A coffee shop’s average transaction price is $4, and the contribution margin is 60
percent. A typical customer makes a purchase once a week or 52 weeks per year, and
the management estimates the value of the loyal customer over the buying life cycle as
$520. The customer defection rate is _____.
a. less than or equal to 0.10
b. more than 0.10 and less than or equal to 0.15
c. more than 0.15 and less than or equal to 0.20
d. more than 0.20 and less than or equal to 0.25
Answer:
Which of the following is NOT TRUE regarding inventory management?
a. The two fundamental inventory decisions are: where to order and what to order.
b. Inventory management applies to goods and to services.
c. Different types of inventory characteristics require different approaches for control.
d. Stock-keeping units (SKUs) are often aggregated or partitioned into groups with
similar characteristics or dollar value.
Answer:
The average number of entities completed per unit timethe output ratefrom a process is
called _____.
a. utilization
b. throughput
c. service rate
d. work-in-process
Answer:
Historically, the average proportion of defective bars has been 015. Samples will be of
100 bars each. Construct a p-chart using . Suppose a sample had 0.054
defectives. What would be the best action to take in this scenario?
a. Nothing; it appears to be random variation.
b. Look for assignable causes.
c. Change z to 2 and take another sample.
d. Change z to 4 and continue sampling.
Answer:
Quality at the source requires _____.
a. starting with a plan
b. having reliable suppliers
c. doing it right the first time
d. having a good design
Answer:
_____ is the process of managing information, physical goods, and services to ensure
their availability at the right place, at the right time, at the right cost, at the right
quantity, and with the highest attention to quality.
a. Offshoring
b. Value proposition
c. Operational structure
d. Value chain integration
Answer:
C&M Machining is developing plans for a dedicated production line and needs to
determine how many drill presses will be needed. Engineering estimates are that one
drill press will be able to process 120 parts per hour. Daily demand is 2,400 parts. C&M
operates one 8-hour shift per day. How many drill presses are needed to meet the
capacity requirements?
a. 2 drills
b. 3 drills
c. 4 drills
d. 5 drills
Answer:
Which of the following is NOT directly related to W. Edwards Deming?
a. A product or a service possesses quality if it enjoys a sustainable market.
b. Quality is free.
c. Higher quality leads to higher productivity and lower cost.
d. The Deming cycle consists of four stages: plan, do, study, and act (PDSA).
Answer:
Table 1 Statistical Process Control (SPC) Problem Data*
*The range and row average help you avoid simple math errors and quicken the time to
complete the SPC analysis but you have to know what to use when.
Using Table 1, for the R-chart, what is the value of LCLR?
a. Less than or equal to 1.0
b. Greater than 1.0 but less than or equal to 1.5
c. Greater than 1.5 but less than or equal to 2.0
d. Greater than 2.0
Answer:
A _____ graphically displays the relationships between different variables.
a. Pareto diagram
b. cause-and-effect diagram
c. scatter diagram
d. control chart
Answer:
Apple computer would best be described as what type of company?
a. Business to business (B2B)
b. Business to customer (B2C)
c. Customer to customer (C2C)
d. Government to customer (G2C)
Answer:
All of the following are verification techniques EXCEPT:
a. developing logical flowcharts.
b. developing a model with high face validity.
c. conceptualizing a problem into smaller pieces or modules.
d. enabling people other than the programmer to check codes.
Answer:
A U.S. motorcycle manufacturer has the option of either making the gas tank in their
newly designed motorcycle, or subcontracting it to a manufacturer from Sinagpore. The
manufacturer expects to produce 1,000 units per year. Costs for the two options are:
The annual cost to make the gas tank in-house is _____.
a. less than or equal to $30,000
b. more than $30,000 but less than or equal to $40,000
c. more than $40,000 but less than or equal to $50,000
d. more than $50,000 but less than or equal to $60,000
Answer:
Which of the following statements does NOT fit with the Delphi method?
a. Judgments and opinions of experts is gathered.
b. Group of people from only inside the organization are asked to make predictions.
c. Process iterates until a consensus is reached.
d. It is a complex approach in judgmental forecasting.
Answer:
An internal audit of a hospital’s medical laboratory found 108 errors in testing of patient
specimens for one month or 30 days. Each day 400 patients were tested using an
average of 3.2 tests per patient. What is the dpmo for this situation?
a. Less than 500
b. More than or equal to 500 but less than 1,000
c. More than or equal to 1,000 but less than 2,000
d. More than or equal to 2,000
Answer:
The arrival rate in queuing formulas is expressed as:
a. a fraction of the service rate.
b. arrivals per unit of time.
c. total number of arrivals.
d. the average time between arrivals.
Answer:
A Gantt chart is:
a. a useful tool for depicting a schedule graphically.
b. a chart that enables the project manager to know what activities should be performed
at a given time.
c. a chart that can be used to monitor daily progress of a project so that corrective action
can be taken when necessary.
d. All of the above
Answer:
The bill of material (BOM) for Products A and B are shown below followed by a table
of inventory data (called Exhibit 1). The master production scheduling (MPS) for A
calls for 150 units of A to be completed in Week 4 and another 225 units to be
completed in Week 5. End item A has a two-week lead time. The MPS calls for 400
units of B to be completed in Week 6. End item B has a one-week lead time.
Exhibit 1
Using the data given in Exhibit 1, determine the gross requirements for Item E in Week
2.
a. 450
b. 300
c. 1,600
d. 1,900
Answer:
Which is NOT true regarding simple exponential smoothing?
a. It forecasts the value of the time series in the next period
b. It has a smoothing constant ranging between 0 and 1.
c. It uses a weighted average of past time-series values.
d. It includes trend or seasonal effects.
Answer:
Identify a true statement about models of organizational performance.
a. The theory of the balanced scorecard states that leadership drives the system that
creates business results.
b. The Service-Profit Chain model focuses on learning, internal business, customers,
and financial performance.
c. The five performance perspectives of the balanced scorecard model are cost, time,
quality, flexibility, and innovation.
d. The Service-Profit Chain model is based on a set of cause-and-effect linkages
between internal and external performance.
Answer:
Data regarding the activities for a project are presented below. The times are in weeks.
The critical path for this project is A-D-H-I-J-K.
a. Determine the standard deviation of the critical path.
b. Determine the probability of completing the project in 38 weeks or less.
c. What is the probability of completing the project in 32 weeks or less?
Answer:
Costs associated with backordering products are called _____ costs.
a. holding
b. shortage
c. ordering
d. setup
Answer:
A conservative or risk-averse approach to one-time decisions without event
probabilities is known as _____.
a. maximax
b. maximin
c. minimax regret
d. expected value
Answer:
_____ refers to the process of acquiring and consolidating elements of a value chain to
achieve more control.
a. Vertical integration
b. Horizontal integration
c. Outsourcing
d. Offshoring
Answer:
A U.S. motorcycle manufacturer has the option of either making the gas tank in their
newly designed motorcycle, or subcontracting it to a manufacturer from Sinagpore. The
manufacturer expects to produce 1,000 units per year. Costs for the two options are:
The volume they are indifferent regarding the decision to make or buy is _____ units.
a. less than or equal to 2,000
b. more than 2,000 but less than or equal to 4,000
c. more than 4,000 but less than or equal to 6,000
d. more than 6,000 but less than or equal to 8,000
e. more than 8,000.
Answer:
Which of the following is an example of high-customer-contact systems?
a. Distribution systems
b. Construction services
c. Estate planning
d. Package sorting
Answer:
Which of the following is NOT a characteristic of management decisions for which
decision analysis techniques apply?
a. They must be important.
b. They are probably unique.
c. They are usually deterministic.
d. They are complex.
Answer:
The _____ method takes into account the location of facilities and markets, demand,
and transportation costs in arriving at the best location for a single facility.
a. global sourcing
b. inventory management
c. multisite management
d. center-of-gravity
Answer:
Managing the flow of goods and materials from the customers toward either suppliers,
distributers, or manufacturers for the purpose of reuse, resale, or disposal through the
supply chain is called the _____.
a. reverse logistics
b. pull system
c. push system
d. response management
Answer:
The first, second, and third waves of outsourcing experienced by the United States
involve _____ respectively.
a. goods-producing jobs, simple service work, and skilled knowledge work
b. simple service work, goods-producing jobs, and skilled knowledge work
c. simple service work, skilled knowledge work, and goods-producing jobs
d. skilled knowledge work, simple service work, and goods-producing jobs
Answer:
A medical equipment testing and calibration service is depicted in Figure 1. The
customer usually brings the equipment to the service center. The service process
requires service technicians to perform three process steps #1 to #3. Each technician is
cross-trained so they can perform any of the three steps. The inspector does Step # 4
alone. After step #4, two parallel work activities are performed. That is, a shipping clerk
packs the work (step 7) while a billing clerk prepares the invoice (step 5)
simultaneously, and the customer is contacted by phone for pick-up (step 6). The
average throughput is 3 equipment units per hour.
Figure 1 Flow chart of the medical equipment testing and calibration service
process
The table below shows the work content of the process steps, activity times in minutes
per unit, shared and non-shared work activities, and the type of resource required. There
are 3 service technicians on duty: 1 inspector, 1 billing clerk, and 1 shipping clerk.
The service rate in units per hour for the service technician is _____ units per hour.
a. 2
b. 4
c. 6
d. 5
Answer:
A manufacturing
company needs to
know whether to
make in-house or buy an injection molding machine for its new fax machine
production. The company expects to produce 9,000 units per year. The following
estimates have been made:
a. What is the annual cost to make an injection molding machine?
b. What is the annual cost to buy an injection molding machine?
c. At what volume are they indifferent regarding the decision to make or buy?
Answer:
A push system _____.
a. works best when there are a large number of distribution centers
b. is more appropriate for make-to-order items
c. can reduce transportation costs by using full-truckload shipments
d. works best with variable sales patterns
Answer:
A tracking signal provides a method for monitoring a forecast by quantifying _____.
a. bias
b. error
c. accuracy
d. outliers
Answer:
In design specification terminology, the target dimension is called the:
a. nominal.
b. exceptional.
c. bull’s-eye.
d. tolerance.
Answer:
Long-term capacity planning must be closely tied to the strategic direction of an
organization.
Answer:
In manufacturing, quality control is generally applied at the receiving stage from
suppliers, during various production processes, and at the finished-goods stage.
Answer:
W. Edwards Deming believed that higher quality leads to higher costs and even higher
market share.
Answer:
According to the Toyota Motor Company, waiting time is necessary in production and
is not classified as waste.
Answer:
Reliability does not apply to service processes.
Answer:
General Electric would be considered a multinational enterprise because it sources,
markets, and produces its goods in several countries.
Answer:
In a product layout, a breakdown of one piece of equipment will not cause the entire
process to shut down.
Answer:
Discuss different ways of defining quality and how these differ for goods and services.
Answer:
Webster Manufacturing Inc. is implementing a Just-in-Time (JIT) system and wants to
know how many Kanbans to use for the initial setup of its JIT system. The daily
demand is 400 units and each Kanban (i.e., container) holds 15 units. The combined
processing and waiting time per container is 0.7 days. If the initial alpha value for
safety stock is 0.6, what is the maximum authorized inventory?
a. More than 100 but less than or equal to 200 units
b. More than 200 but less than or equal to 300 units
c. More than 300 but less than or equal to 400 units
d. More than 400 units
Answer:
Define time series and its characteristics.
Answer:
Explain the difference between independent demand and dependent demand.
Answer:
A manufacturer made a commitment to supply 20 units of a product. The first unit took
1,200 hours to make, the second unit took 900 hours, and the third unit took 768 hours.
Determine the total number of hours required to make the first ten (10) items.
Answer:
Single exponential smoothing is a forecasting technique that uses a weighted average of
past time-series values to forecast the value of the time series in the next period.
Answer:
To improve process designs, one must focus on increasing costs through better
technology.
Answer:
List at least six principal factors (contributors) to project success.
Answer:
Lean production is focused on efficiency by reducing waste and improving process
flow, while Six Sigma is focused on effectiveness by reducing errors and defects.
Answer:
What is the implied service rate per service-counter employee at an airport automobile
rental counter if the customer demand is 36 customers per hour, two service-counter
employees are on duty, and their labor utilization is 90%?
a. More than 10 but less than or equal to 12 customers/hour/employee
b. More than 12 but less than or equal to 14 customers/hour/employee
c. More than 14 but less than or equal to 16 customers/hour/employee
d. More than 16 customers/hour/employee
Answer:
Because of demanding customers, organizations must always maintain a 100 percent
service level.
Answer:
The expected-value concept weighs each payoff for an alternative in proportion to the
likelihood that the payoff will occur.
Answer: