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14) For students not wanting a traditional major in marketing or accounting, for example, the college
decided to create a general business major, which allowed any combination of the easiest business
courses to comprise the program. The competitive priority achieved in this example is:
A) customization.
B) delivery speed.
C) consistent quality.
D) low-cost.
15) A company's ability to support varying rates of production is best described as:
A) volume flexibility.
B) variety.
C) consistent quality.
D) development speed.
16) A firm gains competitive advantage by outperforming competitors in terms of competitive priorities,
which fall into four major groups: ________, ________, ________, and ________.
17) ________ is the elapsed time between receiving a customer's order and filling it.
18) ________ measures the frequency with which delivery-time promises are met.
19) ________ is the ability to accelerate or decelerate the rate of production quickly to handle large
fluctuations in demand.
20) Every sub-contractor knew that their quality had to be excellent to be considered for the project; it
was their ability to deliver on time that would secure the lucrative contract. Quality was recognized as
being an ________, but on-time delivery was the ________.
21) Explain what an operations strategy is and the importance of competitive priorities. Give an example
from an organization (public or private, manufacturing or service).
22) Name the two competitive priorities for quality and give an example of each.
23) Name the three competitive priorities for time and give an example of each.
1) Most products today are composites of global materials and services from throughout the world.
2) The increased global presence of many firms has lessened the burden to behave ethically.
3) The Internet of Things is a trend that affects operations and supply chain management in a minor way.
4) In an assembly operation at a furniture factory, six employees assembled an average of 450 custom
chairs per 5-day week. What is the labor productivity of this operation?
A) 90 chairs per worker per day
B) 20 chairs per worker per day
C) 15 chairs per worker per day
D) 75 chairs per worker per day
5) A manufacturing process requires 12 minutes of labor to make 10 units of product. Which of the
following actions will increase productivity?
1. Increase labor per 10 units of production
2. Decrease labor per 10 units of production
3. Increase number of units per 10 minutes of labor
4. Decrease number of units per 12 minutes of labor
A) 1 and 3 only
B) 2 and 4 only
C) 1 and 4 only
D) 2 and 3 only
6) The details of weekly output and input for a fabrication process are as follows: output is 400 units, with
a standard selling price of $100 per unit. For the week, total labor costs are: 10 workers at 40 hours for the
week, are paid $15 per hour. Total material costs for the 400 units are $5,000. Weekly overhead is charged
at the rate of 1.5 times the labor costs. What is the multifactor productivity for the week?
A) 0.02
B) 0.75
C) 1.50
D) 2.00
7) Use the information provided in Table 1.2. What is the multifactor productivity of the current process?
A) less than or equal to 8.0
B) greater than 8.0 but less than or equal to 10.0
C) greater than 10.0 but less than or equal to 12.0
D) greater than 12.0
8) Use the information provided in Table 1.2. What is the multifactor productivity of the new process?
A) less than or equal to 8.0
B) greater than 8.0 but less than or equal to 10.0
C) greater than 10.0 but less than or equal to 12.0
D) greater than 12.0
9) Use the information provided in Table 1.2. Based on your productivity calculations, what decision
should you make?
A) implement the new process
B) stay with the current process
C) need more information to make a decision
D) Either process is acceptable (since the multi-factor productivities are the same).
10) It takes the Blacksburg shipyard twenty six weeks with 500 workers to build a small tanker. Material
costs are $32 million and overhead costs are $2 million. Workers cost $40 per hour including benefits and
work 40 hours per week. The ship sells for $75 million. What is the multifactor productivity ratio?
A) less than 1.0
B) greater than 1.0 but less than or equal to 2.0
C) greater than 2.0 but less than or equal to 3.0
D) greater than 3.0
11) Which of the following would be considered an advantage of global competition?
A) ability to safeguard proprietary technology in working with offshore suppliers
B) a recent climate of low political risk and lessening nationalization
C) high levels of worker skills in foreign countries mean less required training
D) strong global competition and increased worldwide demand
12) With regards to globalized operations and cost advantages, what China is to manufacturing, India is
to:
A) services.
B) human resources.
C) finance.
D) supply chain.
13) Companies that do not have operations in China find it difficult to compete based on the basis of low
prices with companies that do. Instead those companies tend to compete based on:
A) quality and social responsibility.
B) speed and small production runs.
C) luxury.
D) quality and small production runs.
14) Which of the following statements about "big data" is false?
A) The data must be organized and analyzed to be of any use.
B) Firms use high-powered analytical models to sift through the data
C) Data may be collected instantly or over a period of months.
D) It is not necessary for operations managers to be involved in implementation of "big data" processes.
15) The question of whether a manufacturer has rights to utilize data collected from a health monitoring
device to improve future versions of the product is a concern of:
A) privacy.
B) technology.
C) security.
D) hardware costs.
16) The utilization of sensor data to detect deteriorating machine parts prior to product failure is an
example of which operations management application?
A) Product design and development
B) Inventory management
C) Preventive maintenance
D) Logistics
17) Productivity is defined as ________ divided by ________.
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18) Half of the world's greenhouse gases are produced by only ________ nations.
19) In order to utilize the capabilities of the internet of things, the organizational roles of ________ and
________ will have to become more aligned, although they are traditionally two separate functional areas.
20) How has global competition affected productivity? Cite specific examples and reference the
productivity equation to support your thesis.
Answer: Examples will vary; students should argue that the increase in global competition has increased
productivity for those firms that have survived. Firms that fail (or have already failed) to effectively
28
21) What are some disadvantages of globalization?
Answer: Operations in other countries can have disadvantages. A firm may have to relinquish
proprietary technology if it turns over some of its component manufacturing to offshore suppliers or if
22) What are some ethical issues that are prevalent in organizations that have a global operations
presence?
Answer: Some countries are more sensitive than others about conflicts of interest, bribery, discrimination
23) Barry's Tire Service completed 100 tire changes, six brake jobs, and 16 alignments in an eight-hour day
with his standard crew of six mechanics. A brake specialist costs $16 per hour, a tire changer costs $8 per
hour, and an alignment mechanic costs $14 per hour. The materials cost for a day was $2,000, and
overhead cost was $500.
a. What is the shop's labor productivity if the retail price for each respective service is $60, $150, and $40?
b. What is the multifactor productivity, if the crew consisted of two of each type mechanic?
24) Table 1.3
The Abco Company manufactures electrical assemblies. The current process uses 10 workers and
produces 200 units per hour. You are considering changing the process with new assembly methods that
increase output to 300 units per hour, but will require 14 workers. Particulars are as follows:
CURRENT PROCESS
NEW PROCESS
OUTPUT (UNITS / HOUR)
200
300
NUMBER OF WORKERS
10
14
MATERIAL COST / HOUR
$120
$150
Workers are paid at a rate of $10 per hour, and overhead is charged at 140% (or 1.4 times) labor costs.
Finished switches sell for $20/unit.
a. Calculate the multifactor productivity for the current process.
b. Calculate the multifactor productivity for the new process.
c. Determine if the new process should be implemented.
30
25) The three person crew worked their way through the neighborhood, mowing lawns, edging, applying
fertilizer and weed treatments where necessary and collecting all the clippings for use as mulch as part of
their new green initiative. Their pricing scheme appears in Table A and the mix of orders and service
costs appear in Table B:
a. What is their multifactor productivity for these orders in the prestigious Edmond Oaks neighborhood?
b. Which of the service combinations provided by them is the most productive service combination from
a multifactor perspective?
c. What is their labor productivity for the same mix of orders?
Table A: Price List
SERVICE
PRICE
LABOR
MATERIAL
Mow lawn
$75
1 hr
$2
Edge
$20
.25
$1
Fertilizer treatment
$120
.25
$45
Weed prevention treatment
$80
.25
$25
Multiple services
5% discount times
the number of
services
Workers are paid at a rate of $10 per hour, and overhead is charged at 120% (or 1.2 times) labor costs. For
a customer that gets both mowing and edging, their $95 bill would be discounted for two services times
5% for a total of 10% off the $95 straight charge for a cost of $85.50. A customer receiving three services
would get a 15% discount off their service bill. Labor hours shown in Table A are total hours for the
three-person crew.
Table B: Orders Processed
SERVICE
# Customers
Mow lawn & edge
6
Mow lawn, edge, and fertilize
3
Mow lawn, edge, and weed prevention treatment
2
Mow lawn & fertilize
2
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Answer:
a. Multifactor Productivity Overall
Total Revenue = $86 × 6 + $182.75 × 3 + $148.75 × 2 + $175.50 × 2 = $1,709.75
Labor Cost = $12.50 × 6 + $15 × 3 + $15 × 2 + $12.50 × 2 = $175
b. Multifactor Productivity by Service
Mow & Edge = = 2.8
c. Overall Labor Productivity.
Total Revenue = $85.59 × 6 + $182.75 × 3 + $148.75 × 2 + $175.50 × 2 = $1,709.75
32
26) The three-person crew worked their way through the neighborhood, testing doorknobs and windows
and slipping past security systems like a team of ninjas. Of course, they weren't ninjas, but a crew of
brazen burglars, hoping to grab cash and other valuables to fence at the next level of their supply chain.
Fortune smiles on them on this day in the prestigious Edmond Oaks neighborhood. A lawn maintenance
crew is creating a tremendous racket mowing and edging lawns, which completely drowns out the
sounds of breaking glass. Details of the day's haul appear in Table C.
a. What is the multifactor productivity?
b. What is the labor productivity?
Table C: The Haul
ITEM
SALES PRICE
LABOR
MATERIAL
Krugerrand
$1,500
1 hr
$2
Flat screen TV
$250
.25
$1
$200 cash
$200
.05
$45
Lava lamp
$5
.15
$25
Rolex watch
$180
.10
$1
Workers are paid at a flat rate of 20% of the sales price of the merchandise. Materials cost
represents the cost of gasoline and surgical gloves, and overhead is 20% of the sales price of
the merchandise.
Answer:
a. Multifactor Productivity
Total Revenue = $1,500 + $250 + $200 + $5 + $180 = $2,135
b. Labor Productivity
Total Revenue = $1,500 + $250 + $200 + $5 + $180 = $2,135
27) What are some of the concerns operations managers must address regarding using the internet of
things? Cite a specific example.
1) Understanding the concepts in this text will help you become an effective manager in any functional
area of business.
2) Managing supply chains does not involve processes external to the firm.
3) The effective operation of a firm and its supply chain is more important than the design and
implementation of its processes.
4) It is the sole responsibility of the operations function of an organization to design and operate
processes that are part of a supply chain.
5) Operations managers are involved at both the strategic and tactical levels of corporate strategy.
6) If a retail store owner does not have a popular item in stock because he underestimated the forecasted
sales for that item, he most likely has a challenge with:
A) managing processes.
B) managing customer demand.
C) managing supply chains.
D) managing people.
7) The key decisions to eliminate activities that do not add value while improving those that do are an
important part of:
A) managing processes.
B) managing customer demand.
C) managing supply chains.
D) managing people.
8) ________ are often responsible for key performance measures such as cost and quality.
9) Each function of an organization is connected with operations through shared ________.
35
10) Effective management of its processes can allow a firm to reduce its ________ and also increase
________.
11) Explain the types of decisions that operations managers are involved in and how they are linked to a
firm's strategy.
Answer: Operations managers are involved in tactical decisions such as process improvement,
