Revenue management systems (RMS):
a. consist of standard and static methods to forecast demand.
b. rely solely on overbooking.
c. are cost minimization models.
d. maximize the revenue generated by a perishable asset.
Answer:
Cause-and-effect diagrams would help most in which phase of the DMAIC
problem-solving approach?
a. Define
b. Measure
c. Analyze
d. Control
Answer:
Using two-digit random numbers, the interval 5579 represents the probability of _____.
a. 0.55 to 0.79
b. 0.25
c. 0.24
d. 0.67
Answer:
A model that starts with the future-most point and moves toward the current time period
is called a _____.
a. payoff table
b. maximax decision
c. decision tree
d. satisficing matrix
Answer:
A pharmacy lab is used for only two high volume prescriptions, A and B. The time per
setup (in minutes), processing time (in seconds), and order size (in units) is given
below.
Using the information, determine the total capacity required for this lab in minutes.
a. Less than 2000 minutes
b. Equal to or greater than 2000 but less than 2200 minutes
c. Equal to or greater than 2200 but less than 2400 minutes
d. Greater than 2400 minutes
Answer:
Ayben is responsible for managing an advertising and promotion project using Program
Evaluation and Review Technique (PERT) with the following activities (times are given
in weeks).
Draw the project network here. BLANK SPACES
Using the table for the advertising and promotion project, what is the critical path and
expected completion time for this project?
a. A-D-E; 17 weeks
b. A-C-E; 16 weeks
c. B-E; 14 weeks
d. A-D-E; 18 weeks
Answer:
Which of the following is NOT a key assumption underlining the classic economic
order quantity (EOQ) model?
a. The entire order quantity arrives in the inventory at one time.
b. There are only two types of relevant costs: order/setup and inventory holding.
c. Demand is assumed to be stochastic.
d. Stockouts are not allowed.
Answer:
Kelly opens an aquarium store in a lively shopping mall and finds business to be
booming, but she often stocks out of key items customers want. She decides to
experiment with inventory control methods such as using a fixed order quantity (FQS)
and/or fixed order period (FPS) systems. The Fluval 303 pump, a high margin and
profitable pump, is one of her best sellers, but it stocks out frequently. She collects the
following data about the pump’s sales.
Demand = 10 units per week Store operates 45 weeks/year
Order cost = $30/order Lead time = 3 weeks
Item cost = $80/pump Standard deviation of weekly demand = 4 units
Inventory-holding cost = 15% per year Desired service level = 90 percent
If Kelly decides to use a fixed-period system (FPS), the fixed-order interval (T) based
on store economics is:
a. less than or equal to 5 weeks.
b. more than 5 but less than or equal to 10 weeks.
c. more than 10 but less than or equal to 15 weeks.
d. more than 15 but less than or equal to 20 weeks.
Answer:
Database systems, artificial intelligence programs, and voice-recognition software are
examples of _____.
a. hard technology
b. soft technology
c. computer numerical software
d. integrated operating software
Answer:
Which of the following terms is least related to Program Evaluation and Review
Technique (PERT)?
a. Beta distribution
b. Variance
c. Most probable time
d. Crashing
Answer:
_____ is the ability to provide goods and services to customers with minimum waste
and maximum utilization of resources.
a. Operational efficiency
b. Volume flexibility
c. Reliability
d. Sustainability
Answer:
A hotel purchases 8,000 gallons of a cleaning product. Each gallon costs $10, and the
cost of holding one gallon for a year is estimated to be $3. Ordering cost amounts to
$30 per order.
a. If the hotel orders in lots of 500 gallons, how many orders does it place each year?
b. What are the ordering and holding costs, and total annual cost?
c. If the economic ordering quantity is used, how much improvement in cost will result?
Answer:
Which of the following variables is ordinarily NOT an output of waiting-line analysis?
a. The waiting cost per hour per passenger
b. The hourly cost associated with each server
c. The total cost per minute
d. The number of servers
Answer:
Additional inventory that is kept over and above the average amount required to meet
demand is called _____ inventory.
a. seasonal
b. work-in-process
c. finished goods
d. safety stock
Answer:
In the 5Ss, a clean work area refers to _____.
a. sort
b. synchronize
c. shine
d. standardize
Answer:
A local hamburger chain is considering adding a drive-through window. They estimate
that during the dinner hour, customer arrival rate will average 18 per hour and follow a
Poisson distribution. Service times during this same period are estimated to follow an
exponential distribution with a mean of 24 customers per hour.
a. Determine the probability that the service facility (drive-through window) is idle.
b. Determine the probability of four vehicles in the system.
c. Determine the average number of vehicles waiting for service.
d. Determine the average number of vehicles in the system.
e. Determine the average time a vehicle spends waiting for service.
f. Determine the average time a vehicle spends in the system.
g. Determine the probability that an arriving vehicle has to wait for service.
Answer:
Which of the following is NOT a psychological strategy for dealing with a long wait
time?
a. Distraction
b. Specifying the wait time
c. Displaying artwork in the waiting area
d. Technology
Answer:
A retail store sells a popular cosmetic called Rochelleand the store manager is given
$100,000 by the corporate office to improve store performance any way she thinks best.
The “base case” information is a price of $30 per bottle, a contribution margin of 0.50, a
customer defection rate of 17%, and a repurchase frequency of 3 times a year. If these
improvement funds could be used to either (a) increase the contribution margin to 0.58
or (b) reduce the customer defection rate to 15% or (c) increase the repurchase
frequency to 4 times per year, what is the best way to spend these improvement funds
by answering the next two multiple choice questions? (Assume all other
variablesremain at the base case level for each of the three improvement options.) VLC
= P*CM*RF*BLC
You may want to use the table below to help organize your computations and answer.
Which of the following is the best way to use the $100,000 in improvement funds?
a. Do nothing (stay with base case).
b. Improve option (a)increase the contribution margin to 0.58.
c. Improve option (b)reduce the defection rate to 15%.
d. Improve option (c)increase the repurchase frequency to 4.
e. Two improvement options have equal VLC dollars, so split the funds between the
two tied improvement options.
Answer:
Opportunity loss or ill-feeling that people often have after making a nonoptimal
decision is best related to _____.
a. maximax
b. maximin
c. minimax regret
d. expected value
Answer:
Which of the following is NOT a characteristic of a time series?
a. Time bucket
b. Trend
c. Cyclical pattern
d. Random variation
Answer:
The precedence relationships in a network limit the activity _____.
a. nonnegativity time
b. overtime
c. crash time
d. inventory time
Answer:
A print shop has four jobs that have to be processed through their only five-color press.
They usually use the first come, first served (FCFS) rule of scheduling jobs. However,
the customers are waiting in the lobby for these jobs so the shop wants to minimize the
average waiting time. They are going to use the shortest processing time rule to do so.
Processing times for each job are as follows (assume this is the arrival order): Job A, 30
minutes; Job B, 17 minutes; Job C, 12 minutes; and Job D, 39 minutes.
Using the first come, first served (FCFS) rule to sequence these jobs, the average
waiting (flow) time is _____.
a. more than 20 but less than or equal to 30 minutes
b. more than 30 but less than or equal to 40 minutes
c. more than 40 but less than or equal to 50 minutes
d. more than 50 minutes
Answer:
Table 1
The mean absolute deviation (MAD) is:
a. less than or equal to 20.
b. more than 20 but less than or equal to 30.
c. more than 30 but less than or equal to 40.
d. more than 40 but less than or equal to 50.
Answer:
A pharmacy lab is used for only two high volume prescriptions, A and B. The time per
setup (in minutes), processing time (in seconds), and order size (in units) is given
below. Using the information, determine the total capacity required for this lab (i.e.,
how much work in minutes do these two jobs require) in minutes. One setup is incurred
per order.
a. Less than 2000 minutes
b. Equal to or greater than 2000 but less than 2200 minutes
c. Equal to or greater than 2200 but less than 2400 minutes
d. Greater than 2400 minutes
Answer:
Which of the following statements is NOT true about assembly lines?
a. They are low cost.
b. They are a type of cellular layout.
c. They make goods and services affordable to mass markets.
d. They are important in service operations.
Answer:
Which one of the following statements is TRUE of a servicescape?
a. Fresh flowers in a medical office are an example of ambient conditions for a
servicescape.
b. Employee uniforms are not part of a servicescape.
c. An example of an elaborate servicescape is a Federal Express mail drop-off box.
d. An example of a lean servicescape is a hospital.
Answer:
A plastic cell phone case has been experiencing physical quality control problems. That
is, the clear screen does not always fit (and snap into place) on the case. The dimensions
of the screen have consistently been in statistical process control (SPC). A root cause
quality initiative collected the following data about the plastic cell phone case. Analyze
the width of the cell phone case using control charts and make a recommendation.
Table 1 Cell Phone Plastic Case Widths in Centimeters Data*
*The sample averages and ranges helps in avoiding simple math errors and quickens the
time to complete the SPC analysis.
Using Table 1 for the R-chart, what is the value of UCLR?
a. Less than or equal to 0.2
b. Greater than 0.2 but less than or equal to 0.3
c. Greater than 0.3 but less than or equal to 0.4
d. Greater than 0.4
Answer:
Maria opens an aquarium store in a lively shopping mall and finds business to be
booming, but she often stocks out of key items customers want. She decides to
experiment with inventory control methods such as using a fixed-order quantity (FQS)
and/or fixed-order period (FPS) systems. The Fluval 303 pump, a high margin and
profitable pump, is one of her best sellers, but it stocks out frequently. She collects the
following details with respect to this pump’s sales.
a. What is the economic order quantity (EOQ) rounded to the next highest number?
b. If the current order quantity used by Maria is 25 pumps per order, how much money
can she save annually by adopting an economic order quantity (EOQ) ordering policy?
c. If Maria decides to use an FPS, what is the economic fixed-order interval?
Answer:
A major biotechnology company has developed a new drug for arthritis victims using
gene-splicing technology. It has been on the market for five months and has
experienced the following sales (in thousands of dollars):
a. What is the exponential smoothing forecast for May assuming that January sales is
also the initial forecast, and the alpha value is 0.5?
b. What is the exponential smoothing forecast for May assuming that January sales is
also the initial forecast, and the alpha value is 0.8?
c. What is the mean absolute deviation (MAD) for exponentially smoothed forecasts for
the months March to May assuming that January sales is also the initial forecast, and
the alpha value is 0.5?
d. What is the MAD for exponentially smoothed forecasts for the months March to May
assuming that January sales is also the initial forecast, and the alpha value is 0.8?
e. What is the tracking signal for exponentially smoothed forecasts for the months
March to May assuming that January sales is also the initial forecast, and the alpha
value is 0.5?
f. What is the tracking signal for exponentially smoothed forecasts for the months
March to May assuming that January sales value is 0.8?
Answer:
Validation consists of all of the following EXCEPT:
a. developing a model with high face validity.
b. validating model assumptions.
c. developing logical flowcharts.
d. validating model output.
Answer:
What is the output rate if the cycle time is set at 2 minutes?
a. min cycle time = 0.8; max cycle time = 39; output rate = 204.5
b. min cycle time = 2.2; max cycle time = 39; output rate = 204.5
c. min cycle time = 2.2; max cycle time = 31.2; output rate = 562.5
d. min cycle time = 0.8; max cycle time = 2.2; output rate = 562.5
Answer:
An R2 of 0.80 means:
a. 80% of the variability in the independent variable is explained by the dependent
variable.
b. 80% of the variability in the dependent variable is explained by the independent
variable.
c. 80% of the variability in the dependent variable is not explained by the independent
variable.
d. Multiple regression is used.
Answer:
In a fixed order quantity (FOQ) system, which of the following is TRUE when interest
rates increase and all other costs remain the same?
a. Cycle inventory decreases
b. Order quantity increases
c. Order costs increase
d. Safety stock quantity increases
Answer:
Based on the information shown below in Table 5, develop a forecast for June using
both the two-period moving average model and the exponential smoothing model with
α = 0.10. For the exponential smoothing model, assume the forecast for February is
800.
Table 5
The exponential smoothing model forecast for June is _____.
a. less than or equal to 840
b. more than 840 but less than or equal to 850
c. more than 850 but less than or equal to 860
d. more than 870 but less than or equal to 880
Answer:
Define forecast error and describe its metrics.
Answer:
Define a value stream map. How does this differ from a regular process map?
Answer:
Speed is usually measured in clock time, whereas variability is measured by quantifying
the variances around average performance or targets.
Answer:
What are the Seven Quality Control (QC) Tools and what is their significance in quality
improvement? Briefly explain how each tool is used.
Answer:
Zainab opens an aquarium store in a lively shopping mall and finds business to be
booming, but she often stocks out of key items customers want. She decides to
experiment with inventory control methods such as using a fixed order quantity (FQS)
and/or fixed order period (FPS) systems. The Fluval 303 pump, a high margin and
profitable pump, is one of her best sellers, but it stocks out frequently. She collects the
following data with respect to this pump’s sales:
Demand = 5 units per week Store operates 50 weeks/year
Order cost = $40/order Lead time = 3 weeks
Item cost = $80/pump
Inventory-holding cost = 15% per year
If Zainab decides to use a fixed-period system (FPS), the fixed-order interval based on
store economics is:
a. less than 5 weeks.
b. more than 5 but less than or equal to 10 weeks.
c. more than 10 but less than or equal to 15 weeks.
d. more than 15 but less than or equal to 20 weeks.
Answer:
Service measures should be closely linked to customer satisfaction so that they can
form the basis for improvement efforts.
Answer:
In designing processes, one often starts at the detail level and moves progressively
toward the aggregate.
Answer:
A periodic-order quantity (POQ) for a one-week time period is equivalent to lot-for-lot
(LFL) sizing.
Answer:
A Proctor and Gamble factory process fills boxes with detergent. Construct an
appropriate set of control charts to monitor the process. Historical data for fill weight
(in ounces) of eight samples is presented below. A sample size of six was used.
For the Proctor and Gamble detergent box problem, the lower control limit for the x-bar
chart is _____.
a. less than or equal to 12
b. more than 12 but less than or equal to 14
c. more than 14 but less than or equal to 16
d. more than 16
Answer:
Define economies of scale and diseconomies of scale. Explain how they relate to
capacity decisions.
Answer:
Queue time is a fancy term for service time variance.
Answer:
To create and deliver a service, four steps are required and based on collecting
information on errors per step, the following reliabilities have been determined: Step 1
= 0.92, Step 2 = 0.88, Step 3 = 0.94, and Step 4 = 0.84. What is the reliability of the
total service system?
Answer:
The people best suited to set work standards are managers with input from industrial
engineers.
Answer:
Quality function deployment (QFD) is focused primarily on developing a viable quality
control plan.
Answer:
Inventory turnover value tells managers how much of the firm’s assets are tied up in
inventory.
Answer:
Projects are often used for standardized products and not for custom goods and
services.
Answer:
The strategy of matching capacity additions with demand as closely as possible is often
called a capacity straddle strategy.
Answer:
Computer chips and microprocessors are examples of hard technology.
Answer:
The Department of Motor Vehicle (DMV) testing center has ten (10) testers who test 75
drivers per day. Each tester can test eight (8) drivers per day. What would the service
rate need to be in order to achieve 85% utilization?
Answer:
Common causes of variations generally accounts for about 10 to 15 percent of the
observed variation within a process.
Answer: