Operations Management: Processes and Supply Chains, 12e (Krajewski)
Chapter 1 Using Operations to Create Value
1.1 Role of Operations in an Organization
1) Operations management refers to the direction and control of inputs that transform processes into
products and services.
2) As a functional area of a business, Operations translates materials and services into outputs.
3) The three main line functions of any business include Operations, Finance and Marketing.
4) Support functions in an organization include Accounting, Human Resources and Engineering.
5) Regardless of how departments like Accounting, Engineering, Finance, and Marketing function in an
organization, they are all linked together through:
A) management.
B) processes.
C) customers.
D) stakeholders.
6) The foundations of modern manufacturing and technological breakthroughs were inspired by the
creation of the mechanical computer by:
A) Charles Babbage.
B) James Watt.
C) Eli Whitney.
D) Frederick Taylor.
7) Which of these Great Moments in Operations and Supply Chain Management did not occur in the 20th
century?
A) invention of the assembly line
B) publication of the Toyota Production Systems book
C) establishment of railroads
D) strategic planning for achieving product variety
8) Operations management refers to the systematic design, direction, and control of ________ that
transform ________ into products and services.
9) The three mainline functions of any business are ________, ________, and ________.
10) What are the three key functions of a firm and what is each responsible for?
1) A process involves transforming inputs into outputs.
2) Every process has a customer.
3) A nested process refers to a process within a process.
4) At the level of the firm, service providers offer just services and manufacturers offer just products.
5) At the process level, it is much easier to distinguish whether the process is providing a service or
manufacturing a product.
6) Manufacturing processes tend to be capital intensive.
7) Quality is more easily measured in a service process than in a manufacturing process.
8) Contact with the customer is usually higher in a manufacturing process than in a service process.
9) At the level of the firm, service providers do not just offer services and manufacturers do not just offer
products.
10) Which of these statements about processes is not true?
A) A process can have its own set of objectives.
B) A process can involve work flow that cuts across departmental boundaries.
C) A process can require resources from several departments.
D) A process can exist without customers.
11) Operations management is part of a production system that can be described in the following manner:
Organization: inputs→processes→outputs.
Which one of the following correctly describes a production system?
A) Airline: pilots→planes→transportation
B) Bank: tellers→computer equipment→deposits
C) Furniture manufacturer: wood→sanding→chair
D) Telephone company: satellites→cables→communication
12) Use the information provided in Table 1.1. An example of an internal customer is:
A) the lumber company.
B) the Receiving Department at ABC.
C) the Shipping Department at ABC.
D) the toy store at the mall.
13) Use the information provided in Table 1.1. An example of an internal supplier is:
A) the lumber company.
B) the Receiving Department at ABC.
C) the Shipping Department at ABC.
D) the toy store at the mall.
14) Use the information provided in Table 1.1. An example of an external customer is:
A) the lumber company.
B) the Customer Service Department at ABC.
C) the Shipping Department at ABC.
D) the toy store at the mall.
15) Use the information provided in Table 1.1. An example of an external supplier is:
A) the lumber company.
B) the Receiving Department at ABC.
C) the Customer Service Department at ABC.
D) the toy store at the mall.
16) Which of the following is an example of a nested process?
A) At the start of the new semester, a student first pays tuition and then goes to the bookstore.
B) A customer service representative verifies a caller’s account information.
C) A candidate’s intent to graduate is checked for financial holds by the Bursar and for degree
requirements by Advising before the diploma mill prints their sheepskin.
D) A stockbroker calls a client and advises her to sell silver short.
17) Which of the following statements is more of a general characteristic of a manufacturing organization,
as compared to a service organization?
A) Short-term demand tends to be highly variable.
B) Operations are more capital intensive.
C) Outputs are more intangible.
D) Quality is more difficult to measure.
18) Which one of the following statements is more of a general characteristic of a service organization, as
compared to a manufacturing organization?
A) Output can be inventoried.
B) The response time is longer.
C) There is less customer contact.
D) Quality is not easily measured.
19) Manufacturing processes usually have:
A) physical, durable output.
B) high levels of customer contact.
C) output that cannot be inventoried.
D) low levels of capital intensity.
20) Service processes usually have:
A) physical, durable output.
B) low levels of customer contact.
C) output that can be inventoried.
D) shorter response times.
21) A(n) ________ is any activity or group of activities that takes one or more inputs, transforms and adds
value to them, and provides one or more outputs for its customers.
22) List and briefly describe five differences between services and manufacturing. Processes provide
examples to illustrate your arguments.
Answer:
Manufacturing Processes
Service Processes
Physical, durable products
Intangible, perishable products
Output can be produced, stored, and
transported
Can’t be stored and transported
Low customer contact
Customers can be part of the input and
part of the process
Have days to deliver
Must be offered within minutes
Capital intensive
Labor intensive
Quality easily measured
Quality not easily measured
23) Identify a large employer in your hometown. Describe this organization’s inputs, processes, and outputs.
1) A core process is a set of activities that delivers value to external customers.
2) The supplier relationship process selects the suppliers of services, materials and information, while the
order fulfillment process facilitates the timely and efficient flow of these items into the firm.
3) One distinction between core processes and support processes is that core process can cut across the
organization while support processes do not.
4) A set of activities that delivers value to external customers is a:
A) supply chain.
B) core process.
C) support process.
D) system.
5) Budgeting, recruiting, and scheduling are examples of a:
A) development.
B) core process.
C) support process.
D) system.
6) The process that facilitates the placement of orders and identifies, attracts, and builds relationships
with external customers is called the:
A) customer relationship process.
B) new service development process.
C) order fulfillment process.
D) supplier relationship process.
7) The process that includes the activities required to produce and deliver the service or product to the
external customer is called the:
A) customer relationship process.
B) new service development process.
C) order fulfillment process.
D) supplier relationship process.
8) Which of these business processes typically lies within the realm of operations?
A) complaint handling
B) customer relationship
C) help desks
D) waste management
9) The cumulative work of the processes of a firm is a(n) ________.
10) ________ provide vital resources and inputs to core processes.
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1.4 Operations Strategy
1) A firm’s core competencies should determine its core processes.
2) Firm A wants to enter a foreign market and has a skill that is difficult to duplicate. Firm B desires this
skill, so Firm A works with Firm B in an arrangement known as a joint venture.
3) The framework for carrying out all of an organization’s functions is:
A) the competitive priority.
B) the corporate strategy.
C) the market analysis.
D) the organizational design.
4) In response to social and political moves to discourage cigarette smoking, major cigarette
manufacturers have had to diversify into other products. Identifying the pressures against smoking is an
example of:
A) environmental scanning.
B) market segmentation.
C) flow strategy.
D) mission statement development.
5) A company realizes that recent layoffs at its primary company reflect potential falling demands for its
customers’ products, and hence for its own products. The company has engaged in:
A) flow strategy.
B) market segmentation.
C) mission statement redefinition.
D) environmental scanning.
6) Core competencies are:
A) product or service attributes that represent the needs of a particular market segment.
B) another name for competitive priorities.
C) various flow strategies.
D) the unique resources and strengths that management considers when formulating strategy.
7) Which of the following is an example of a core competency?
A) facilities
B) top quality
C) low-cost operations
D) on-time delivery
8) Price, quality, and the degree of customization are all examples of:
A) volume needs.
B) other needs.
C) product needs.
D) delivery system needs.
9) The Gap, Inc. has targeted teenagers and young adults in need of casual clothes, and through its
GapKids stores, the parents or guardians of infants through 12-year-olds. This is an example of:
A) market segmentation.
B) a collaborative effort between the company and its customers.
C) a needs assessment.
D) a mission statement.
10) One form of strategic alliance is the ________, in which two firms agree to cooperate to produce a
product or service together.
11) What are four core processes in a firm and how are they related?
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1.5 Competitive Priorities and Capabilities
1) Competitive priorities are the means by which operations implements the firm’s corporate strategies.
2) Flexibility is a possible competitive priority.
3) A firm once made purchasing decisions based on which supplier had the lowest cost. But once cash
flow was healthy, purchasing decisions were made based on the fastest delivery of goods and services by
firms. In this case, delivery speed is clearly the order qualifier.
4) Admission to the prestigious school had become so competitive that a high GPA is no longer enough to
separate one fresh-faced high school student from another. Today’s outstanding candidate must also
demonstrate their involvement in a myriad of extracurricular activities in order to be admitted. It seems
that good grades are now:
A) a needs assessment.
B) order qualifiers.
C) order winners.
D) a mission statement.
5) The first three cars I bought all fell apart around 50,000 miles. It was called planned obsolescence and
no one seemed to care until companies entered the market that promised 70,000, then 80,000, and finally
100,000 mile warranties. What sets a great car apart from a good one now is not the quality, which is
assumed, but performance, safety and fuel economy. A car that can achieve all three is highly sought
after. In the automotive market, performance, safety and fuel economy are sterling examples of:
A) order winners.
B) a needs assessment.
C) order qualifiers.
D) a mission statement.
6) You are interested in buying a laptop computer. Your list of considerations include the computer’s
speed in processing data, its weight, screen size, and price. You consider a number of different models,
and narrow your list based on speed and monitor screen size, then finally select a model to buy based on
its weight and price. In this decision, weight and price are examples of:
A) order qualifiers.
B) a needs assessment.
C) order winners.
D) a mission statement.
7) Competitive priorities:
A) may change over time.
B) are the cost, quality, time and flexibility dimensions that a process or supply chain actually possesses
and is able to deliver.
C) are used to distinguish between a service that is considered and one that is actually purchased.
D) are developed by a review of internal operations capabilities.
8) You are interested in buying a laptop computer. Your list of considerations include the computer’s
speed in processing data, its weight, screen size and price. You consider a number of different models,
and narrow your list based on its speed and monitor screen size, then finally select a model to buy based
on its weight and price. In this decision, speed and monitor screen size are examples of:
A) order winners.
B) a mission statement.
C) a needs assessment.
D) order qualifiers.
9) Using an airline example for competitive priorities, the process capability of handling service needs of
all market segments and promotional programs would be best described by:
A) top quality.
B) variety.
C) consistent quality.
D) delivery speed.
10) A company’s ability to quickly introduce a new service or product would be best described as:
A) volume flexibility.
B) variety.
C) consistent quality.
D) development speed.
11) A business focusing on increasing the efficiency of its operations is more directly addressing:
A) volume flexibility.
B) variety.
C) consistent quality.
D) low-cost.
12) While other suppliers bidding for the contract brought bids with lower per unit costs, Orchard
wanted to take delivery based on the fact that the components they were using were machined to their
exacting specifications 99.99999% of the time. Orchard’s competitive priority was:
A) top quality.
B) consistent quality.
C) on-time delivery.
D) delivery speed.
13) A popular haberdashery could take a customer‘s measurements in the afternoon and produce a dandy
suit ready for customer pickup by next morning. Their competitive priority was:
A) variety.
B) top quality.
C) delivery speed.
D) on-time delivery.