafeteria for $1.75. The vendor believes that the demand for hot dogs follows the probability distribution shown below:

Demand for Hot Dogs 1000 1500 2000 2500 3000

Probability 0.30 0.20 0.30 0.15 0.05

The optimal number of hot dogs the vendor should order for next Saturday’s game is a. 1000 b. 1500 c. 2000 d. 3000 Ans: c Difficulty: Moderate Feedback: Aggregate Planning for Services

66. A hotel manager must decide how many rooms to overbook. Room rates are $125 per night and each room costs $45 to maintain. A bumped customer is sent to another hotel at a cost of $75. Given the distribution of no-shows below, how many rooms should the manager overbook?

No-Shows 7 8 9 10 11 12 13 14 15 a. b. c. d.

Overbook 9 rooms Overbook 10 rooms Overbook 11 rooms Overbook 12 rooms

Ans: b Difficulty: Moderate Feedback: Aggregate Planning for Services

Probability 0.15 0.20 0.15 0.15 0.10 0.10 0.05 0.05 0.05

67. The following information relates to a company’s aggregate production planning activities: Quarter Demand Forecast 1 37,500 2 45,000 3 25,000 4 62,500 Beginning Workforce = 125 workers Production per Employee = 500 units per quarter Hiring Cost = $750 per worker Firing Cost = $1,500 per worker Inventory Carrying Cost = $10 per unit per quarter If a chase demand strategy is used then the number of workers hired in quarter 4 is a. 0 b. 15 c. 75 d. 125 Ans: c Difficulty: Moderate Feedback: Quantitative Techniques for Aggregate Planning

68. The following information relates to a company’s aggregate production planning activities: Quarter Demand Forecast 1 37,500 2 45,000 3 25,000 4 62,500 Beginning Workforce = 125 workers Production per Employee = 500 units per quarter Hiring Cost = $750 per worker Firing Cost = $1,500 per worker Inventory Carrying Cost = $10 per unit per quarter If a chase demand strategy is used the number of workers fired in quarter 3 is a. 0 b. 40 c. 50 d. 75 Ans: b Difficulty: Moderate Feedback: Quantitative Techniques for Aggregate Planning

69. The following information relates to a company’s aggregate production planning activities: Quarter Demand Forecast 1 37,500 2 45,000 3 25,000 4 62,500 Beginning Workforce = 125 workers Production per Employee = 500 units per quarter Hiring Cost = $750 per worker Firing Cost = $1,500 per worker Inventory Carrying Cost = $10 per unit per quarter If a chase demand strategy is used the total hiring and firing costs for the production plan is a. $67,500 b. $135,000 c. $202,500 d. $337,500 Ans: c Difficulty: Moderate Feedback: Quantitative Techniques for Aggregate Planning

70. The following information relates to a company’s aggregate production planning activities: Quarter Demand Forecast 1 37,500 2 45,000 3 25,000 4 62,500 Beginning Workforce = 125 workers Production per Employee = 500 units per quarter Hiring Cost = $750 per worker Firing Cost = $1,500 per worker Inventory Carrying Cost = $10 per unit per quarter If a level production strategy is used the number of units to produce each quarter is a. 42,500 b. 85,000 c. 62,500

d. 37,500 Ans: a Difficulty: Moderate Feedback: Quantitative Techniques for Aggregate Planning

71. The following information relates to a company’s aggregate production planning activities: Quarter Demand Forecast 1 37,500 2 45,000 3 25,000 4 62,500 Beginning Workforce = 125 workers Production per Employee = 500 units per quarter Hiring Cost = $750 per worker Firing Cost = $1,500 per worker Inventory Carrying Cost = $10 per unit per quarter If a level production strategy is used the number of workers required each quarter is a. 50 b. 75 c. 85 d. 125 Ans: c Difficulty: Moderate Feedback: Quantitative Techniques for Aggregate Planning

72. The following information relates to a company’s aggregate production planning activities: Quarter Demand Forecast 1 37,500 2 45,000 3 25,000 4 62,500 Beginning Workforce = 125 workers Production per Employee = 500 units per quarter Hiring Cost = $750 per worker Firing Cost = $1,500 per worker Inventory Carrying Cost = $10 per unit per quarter

If a level production strategy is used the number of units in inventory at the end of quarter 3 is a. 0 b. 2,500 c. 5,000 d. 20,000 Ans: d Difficulty: Moderate Feedback: Quantitative Techniques for Aggregate Planning

73. The following information relates to a company’s aggregate production planning activities: Quarter Demand Forecast 1 37,500 2 45,000 3 25,000 4 62,500 Beginning Workforce = 125 workers Production per Employee = 500 units per quarter Hiring Cost = $750 per worker Firing Cost = $1,500 per worker Inventory Carrying Cost = $10 per unit per quarter If a level production strategy is used the total cost of the production plan (hiring cost, firing cost, and inventory cost) is a. $60,000 b. $275,000 c. $335,000 d. $610,000 Ans: c Difficulty: Moderate Feedback: Quantitative Techniques for Aggregate Planning

Short Answer Questions

74. What is aggregate planning and what alternatives are generally feasible when developing the aggregate production plans?

Ans: Aggregate planning determines the resource capacity a firm will need to meet its demand over an intermediate time horizon—6 to 12 months in the future. The term aggregate is used because the plans are developed for product lines or product families, rather than individual products. Within this time frame it is usually not feasible to increase capacity by building new facilities or purchasing new equipment; however, it is feasible to hire or lay off workers, increase or deduce the workweek, add an extra shift, subcontract out work, use overtime, or build up and deplete inventory levels.

Difficulty: Moderate Feedback: The Sales and Operations Planning Process

75. Briefly discuss the two primary objectives of aggregate planning.

Ans: There are two objectives to aggregate planning: (1) to establish a companywide game plan for allocating resources, and (2) to develop an economic strategy for meeting demand. The first objective refers to the long-standing battle between the firm’s marketing and production functions. Marketing will sometimes make unrealistic sales projections that production is expected to meet. Production employees who are evaluated on keeping manufacturing costs down may be reluctant to accept orders that incur higher processing costs. The job of aggregate planning is to match forecasted demand with available capacity. If capacity is inadequate it can sometimes be expanded, but at a cost.

An analysis of whether the extra revenue is worth the extra cost must be performed.

Difficulty: Moderate Feedback: The Sales and Operations Planning Process

76. What are the outputs of aggregate planning?

Ans: The outputs of aggregate planning include production per month or quarter by product or service family, the size of the workforce, and the amount of regular, overtime, and subcontracted production required. Inventory and backlog levels are projected, along with the number of units or dollars to be backordered or lost. For companies that outsource most of their production, the aggregate plan also includes where the production will take place. For services, the aggregate plan outlines how much work can be completed (or new work accepted) in a specified time period.

Difficulty: Moderate Feedback: The Sales and Operations Planning Process

File: ch S14, Chapter 14 Supplement: Operational Decision-Making Tools: Linear Programming

True/False

1. Operations mangers find very few types of linear program models applicable today because finding an optimal solution is no longer a concern.

Ans: False Difficulty: Easy Feedback: Model Formulation

2. In general, the objective function for linear programming problems in operations is one of minimizing costs.

Ans: True Difficulty: Moderate Feedback: Model Formulation

3. A formulation for a linear programming model consists of a decision variable, a constraint and several objective functions.

Ans: False Difficulty: Easy Feedback: Model Formulation

4. The objective function is a linear relationship that either minimizes or maximizes some value.

Ans: True Difficulty: Easy Feedback: Model Formulation

5. The formulation for a linear programming problem cannot include more than one decision variable.

Ans: False Difficulty: Easy Feedback: Model Formulation

6. The constraints in a linear programming formulation define the feasible solution space.

Ans: True Difficulty: Easy Feedback: Model Formulation

7. Linear programming is a mathematical modeling technique based on linear relationships Ans: True Difficulty: Easy Feedback: Model Formulation

8. While all linear programming problems have a single objective function, very few, if any, have constraints.

Ans: False Difficulty: Easy Feedback: Model Formulation

9. A linear programming model’s constraints are nonlinear relationships that describe the restrictions placed on the decision variables.

Ans: False Difficulty: Moderate Feedback: Model Formulation

10. Linear programming problems with two decision variables can be solved graphically.

Ans: True Difficulty: Moderate Feedback: Graphical Solution Method

11. Most real-world linear programming problems are solved graphically.

Ans: False Difficulty: Easy Feedback: Graphical Solution Method

12. The feasible solution space contains the values for the decision variables that satisfy the majority of the linear programming model’s constraints.

Ans: False Difficulty: Moderate Feedback: LP model solution

13. The optimal solution for a linear programming problem will always occur at an extreme point.

Ans: True Difficulty: Moderate Feedback: Linear Programming Model Solution

14. The simplex method used for solving linear programming problems uses matrix algebra to solve simultaneous equations.

Ans: True Difficulty: Moderate Feedback: Linear Programming Model Solution

15. Because linear programming provides an optimal solution, sensitivity analysis is never an important consideration.

Ans: False Difficulty: Moderate Feedback: Linear Programming Model Solution

Multiple Choice

16. _____________ represent a restriction on decision variable values for a linear programming problem. a. Surpluses b. Constraints c. Extreme points d. Optimal points Ans: b Difficulty: Moderate Feedback: Model Formulation

17. The area that contains the values that satisfies all the constraints in a linear programming problem is known as the _________________ space. a. optimal solution b. non-optimal solution c. feasible solution d. infeasible solution.

Ans: c Difficulty: Moderate Feedback: Graphical Solution Method

18. The optimal solution for a linear programming problem will always occur a. when the slack price equals the surplus price. b. when the surplus price equals the slack price. c. at an extreme point. d. at a non-extreme point.

Ans: c Difficulty: Moderate Feedback: Graphical Solution Method

19. The simplex method is a solution method used for linear programming problems that have a. no constraints. b. at least one constraint. c. at least two constraints. d. at least three constraints.

Ans: a Difficulty: Moderate Feedback: Model Formulation

20. The constraint 3x1 + 6x2 > 48 is converted to an equality by a. adding a slack variable. b. subtracting a surplus variable. c. adding both a slack variable and a surplus variable. d. subtracting both a slack variable and a surplus variable.

Ans: b Difficulty: Moderate Feedback: Linear Programming Model Formulation

21. For a less than or equal to (<) constraint the shadow price represents the a. amount you would be willing to pay for one additional unit of a resource. b. amount you at which you would be willing to sell one additional unit of a resource. c. difference between the slack price and the surplus price. d. difference between the surplus price and the slack price.

Ans: a Difficulty: Moderate Feedback: Sensitivity Analysis

22. A company produces product A and product B. Each product must go through two processes. Each A produced requires two hours in process 1 and five hours in process 2. Each B produced requires six hours in process 1 and three hours in process 2.

There are 80 hours of capacity available each week in each process. Each A produced generates $6.00 in profit for the company. Each B produced generates $9.00 in profit

for the company. If the company produces 6 units of A and 9 units of B the company’s objective function is a. $6.00A + $9.00B b. $9.00A + $6.00B c. $6.00A - $9.00B d. $6.00A*$9.00B Ans: a Difficulty: Moderate Feedback: Linear Programming Model Solution

23. A company produces product A and product B. Each product must go through two processes. Each A produced requires two hours in process 1 and five hours in process 2. Each B produced requires six hours in process 1 and three hours in process 2.

There are 80 hours of capacity available each week in each process. Each A produced generates $6.00 in profit for the company. Each B produced generates $9.00 in profit for the company. If the company produces 6 units of A and 9 units of B the constraint for process 1 is represented by a. 2A + 5B < 80 b. 2A + 6B > 80 c. 2A + 6B < 80 d. 2A + 6B < 80 Ans: d Difficulty: Moderate Feedback: Linear Programming Model Solution

24. A company produces product A and product B. Each product must go through two processes. Each A produced requires two hours in process 1 and five hours in process 2. Each B produced requires six hours in process 1 and three hours in process 2.

There are 80 hours of capacity available each week in each process. Each A produced generates $6.00 in profit for the company. Each B produced generates $9.00 in profit for the company. If the company produces 6 units of A and 9 units of B the capacity constraint for Process 2 is a. 5A + 3B > 80 b. 6A + 3 B < 80 c. 5A + 3B < 80 d. 5A + 3B < 80 Ans: c Difficulty: Moderate Feedback: Linear Programming Model Solution

25. A company produces product A and product B. Each product must go through two processes. Each A produced requires two hours in process 1 and five hours in process 2. Each B produced requires six hours in process 1 and three hours in process 2.

There are 80 hours of capacity available each week in each process. Each A produced generates $6.00 in profit for the company. Each B produced generates $9.00 in profit for the company. If the company produces 6 units of A and 9 units of B the value of the objective function is equal to a. $36. b. $81. c. $108. d. $117 Ans: d Difficulty: Moderate Feedback: Linear Programming Model Solution

26. A company produces product A and product B. Each product must go through two processes. Each A produced requires two hours in process 1 and five hours in process 2. Each B produced requires six hours in process 1 and three hours in process 2.

There are 80 hours of capacity available each week in each process. Each A produced generates $6.00 in profit for the company. Each B produced generates $9.00 in profit for the company. If the company produces 6 units of A and 9 units of B the amount of slack (in hours) for process 1 is a. 0 hours. b. 14 hours. c. 66 hours. d. 80 hours.

Ans: a Difficulty: Hard Feedback: Linear Programming Model Solution

Short Answer Questions

27. How is linear programming useful to an operations manager?

Ans: Linear programming is a mathematical modeling technique used to determine a level of operational activity in order to achieve an objective, subject to restrictions called constraints. Many decisions faced by an operations manager are centered around the best way to achieve the objectives of the firm subject to the constraints of the operating environment. There constraints can be limited resources, such as time, labor, energy, materials, or money, or they can be restrictive guidelines.

Difficulty: Moderate Feedback: Model Formulation

28. Briefly define the components that comprise a linear programming model.

Ans: A linear programming model consists of decision variables, an objective function, and model constraints. Decision variables are mathematical symbols that represent levels of activity of an operation. The objective function is a linear mathematical relationship that describes the objective of an operation in terms of the decision variables. The model constraints are also linear relationships of the decision variables that represent the restrictions placed on the decision situation by the operating environment.

Difficulty: Moderate Feedback: Model Formulation

29. What is meant by the term “shadow price” in linear programming?

Ans: The shadow prices are the marginal values (also referred to as dual values) of the resource constraints in the linear programming model. The shadow prices represent the amount the company would be willing to pay for one additional unit of a resource. The shadow prices are not the original selling prices of a resource, but are rather the amount the company should pay to get more of the resource. The shadow price is helpful to the company in pricing resources and making decisions about securing additional resources.

Difficulty: Moderate Feedback: Sensitivity Analysis

File: ch15, Chapter 15: Resource Planning

True/False

1. Material requirements planning (MRP) translates the master production schedule into requirements for components, subassemblies, and raw materials.

Ans: True Difficulty: Easy Feedback: Material Requirements Planning (MRP)

2. Capacity requirement planning (CRP) converts the material plan into labor and machine workloads.

Ans: True Difficulty: Easy Feedback: Capacity Requirements Planning (CRP)

3. One objective of material requirements planning (MRP) is to utilize all available capacity.

Ans: False Difficulty: Easy Feedback: Material Requirements Planning (MRP)

4. A material requirements planning (MRP) system serves as both an inventory control system and as a production scheduling system.

Ans: True Difficulty: Moderate Feedback: Material Requirements Planning (MRP)

5. Material requirements planning (MRP) is useful for managing and scheduling discrete demand items.

Ans: True Difficulty: Moderate Feedback: Material Requirements Planning (MRP)

6. A forecast of dependent demand requirements is one of the major inputs into the MRP process.

Ans: False Difficulty: Moderate Feedback: Material Requirements Planning (MRP)

7. Very simple products typically do not require material requirements planning (MRP) to plan production or monitor inventory levels.

Ans: True Difficulty: Moderate Feedback: Material Requirements Planning (MRP)

8. The master production schedule (MPS) is a major output of the MRP process.

Ans: False Difficulty: Easy Feedback: Material Requirements Planning (MRP)

9. The optimal time required to manufacture a product is called its cumulative lead time.

Ans: False Difficulty: Easy Feedback: Material Requirements Planning (MRP)

10. Modular bills of material are used to group small, lose parts together into a kit.

Ans: False Difficulty: Moderate Feedback: Material Requirements Planning (MRP)

11. Information concerning on-hand quantities, lot sizes and, lead time, figures can be found in the master production schedule (MPS).

Ans: False Difficulty: Moderate Feedback: Material Requirements Planning (MRP)

12. Lot sizing rules are used in MRP to determine work or purchase order quantities.

Ans: True Difficulty: Moderate Feedback: Material Requirements Planning (MRP)

13. Planned order releases at one level of a product structure generate gross requirements at the next level.

Ans: True Difficulty: Moderate Feedback: Material Requirements Planning (MRP)

14. The periodic order quantity (POQ) lot sizing technique that places orders every demand period.

Ans: False Difficulty: Moderate Feedback: Material Requirements Planning (MRP)

15. Capacity requirements planning (CRP) projects the load from a given material plan onto the capacity of a system.

Ans: True Difficulty: Moderate Feedback: Capacity Requirements Planning (CRP)

Formatted: Indent: Left: 0"

16. A load profile displays underloads and overloads.

Ans: True Difficulty: Easy Feedback: Capacity Requirements Planning (CRP)

17. An enterprise resource planning (ERP) system shares information across functional areas.

Ans: True Difficulty: Moderate Feedback: Enterprise Resource Planning (ERP)

18. The application modules that comprise the ERP system are designed to support only customer relationship management processes.

Ans: False Difficulty: Moderate Feedback: Enterprise Resource Planning (ERP)

19. ERP systems are only concerned with production and marketing processes.

Ans: False Difficulty: Easy Feedback: Enterprise Resource Planning (ERP)

20. Customer relationship management (CRM) software plans and executes business processes that involve customer interactions.

Ans: True Difficulty: Moderate Feedback: Customer Relationship Management (CRM)

21. Material requirements planning (MRP) is more useful for simple products and less useful for complex products.

Ans: False Difficulty: Easy Feedback: Material Requirements Planning (MRP)

22. The total length of time to purchase an item from a supplier is called its cumulative lead time.

Ans: False Difficulty: Easy Feedback: Material Requirements Planning (MRP)

23. The quantities reported on a master production schedule may reflect a combination of actual and forecasted demand.

Ans: True Difficulty: Moderate Feedback: Material Requirements Planning (MRP)

24. The quantities displayed on a master production schedule represent production and not actual demand.

Ans: True Difficulty: Moderate Feedback: Material Requirements Planning (MRP)

25. A phantom bill of material is appropriate when a product consists of assemblies that are later combined to form a variety of final products.

Ans: False Difficulty: Moderate Feedback: Material Requirements Planning (MRP)

Formatted: Indent: Left: 0"

26. Because the item master file is an input into the MRP process it should be updated to reflect any revisions or changes.

Ans: True Difficulty: Moderate Feedback: Material Requirements Planning (MRP)

27. Firms that successfully implement an MRP system no longer require cycle counting of inventory.

Ans: False Difficulty: Moderate Feedback: Material Requirements Planning (MRP)

28. A matrix is used to organize and display the information generated by the MRP process.

Ans: True Difficulty: Moderate Feedback: Material Requirements Planning (MRP)

29. Effective capacity is determined by multiplying the rated capacity by utilization and efficiency.

Ans: True Difficulty: Moderate Feedback: Capacity Requirements Planning (CRP)

30. Load leveling is used to resolve underloaded and overloaded capacity conditions.

Ans: True Difficulty: Easy Feedback: Capacity Requirements Planning (CRP)

31. Enterprise resource planning integrates business processes at the expense of customer interaction.

Ans: False Difficulty: Moderate Feedback: Enterprise Resource Planning (ERP)

32. ERP application modules can be used alone or in combination.

Ans: True Difficulty: Moderate Feedback: Enterprise Resource Planning (ERP)

33. Single-source ERP systems are often easier to integrate than systems built using the best-in-breed approach.

Ans: True Difficulty: Moderate Feedback: Enterprise Resource Planning (ERP)

34. The last stage in ERP implementation involves analyzing business processes.

Ans: False Difficulty: Easy Feedback: Enterprise Resource Planning (ERP)

35. Customer relationship management systems change the focus from managing products to managing customers.

Ans: True Difficulty: Moderate Feedback: Customer Relationship Management (CRM)

Multiple Choice

36. Material requirements planning (MRP) is a useful for all of the following except a. dependent demand items. b. discrete demand items. c. independent demand items. d. erratic orders.

Formatted: Indent: Left: 0", Tab stops: Not at 0.25"

Ans: c.

Difficulty: Moderate Feedback: Material Requirements Planning (MRP) Formatted: Indent: Left: 0"

37. a. b. c. d.

37. All of the following are inputs into the MRP process except the master production schedule. the product structure file. the item master file. the planned order report.

Formatted: No bullets or numbering

Ans: d Difficulty: Easy Feedback: Material Requirements Planning (MRP)

38. The product structure file lists all of the following except a. the product’s demand. b. the items that go into the product. c. a brief description of each item. d. when and in what quantity each item is needed in the assembly process.

Formatted: Indent: Left: 0", Numbered + Level: 1 + Numbering Style: 1, 2, 3, … + Start at: 38 + Alignment: Left + Aligned at: 0.38" + Indent at: 0.63"

Ans: a Difficulty: Easy Feedback: Material Requirements Planning (MRP)

39. A phantom bill of material is used

Formatted: Indent: Left: 0", Numbered + Level: 1 + Numbering Style: 1, 2, 3, … + Start at: 38 + Alignment: Left + Aligned at: 0.38" + Indent at: 0.63"

a. b. c. d.

to group small, loose parts together. when the product is manufactured in major subassemblies. for subassemblies that are immediately consumed in the next stage of production. when due dates have not been calculated.

Ans: c Difficulty: Moderate Feedback: Material Requirements Planning (MRP)

40. A _______________ of material is used to plan the production of products with many optional features. a. K-bill b. modular bill c. phantom bill d. time-phased bill

Formatted: Indent: Left: 0", Numbered + Level: 1 + Numbering Style: 1, 2, 3, … + Start at: 38 + Alignment: Left + Aligned at: 0.38" + Indent at: 0.63"

Ans: b Difficulty: Moderate Feedback: Material Requirements Planning (MRP)

41. The item master file contains all the following except a. on-hand quantities. b. lead times. c. planned order releases. d. on-order quantities.

Formatted: Indent: Left: 0", Numbered + Level: 1 + Numbering Style: 1, 2, 3, … + Start at: 38 + Alignment: Left + Aligned at: 0.38" + Indent at: 0.63"

Ans: c Difficulty: Moderate Feedback: Material Requirements Planning (MRP)

42. The MRP process of subtracting on-hand quantities and scheduled receipts from gross requirements to produce net requirements is referred to as a. cycle counting. b. lot sizing. c. exploding. d. netting.

Ans: d Difficulty: Moderate Feedback: Material Requirements Planning (MRP)

Formatted: Indent: Left: 0", Numbered + Level: 1 + Numbering Style: 1, 2, 3, … + Start at: 38 + Alignment: Left + Aligned at: 0.38" + Indent at: 0.63"

43. The MRP process of determining requirements for lower level items based on the master production schedule is referred to as a. lot sizing. b. netting. c. backward scheduling. d. exploding.

Formatted: Indent: Left: 0", Numbered + Level: 1 + Numbering Style: 1, 2, 3, … + Start at: 38 + Alignment: Left + Aligned at: 0.38" + Indent at: 0.63"

Ans: d Difficulty: Moderate Feedback: Material Requirements Planning (MRP)

44. ______________ is a lot sizing technique that orders for multiple demand periods is referred to as a. Lot-for-lot (L4L) b. Periodic order quantity (POQ) c. Economic order quantity(EOQ) d. Multiple order quantity (MOQ)

Formatted: Indent: Left: 0", Numbered + Level: 1 + Numbering Style: 1, 2, 3, … + Start at: 38 + Alignment: Left + Aligned at: 0.38" + Indent at: 0.63"

Ans: b Difficulty: Moderate Feedback: Material Requirements Planning (MRP)

45. Which of the following is not a major input into capacity requirements planning (CRP)? a. planned order releases b. routing file c. load profiles for each work center d. open orders file Ans: c Difficulty: Moderate Feedback: Capacity Requirements Planning (CRP)

Formatted: Indent: Left: 0", Numbered + Level: 1 + Numbering Style: 1, 2, 3, … + Start at: 38 + Alignment: Left + Aligned at: 0.38" + Indent at: 0.63"

46. A load profile compares a. requirements for all lower-level items to higher-level items. b. cumulative lead times to projected lead times. c. the quantities in which items should be produced to actual demand. d. released and planned orders with work center capacity.

Formatted: Indent: Left: 0", Numbered + Level: 1 + Numbering Style: 1, 2, 3, … + Start at: 38 + Alignment: Left + Aligned at: 0.38" + Indent at: 0.63"

Ans: d Difficulty: Moderate Feedback: Capacity Requirements Planning (CRP)

47. All of the following can be used for underloaded conditions except a. acquiring additional work. b. pushing work back. c. pulling work ahead. d. reducing normal capacity.

Formatted: Indent: Left: 0", Numbered + Level: 1 + Numbering Style: 1, 2, 3, … + Start at: 38 + Alignment: Left + Aligned at: 0.38" + Indent at: 0.63"

Ans: b Difficulty: Moderate Feedback: Capacity Requirements Planning (CRP)

48. Which of the following would not be used for an overloaded condition? a. pulling work ahead b. rerouting jobs to alternative work centers c. pushing work back d. splitting lots between two or more machines

Formatted: Indent: Left: 0", Numbered + Level: 1 + Numbering Style: 1, 2, 3, … + Start at: 38 + Alignment: Left + Aligned at: 0.38" + Indent at: 0.63"

Ans: a Difficulty: Moderate Feedback: Capacity Requirements Planning (CRP)

49. Given the following Product Structure Record A B(3) D(2) G(3)

C(2) E(1)

D(3)

G(2)

G(3)

The number of E’s required for each A would be a. 1 b. 2

Formatted: Indent: Left: 0", Numbered + Level: 1 + Numbering Style: 1, 2, 3, … + Start at: 38 + Alignment: Left + Aligned at: 0.38" + Indent at: 0.63"

c. 3 d. 4 Ans: c Difficulty: Moderate Feedback: Material Requirements Planning (MRP)

50. Given the following Product Structure Record A B(3) D(2)

Formatted: Indent: Left: 0", Numbered + Level: 1 + Numbering Style: 1, 2, 3, … + Start at: 38 + Alignment: Left + Aligned at: 0.38" + Indent at: 0.63"

C(2) E(1)

D(3)

G(2)

G(3)

G(3)

The number of D’s required for each A would be a. b. c. d.

2 3 6 12

Ans: d Difficulty: Moderate Feedback: Material Requirements Planning (MRP)

51. Given the following Product Structure Record A B(3) D(2) G(3)

C(2) E(1)

D(3)

G(2)

G(3)

The number of G’s required for each A would be

Formatted: Indent: Left: 0", Numbered + Level: 1 + Numbering Style: 1, 2, 3, … + Start at: 38 + Alignment: Left + Aligned at: 0.38" + Indent at: 0.63"

a. b. c. d.

40 20 18 3

Ans: a Difficulty: Moderate Feedback: Material Requirements Planning (MRP)

Formatted: Indent: Left: 0", Numbered + Level: 1 + Numbering Style: 1, 2, 3, … + Start at: 38 + Alignment: Left + Aligned at: 0.38" + Indent at: 0.63"

52. Given the following MRP matrix for Item D: ITEM: D Lot Size: Min 100 LT: 2 Gross Requirements Schedule Receipts Project on Hand 120 Net Requirements Planned Order Receipts Planned Order Releases

1 60

2 90 150

3 150

Period 4 5 150 180

6 270

7 120

The planned order release for period 3 would be a. b. c. d.

100 160 270 300

Ans: b Difficulty: Hard Feedback: Material Requirements Planning (MRP)

Formatted: Indent: Left: 0", Numbered + Level: 1 + Numbering Style: 1, 2, 3, … + Start at: 38 + Alignment: Left + Aligned at: 0.38" + Indent at: 0.63"

53. Given the following MRP matrix for Item D: ITEM: D Lot Size: Min 100 LT: 2 Gross Requirements Schedule Receipts Project on Hand 120 Net Requirements Planned Order Receipts Planned Order Releases

1 60

2 90 150

3 150

The planned order release for period 5 would be a. 100 b. 120

Period 4 5 150 180

6 270

7 120

c. 160 d. 270 Ans: b Difficulty: Hard Feedback: Material Requirements Planning (MRP)

Formatted: Indent: Left: 0", Numbered + Level: 1 + Numbering Style: 1, 2, 3, … + Start at: 38 + Alignment: Left + Aligned at: 0.38" + Indent at: 0.63"

54. Given the following MRP matrix for Item D: ITEM: D Lot Size: Min 100 LT: 2 Gross Requirements Schedule Receipts Project on Hand 120 Net Requirements Planned Order Receipts Planned Order Releases

1 60

2 90 150

3 150

Period 4 5 150 180

6 270

7 120

The planned order receipt for period 6 would be a. b. c. d.

100 120 160 270

Ans: d Difficulty: Hard Feedback: Material Requirements Planning (MRP)

Formatted: Indent: Left: 0", Numbered + Level: 1 + Numbering Style: 1, 2, 3, … + Start at: 38 + Alignment: Left + Aligned at: 0.38" + Indent at: 0.63"

55. Given the following MRP matrix for Item D: ITEM: D Lot Size: Min 100 LT: 2 Gross Requirements Schedule Receipts Project on Hand 120 Net Requirements Planned Order Receipts Planned Order Releases

1 60

2 90 150

3 150

Period 4 5 150 180

The projected on hand quantity at the end of period 3 would be a. b. c. d.

0 20 60 70

6 270

7 120

Ans: d Difficulty: Hard Feedback: Material Requirements Planning (MRP)

Formatted: Indent: Left: 0", Numbered + Level: 1 + Numbering Style: 1, 2, 3, … + Start at: 38 + Alignment: Left + Aligned at: 0.38" + Indent at: 0.63"

56. Given the following MRP matrix for Item C: ITEM: C Lot Size: POQ LT: 2 Gross Requirements Schedule Receipts Project on Hand 100 Net Requirements Planned Order Receipts Planned Order Releases

1 70

2 90 200

3 150

Period 4 5 150 180

6 290

7 120

8 150

If each order cost $500 and the holding cost is $0.75 per item per period, the periodic order quantity would be a. b. c. d.

3 periods of requirements 2 periods of requirements 1 period of requirements 0 period of requirements

Ans: a Difficulty: Hard Feedback: Material Requirements Planning (MRP)

Formatted: Indent: Left: 0", Numbered + Level: 1 + Numbering Style: 1, 2, 3, … + Start at: 38 + Alignment: Left + Aligned at: 0.38" + Indent at: 0.63"

57. Given the following MRP matrix for Item C: ITEM: C Lot Size: POQ LT: 2 Gross Requirements Schedule Receipts Project on Hand 100 Net Requirements Planned Order Receipts Planned Order Releases

1 70

2 90 200

3 150

Period 4 5 150 180

6 290

7 120

8 150

If each order cost $500 and the holding cost is $0.75 per item per period, then using the Periodic Order Quantity lot sizing technique, the Planned Order Release for period 1 would be a. 270 b. 290

c. 340 d. 560 Ans: c Difficulty: Hard Feedback: Material Requirements Planning (MRP)

Formatted: Indent: Left: 0", Numbered + Level: 1 + Numbering Style: 1, 2, 3, … + Start at: 38 + Alignment: Left + Aligned at: 0.38" + Indent at: 0.63"

58. Given the following MRP matrix for Item C: ITEM: C Lot Size: POQ LT: 2 Gross Requirements Schedule Receipts Project on Hand 100 Net Requirements Planned Order Receipts Planned Order Releases

1 70

2 90 200

3 150

Period 4 5 150 180

6 290

7 120

8 150

If each order cost $500 and the holding cost is $0.75 per item per period, then using the Periodic Order Quantity lot sizing technique, the Planned Order Release for period 4 would be a. 270 b. 290 c. 340 d. 560 Ans: b Difficulty: Hard Feedback: Material Requirements Planning (MRP)

Formatted: Indent: Left: 0", Numbered + Level: 1 + Numbering Style: 1, 2, 3, … + Start at: 38 + Alignment: Left + Aligned at: 0.38" + Indent at: 0.63"

59. Given the following MRP matrix for Item C: ITEM: C Lot Size: POQ LT: 2 Gross Requirements Schedule Receipts Project on Hand 100 Net Requirements Planned Order Receipts Planned Order Releases

1 70

2 90 200

3 150

Period 4 5 150 180

6 290

7 120

8 150

If each order cost $500 and the holding cost is $0.75 per item per period, then using the Periodic Order Quantity lot sizing technique, the Projected on Hand at the end of period 7 would be

a. b. c. d.

330 270 0 140

Ans: c Difficulty: Hard Feedback: Material Requirements Planning (MRP)

Formatted: Indent: Left: 0", Numbered + Level: 1 + Numbering Style: 1, 2, 3, … + Start at: 38 + Alignment: Left + Aligned at: 0.38" + Indent at: 0.63"

60. Given the following Product Structure Record A

B(2)

E(2)

C(3)

F(3)

F(2)

D(6)

G(3)

E(3)

H(1)

F(2)

I(1)

The number of I’s required for each A would be a. b. c. d.

1 2 6 12

Ans: c Difficulty: Moderate Feedback: CRM

61. Given the following Product Structure Record A

B(2)

E(2)

C(3)

F(3)

F(2)

D(6)

G(3)

E(3)

H(1)

F(2)

I(1)

Formatted: Numbered + Level: 1 + Numbering Style: 1, 2, 3, … + Start at: 38 + Alignment: Left + Aligned at: 0.38" + Indent at: 0.63"

The number of F’s required for each A would be a. b. c. d.

6 12 18 24

Ans: d Difficulty: Moderate Feedback: Material Requirements Planning (MRP)

Formatted: Indent: Left: 0", Numbered + Level: 1 + Numbering Style: 1, 2, 3, … + Start at: 38 + Alignment: Left + Aligned at: 0.38" + Indent at: 0.63"

62. Given the following Product Structure Record A

B(2)

E(2)

C(3)

F(3)

F(2)

D(6)

G(3)

E(3)

H(1)

F(2)

I(1)

The number of G’s required to assemble 10 A’s would be a. b. c. d.

9 10 90 180

Ans: c Difficulty: Moderate Feedback: Material Requirements Planning (MRP)

Formatted: Indent: Left: 0", Numbered + Level: 1 + Numbering Style: 1, 2, 3, … + Start at: 38 + Alignment: Left + Aligned at: 0.38" + Indent at: 0.63"

63. Given the following MRP matrix for Item E: ITEM: E Lot Size: L4L LT: 3 Gross Requirements Schedule Receipts Project on Hand 500 Net Requirements

1 200

2 100

3 200 300

Period 4 5 200 300

6 200

7 300

Planned Order Receipts Planned Order Releases

The planned order releases for period 1 would be a. b. c. d.

300 200 75 0

Ans: d Difficulty: Hard Feedback: Material Requirements Planning (MRP)

Formatted: Indent: Left: 0", Numbered + Level: 1 + Numbering Style: 1, 2, 3, … + Start at: 38 + Alignment: Left + Aligned at: 0.38" + Indent at: 0.63"

64. Given the following MRP matrix for Item E: ITEM: E Lot Size: L4L LT: 3 Gross Requirements Schedule Receipts Project on Hand 500 Net Requirements Planned Order Receipts Planned Order Releases

1 200

2 100

3 200 300

Period 4 5 200 300

6 200

7 300

The projected on hand quantity at the end of period 3 would be a. 0 b. 100 c. 300 d. 500 Ans: c Difficulty: Hard Feedback: Material Requirements Planning (MRP)

Formatted: Indent: Left: 0", Numbered + Level: 1 + Numbering Style: 1, 2, 3, … + Start at: 38 + Alignment: Left + Aligned at: 0.38" + Indent at: 0.63"

65. Given the following MRP matrix for Item E: ITEM: E Lot Size: L4L LT: 3 Gross Requirements Schedule Receipts Project on Hand 500 Net Requirements Planned Order Receipts Planned Order Releases

1 200

2 100

3 200 300

Period 4 5 200 300

6 200

7 300

The planned order releases for period 3 would be a. b. c. d.

300 200 75 0

Ans: b Difficulty: Hard Feedback: Material Requirements Planning (MRP)

Formatted: Indent: Left: 0", Numbered + Level: 1 + Numbering Style: 1, 2, 3, … + Start at: 38 + Alignment: Left + Aligned at: 0.38" + Indent at: 0.63"

66. Given the following MRP matrix for Item E: ITEM: E Lot Size: L4L LT: 3 Gross Requirements Schedule Receipts Project on Hand 500 Net Requirements Planned Order Receipts Planned Order Releases

1 200

2 100

3 200 300

Period 4 5 200 300

6 200

7 300

The planned order releases for period 4 would be a. b. c. d.

300 200 75 0

Ans: a Difficulty: Hard Feedback: Material Requirements Planning (MRP)

67. A firm has the following gross requirements for Item F. If ordering costs are $60 per order and carrying costs are $0.50 per period.

Item F LT: 1 Gross Requirements Schedule Receipts Project on Hand 100 Net Requirements Planned Order Receipts Planned Order Releases

1 60

Period 2 3 40 80

If L4L ordering is used the planned order releases would be

4 60

Formatted: Indent: Left: 0", Numbered + Level: 1 + Numbering Style: 1, 2, 3, … + Start at: 38 + Alignment: Left + Aligned at: 0.38" + Indent at: 0.63"

a. b. c. d.

40 in period 1 and 0 in period 3 80 in period 2 and 60 in period 3 60 in period 2 and 80 in period 3 0 in period 1 and 40 in period 3

Ans: b Difficulty: Hard Feedback: Material Requirements Planning (MRP)

68. A firm has the following gross requirements for Item F. If ordering costs are $60 per order and carrying costs are $0.50 per period.

Item F LT: 1 Gross Requirements Schedule Receipts Project on Hand 100 Net Requirements Planned Order Receipts Planned Order Releases

1 60

Period 2 3 40 80

Formatted: Indent: Left: 0", Numbered + Level: 1 + Numbering Style: 1, 2, 3, … + Start at: 38 + Alignment: Left + Aligned at: 0.38" + Indent at: 0.63"

4 60

If EOQ lot sizing is used the minimum order quantity would be a. b. c. d.

85 100 120 150

Ans: c Difficulty: Hard Feedback: Material Requirements Planning (MRP)

69. A firm has the following gross requirements for Item F. If ordering costs are $60 per order and carrying costs are $0.50 per period.

Item F LT: 1 Gross Requirements Schedule Receipts Project on Hand 100 Net Requirements Planned Order Receipts Planned Order Releases

1 60

Period 2 3 40 80

4 60

Formatted: Indent: Left: 0", Numbered + Level: 1 + Numbering Style: 1, 2, 3, … + Start at: 38 + Alignment: Left + Aligned at: 0.38" + Indent at: 0.63"

If EOQ lot sizing is used to set the minimum order quantity, then the planned order releases would be a. b. c. d.

40 in period 1 and 0 in period 3 0 in period 2 and 80 in period 3 120 in period 2 and 120 in period 3 100 in period 2 and 100 in period 3

Ans: c Difficulty: Hard Feedback: Material Requirements Planning (MRP)

70. A firm has the following gross requirements for Item F. If ordering costs are $60 per order and carrying costs are $0.50 per period.

Item F LT: 1 Gross Requirements Schedule Receipts Project on Hand 100 Net Requirements Planned Order Receipts Planned Order Releases

1 60

Period 2 3 40 80

Formatted: Indent: Left: 0", Numbered + Level: 1 + Numbering Style: 1, 2, 3, … + Start at: 38 + Alignment: Left + Aligned at: 0.38" + Indent at: 0.63"

4 60

If EOQ lot sizing is used to set the minimum order quantity, then the projected on hand quantity at the end of period 3 would be a. b. c. d.

40 0 100 20

Ans: a Difficulty: Hard Feedback: Material Requirements Planning (MRP)

71. A firm has the following gross requirements for Item F. If ordering costs are $60 per order and carrying costs are $0.50 per period.

Item F LT: 1 Gross Requirements Schedule Receipts Project on Hand 100 Net Requirements Planned Order Receipts

1 60

Period 2 3 40 80

4 60

Formatted: Indent: Left: 0", Numbered + Level: 1 + Numbering Style: 1, 2, 3, … + Start at: 38 + Alignment: Left + Aligned at: 0.38" + Indent at: 0.63"

Planned Order Releases

If the periodic order quantity lot sizing rule is used, the number of periods worth of requirements would be a. 0 b. 1 c. 2 d. 3 Ans: c Difficulty: Hard Feedback: Material Requirements Planning (MRP)

72. A firm has the following gross requirements for Item F. If ordering costs are $60 per order and carrying costs are $0.50 per period.

Item F LT: 1 Gross Requirements Schedule Receipts Project on Hand 100 Net Requirements Planned Order Receipts Planned Order Releases

Period 2 3 40 80

1 60

Formatted: Indent: Left: 0", Numbered + Level: 1 + Numbering Style: 1, 2, 3, … + Start at: 38 + Alignment: Left + Aligned at: 0.38" + Indent at: 0.63"

4 60

If the periodic order quantity lot sizing rule is used, then planned order releases in Period 2 would be a. b. c. d.

40 in period 1 60 in period 2 120 in period 3 140 in Period 2

Ans: d Difficulty: Hard Feedback: Material Requirements Planning (MRP)

Formatted: Indent: Left: 0", Numbered + Level: 1 + Numbering Style: 1, 2, 3, … + Start at: 38 + Alignment: Left + Aligned at: 0.38" + Indent at: 0.63"

73. Given the following Product Structure Record A

B(3)

E(2)

C(2)

E(3)

D(4)

F(2)

F(3)

G(2)

The number of E’s required for each A would be a. 3 b. 6 c. 12 d. 24 Ans: c Difficulty: Moderate Feedback: Material Requirements Planning (MRP)

Formatted: Indent: Left: 0", Numbered + Level: 1 + Numbering Style: 1, 2, 3, … + Start at: 38 + Alignment: Left + Aligned at: 0.38" + Indent at: 0.63"

74. Given the following Product Structure Record A

B(3)

E(2)

C(2)

E(3)

D(4)

F(2)

F(3)

G(2)

The number of F’s required for each A would be a. 2 b. 3 c. 12 d. 16 Ans: d Difficulty: Moderate Feedback: Material Requirements Planning (MRP)

Formatted: Indent: Left: 0", Numbered + Level: 1 + Numbering Style: 1, 2, 3, … + Start at: 38 + Alignment: Left + Aligned at: 0.38" + Indent at: 0.63"

75. Given the following Product Structure Record A

B(3)

E(2)

C(2)

E(3)

D(4)

F(2)

F(3)

G(2)

The number of G’s required for each A would be a. 2 b. 8 c. 12 d. 24 Ans: b Difficulty: Moderate Feedback: Material Requirements Planning (MRP)

Short Answer

76. How does MRP differ from traditional inventory control systems?

Ans: Material requirements planning (MRP) is a computerized inventory control and production planning system. The main objective of any inventory system is to ensure that material is available when needed. One objective of MRP is to maintain the lowest possible level of inventory. MRP does this by determining when component items are needed and scheduling them to be ready at that time, no earlier and no later. MRP was the first inventory system to recognize that inventories of raw materials, components, and finished goods may need to be handled differently. In the process of planning inventory levels for these various types of goods, the system also planned purchasing activities (for raw materials and purchased components), manufacturing activities (for component parts and assemblies), and delivery schedules (for finished products). Thus, the system was more than an inventory system; it became a production scheduling system as well. With its computerized data base, MRP is able to keep track of the relationship of job orders so that if a delay in one aspect of production is unavoidable, other related activities can be rescheduled, too. MRP systems have the ability to keep schedules valid and up to date.

Difficulty: Moderate Feedback: Material Requirements Planning (MRP)

77. What is the difference between independent and dependent demand?

Formatted: Indent: Left: 0", Numbered + Level: 1 + Numbering Style: 1, 2, 3, … + Start at: 38 + Alignment: Left + Aligned at: 0.38" + Indent at: 0.63"

Formatted: Indent: Left: 0", Numbered + Level: 1 + Numbering Style: 1, 2, 3, … + Start at: 38 + Alignment: Left + Aligned at: 0.38" + Indent at: 0.63"

Ans: The demand for the final product, or end items, is referred to as independent demand. Independent demand occurs outside of the firm and must be forecasted.

Dependent demand is the demand for component parts, subassemblies, and modules that comprise the end item. The requirements for dependent demand items are calculated, not forecasted. Because dependent demand is calculated and independent demand is forecasted different inventory control systems are used for each type. MRP is appropriate for dependent demand.

Difficulty: Hard Feedback: Material Requirements Planning (MRP)

78. When is it appropriate to use material requirements planning (MRP)?

Ans: MRP is a useful inventory and production control system for dependent and discrete demand items, complex products, job shop production, and assemble-to-order environments.

Difficulty: Moderate Feedback: Material Requirements Planning (MRP)

79. What is the master production schedule (MPS) and what role does in play in the material requirements planning (MRP) process?

Formatted: Indent: Left: 0", Numbered + Level: 1 + Numbering Style: 1, 2, 3, … + Start at: 38 + Alignment: Left + Aligned at: 0.38" + Indent at: 0.63"

Formatted: Indent: Left: 0", Numbered + Level: 1 + Numbering Style: 1, 2, 3, … + Start at: 38 + Alignment: Left + Aligned at: 0.38" + Indent at: 0.63"

Ans: The master production schedule (MPS) specifies which end items or finished products a firm is to produce, how many are needed, and when they are needed. The MPS works within the constraints of the production plan but produces a more specific schedule by individual products. The time frame is more specific as well. An MPS is usually expressed in days or weeks and may extend over several months to cover the complete manufacture of the items contained in the MPS. The MPS drives the MRP process. The schedule of finished products provided by the master schedule is needed before the MRP system can do its job of generating production schedules for component items.

Difficulty: Moderate Feedback: Material Requirements Planning (MRP)

80. What is a bill-of-material?

Ans: The bill of material for a product lists the items that go into the product, includes a brief description of each item, and specifies when and in what quantity each item is needed in the assembly process.

Difficulty: Easy Feedback: Material Requirements Planning (MRP)

Formatted: Indent: Left: 0", Numbered + Level: 1 + Numbering Style: 1, 2, 3, … + Start at: 38 + Alignment: Left + Aligned at: 0.38" + Indent at: 0.63"

81. What is Enterprise Resource Planning (ERP)?

Ans: Enterprise Resource Planning (ERP) is software that organizes and manages a company’s business processes by sharing information across functional areas. It transforms transactional data like sales into useful information that supports business decisions in other parts of the company, such as manufacturing, inventory, procurement, invoicing, distribution, and accounting. In addition to managing all sorts of back-office functions, ERP connects with supply chain and customer management applications, helping businesses share information both inside and outside the company. Thus, ERP serves as the backbone for an organization’s information needs, as well as its e-business initiatives.

Difficulty: Moderate Feedback: Enterprise Resource Planning (ERP)

82. 8What steps are necessary to effectively implement Enterprise Resource Planning (ERP)?

Ans: Effective ERP implementation typically requires that a firm analyze its business processes, choose the ERP modules to implement, understand the level of sophistication needed for the business, finalize delivery and access, and link the system with its external partners.

Difficulty: Moderate Feedback: Enterprise Resource Planning (ERP)

Formatted: Indent: Left: 0", Numbered + Level: 1 + Numbering Style: 1, 2, 3, … + Start at: 38 + Alignment: Left + Aligned at: 0.38" + Indent at: 0.63"

Formatted: Indent: Left: 0", Numbered + Level: 1 + Numbering Style: 1, 2, 3, … + Start at: 38 + Alignment: Left + Aligned at: 0.38" + Indent at: 0.63"

File: ch16, Chapter 16: Lean Systems

True/False

1. Kaizen is a Japanese term that means fool proofing to prevent defects.

Ans: False Difficulty: Easy Feedback: Basic Elements of Lean Production

2. Mass production means doing more with fewer workers, less inventory, and less space.

Ans: False Difficulty: Easy Feedback: Basic Elements of Lean Production

3. The individual generally credited with the development of lean production is an American.

Ans: False Difficulty: Easy Feedback: Basic Elements of Lean Production

4. In lean production, waste is defined as anything that does not add value to the product.

Ans: True Difficulty: Moderate Feedback: Basic Elements of Lean Production

5. General purpose machines are an example of flexible resources.

Ans: True

Difficulty: Easy Feedback: Basic Elements of Lean Production

6. Producing items before they are needed is considered waste under the principles of lean production.

Ans: True Difficulty: Moderate Feedback: Basic Elements of Lean Production

7. Waiting for parts to arrive or for machines to finish production is considered a form of waste under the principles of mass production.

Ans: False Difficulty: Moderate Feedback: Basic Elements of Lean Production

8. The time required for a worker to complete one pass through the operations assigned to her is called the operator cycle time.

Ans: True Difficulty: Moderate Feedback: Basic Elements of Lean Production

9. Takt time is the pace at which production output is aligned with machine capacity.

Ans: False Difficulty: Moderate Feedback: Basic Elements of Lean Production

10. Manufacturing cells are comprised of similar machines to process a family of parts.

Ans: False Difficulty: Moderate Feedback: Basic Elements of Lean Production

11. Taiichi Ohno observed that customers in American supermarkets pull items through the system.

Ans: True Difficulty: Moderate Feedback: Basic Elements of Lean Production

12. Push systems rely on predetermined production schedules often generated by computerized systems.

Ans: True Difficulty: Moderate Feedback: Basic Elements of Lean Production

13. The concept of pull production is easy to implement because it is similar to traditional scheduling procedures.

Ans: False Difficulty: Easy Feedback: Basic Elements of Lean Production

14. Kanbans were derived from the two-bin inventory system.

Ans: True Difficulty: Moderate Feedback: Basic Elements of Lean Production

15. A kanban square is a marked area designated for holding a set quantity of output.

Ans: True Difficulty: Moderate Feedback: Basic Elements of Lean Production

16. Kanbans are used to maintain the discipline required of a push production system.

Ans: False Difficulty: Moderate Feedback: Basic Elements of Lean Production

17. The number of kanbans needed to maintain control in a pull system can be calculated from demand and lead time information.

Ans: True Difficulty: Moderate Feedback: Basic Elements of Lean Production

18. Small-lot production reduces lead time but increases quality problems.

Ans: False Difficulty: Moderate Feedback: Basic Elements of Lean Production

19. Advantages of small-lot production include requiring less space and lower capital investment.

Ans: True Difficulty: Easy Feedback: Basic Elements of Lean Production

20. The lower inventory levels associated with small-lot production make processes more dependent on each other.

Ans: True Difficulty: Moderate Feedback: Basic Elements of Lean Production

21. Setup time is not a component of the cumulative lead time for a manufactured product.

Ans: False

Difficulty: Easy Feedback: Basic Elements of Lean Production

22. The lower inventory levels resulting from small-lot production hides problems in the production process.

Ans: False Difficulty: Moderate Feedback: Basic Elements of Lean Production

23. Internal setup activities can be performed when a process is running.

Ans: False Difficulty: Moderate Feedback: Basic Elements of Lean Production

24. Reducing variability in production through more accurate demand forecasts is one way to maintain uniform production levels.

Ans: True Difficulty: Moderate Feedback: Basic Elements of Lean Production

25. A poka-yoke is any foolproof device that prevents defects or injury from occurring.

Ans: True Difficulty: Moderate Feedback: Basic Elements of Lean Production

26. The authority for a worker to stop the production line when quality problems are encountered is known as poka-yoke.

Ans: False Difficulty: Moderate Feedback: Basic Elements of Lean Production

27. Total productive maintenance combines preventive maintenance with kaizen.

Ans: False Difficulty: Moderate Feedback: Basic Elements of Lean Production

28. Lean concepts cannot be applied to services because services are intangible.

Ans: False Difficulty: Easy Feedback: Basic Elements of Lean Production

29. Flexible resources is a basic element of lean production.

Ans: True Difficulty: Easy Feedback: Basic Elements of Lean Production

30. The concept of cellular layouts was developed by a U.S. engineer in the 1920s.

Ans: True Difficulty: Hard Feedback: Basic Elements of Lean Production

31. The output of a manufacturing cell is changed by adding or removing workers.

Ans: True Difficulty: Easy Feedback: Basic Elements of Lean Production

32. The pull system was developed by Ohno to coordinate production between processes.

Ans: True Difficulty: Moderate

Feedback: Basic Elements of Lean Production

33. A push system prevents both overproduction and underproduction.

Ans: False Difficulty: Easy Feedback: Basic Elements of Lean Production

34. In the dual kanban system, a withdrawal kanban authorizes the production of goods.

Ans: False Difficulty: Moderate Feedback: Basic Elements of Lean Production

35. One benefit of small lot production is that workers show fewer tendencies to let poor quality pass.

Ans: True Difficulty: Easy Feedback: Basic Elements of Lean Production

36. One component of lead time, setup time, is often the biggest bottle neck.

Ans: True Difficulty: Hard Feedback: Basic Elements of Lean Production

37. In lean production, a strong relationship exists between setup times and small lots.

Ans: True Difficulty: Moderate Feedback: Basic Elements of Lean Production

38. In a lean production system, kanban systems have been shown to handle large fluctuations in the production requirements on the final assembly line.

Ans: False Difficulty: Easy Feedback: Basic Elements of Lean Production

39. Mixed-modeling sequencing is used at Toyota to reduce setup times.

Ans: False Difficulty: Easy Feedback: Basic Elements of Lean Production

40. Poka-yolk is a Japanese term used to describe the removal of waste in a lean production system.

Ans: False Difficulty: Easy Feedback: Basic Elements of Lean Production

41. To keep machines running firms can use either breakdown maintenance or preventative maintenance.

Ans: True Difficulty: Moderate Feedback: Basic Elements of Lean Production

42. Firms that adopt lean production experience reductions in cycle time, inventory cost and employee training costs.

Ans: False Difficulty: Moderate Feedback: The Benfits of Lean Production

43. Early adopters of lean production in the U.S. were unsuccessful because they tried to implement lean by slashing inventories and forcing their suppliers to make more frequent deliveries.

Ans: True Difficulty: Moderate Feedback: Implementing Lean Production

Multiple Choice

44. All of the following factors pressure companies for quicker response and shorter cycle times except a. demanding customers. b. longer product life cycles. c. globalization. d. All the above are factors.

Ans: b Difficulty: Easy Feedback: Basic Elements of Lean Production

45. ___________ is generally credited with the development of lean production. a. Frederick Taylor b. W. Edwards Deming c. Taiichi Ohno d. None of the above.

Ans: c Difficulty: Easy Feedback: Basic Elements of Lean Production

46. Which of the following is not a basic element of lean production? a. flexible resources b. pull system c. repetitive production d. small lot production Ans: c

Difficulty: Moderate Feedback: Basic Elements of Lean Production

47. In lean production, waste is defined as a. overproduction. b. high levels of inventory. c. unnecessary movement. d. All the above are waste.

Ans: d Difficulty: Easy Feedback: Basic Elements of Lean Production

48. The pace at which production should take place to match the rate of customer demand is known as a. product flow time b. jidoka time c. kanban time d. takt time Ans: d Difficulty: Moderate Feedback: Basic Elements of Lean Production

49. In a pull production system a card that corresponds to a standard quantity of production is known as a(n) a. jidoka. b. andon. c. kanban. d. kaizen.

Ans: c Difficulty: Moderate Feedback: Basic Elements of Lean Production

50. In a pull system reducing the number of kanbans a. increases inventory making problems more visible. b. reduces inventory making problems less visible.

c. reduces inventory making problems more visible. d. increases inventory making problems less visible.

Ans: c Difficulty: Hard Feedback: Basic Elements of Lean Production

51. A workstation’s output is 200 bottles of wine per hour. It takes 45 minutes to receive a withdrawal kanban of corks from the previous workstation. The withdrawal kanban is attached to a container holding 30 corks. The process uses a safety factor of 20 percent. What is the number of withdrawal kanbans needed to support the bottling process. a. 4 b. 5 c. 6 d. 3 Ans: c Difficulty: Moderate Feedback: Basic Elements of Lean Production

52. A workstation’s output is 200 bottles of wine per hour. It takes 30 minutes to receive a withdrawal kanban of corks from the previous workstation. The withdrawal kanban is attached to a container holding 30 corks. The process uses a safety factor of 20 percent. What is the number of withdrawal kanbans needed to support the bottling process? a. 10 b. 2 c. 8 d. 4 Ans: d Difficulty: Hard Feedback: Basic Elements of Lean Production

53. A workstation must produce 400 units an hour. It takes 24 minutes to receive the necessary material for production from the previous workstation. Output is moved between workstations in containers holding 44 units. If the process uses a safety factor of 10%, then the amount of safety stock on average would be a. 16

b. 32 c. 8 d. 60 Ans: a Difficulty: Moderate Feedback: Basic Elements of Lean Production

54. A workstation must produce 400 units an hour. It takes 24 minutes to receive the necessary material for production from the previous workstation. Output is moved between workstations in containers holding 44 units. If the process uses a safety factor of 10%, then the number of kanbans that should be circulating between this workstation and the previous workstation is a. 2 b. 4 c. 6 d. 8 Ans: b Difficulty: Moderate Feedback: Basic Elements of Lean Production

55. How many kanbans should circulate between two workstations if demand is 500 units per hour, lead time is 20 minutes, container sizes are 35, and the company uses a safety factor of 5%? a. 4 b. 5 c. 12 d. 8 Ans: b Difficulty: Moderate Feedback: Basic Elements of Lean Production

56. Which of the following statements concerning small-lot production is not true? a. small-lot production requires less space b. small-lot production requires more capital investment c. small-lot production simplifies transportation between workstations d. small-lot production allows processes to be moved closer together

Ans: b Difficulty: Moderate Feedback: Basic Elements of Lean Production

57. Lower inventory levels make processes a. less dependent on each other while keeping bottlenecks hidden. b. less dependent on each other while revealing bottlenecks more quickly. c. more dependent on each other while revealing bottlenecks more quickly. d. more dependent on each other while keeping bottlenecks hidden.

Ans: c Difficulty: Moderate Feedback: Basic Elements of Lean Production

58. Which of the following is not a typical component of lead time? a. processing time b. maintenance time c. waiting time d. setup time Ans: b Difficulty: Moderate Feedback: Basic Elements of Lean Production

59. Improved scheduling of materials, workers, and machines will most generally affect a. processing time. b. move time. c. waiting time. d. setup time.

Ans: c Difficulty: Easy Feedback: Basic Elements of Lean Production

60. Which of the following is not a principle for reducing setup times? a. converting external setup to internal setup b. converting internal setup to external setup c. separating internal setup from external setup

d. performing setup activities in parallel Ans: a Difficulty: Moderate Feedback: Basic Elements of Lean Production

61. ______________ setups that can be performed in advance while the machine is running. a. Internal b. External c. Parallel d. Unnecessary Ans: b Difficulty: Easy Feedback: Basic Elements of Lean Production

62. A ___________ is a foolproof device that prevents defects from occurring. a. kaizen b. jidoka c. muda d. poka-yoke Ans: d Difficulty: Moderate Feedback: Basic Elements of Lean Production

63. The authority given to the worker to stop the production line if quality problems are encountered is known as a. kaizen. b. jidoka. c. poka-yoke d. muda.

Ans: b Difficulty: Moderate Feedback: Basic Elements of Lean Production

64. The concept of allocating extra time to a schedule for planning, problem solving, and maintenance is known as a. preventative scheduling. b. preventive maintenance. c. over capacity maintenance. d. under capacity scheduling.

Ans: d Difficulty: Moderate Feedback: Basic Elements of Lean Production

65. The benefits of lean production include all of the following except reduced a. inventory. b. product variety. c. pace requirements. d. lead times.

Ans: b Difficulty: Easy Feedback: Basic Elements of Lean Production

66. All of the following are benefits expected from implementing lean production except a. better quality. b. shorter lead times. c. reduced capacity. d. improved sales.

Ans: c Difficulty: Moderate Feedback: Basic Elements of Lean Production

67. Lean production is difficult to implement when a. demand is highly variable. b. product variety is high.. c. there are many unique products. d. all of the above are true.

Ans: d Difficulty: Easy Feedback: Basic Elements of Lean Production

68. Combining the practice of preventive maintenance with the concepts of total quality is known as a. total preventive quality. b. total productive maintenance. c. quality breakdown maintenance. d. reliability assurance.

Ans: b Difficulty: Easy Feedback: Basic elements of lean

69. Mixed-model sequencing a. facilitates total productive maintenance. b. achieves uniform production levels. c. increases product lead times. d. reduces worker productivity.

Ans” b Difficulty: Easy Feedback: Basic Elements of Lean Production

70. Value stream mapping (VSM) is a tool for a. reducing setup times. b. improving quality at the source. c. analyzing process flow. d. designing manufacturing cells.

Ans: c Difficulty: Moderate Feedback: Value Stream Mapping

71. Analyzing process flow and eliminating waste is referred to as a. just-in-time. b. the Toyota Production System. c. value stream mapping d. total productive maintenance.

Ans: c Difficulty: Easy Feedback: Value Stream Mapping

72. Which of the following is not a benefit of lean production? a. Greater flexibility b. Increased capacity c. More customers d. More product variety Ans: c Difficulty: Easy Feedback: The Benefits of Lean Production

73. Which of the following is not typically a component of lead time? a. Move time. b. Breakdown time. c. Wait time. d. Setup time.

Ans: b Difficulty: Easy Feedback: Basic Elements of Lean Production

74. A ____________ kanban is used to order material in advance of production. a. material b. supplier c. production d. withdrawal Ans: a Difficulty: Moderate Feedback: Basic Elements of Lean Production.

Short Answer

75. What role does the elimination of waste play in lean production?

Ans: The elimination of waste, or muda in Japanese, is a basic tenet of lean production.

Waste is viewed as anything other than the minimum amount of equipment, materials, parts, space and time necessary to add value to the product. In operations waste results from overproduction, waiting, unnecessary transporting of materials and parts, unnecessary steps in production, excessive inventory, rework and scrap. Lean production is the result of the mandate to eliminate waste in all its forms from the production process.

Difficulty: Moderate Feedback: Basic Elements of Lean Production

76. What is a manufacturing cell and what is its purpose?

Ans: Manufacturing cells group dissimilar machines together to process a family of parts with similar shapes or processing requirements. The layout of machines within the cell resembles a small assembly line and is usually U-shaped. Work is moved within the cell, ideally one unit at a time, from one process to the next by a worker moving about the cell in a prescribed path. Work normally flows through the cell in one direction and experiences little waiting. Changes of product mix within the cell are easy to accommodate. Changes in volume can be handled by adding workers or subtracting workers from the cell. Because cells produce similar items, setup times are low and lot sizes can be reduced. Movement from the cells to assembly lines occurs in small lots.

Manufacturing cells reduce waste because of their smaller size, workflow, and flexibility.

Difficulty: Hard Feedback: Basic Elements of Lean Production

77. How does the pull system differ from the push system?

Ans: In a push system, a schedule is prepared in advance for a series of workstations, and each workstation pushes its completed work to the next station even if the next station is not ready for it. This can lead to high work-in-process inventories. With the pull system, workers go back to previous stations and take only the parts or materials they need and can process immediately. When their output has been taken, workers at the previous station know it is time to start producing more, and they replenish the exact quantity that the subsequent station just took away. If their output is not taken, workers at the previous

station simply stop production; no excess is produced. The pull system forces operations to work in coordination with one another. It prevents overproduction and under production since only necessary quantities are produced.

Difficulty: Moderate Feedback: Basic Elements of Lean Production

78. What is a kanban and how is it used in a pull system?

Ans: Kanban is the Japanese word for card. In the pull system, each kanban corresponds to a standard quantity of production or size of container. A kanban contains basic information such as a part number, brief description, type of container, unit load, preceding station, and subsequent station. Sometimes the kanban is color-coded to indicate raw materials or other stages of manufacturing. The information on the kanban does not change during production. The kanbans are used to exercise more control over the pull process on the shop floor and to encourage the continual reduction of inventory.

Difficulty: moderate Feedback: Basic Elements of Lean Production

79. What are the benefits of small-lot production?

Ans: Small-lot production requires less space and capital investment than systems that incur large inventories. By producing small amounts at a time, processes can be moved physically closer together and transportation between stations can be simplified. In small-lot production, quality problems are easier to detect and employees show less tendency to let poor quality pass. Lower inventory levels make processes more dependent on each other. This is beneficial because it reveals errors and bottlenecks more quickly and gives workers an opportunity to solve them.

Difficulty: moderate Feedback: Basic elements of lean

File: ch17, Chapter 17: Scheduling

True/False

1. Scheduling specifies when labor, equipment and facilities are needed to produce a product.

Ans: True Difficulty: Easy Feedback: Objectives in Scheduling

2. Scheduling is considered the last stage of the planning process.

Ans: True Difficulty: Easy Feedback: Objectives in Scheduling

3. The wide variety of jobs in a job shop makes scheduling difficult.

Ans: True Difficulty: Easy Feedback: Objectives in Scheduling

4. Managers typically use multiple objective when constructing a schedule.

Ans: True Difficulty: Easy Feedback: Objectives in Scheduling

5. Minimizing overtime is one of several objectives that could be considered when constructing a schedule.

Ans: True Difficulty: Easy

Feedback: Objectives in Scheduling

6. Job shop scheduling is usually performed by skilled machine operators.

Ans: False Difficulty: Easy Feedback: Objectives in Scheduling

7. The process of assigning work to limited resources is known as scheduling.

Ans: False Difficulty: Moderate Feedback: Loading

8. Sequencing involves determining the order in which jobs are released to the shop floor.

Ans: False Difficulty: Hard Feedback: Sequencing

9. The sequence in which jobs should be processed is determined using linear programming.

Ans: False Difficulty: Moderate Feedback: Sequencing

10. Determining the optimal allocation of jobs to machines or workers can be solved using the assignment method of linear programming.

Ans: True Difficulty: Moderate Feedback: Sequencing

11. The process of prioritizing jobs that have been assigned to a resource is called sequencing.

Ans: True Difficulty: Easy Feedback: Sequencing

12. The time required for a job to move through the system is referred to as flow time.

Ans: True Difficulty: Moderate Feedback: Sequencing

13. All sequencing rules strive to optimize both processing efficiency and due date performance.

Ans: False Difficulty: Moderate Feedback: Sequencing

14. Johnson’s rule gives an optimal sequence for jobs processed serially through a two step system.

Ans: True Difficulty: Moderate Feedback: Sequencing

15. The shortest processing time (SPT) rule is most useful when the job shop is not congested.

Ans: False Difficulty: Moderate Feedback: Sequencing

16. The longest processing time (LPT) rule tends to complete larger jobs in-house when subcontracting is anticipated.

Ans: True Difficulty: Moderate Feedback: Sequencing

17. The first-come, first-served (FCFS) sequencing rule should be only used when operating at high levels of capacity.

Ans: False Difficulty: Moderate Feedback: Sequencing

18. Gantt charts show the planned and yet to be completed activities against total activities.

Ans: False Difficulty: Moderate Feedback: Objectives in Scheduling

19. Increasing the capacity of a work center that is a bottleneck increases output.

Ans: True Difficulty: Moderate Feedback: Theory of Constraints

20. Finite scheduling will not load a resource beyond its fixed capacity.

Ans: True Difficulty: Moderate Feedback: Advanced Planning and Scheduling Systems

21. The theory of constraints (TOC) approach to scheduling concentrates on scheduling the bottleneck resources.

Ans: True Difficulty: Moderate Feedback: Theory of Constraints

22. With drum-buffer-rope (DBR) the bottleneck resource is always the buffer.

Ans: False Difficulty: Moderate Feedback: Theory of Constraints

23. Scheduling using the theory of constraints (TOC) requires that process batch sizes and transfer batch sizes always match.

Ans: False Difficulty: Moderate Feedback: Theory of Constraints

24. Typically, there are more options available when scheduling employees because labor is a very flexible resource.

Ans: True Difficulty: Moderate Feedback: Employee Scheduling

25. The scheduling function for mass production and job shop production are basically the same.

Ans: False Difficulty: Moderate Feedback: Objectives in Scheduling

26. Job shop scheduling is also known as shop floor control.

Ans: True Difficulty: Moderate Feedback: Objectives in Scheduling

27. The dispatch list contains the order in which work is assigned to a productive resource.

Ans: False Difficulty: Moderate Feedback: Sequencing

28. In a job shop environment the process of prioritizing jobs assigned to a productive resource is called sequencing.

Ans: True Difficulty: Moderate Feedback: Sequencing

29. Tardiness is defined as the difference between a job’s flow time and makespan.

Ans: False Difficulty: Moderate Feedback: Sequencing

30. Input/output control provides the information necessary to regulate work flow in a job shop environment.

Ans: True Difficulty: Moderate Feedback: Monitoring

31. The assignment method of linear programming can be used for both loading and employee scheduling.

Ans: True Difficulty: Moderate Feedback: Employee Scheduling

Multiple Choice

32. Which of the following is not typically considered an objective of scheduling? a. minimizing job lateness b. maximizing time in the system c. minimizing overtime d. maximizing machine utilization Ans: b Difficulty: Easy Feedback: Objectives of Scheduling

33. The process of assigning work to limited resources is known as a. loading. b. sequencing. c. monitoring. d. dispatching Ans: a Difficulty: Easy Feedback: Loading

34. The process of prioritizing jobs that have been assigned to a resource is called a. loading. b. monitoring. c. sequencing. d. input/output analysis.

Ans: c Difficulty: Easy Feedback: Sequencing

35. If a job is ahead of schedule, then its critical ratio (CR) will be a. less than one. b. greater than one. c. equal to one. d. none of the above.

Ans: b Difficulty: Moderate Feedback: Sequencing

36. If the work remaining is greater than the time remaining, the critical ratio (CR) will be a. less than one. b. greater than one. c. equal to one. d. none of the above.

Ans: a Difficulty: Moderate Feedback: Sequencing

37. The time required to complete a group of jobs is referred to as a. flow time. b. makespan. c. completion time. d. none of the above.

Ans: b Difficulty: Easy Feedback: Sequencing

38. The sequencing rule that will minimize average job completion time for a set number of jobs to be processed on one machine is a. first-come-first served (FCFS). b. longest processing time (LPT). c. shortest process time (SPT). d. due date (DDATE).

Ans: c Difficulty: Moderate Feedback: Sequencing

39. The sequencing rule that minimizes average tardiness for a set of jobs to be processed on one machine is a. first-come-first served (FCFS). b. longest processing time (LPT) c. shortest process time (SPT) d. due date (DDATE).

Ans: c Difficulty: Moderate Feedback: Sequencing

40. If the following jobs are sequenced according to the first-come-first-served (FCFS) rule then the mean completion time in days for all jobs is (assume zero for today’s date)

Job A B C D E

a. b. c. d.

Processing Time (days) 8 6 11 5 3

Due Date 12 15 17 10 8

33 days.

22 days.

6.6 days.

4.4 days.

Ans: b Difficulty: Moderate Feedback: Sequencing

41. If the following jobs are sequenced according to the FCFS rule then the mean tardiness (in days) for all jobs would be (assume zero for today’s date)

Job A B C D E

a. 5 days.

Processing Time (days) 8 6 11 5 3

Due Date 12 15 17 10 8

b. 8.33 days. c. 10.6 days. d. 25 days Ans: c Difficulty: Moderate Feedback: Sequencing

42. If the following jobs are sequenced according to the FCFS rule then the maximum job tardiness (in days) is (assume zero for today’s date)

Job A B C D E

a. b. c. d.

Processing Time (days) 8 6 11 5 3

Due Date 12 15 17 10 8

0 days.

8 days.

20 days.

25 days.

Ans: d Difficulty: Moderate Feedback: Sequencing

43. If the following jobs are sequenced according to the FCFS rule then the total number of jobs that would be late is (assume zero for today’s date)

Job A B C D E

a. b. c. d.

Ans: b

4.

3.

2.

1.

Processing Time (days) 8 6 11 5 3

Due Date 12 15 17 10 8

Difficulty: Moderate Feedback: Sequencing

44. If the following jobs are sequenced according to the FCFS rule then job C is completed on day (assume zero for today’s date)

Job A B C D E

a. b. c. d.

Processing Time (days) 8 6 11 5 3

Due Date 12 15 17 10 8

11.

17.

25.

30

Ans: c Difficulty: Moderate Feedback: Sequencing

45. If the following jobs are sequenced according to the SPT rule then the mean completion time (in days) for all jobs is (assume zero for today’s date)

Job A B C D E

a. b. c. d.

6.6 days.

16 days.

22 days.

33 days.

Ans: b Difficulty: Moderate Feedback: Sequencing

Processing Time (days) 8 6 11 5 3

Due Date 12 15 17 10 8

46. If the following jobs are sequenced according to the SPT rule then the mean tardiness (in days) for all jobs is (assume zero for today’s date)

Job A B C D E

a. b. c. d.

Processing Time (days) 8 6 11 5 3

Due Date 12 15 17 10 8

16 days.

13 days.

5.2 days.

3.2 days

Ans: c Difficulty: Moderate Feedback: Sequencing

47. If the following jobs are sequenced according to the SPT rule then the maximum job tardiness (in days) is (assume zero for today’s date)

Job A B C D E

a. b. c. d.

Processing Time (days) 8 6 11 5 3

Due Date 12 15 17 10 8

26 days 16 days 10 days 5.2 days

Ans: b Difficulty: Moderate Feedback: Sequencing

48. If the following jobs are sequenced according to the SPT rule then the total number of jobs that would be late is (assume zero for today’s date)

Job

Processing Time (days)

Due Date

A B C D E

a. b. c. d.

8 6 11 5 3

12 15 17 10 8

0 jobs.

1 job.

2 jobs.

3 jobs.

Ans: c Difficulty: Moderate Feedback: Sequencing

49. If the following jobs are sequenced according to the SPT rule then job B is completed on day (assume zero for today’s date)

Job A B C D E

a. b. c. d.

Processing Time (days) 8 6 11 5 3

Due Date 12 15 17 10 8

6.

14.

15.

22

Ans: b Difficulty: Moderate Feedback: Sequencing

50. If the following jobs are sequenced according to the LPT rule then the mean completion time (in days) for all jobs is (assume zero for today’s date) Job A B C D E

a. 118 days.

Processing Time (days) 8 6 11 5 3

Due Date 12 15 17 10 8

b. 6.6 days. c. 33 days. d. 23.6 days Ans: d Difficulty: Moderate Feedback: Sequencing

51. If the following jobs are sequenced according to the LPT rule then the mean tardiness (in days) for all jobs is (assume zero for today’s date)

Job A B C D E

a. b. c. d.

Processing Time (days) 8 6 11 5 3

Due Date 12 15 17 10 8

62 days.

12.4 days.

15.5 days.

25 days

Ans: b Difficulty: Moderate Feedback: Sequencing

52. If the following jobs are sequenced according to the LPT rule then the maximum job tardiness (in days) is (assume zero for today’s date)

Job A B C D E

a. b. c. d.

Ans: d

7 days.

10 days.

20 days.

25 days.

Processing Time (days) 8 6 11 5 3

Due Date 12 15 17 10 8

Difficulty: Moderate Feedback: Sequencing

53. If the following jobs are sequenced according to the LPT rule then the total number of jobs that would be late is (assume zero for today’s date)

Job A B C D E

a. b. c. d.

Processing Time (days) 8 6 11 5 3

Due Date 12 15 17 10 8

5 jobs.

4 jobs.

3 jobs.

2 jobs.

Ans: b Difficulty: Moderate Feedback: Sequencing

54. If the following jobs are sequenced according to the LPT rule then job D would be completed on day (assume zero for today’s date )

Job A B C D E

a. b. c. d.

5.

25.

30.

33.

Ans: c Difficulty: Moderate Feedback: Sequencing

Processing Time (days) 8 6 11 5 3

Due Date 12 15 17 10 8

55. If the following jobs are sequenced according to the SLACK rule then the mean completion time (in days) for all jobs is (assume zero for today’s date)

Job A B C D E

a. b. c. d.

Processing Time (days) 8 6 11 7 3

Due Date 12 15 17 10 8

35 days.

20.8 days.

18.4 days.

7 days.

Ans: b Difficulty: Hard Feedback: Sequencing

56. If the following jobs are sequenced according to the SLACK rule then the mean tardiness (in days) for all jobs is (assume zero for today’s date)

Job A B C D E

a. b. c. d.

Processing Time (days) 8 6 11 7 3

Due Date 12 15 17 10 8

11.25 days.

9 days.

20 days.

12.5 days.

Ans: b Difficulty: Hard Feedback: Sequencing

57. If the following jobs are sequenced according to the SLACK rule then the maximum job tardiness (in days) is (assume zero for today’s date)

Job

Processing Time (days)

Due Date

A B C D E

a. b. c. d.

8 6 11 7 3

12 15 17 10 8

20 days.

12 days.

10 days.

7 days

Ans: a Difficulty: Hard Feedback: Sequencing

58. If the following jobs are sequenced according to the SLACK rule then the total number of jobs that would be late is (assume zero for today’s date)

Job A B C D E

a. b. c. d.

Processing Time (days) 8 6 11 7 3

Due Date 12 15 17 10 8

1 jobs.

2 jobs.

3 jobs 4 jobs

Ans: d Difficulty: Hard Feedback: Sequencing

59. If the following jobs are sequenced according to the SLACK rule then job A would be completed on day (assume zero for today’s date)

Job A B C D E

Processing Time (days) 8 6 11 7 3

Due Date 12 15 17 10 8

a. b. c. d.

8.

7.

15.

12.

Ans: c Difficulty: Hard Feedback: Sequencing

60. If the following jobs are sequenced according to the DDATE rule then the mean completion time (in days) for all jobs is (assume zero for today’s date)

Job A B C D E

a. b. c. d.

Processing Time (days) 8 6 11 5 3

Due Date 12 15 17 10 8

16.4 days.

22.6 days.

28.7 days.

33.0 days

Ans: a Difficulty: Moderate Feedback: Sequencing

61. If the following jobs are sequenced according to the DDATE rule then the mean tardiness (in days) for all jobs is (assume zero for today’s date)

Job A B C D E

a. b. c. d.

9.0 days.

5.4 days.

3.2 days.

2.8 days

Processing Time (days) 8 6 11 5 3

Due Date 12 15 17 10 8

Ans: b Difficulty: Moderate Feedback: Sequencing

62. If the following jobs are sequenced according to the DDATE rule then the maximum job tardiness (in days) is (assume zero for today’s date)

Job A B C D E

a. b. c. d.

Processing Time (days) 8 6 11 5 3

Due Date 12 15 17 10 8

12 days.

15 days.

16 days.

27 days.

Ans:: c Difficulty: Moderate Feedback: Sequencing

63. If the following jobs are sequenced according to the DDATE rule then the total number of jobs that would be late is (assume zero for today’s date)

Job A B C D E

a. b. c. d.

5 jobs.

4 jobs.

3 jobs.

2 jobs.

Ans: c Difficulty: Moderate Feedback: Sequencing

Processing Time (days) 8 6 11 5 3

Due Date 12 15 17 10 8

64. If the following jobs are sequenced according to the DDATE rule then job A would be completed on day (assume zero for today’s date)

Job A B C D E

a. b. c. d.

Processing Time (days) 8 6 11 5 3

Due Date 12 15 17 10 8

8.

12.

16.

22

Ans c Difficulty: Moderate Feedback: Sequencing

65. Four products (1, 2, 3, and 4) must be processed on one of four machines (A, B, C, and D). The times required in minutes for each product on each machine are shown below.

Machine Product A B C D 1 10 9 16 12 2 8 14 17 5 3 19 20 11 7 4 8 18 5 10 If management wishes to assign products to machines so that the total time to complete all the products is minimized, then Product 1 is assigned to a. b. c. d.

machine A machine B machine C machine D

Ans: b Difficulty: Hard Feedback: Sequencing

66. Four products (1, 2, 3, and 4) must be processed on one of four machines (A, B, C, and D). The times required in minutes for each product on each machine are shown below.

Machine Product A B C D 1 10 9 16 12 2 8 14 17 5 3 19 20 11 7 4 8 18 5 10 If management wishes to assign products to machines so that the total time to complete all the products is minimized, then Product 3 is assigned to a. machine A. b. machine B. c. machine C. d. machine D Ans: d Difficulty: Hard Feedback: Sequencing

67. Four products (1, 2, 3, and 4) must be processed on one of four machines (A, B, C, and D). The times required in minutes for each product on each machine are shown below.

Machine Product A B C D 1 10 9 16 12 2 8 14 17 5 3 19 20 11 7 4 8 18 5 10 If management wishes to assign products to machines so that the total time to complete all the products is minimized, then Product 4 is assigned to a. machine A. b. machine B. c. machine C. d. machine D. Ans: c Difficulty: Hard Feedback: Sequencing

68. Four products (1, 2, 3, and 4) must be processed on one of four machines (A, B, C, and D). The times required in minutes for each product on each machine are shown below.

Machine Product A B C D 1 10 9 16 12 2 8 14 17 5 3 19 20 11 7 4 8 18 5 10 If management assigns products to machines so that the total time to complete all jobs is minimized, then the time to complete Product 1 is a. 10 minutes. b. 9 minutes. c. 16 minutes. d. 12 minutes Ans: b Difficulty: Hard Feedback: Sequencing

69. Four products (1, 2, 3, and 4) must be processed on one of four machines (A, B, C, and D). The times required in minutes for each product on each machine are shown below.

Machine Product A B C D 1 10 9 16 12 2 8 14 17 5 3 19 20 11 7 4 8 18 5 10 The minimum time required to complete all the products is a. 29 minutes. b. 27 minutes. c. 33 minutes. d. 36 minutes.

Ans: a Difficulty: Hard Feedback: Sequencing

70. The scheduling rule that minimizes the makespan time for a set of jobs that must be processed through a two-step system where every job follows the same sequence through the two processes is a. the shortest processing time (SPT). b. Johnson’s Rule. c. the assignment method. d. the minimal slack rule.

Ans: b Difficulty: Easy Feedback: Sequencing

71. The following set of jobs must be processed serially through a two-step system. If Johnson’s Rule is used to sequence the jobs then the order in which the jobs would be performed is Job A B C D E

a. b. c. d.

Process 1 12 8 7 10 5

Process 2 9 11 6 14 8

A-B-C-D-E C-B-E-D-A E-B-D-A-C D-E-B-A-C

Ans: c Difficulty: Hard Feedback: Sequencing

72. The following set of jobs must be processed serially through a two-step system. The times at each process are in hours. If Johnson’s Rule is used to sequence the jobs then the makespan time (in hours) for all jobs is Job A B C D E

Process 1 12 8 7 10 5

Process 2 9 11 6 14 8

a. b. c. d.

42 hours.

53 hours.

90 hours.

95 hours.

Ans: b Difficulty: Hard Feedback: Sequencing

73. The following set of jobs must be processed serially through a two-step system. The times at each process are in hours. If Johnson’s Rule is used to sequence the jobs then Job C would start processing on operation 2 at Job A B C D E

a. b. c. d.

Process 1 12 8 7 10 5

Process 2 9 11 6 14 8

hour 13. hour 26. hour 47. hour 53

Ans: c Difficulty: Hard Feedback: Sequencing

74. The following set of jobs must be processed serially through a two-step system. The times at each process are in hours. If Johnson’s Rule is used to sequence the jobs then Job A would complete processing on operation 2 at Job A B C D E

a. hour 21. b. hour 35. c. hour 38.

Process 1 12 8 7 10 5

Process 2 9 11 6 14 8

d. hour 47.

Ans: d Difficulty: Hard Feedback: Sequencing

75. A ________ chart is used to show both planned and completed activities against a time scale. a. Gantt b. Dispatch c. Sequencing d. None of the above.

Ans: a Difficulty: Easy Feedback: Monitoring

Short Answer Questions

76. What makes scheduling so difficult in a job shop?

Ans: Job shop scheduling is difficult because of the variety of jobs (or customers) that are processed, each with distinctive routing and processing requirements. In addition, although the volume of each customer order may be small, there are probably a great number of different orders in the shop at any one time. This necessitates planning for the production of each job as it arrives, scheduling its use of limited resources, and monitoring its progress through the system.

Difficulty: Easy Feedback: Objectives in Scheduling

77. List some of the objectives in scheduling.

Ans: There are many different possible objectives in constructing a schedule, including: meeting customer due dates, minimizing job lateness, minimizing response time, minimizing completion time, minimizing time in the system, minimizing overtime, maximizing machine or labor utilization, minimizing idle time, and minimizing work-inprocess inventory.

Difficulty: Moderate

Feedback: Objectives of Scheduling

78. Why is monitoring an important component of job shop scheduling?

Ans: In a job shop environment, where jobs follow different paths through the shop, visit many different machine centers, and compete for similar resources, it is not always easy to keep track of the status of a job. When jobs are first released to the shop, it is relatively easy to observe the queue that they join and predict when their initial operations might be completed. As the job progresses, however, or the shop becomes more congested, it becomes increasingly difficult to follow the job through the system. Competition for resources (resulting in ling queues), machine breakdowns, quality programs, and setup requirements are just a few of the things that can delay a job’s progress. Monitoring develops progress reports on each job until it is completed and helps maintain reliable schedules in the system.

Difficulty: Moderate Feedback: Monitoring

79. What is the difference between infinite scheduling and finite scheduling?

Ans: Infinite scheduling loads work without regard to capacity and then levels the load and sequences the jobs. Thus, leveling and sequencing decisions are made after overloads and underloads have been identified. This iterative process is very time consuming and not efficient. Finite scheduling assumes a fixed maximum capacity and will not load the resource beyond its capacity. Loading and sequencing decisions are made at the same time, so that the first jobs loaded onto a work center are of highest priority. Any jobs remaining after the capacity of the work center or resource has been reached are of lower priority and are scheduled for later time periods. This approach is easier than the infinite scheduling approach, but it will be successful only if the criteria for choosing the work to be performed, as well as capacity limitations, can be expressed accurately and concisely.

Difficulty: Moderate Feedback: Advanced Planning and Scheduling Systems

80. Who developed the theory of constraints (TOC) and what is its approach to scheduling?

Ans: The theory of constraints (TOC) was developed by an Israeli physicist named Eliyahu Goldratt. Because he did not have a business or manufacturing background, Dr. Goldratt took a commonsense, intuitive approach to scheduling. He developed a software system that used mathematical programming and simulation to create a schedule that realistically considered the constraints of the manufacturing system. Dr. Goldratt’s first

insight into the scheduling problem led him to simplify the number of variables considered. Instead of trying to balance the capacity of the manufacturing system, he thought it best to balance the flow of work through the system. He identified resources as bottleneck or non-bottleneck and noted that the system’s flow is controlled by the bottleneck resources. These resources should always have material to work on, should spend little time on nonproductive activities, should be fully staffed, and should be the focus of continuous improvement activities. Goldratt pointed out that an hour’s worth of production lost at a bottleneck reduces the output of the system by the same amount of time, whereas an hour lost at a non-bottleneck resource may have no effect at all.

Consequently, Goldratt simplified the scheduling problem by initially scheduling the bottleneck resources and then the non-bottleneck ones. In this way production could be synchronized with the needs of the bottleneck and the system as a whole.

Difficulty: Hard Feedback: Theory of Constraints