Management, 3e (Hitt)
Chapter 13 Operations Management
1) The tools and techniques of operations management do not apply to service firms or service
activities.
2) The term operations management is used to describe the activities related to producing both
products and services.
3) Operations management is purely a specialized function, without organizational or strategic
importance.
4) A popular definition of quality is “fitness for use,” which is a measure of how well a product
or service performs its intended purpose.
5) Total quality management (TQM) encompasses a commitment from employees at all levels to
continually strive to make improvements and satisfy customers.
6) Total quality management (TQM) requires the use of a separate team of experts to inspect
products or services for defects or errors after completion.
7) TQM emphasizes “quality at the source,” that is, quality inspection at all stages of production
or service output.
8) Statistical process control is a TQM employee empowerment tool.
9) TQM uses only quantitative methods to promote “quality at the source.”
10) The fundamental notion of process reengineering is that form influences function.
11) Continuous process improvement in an organization involves both incremental and
breakthrough improvements in the way it does business.
12) The Six Sigma approach mainly focuses on hitting a target average for eliminating defects
and enhancing quality.
13) Capacity planning involves determining how much of a product or service a firm should be
able to produce.
14) Capacity planning for operations managers is a routine activity with little risk.
15) Most organizations should operate at maximum capacity at all times.
16) A materials requirement planning (MRP) system produces schedules that identify raw
materials, parts, and assemblies needed during specified time periods.
17) Managers use the economic order quantity (EOQ) model to minimize total inventory costs.
18) The ABC analysis model helps managers decide when to order a product and how much of it
to order.
19) In today’s business world, most companies plan on carrying excess inventory in order to
meet unexpected upswings in consumer demand.
20) Just-in-time (JIT) systems are used to manage and control inventory systems in order to
ensure the timely delivery of products or services and all related inputs.
21) A JIT system works best for organizations that make customized, one-of-a-kind products or
services.
22) Gantt charts are mathematical representations of projects.
23) Gantt charts and PERT/CPM tools perform identical functions.
24) The “critical path” through a network of activities represents the shortest time path for the
project.
25) Productivity is a measurement of how well an organization is using its resources to produce
goods and services.
26) The supply chain refers to the coordinated system of resources, information, activities,
people, and organizations involved in moving a product or service from raw materials to
components and into a finished product or service delivered to the end customer.
27) As the complexity of managing supply chains has increased, its potential strategic
importance has decreased.
28) ________ is a specialized field of management associated with the conversion or
transformation of resources into products and services.
A) Strategic management
B) Operations management
C) Production management
D) Supply-chain management
29) Which of the following is true of operations managers?
A) Their objectives have no direct cost implications.
B) They use a single technique to ensure timely delivery.
C) They are in charge of product quantity not quality.
D) They perform their duties while minimizing costs.
30) Which of the following statements is true of the quality of a product?
A) Quality consists of both efficiency and effectiveness.
B) Quality is not related to reliability.
C) Quality definitions are different for products and services.
D) Quality enhancements affect future, not current, revenues.
31) ________ is a management philosophy that involves a commitment from all levels of
employees to continually strive to make improvements and satisfy customers.
A) Capacity planning
B) Total quality management
C) Statistical process control
D) Just-in-time systemization
32) Which of the following is true of TQM?
A) It is not a part of any organizational culture.
B) It requires only the managers of an organization to commit to it.
C) It uses both quantitative and nonquantitative techniques.
D) It checks for quality control post-production.
33) The TQM concept of “quality at the source” involves ________.
A) cost controls and statistical analysis
B) computer-aided design and work standardization
C) capacity planning and operational protraction
D) quantitative techniques and employee empowerment
34) ________ is a quantitative tool to aid in making decisions concerning how well a process is
performing.
A) Employee empowerment
B) Statistical process control
C) Total quantity management
D) Electronic data interchange
35) The term ________ refers to the incremental and breakthrough improvements in the way an
organization does business.
A) computer-aided engineering
B) electronic data interchange
C) statistical process control
D) continuous process improvement
36) The fundamental notion of process reengineering is that ________.
A) function influences form
B) form influences function
C) form and function exist independently
D) form and function are irrelevant to the process
37) Which of the elements of continuous process improvement examines the critical sequences
and seeks to maximize the objective.
A) design
B) objectives
C) capabilities
D) metrics
38) Top executives at McCain Ericsson Bank have taken up business process reengineering to
improve the standards of the organization. They are unsure if their current loan application
process is an adequate measure of determining whether or not a loan should be given to an
individual. Which of the following elements are they considering?
A) objective
B) design
C) capabilities
D) infrastructure
39) ________ is a disciplined, data-driven approach for eliminating defects and enhancing
quality, with an orientation toward the impact such improvements will have on the customer.
A) Six Sigma
B) ABC analysis
C) PERT analysis
D) CAD/CAM
40) The total quality management philosophy emphasizes that ________.
A) separate teams of experts should inspect products or services for defects or errors after
completion
B) empowered employees will take responsibility for their individual output as well as that of the
whole organization
C) operations management is a specialized function without organizational or strategic
importance
D) organizations should operate at the maximum capacities at all times
41) Managers use capacity planning to ________.
A) ensure that total inventory costs are minimized
B) make decisions concerning how well a process is performing
C) categorize items to produce a list of items that require the most control
D) determine how much of a product or service a firm should be able to produce
42) The ________ is the maximum capacity at which a facility can run under ideal conditions.
A) design capacity
B) effective capacity
C) optimal capacity
D) supply capacity
43) Blue Springs is a company that produces bottled water. It has received a huge order to supply
water for a five-day convention that is taking place in the city. There are about half a million
guests expected to attend each day. The company must operate at its ________ to meet this
demand.
A) optimal capacity
B) effective capacity
C) supply capacity
D) design capacity
44) ________ is the percent of design capacity a facility is actually expected to maintain.
A) Expected capacity
B) Effective capacity
C) Projected capacity
D) Extended capacity
45) Dr. Magorium’s Toy Co. managers hold a meeting every July to decide on the Christmas
season offerings to be made that year in order to make good revenues for the organization.
Which of the following scenarios best parallels this?
A) A manager in a chemical plant is in the process of deciding whether there is need for another
new ethanol-refining machine or whether he can meet the demand with existing ones.
B) A hotdog seller calculates how many buns he must buy as the next day he plans to be outside
the Superbowl stadium.
C) A university decides to discontinue a philosophy course due to lack of students signing up for
it.
D) A Hollywood producer promotes his latest action feature with emphasis on areas where action
films traditionally do well.
46) ________ is a system of getting the right materials to the right place at the right time.
A) Flexible manufacturing
B) Total quality management
C) Computer-assisted delivery
D) Materials requirement planning
47) Sandra, the operations manager of the Zara clothing chain, is informed that the summer line
requires certain materials that are not available locally. She recalls having used the same raw
materials two summers ago from a niche supplier. Which of the following should she use to
solve this issue?
A) MRP
B) TQM
C) EOQ
D) RFP
48) Which of the following is true of firms that implement a MRP system?
A) They can often increase their inventory.
B) They are not efficient in responding to customer demands.
C) They can price their products competitively.
D) They use TQM as a subapproach to MRP.
49) Since the two major costs of a company, annual carrying costs and ________, vary inversely,
there are always tradeoffs to make.
A) overhead costs
B) holding costs
C) variable costs
D) ordering costs
50) What are stock outs?
A) carrying of excess inventories that increase holding costs and therefore total costs
B) not getting products and services to customers when they want them
C) guarantee of product quality and quantity together with timely delivery
D) It is a term that refers to goods that have never been purchased by a customer.
51) Retail managers can use ________ to determine which inventory items require the most
attention.
A) EOQ modeling
B) CSI factoring
C) ABC analysis
D) LIFO analysis
52) The profits of Dunkin’ Donuts are down by a quarter. The management believes this is
because of the high cost of the raw materials being used. Matt, the operations manager, should
use the ________ model so that total inventory costs are minimized.
A) DLC
B) EOQ
C) IQA
D) TPM
53) Which of the following is as costly as having excess unused inventory?
A) not being able to reach products to customers when required
B) holding parts in a static industry
C) holding just enough inventory for adequate supply
D) not having enough storage space for inventory
54) Which of the following is an advantage of using the EOQ model?
A) helps managers make decisions about when and how much of a product to order
B) improving productivity and quality by reducing labor and equipment time
C) provides information about which inventory items require the most attention
D) increasing customer satisfaction by decreasing the time required to make and deliver the
product or service
55) Holding parts in dynamic industries ________.
A) is best because the parts do not depreciate in value
B) does not just increase holding cost but has to be written off
C) causes many companies to incur increased profits
D) does not make any difference to the industry
56) ________ refer to inventory management and control systems that ensure the timely delivery
of a product or service and related inputs.
A) Just-in-time systems
B) Supply-chain systems
C) Continuous improvement mechanisms
D) Statistical process control techniques
57) A(n) ________ is a nonmathematical graphical representation of projects used by managers
to help monitor the progress of projects.
A) ABC analysis
B) Gantt chart
C) EOQ system
D) JIT system
58) Production of Sliver’s latest small car, the Beetle, has been a dramatic improvement
compared to its previous product, Quiver. The production target of 2,000 Beetle cars per day has
been reached only within 10 weeks since the launch date, which was less than the time they
needed for Quiver. Which of the following, if true, would suggest that Sliver adopted a JIT
strategy for the Beetle?
A) Sliver acquired one of its major distributors before the production of the Beetle.
B) Sliver has recently made a substantial investment in acquiring warehouses close to its
production facilities.
C) Sliver acquired a fleet of airplanes to ensure that all the components it sourced from across
the world were unaffected by supply bottlenecks in other countries.
D) All of Sliver’s production factories have their own purchase departments that help the
company achieve benefits of scale discounting.
59) Typically, the ________ would be the most useful tools for scheduling, monitoring, and
controlling the timing of a bridge construction.
A) ABC/EOQ models
B) CAD/CAE approaches
C) PERT/CPM techniques
D) TQM and CPI programs
60) The PERT/CPM technique requires the project manager to determine ________.
A) the most economical quantity of products to order
B) which activities must precede others and which must follow
C) timely delivery of a product or service and related inputs
D) how to minimize total inventory costs
61) Globalization of business leads to ________.
A) increase in cost of production
B) lower profit margins
C) high pricing power for companies
D) more choices for customers
62) ________ is the measure of how well an organization is using its resources (inputs) to
produce goods and services (outputs).
A) Profit
B) Turnover
C) Productivity
D) Work standardization
63) Which of the following leads to cost reduction?
A) productivity
B) excess inventory
C) customer satisfaction
D) high demand
64) A ________ is the amount of time it takes a trained employee to complete a specific activity
or process.
A) unit of labor
B) work standard
C) work-sample index
D) level of effort measurement