Operation Management

What is sometimes referred to as rated capacity??

• Efficiency
• Utilization
• effective capacity
• expected output

Demand for a given item is said to be dependent if

• there is a deep bill of material
• it originates from the external customer
• the finished products are mostly services
• there is a clearly identifiable parent

Many suppliers feel that having a variety of customers is better than being tied to long-term contracts with one customer.

• True
• False

One question that operations managers must ask when generating an aggregate plan is what factors are likely to influence demand and by how much.

• True
• False

Which time series model uses past forecasts and past demand data to generate a new forecast?

• Naive
• Exponential Smoothing
• Weighted Moving Avarage
• Moving Average

The four phases of the product life cycle are introduction, growth, incubation and decline

• True
• False

The typical full-service restaurant uses a product-focused process.

• True
• False

ANo __ is a timetable that specifies what is to be made and when.

• master production schedule

For a given level of demand, annual holding cost is larger as the order quantity is __.

• larger

Political risk, cultural issues, and exchange rates are among those __ that affect which country will be selected for a location decision

• CRITICAL SUCCESS FACTORS

In time series, which of the following cannot be predicted

• technological trends
• seasonal fluctuations
• random fluctuations
• large increases in demand

One function of MRP is to take advantage of quantity discounts.

• True
• False

When __, in addition to creativity and R&D investments, is critical to operations strategy, cost may cease to be the primary focus of location criteria

• INNOVATION

__ is the time between placement and receipt of an order.

• lead time

Which of the following is a function of inventory?

• to take advantage of quantity discounts
• a. o take advantage of quantity discounts
• to decouple or separate parts of the production process
• All of the above are functions of inventory
• to hedge against inflation

Aggregate planning in manufacturing ties organizational strategic goals to a production plan.

• True
• False

Effective capacity is the

• maximum output of a system in a given period
• minimum usable capacity of a particular facility
• capacity a firm expects to achieve given the current operating constraints
• average output that can be achieved under ideal conditions

Intangible costs are readily identifiable and can be measured with precision.

• True
• False

One criterion for developing effective schedules is minimizing completion task

• True
• False

Ethical and social dilemmas arise because stakeholders of a business have conflicting perspectives.

• True
• False

Unfavorable exchange rates can offset other savings in a location decision.

• True
• False

One reason for a firm locating near its competitors is the presence of a major resource it needs.

• True
• False

manufacturing ties organizational strategic goals to a production plan

• AGGREGATE PLANNING

The level scheduling strategy allows lower inventories than the pure chase strategy

• True
• False

A dependent demand item is so called because its demand is dependent on customer preferences

• True
• False

ABC analysis divides on-hand inventory into three classes, generally based upon

• the number of units on hand
• item quality
• annual dollar volume
• annual demand

refers to the physical surrounding in which the service is delivered

• Service Escape
• Services
• Service Blueprint

The 5S term __ includes analysis to improve workflow and reduce wasted motion.

Forecasts of individual products tend to be more accurate than forecasts of product families.

• True
• False

In process-focused facilities, equipment utilization is low.

• True
• False

A location decision for an appliance manufacturer would tend to have aNo

• revenue focus
• cost focus
• labor focus
• environmental focus

the movement of goods and services internally and to customers, and the role of marketing and public relations in the location choice.

• LOCATION

Dependent on expert or informed opinion about future product demands which is intuitive and based on subjective judgment.

• Time Series Analysis
• Qualitative Techniques
• Causal Forecasting
• Economic Perspective

A naïve forecast for September sales of a product would be equal to the forecast for August.

• True
• False

A measure of the efficiency of a person, machine, factory, system, etc., in converting inputs into useful outputs

• PRODUCTIVITY

The priority rule that appears fair to customers in service systems is __.

• first come, first served

ANo __ is a JIT concept that results in material being produced only when requested and moved to where it is needed just as it is needed.

• pull system

Operations management is the set of activities that create value in the form of goods and services by transforming inputs into outputs

• True
• False

is typically characterized by a strong growth in sales and profits, and because the company can start to benefit from economies of scale in production, the profit margins, as well as the overall amount of profit, will increase.

• Introduction Stage
• Growth Stage
• Maturity Stage
• Decline Stage

Which of the following is not present in a time series?

• operational variations
• cycles
• Seasonality
• trend

The technique known as level schedules

• requires that schedules be met without variation
• All of the above are true regarding level scheduling
• processes many small batches rather than one large one
• is based on meeting one day's demand with that day's production

A six-month moving average forecast is better than a three-month moving average forecast if demand

• follows a seasonal pattern that repeats itself twice a year
• is rather stable
• follows a downward trend
• has been changing due to recent promotional efforts

Quantitative techniques consist of data gathering from groups of experts, customer focus groups, research groups, think tanks, etc.

• True
• False

One essential ingredient of mass customization is modular design.

• True
• False

Design strategies which support all production goals including technology and resources. A value stream map can help determine what processes are necessary and how to keep them running efficiently.

• PROCESS AND CAPACITY DESIGN

provide continuous training for employees, and institute employee satisfaction programs to achieve success in this area.

Demand (sales) forecasts serve as inputs to financial, marketing, and personnel planning.

• True
• False

When making a location decision at the country level, which of these would be considered?

• location of markets
• corporate desires
• land/construction costs
• air, rail, highway, waterway systems

This is probably the most competitive time for most products and businesses need to invest wisely in any marketing they undertake.

• Decline Stage
• Maturity Stage
• Growth Stage
• Introduction Stage

This stage of the cycle could be the most expensive for a company launching a new product.

• Maturity Stage
• Introduction Stage
• Decline Stage
• Growth Stage

In order to have a career in operations management, one must have a degree in statistics or quantitative methods.

• True
• False

Which of the following is not one of the four main types of inventory?

• safety stock inventory
• raw material inventory
• work-in-process inventory
• maintenance/repair/operating supply inventory

Operations management is applicable

• to services exclusively
• mostly to the manufacturing sector
• to all firms, whether manufacturing and service
• mostly to the service sector

Service blueprint refers to the physical surrounding in which the service is delivered

• True
• False

Strategic planning occurs over the medium or intermediate future of 3 to 18 months.

• True
• False

The benefits of effective scheduling include lower cost, faster delivery, and dependable delivery

• True
• False

Lead times, inventory availability, and purchase orders outstanding are among the five things operations managers must know for effective use of Aggregate plan.

• True
• False

One guideline for a fixed layout is to locate high-draw items around the periphery of the store.

• True
• False

In location decisions, intangible costs are easier to measure than tangible costs.

• True
• False

In the Economic order quantity (EOQ) model, inventory does not arrive in a single moment but flows in at a steady rate.

• True
• False

__ is the amount a facility can hold, store, receive, or produce in a period of time.

• CAPACITY

__ is a process analysis technique that focuses on the customer and the producer's interaction with the customer.

• service blueprint

__ is the minimum inventory necessary to keep a perfect system running

• just-in-time inventory

Causal forecasting adopts that demand is related to some underlying factor for factors in the environment.

• True
• False

ANo __ is a listing of the components, their description, and the quantity of each required to make one unit of a product

• BILL OF MATERIALS

Capacity decisions are based on technological concerns.

• True
• False

Waste is anything that does add value, such as storage or inspection of items; waste also includes any activity that does not add value from the consumer's perspective.

• True
• False

Which of the following is specifically characterized by a focus on continuous improvement, respect for people, and standard work practices?

• kanban
• Just-in-time (JIT)
• Lean operations
• Toyota Production System (TPS)

Give (1) Quantitative Forecasting Technique

• Time Series Model

A product strategy may focus on differentiation, high-cost, or rapid response.

• True
• False

a product-oriented production process that uses modules.

• Product Focus
• Process Focus
• Repetitive Focus
• Mass Customization

The forecasting model that pools the opinions of a group of experts or managers is known as the

• jury of executive opinion model
• sales force composition model
• multiple regression
• consumer market survey model

One limitation of the net present value approach to investments is that investments with identical net present values may have very different cash flows.

• True
• False

An operations manager is not likely to be involved in

• the quality of goods and services to satisfy customers' wants and needs
• work scheduling to meet the due dates promised to customers
• the identification of customers' wants and needs
• the design of goods and services to satisfy customers' wants and needs

Which of the following are the primary functions of all organizations?

• marketing, human resources, and finance/accounting
• operations, marketing, and human resources
• marketing, operations, and finance/accounting
• sales, quality control, and operation

Set of activities that a company take on in order to encourage the selling and buying of their products or services. It includes selling, advertisement and product’s delivery to consumers or other company

• MARKETING

This shrinkage could be due to the market becoming saturated because the consumers are switching to a different type of product.

• Growth Stage
• Maturity Stage
• Decline Stage
• Introduction Stage

The quantity required of a dependent demand item is computed from the demand for the final products in which the item is used.

• True
• False

The main issue in designing process layouts concerns the relative positioning of

• departments
• entrances, loading docks, etc
• raw materials
• safety devices

Which of these factors would be considered when making a location decision at the region/community level?

• proximity to raw materials and customers
• zoning restrictions
• government rules, attitudes, stability, incentives
• cultural and economic issues

__ inventory is material that is usually purchased, but has yet to enter the manufacturing process.

• raw material

Retail inventory that is unaccounted for between receipt and time of sale is known as shrinkage.

• True
• False

__ work with a few variables at a time and are easy to understand and use.

• AGGREGATE PLANS

__ enables an organization to take various business decisions, such as planning the production process, purchasing raw materials, managing funds, and deciding the price of the product

• DEMAND FORECASTING

Utilization is the number of units a facility can hold, receive, store, or produce in a period of time.

• True
• False

__ is the Japanese word for card that has come to mean "signal

• kanban

In the sequence of decisions that affect scheduling, __ is (are) the immediate follower of the master schedule (or master production schedule).

• short-term schedules

Long Term Production Planning can help the management to organize for long-term finances on reasonable terms and conditions.

• True
• False

MRP is generally practiced on items with dependent demand.

• True
• False

__ is a method for dividing on-hand inventory into three classifications based on annual dollar volume.

• abc analysis

Budgeting, paying the bills, and collection of funds are activities associated with the

• finance/accounting function
• control function
• management function
• production/operations function

Price changes are useful for matching the level of demand to the capacity of a facility.

• True
• False

__ is a rapid, low-cost production process that caters to constantly changing unique customer desires

• MASS CUSTOMIZATION

Determine the best strategies to streamline, be cost effective, and to develop trusted partners

• SUPPLY CHAIN MANAGEMENT

This includes looking for ways to implement consistency in costs, quality, and resources across all business divisions.

• DESIGN OF GOODS AND SERVICES

The __ technique may be applicable where a firm's parts and subassemblies are common to a variety of its products

• supermarket

Using Full Time worker is a capacity option that works especially well in the service sector where labor needs are relatively unskilled.

• True
• False

Location decisions are based on many things, including costs, revenues, incentives, attitudes, and intangibles, but not on ethical considerations.

• True
• False

The objective of layout strategy is to develop an effective and efficient layout that will meet the firm's competitive requirements.

• True
• False

Labor cost per unit is also referred to as __.

• LABOR CONTENT

__ is the total of all outputs produced by the transformation process divided by the total of the inputs

An example of an intangible cost, as it relates to location decisions, is the quality of education.

• True
• False

It deals precisely of why and how a company, government or an individual obtains capital or the money needed and how are they going to invest or spend it

• FINANCE

5. The forecasting time horizon and the forecasting techniques used tend to vary over the life cycle of a product.

• True
• False

__ is a lot-sizing technique that generates exactly what was required to meet the plan

• lot-for-lot

For which of the following operations would a fixed-position layout be most appropriate?

• assembling automobiles
• producing TV sets
• refining of crude oil
• constructing a highway tunnel or bridge

Changes in capacity may lead, lag, or straddle the demand.

• True
• False

The __ method is popular because a wide variety of factors, from education to recreation to labor skills, can be objectively included.

• FACTOR-RATING

Which scheduling technique should be employed when due dates are important for a job order?

• backward scheduling
• dispatching
• master scheduling
• forward scheduling

__ determines the order in which jobs should be done at each work center.

• SEQUENCING JOBS

Job lots are groups or batches of parts processed together.

• True
• False

A Process chart shows the loading and idle time of several departments, machines, or facilities.

• True
• False

In aggregate planning, the amount of overtime and the size of the work force are both adjustable elements of capacity.

• True
• False

A office layout groups workers, their equipment, and spaces/offices to provide for comfort, safety, and movement of information

• True
• False

Linear regression is known as aNo __ because it incorporates variables or factors that might influence the quantity being forecast.

• ASSOCIATIVE MODEL

An example of a "hidden" production function is money transfers at banks.

• True
• False

The main focus of JIT efforts to reduce investment in inventory requires __.

Felicien grows mirlitons (that's Cajun for Chayote squash) in his 100 by 100 foot garden. He then sells the crop at the local farmers' market. Two summers ago, he was able to produce and sell 1200 pounds of mirlitons. Last summer, he tried a new fertilizer that promised a 50% increase in yield. He harvested 1900 pounds. Did the fertilizer live up to its promise?

• 58.3%

__ forecasts address the business cycle by predicting inflation rates, money supplies, housing starts, and other planning indicators

• economics

Productivity is more difficult to improve in the service sector.

• True
• False

All organizations, including service firms such as banks and hospitals, have a production function.

• True
• False

Industrial location analysis typically attempts to

• be environmentally friendly
• focus more on human resources
• maximize sales
• reduce costs

A master production schedule specifies

• what product is to be made, and when
• raw materials required to complete the product
• the labor hours required for production
• what component is to be made, and when

One goal of TPS partnerships is the removal of in-plant inventory by delivery in small lots directly to the using department as needed.

• True
• False

The assignment method provides an optimum, one-to-one assignment of jobs to resources.

• True
• False

This model assumes that the demand in the next period and the demand in the most recent period is equal.

• Time Series Model
• Naive Approach
• Trend Projection
• Exponential Smoothing

A bill of material lists all components, ingredients, and materials needed to produce one unit of an end item.

• True
• False

__ is that element of balancing a work cell that superficially resembles cycle time.

• TAKT TIME

__ is extra stock that is carried to serve as a buffer.

• safety stock

The four criteria for short-term scheduling

• include maximize completion time and minimize utilization
• are applied simultaneously
• may have different levels of importance, depending on circumstances
• are of equal importance

Products or services designed in easily segmented components are known as __.

• MODULAR DESIGN

Which of the following represents a common way to manage capacity in the service sector?

• changes in staffing levels
• Reservations
• first-come, first served service rule
• Appointments

The work center master production schedule contains data such as capacity and efficiency

• True
• False

Product storage is an example of waste, in the sense that no value is added.

• True
• False

When a tangible product is not included in a service, it is called a Pure Service.

• True
• False

__is the set of activities that create value in the form of goods and services by transforming inputs into outputs

• OPERATIONS MANAGEMENT

Reducing distance is a common JIT goal

• True
• False

In trend projection, the trend component is the slope of the regression equation

• True
• False

One reason to study operations management is to learn how people organize themselves for productive enterprise.

• True
• False

The capacity planning strategy that delays adding capacity until capacity is below demand, then adds a capacity increment so that capacity is above demand, is said to__ demand

• STRADDLE

A major challenge in inventory management is to maintain a balance between inventory investment and customer service.

• True
• False

Reasons to study Operations Management include

• learning about a costly part of the enterprise
• studying why people organize themselves for free enterprise
• knowing how goods and services are consumed
• understanding what human resource managers do

In ABC analysis, "B" Items are the most tightly controlled.

• True
• False

The typical time horizon for aggregate planning is

• 3 to 18 months
• over one year
• less than a month
• up to 3 months

Fixed layout processes items as they are received, rather than placing them in storage; this helps explain why "warehouses" are now called "distribution centers.".

• True
• False

__ forecasts use a series of past data points to make a forecast.

• time series

Use market research to determine customer needs and batch quality assurance testing on products and services in production

__ is the creation of goods and services.

• PRODUCTION

ANo __ addresses flow, allocates space, and responds to customer behavior

• RETAIL LAYOUT