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Entrepreneurship: Starting & Operating a Small Business, 4e (Mariotti)
Chapter 12 Operating for Success
1) ________ permit businesses to deliver what is promised when it is promised.
A) Expeditors
B) Operations
C) Sales
D) Brokers
Learning Object.: 12.1 Examine the significance of operations in a business.
AACSB Category: Analytical thinking
2) The set of actions that produce goods and services is called ________.
A) shipping
B) operations
C) manufacturing
D) processing
Learning Object.: 12.1 Examine the significance of operations in a business.
AACSB Category: Analytical thinking
3) Which of the following is not a step in the production-distribution chain?
A) A retailer buys 6 rings.
B) A consumer enters a jewelry shop and buys a ring.
C) A consumer wears jewelry to work.
D) A goldsmith crafts 10 rings.
Learning Object.: 12.2 Develop a production-distribution chain for your business.
AACSB Category: Application of knowledge
4) Explain the traditional production-distribution chain.
Learning Object.: 12.2 Develop a production-distribution chain for your business.
AACSB Category: Analytical thinking
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5) The amount of inventory to order that will total the minimum total ordering and holding costs
is called the ________.
A) Economic Order Quantity (EOQ)
B) Economic Reorder Point (ERP)
C) Reorder Point (ROP)
D) Cost Accounting Point
Learning Object.: 12.3 Manage suppliers and inventory.
AACSB Category: Analytical thinking
6) Lost sales and goodwill are potentially significant costs that may arise from ________.
A) too little inventory
B) too much inventory
C) Both A and B
D) poor customer service with inventory
Learning Object.: 12.3 Manage suppliers and inventory.
AACSB Category: Reflective thinking
7) The inventory method where you look at the inventory on hand, and when the stock level of
an item appears to be low, you reorder is called ________.
A) basic control
B) proximal management
C) estimation
D) visual control
Learning Object.: 12.3 Manage suppliers and inventory.
AACSB Category: Analytical thinking
8) A critical component of Supply Chain Management is ________.
A) identifying and securing suppliers
B) managing inventory
C) Both of the above.
D) Neither of the above.
Learning Object.: 12.3 Manage suppliers and inventory.
AACSB Category: Analytical thinking
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9) The three factors included in the calculation of the Reorder Point are ________.
A) demand, lead time, and safety stock
B) supply, price, and safety stock
C) demand, inventory, and price
D) supply, demand, and holding costs
Learning Object.: 12.3 Manage suppliers and inventory.
AACSB Category: Analytical thinking
10) If the lead time for garage doors is 2 weeks, and you sell 100 doors per week, and you
always want at least 20 doors in stock, what is the Reorder Point?
A) 320
B) 220
C) 420
D) 440
Learning Object.: 12.3 Manage suppliers and inventory.
AACSB Category: Application of knowledge
11) Suppliers may be found through ________.
A) newspapers and magazines
B) trade shows, conferences, and catalogs
C) All of the above.
D) None of the above.
Learning Object.: 12.3 Manage suppliers and inventory.
AACSB Category: Analytical thinking
12) Factors to consider when selecting a ________ include charging a price you are willing to
pay and timely delivery.
A) customer
B) supplier
C) sales representative
D) manufacturer
Learning Object.: 12.3 Manage suppliers and inventory.
AACSB Category: Analytical thinking
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13) ________ are the amounts of inventory or raw materials and work-in-process kept to
guarantee service levels.
A) Safety stock levels
B) Sufficiency levels
C) Minimum lots
D) Minimum-Maximum balance
Learning Object.: 12.3 Manage suppliers and inventory.
AACSB Category: Analytical thinking
14) ________ is the management of sourcing, procuring, production, and logistics to go from
raw materials to end consumers across multiple intermediate steps.
A) Supply Chain Management
B) Total Quality Management
C) The Production-Distribution Chain
D) Supply Channel
Learning Object.: 12.3 Manage suppliers and inventory.
AACSB Category: Analytical thinking
15) The visual control approach to inventory management is a scientific method.
Learning Object.: 12.3 Manage suppliers and inventory.
AACSB Category: Analytical thinking
16) Tell how to calculate Reorder Point (ROP) and Economic Order Quantity (EOQ).
Learning Object.: 12.3 Manage suppliers and inventory.
AACSB Category: Analytical thinking
17) Which of the following is not a key factor in deciding on a location for the business?
A) access to suppliers
B) access for customers
C) proximity to your accountant
D) labor pool
Learning Object.: 12.4 Recognize the key factors to consider in the location decision.
AACSB Category: Analytical thinking
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18) The factor-rating for location decisions uses criteria that are prioritized but not weighted. The
purpose is to eliminate subjective considerations.
Learning Object.: 12.4 Recognize the key factors to consider in the location decision.
AACSB Category: Analytical thinking
19) Manufacturing, warehousing, and ________ have similar considerations for the type and size
of facility.
A) retailing firms
B) services firms
C) distribution firms
D) not-for-profit organizations
Learning Object.: 12.5 Explore the design of facilities and their layouts.
AACSB Category: Analytical thinking
20) If you are considering starting a business venture in your home, thoroughly investigate
zoning ordinances, civic association rules, and ________.
A) the neighborhood
B) deed restrictions
C) distance from the Interstate
D) proximity to city hall
Learning Object.: 12.5 Explore the design of facilities and their layouts.
AACSB Category: Analytical thinking
21) Home-based entrepreneurs have special considerations other businesses don’t have.
Learning Object.: 12.5 Explore the design of facilities and their layouts.
AACSB Category: Reflective thinking
22) The statistical methods, within Six Sigma, are designed to eliminate defects to a failure rate
of ________ defects per one million opportunities, or a 99.9997% success rate.
A) 3.4
B) 34
C) 0.34
D) .344
Learning Object.: 12.6 Evaluate product quality methodologies.
AACSB Category: Analytical thinking
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23) Which of the following is given by the President of the United States?
A) Malcolm Baldrige National Quality Award
B) ISO9000:2001
C) Benchmarking Excellence Award
D) National Merit for Success Award
Learning Object.: 12.6 Evaluate product quality methodologies.
AACSB Category: Analytical thinking
24) One sub-methodology employed in Six Sigma is DMAIC which stands for ________.
A) describe, measure, assess, improve, and control
B) define, measure, analyze, improve, and control
C) define, minimize, assess, improve, and collect
D) describe, maximize, analyze, improve, and compact
Learning Object.: 12.6 Evaluate product quality methodologies.
AACSB Category: Analytical thinking
25) Engineers from what company developed Six Sigma in the 1980s?
A) Intel
B) General Motors
C) Motorola
D) General Electric
Learning Object.: 12.6 Evaluate product quality methodologies.
AACSB Category: Analytical thinking
26) The family of standards for quality management systems established by the International
Organization for Standardization is ________.
A) ISO9000
B) ISO8800
C) ISO2008
D) ISO 14000
Learning Object.: 12.6 Evaluate product quality methodologies.
AACSB Category: Analytical thinking
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27) Which of the following is not part of process management?
A) measuring tasks
B) optimizing tasks
C) monitoring tasks
D) costing tasks
Learning Object.: 12.6 Evaluate product quality methodologies.
AACSB Category: Analytical thinking
28) ________ are three of the eight quality management principles for organizational
improvement.
A) Conflicted supplier relationships, process approach, and leadership
B) Customer focus, leadership, and policy approach
C) Customer focus, continual improvement, and involvement of people
D) Continuous improvement, cost control, employee motivation
Learning Object.: 12.6 Evaluate product quality methodologies.
AACSB Category: Analytical thinking
29) A measure of quality that may be used in Total Quality Management (TQM) is ________.
A) on-time delivery
B) compliance with product specifications
C) repeat rates
D) All of the above.
Learning Object.: 12.6 Evaluate product quality methodologies.
AACSB Category: Analytical thinking
30) What organization administers the Malcolm Baldrige National Quality Award?
A) United Nations (UN)
B) National Aeronautical and Space Administration (NASA)
C) National Institute of Standards and Technology (NIST)
D) National Merit Award Administration (NMAA)
Learning Object.: 12.6 Evaluate product quality methodologies.
AACSB Category: Analytical thinking
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31) Comparing one company’s performance against that of other companies in the same industry
or against best practices, standards, or certification criteria is called ________.
A) quality comparison
B) profiling
C) benchmarking
D) qualify deployment
Learning Object.: 12.6 Evaluate product quality methodologies.
AACSB Category: Analytical thinking
32) Organizations applying for the Baldrige Award are judged on ________.
A) customer and market focus
B) leadership and strategic planning
C) process management and human resources focus
D) All of the above.
Learning Object.: 12.6 Evaluate product quality methodologies.
AACSB Category: Analytical thinking
33) ________, an American economist, argued that business should focus on making quality
products instead of maximizing profits – and that profit would follow.
A) Conrad Hilton
B) W. Edwards Deming
C) Paul Samuelson
D) Adam Smith
Learning Object.: 12.6 Evaluate product quality methodologies.
AACSB Category: Analytical thinking
34) The central focus of total quality management (TQM) is continuous improvement.
Learning Object.: 12.6 Evaluate product quality methodologies.
AACSB Category: Reflective thinking
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35) Explain why “profits follow quality.”
Learning Object.: 12.6 Evaluate product quality methodologies.
AACSB Category: Reflective thinking
36) Compare and contrast 2 organization-wide quality initiatives such as Lean Manufacturing,
Benchmarking, ISO9000, Six Sigma, TQM, and Baldrige.
Learning Object.: 12.6 Evaluate product quality methodologies.
AACSB Category: Analytical thinking
37) A ________ for technology is important for decision-making before investment.
A) trial subscription
B) consultant
C) cost/benefit analysis
D) competition research
Learning Object.: 12.7 Implement technology to benefit your business.
AACSB Category: Analytical thinking
38) Retail point-of-sales systems, restaurant menu order systems, and concert venue ticketing
systems are all examples of ________.
A) custom software applications
B) industry-specific technology
C) systems for large businesses
D) indirect marketing
Learning Object.: 12.7 Implement technology to benefit your business.
AACSB Category: Reflective thinking
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39) In general, a web site or electronic storefront is not necessary for retail businesses.
Learning Object.: 12.7 Implement technology to benefit your business.
AACSB Category: Analytical thinking
40) What steps can an organization take to incorporate technology and why might they be
beneficial (name at least 3)?
Answer: Technology can work to a business’s advantage if they use it effectively. Even if the
business is not “technological,” it can apply technology to make business operations more
efficient and effective. The technology could be as simple as a telephone or as complex as a
specialized piece of medical equipment. Companies should be aware of their options, but should
be wary of adopting technology just for the “wow” factor. A cost/benefit analysis for technology
implementation is as important as for any other substantive investment.
Advances in technology that ordinary people can use have been an important part of the
entrepreneurial wave of the last decade. With this in mind:
4) Every entrepreneur should be aware of the specialized computer software and equipment that
is designed for his/her industry.
One of the best investments an owner can make for a business is to buy a computer. Even the
5) Maintain an updated mailing list of customers and print mailing labels.
The phone is still one of the businessperson’s most important technological tools. An
entrepreneur can turn a phone into an answering service for the business by using a voice-mail
system, or he/she can hire an answering service to provide a more personal touch. Either
approach is acceptable – until you have staff to answer customer inquiries; although today some
companies use automated telephone answering systems even if they have hundreds or thousands
of employees.
Learning Object.: 12.7 Implement technology to benefit your business.