Chapter 14 Operations Management: Managing Vital Operations and
Processes Answer Key
True / False Questions
1.
A production system is the system that an organization uses to acquire inputs, convert
inputs into outputs, and dispose of the outputs.
TRUE
A production system is the system that an organization uses to acquire inputs, convert
inputs into outputs, and dispose of the outputs.
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 14-01 Explain the role of operations management in achieving superior quality, efficiency, and
responsiveness to customers.
Topic: Inputs
2.
Operations managers are managers who are responsible for managing an organization’s
production system.
TRUE
Operations managers are managers who are responsible for managing an organization’s
production system. They do whatever it takes to transform inputs into outputs.
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 14-01 Explain the role of operations management in achieving superior quality, efficiency, and
responsiveness to customers.
Topic: Inputs
3.
“Efficiency” refers to goods and services that are reliable, dependable, and satisfying and
that do the job they were designed for.
FALSE
“Efficiency” refers to the amount of inputs required to produce a given output.
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 14-01 Explain the role of operations management in achieving superior quality, efficiency, and
responsiveness to customers.
Topic: Inputs
4.
“Quality” refers to the amount of inputs that are required to produce a given output.
FALSE
“Quality” refers to goods and services that are reliable, dependable, or psychologically
satisfying: They do the job they were designed for and do it well, or they possess some
attribute that gives their users something they value.
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 14-01 Explain the role of operations management in achieving superior quality, efficiency, and
responsiveness to customers.
5.
“Responsiveness to customers” refers to actions taken to meet the demands and needs of
customers.
TRUE
“Responsiveness to customers” refers to actions taken to meet the demands and needs of
customers.
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 14-01 Explain the role of operations management in achieving superior quality, efficiency, and
responsiveness to customers.
Topic: Customer Relationship Management (CRM)
6.
Profit-seeking organizations have customers, but not–for-profit organizations do not have
customers.
FALSE
All organizations, profit-seeking or not-for-profit, have customers. Without customers,
most organizations would cease to exist.
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: 2 Medium
Learning Objective: 14-01 Explain the role of operations management in achieving superior quality, efficiency, and
responsiveness to customers.
Topic: Customer Relationship Management (CRM)
7.
Management experts recommend that an organization define its business in terms of the
products it is producing, and not in terms of the customer needs that it is attempting to
satisfy.
FALSE
Management writers recommend that organizations define their business in terms of
which customer wants or needs they are satisfying, not the type of products they are
producing.
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 14-01 Explain the role of operations management in achieving superior quality, efficiency, and
responsiveness to customers.
Topic: Customer Relationship Management (CRM)
8.
Customers prefer products that are, as far as possible, customized to their unique needs.
TRUE
Customers prefer products that are, as far as possible, customized or tailored to their
unique needs. Customers also prefer low prices, products of high quality, and quick
services.
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 14-02 Describe what customers want, and explain why it is so important for managers to be
responsive to their needs.
Topic: Customer Relationship Management (CRM)
9.
Attributes of an organization’s outputs—their quality, cost, and features—are determined
by the organization’s production system.
TRUE
Because satisfying customers is so important, managers try to design production systems
that can produce the outputs that have the attributes a customer desires. The attributes of
an organization’s outputs—their quality, cost, and features—are determined by the
organization’s production system.
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 14-01 Explain the role of operations management in achieving superior quality, efficiency, and
responsiveness to customers.
Topic: Outputs
10.
Customer relationship management (CRM) is a technique that uses IT to develop an
ongoing relationship with customers to maximize the value an organization can deliver to
them over time.
TRUE
Customer relationship management (CRM) is a technique that uses IT to develop an
ongoing relationship with customers to maximize the value an organization can deliver to
them over time. CRM IT monitors, controls, and links each of the functional activities
involved in marketing, selling, and delivering products to customers.
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: 1 Easy
Topic: Customer Relationship Management (CRM)
11.
CRM systems have two interconnected components: sales and selling, and after-sales
service and support.
FALSE
CRM systems have three interconnected components, sales and selling, after-sales
service and support, and marketing. CRM IT monitors, controls, and links each of the
functional activities involved in marketing, selling, and delivering products to customers.
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 14-02 Describe what customers want, and explain why it is so important for managers to be
responsive to their needs.
Topic: Customer Relationship Management (CRM)
12.
A CRM system can be used as a comprehensive method of gathering crucial information
about the way customers respond to a company’s products.
TRUE
A CRM system can be used as a comprehensive method of gathering crucial information
about the way customers respond to a company’s products.
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 14-02 Describe what customers want, and explain why it is so important for managers to be
responsive to their needs.
Topic: Customer Relationship Management (CRM)
13.
The concept of “quality” can be applied only to manufacturing organizations, but not to
service organizations.
FALSE
Quality is a concept that can be applied to the products of both manufacturing and service
organizations—goods such as a Toyota car or services such as Southwest Airlines flight
service or customer service in a Citibank branch.
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 14-03 Explain why achieving superior quality is so important.
Topic: Total Quality Management (TQM)
14.
Improving product quality increases the operating costs of the organization.
FALSE
Achieving high product quality lowers operating costs because of the effect of quality on
employee productivity. Higher product quality means less employee time is wasted in
making defective products that must be discarded or in providing substandard services,
and thus less time has to be spent fixing mistakes.
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 14-03 Explain why achieving superior quality is so important.
Topic: Total Quality Management (TQM)
15.
Managers should create an environment in which subordinates will not be afraid to report
problems or recommend improvements.
TRUE
First-line managers should spend more time working with nonmanagerial employees and
providing them with the tools they need to do the job. Managers should create an
environment in which subordinates will not be afraid to report problems or recommend
improvements.
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 14-03 Explain why achieving superior quality is so important.
Topic: Total Quality Management (TQM)
Multiple Choice Questions
16.
Which of the following typically represents the impact of increased quality on
organizational performance?
A.
Increased reliability that leads to lower prices
B.
Increased productivity that leads to lower costs
C.
D.
Higher costs that lead to higher profits
With increased quality, we have (1) increased reliability that leads to higher prices and (2)
increased productivity that leads to lower costs. Higher prices in turn lead to higher
profits, and lower costs in turn lead to higher profits.
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 14-03 Explain why achieving superior quality is so important.
Topic: Total Quality Management (TQM)
17.
Which of the following will typically lead to making the highest profits?
A.
Higher prices and higher costs
B.
Lower prices and lower costs
C.
Higher prices and lower costs
D.
Lower prices and higher costs
With increased quality, we have (1) increased reliability that leads to higher prices and (2)
increased productivity that leads to lower costs. Higher prices in turn lead to higher
Blooms: Apply
Difficulty: 3 Hard
Learning Objective: 14-03 Explain why achieving superior quality is so important.
Topic: Total Quality Management (TQM)
18.
Blaze Blends, a metal alloy maker, wants to measure the efficiency of the energy inputs at
its factory. It needs to use a formula to calculate ________ productivity.
A.
employee
B.
partial
C.
total factor
D.
labor
Though sometimes a useful measure of efficiency overall, total factor productivity
obscures the exact contribution of an individual input to the production of a given output.
Consequently, most organizations focus on specific measures of efficiency, known as
partial productivity, that measure the efficiency of an individual unit.
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
Blooms: Apply
Difficulty: 2 Medium
Learning Objective: 14-04 Explain why achieving superior efficiency is so important.
Topic: Inputs
19.
The management of efficiency is an extremely important issue in most organizations,
because increased efficiency generally helps ________.
A.
decrease technology use
B.
decrease production costs
C.
increase product price
D.
increase inventory size
The management of efficiency is an extremely important issue in most organizations,
because increased efficiency lowers production costs, thereby allowing the organization to
make a greater profit or to attract more customers by lowering its price.
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: 2 Medium
Learning Objective: 14-04 Explain why achieving superior efficiency is so important.
Topic: Management
20.
At a manufacturing unit for trousers, there are many stations located in a row. At the first
station cloth is cut, at the second hems are stitched, at the third buttons are sewn, at the
fourth seams are checked, and at the fifth the product is packed. This unit is an example
of ________.
A.
process layout
B.
product layout
C.
fixed-position layout
D.
flexible layout
In a product layout, machines are organized so that each operation needed to manufacture
a product is performed at workstations arranged in a fixed sequence.
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
Blooms: Apply
Difficulty: 1 Easy
Learning Objective: 14-04 Explain why achieving superior efficiency is so important.
Topic: Inputs
21.
Which of the following describes the product layout?
A.
It is efficient only when products are created in large quantities.
B.
Workers move from workstation to workstation.
C.
A conveyor belt is usually not used.
D.
Assembling a product is easily achieved in this layout.
Typically, workers are stationary in this arrangement, and a moving conveyor belt takes
the product being worked on to the next workstation so that it is progressively assembled.
It used to be that this layout was efficient only when products were created in large
quantities; however, the introduction of modular assembly lines controlled by computers
makes it efficient to make products in small batches.
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 3 Hard
Learning Objective: 14-04 Explain why achieving superior efficiency is so important.
Topic: Inputs
22.
In a fixed-position production layout, ________.
A.
different teams assemble different component parts
B.
the product is moved from one workstation to the next
C.
component parts are made in the assembling area
D.
products that are heavy are more difficult to make
In a fixed-position layout, the product stays in a fixed position. Its component parts are
Increasingly, self-managed teams are using fixed-position layouts.
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 14-04 Explain why achieving superior efficiency is so important.
Topic: Inputs
23.
When setup times for complex production equipment is reduced, ________.
A.
efficiency of the production unit goes down
B.
time spent in producing something will increase
C.
flexible manufacturing techniques become irrelevant
D.
employees have to be paid for nonproductive time
It follows that if setup times for complex production equipment can be reduced, efficiency
will rise. If setup times can be reduced, the time that plant and employees spend in
actually producing something will increase. This simple insight has been the driving force
behind the development of flexible manufacturing techniques.
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
Blooms: Apply
Difficulty: 2 Medium
Learning Objective: 14-04 Explain why achieving superior efficiency is so important.
Topic: Inputs
24.
A maker of bottle caps gets orders from customers with different size, material, and
thickness requirements, forcing the workers to frequently change the equipment. Flexible
manufacturing will be ideal in this case because ________.
A.
large numbers of the same type may be produced
B.
cheaper raw material may now be used
C.
the time required to set up equipment is reduced
D.
customers will now agree to use caps of the same size
Flexible manufacturing aims to reduce the time required to set up production equipment. A
favorable outcome from flexible manufacturing is that a company is able to produce many
more varieties of a product than before in the same amount of time. Thus, flexible
manufacturing increases a company’s ability to be responsive to its customers.
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: 2 Medium
Learning Objective: 14-04 Explain why achieving superior efficiency is so important.
Topic: Inputs
25.
A fixed-position production layout would be particularly recommended if ________.
A.
there are no self-managed teams
B.
the product is easily moved on a conveyor belt
C.
you are making jet airlines or gas turbines
D.
products have simple, lightweight parts
Increasingly, self-managed teams are using fixed-position layouts. A fixed-position layout
is commonly used for products such as jet airlines, mainframe computers, and gas
turbines—products that are complex and difficult to assemble or so large that moving
them from one workstation to another would be difficult.
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
Blooms: Apply
Difficulty: 2 Medium
Learning Objective: 14-04 Explain why achieving superior efficiency is so important.
Topic: Inputs
26.
The total amount of raw materials and component parts that an organization has on hand
is known as ________.
A.
buffer
B.
layout
C.
inventory
D.
facilities
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 14-04 Explain why achieving superior efficiency is so important.
Topic: Inputs
27.
What is the advantage of maintaining buffer stocks of inventory?
A.
It brings down storage costs.
B.
It supports a JIT inventory system.
C.
It helps deal with unpredictable supplies.
D.
It helps quickly identify defective stocks.
Although buffer stocks of inventory can be expensive to store, they can help an
organization when it is affected by shortages of inputs brought about by a disruption
among suppliers.
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 14-04 Explain why achieving superior efficiency is so important.
Topic: Inputs
28.
Jet Perks is an organization that has chosen to use a JIT system. Their productivity will
improve because the company can now ________.
A.
give quick feedback to suppliers of defective goods
B.
respond quickly to increased customer demand
C.
have a buffer stock of inventory available
D.
store more raw material in less space
One drawback of JIT systems is that they leave an organization without a buffer stock of
inventory. Although buffer stocks of inventory can be expensive to store, they can help an
organization when it is affected by shortages of inputs brought about by a disruption
among suppliers.
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
Blooms: Apply
Difficulty: 2 Medium
Learning Objective: 14-04 Explain why achieving superior efficiency is so important.
Topic: Just-in–time (JIT) Inventory System
14–19
29.
Which of the following describes self-managing work teams?
A.
Members are too specialized to fill in for absent coworkers.
B.
Each member reports to two first-line managers.
C.
Cost savings arise from eliminating supervisors.
D.
Members misuse the greater autonomy given to them.
In self-managing work teams anyone can fill in for absent coworkers. The members of
each team also assume responsibility for work and vacation scheduling, ordering
materials, and hiring new members—previously all responsibilities of first-line managers.
Because people often respond well to being given greater autonomy and responsibility, the
use of empowered self-managed teams can increase productivity and efficiency.
Moreover, cost savings arise from eliminating supervisors and creating a flatter
organizational hierarchy, which further increases efficiency.
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 3 Hard
Learning Objective: 14-04 Explain why achieving superior efficiency is so important.
Topic: Inputs
30.
Creek Redwood, a furniture maker, shrank its ordering and delivery team by taking most of
its operations online and increased its fleet of trucks to decrease delivery time. These
actions can be described as ______.
A.
a JIT system
B.
process reengineering
C.
flexible manufacturing
D.
total factor productivity
Process reengineering is the fundamental rethinking and radical redesign of business
processes to achieve dramatic improvements in critical measures of performance such as
cost, quality, service, and speed.
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 14-04 Explain why achieving superior efficiency is so important.
Topic: Inputs