Chapter 21—Managing Operations
TRUE/FALSE
1. Work groups tend to be better at coordination than specialization.
2. Operations refers to the processes used to create and deliver a good or service.
3. Powerful companies, whether they are large or small, gain power when satisfying customer needs and
wants better than their competitors.
4. In order to achieve market success, a firm merely needs to concentrate on either providing an excellent
product or service, or devising an insightful marketing strategy.
5. A service firm does not have an operations process.
6. When Kentucky Chocolates mixes ingredients for their candies, this act is part of operations.
7. Because close interactions with customers allow employees to better understand them, management
should be sent in the field periodically.
8. Technology can adequately replace the human touch when the needs of the customer involve large
amounts of data.
9. Job shops in manufacturing use specialized equipment.
10. Event management companies use project manufacturing.
11. The terms repetitive manufacturing and mass production are synonymous.
12. Continuous manufacturing refers to assembly lines that run 24 hours a day, seven days a week.
13. Flexible management systems uses machine automation to cut manufacturing costs while satisfying
customer needs.
14. Manufacturers with seasonal demand schedules often hire temps during peak production and keep only
skeleton crews the rest of the year.
15. For service firms, the customer has to arrive before production begins resulting in employee
scheduling issues.
16. A demand management strategy is the use of pagers by restaurants to notify persons on the waiting list
that a table is ready.
17. Most companies run out of stock from incorrect ordering.
18. The ideal quantity of an item to purchase is referred to as the economic order quantity (EOQ).
19. Obsolescence is a cost of inventory.
20. The just-in-time inventory system classifies inventory into three categories based on value.
21. The simplest method of inventory record-keeping is called the perpetual inventory system.
22. Quality is best defined as the totality of features and characteristics of a product or service that impacts
the firm’s ability to satisfy stated or implied needs.
23. A genuine concern for customer needs and customer satisfaction can assist the TQM efforts of a small
business.
24. Firms who pay attention to operating details are stronger than those who empower their customers for
quality improvement.
25. While large corporations have access to data mining techniques for insights into customer buying
patterns, small companies typically cannot afford the software.
26. Kaoru Ishikawa contends that 85% of the typical company’s quality problems can be solved by using
“The Basic Seven” quality tools.
27. The cost of getting quality right may be more than a small business can bear.
28. Poka-yoke is a proactive approach that seeks to mistake-proof a firm’s operations.
29. Acceptance sampling makes it possible to determine tolerance limits that allow for inherent variation
due to chance.
30. Weighing bags of mulch during a production process is an example of an variable inspection.
31. Unless a firm is planning to market products in Europe or supply components to automakers in the
U.S., getting ISO 9000 certification is a waste of time and money.
32. Measuring quality in a service business is easier than measuring quality in a production business. All
you have to do is ask the customer.
33. The quality of a finished product depends on the quality of the raw materials used to make it.
34. The importance of purchasing rests on three areas: quality, delivery, and service.
35. Buying components is preferable to making them when it is necessary to protect a secret design for a
seasonal item.
36. Outsourcing non-competitive functions can free the entrepreneur to focus on his/her greatest strengths.
37. Cooperative purchasing organizations are firms that specialize in the purchasing function and provide
this service to small businesses.
38. The Supply Chain Operations Reference model is a list of five critical factors when assessing a
strategic alliance.
39. Because the small business owner must perform many functions that consume many hours each day, it
is acceptable practice to decline a salesperson’s request for an appointment.
40. An example of associative forecasting is when a concert promoter predicts attendance based on the
trend of attendance of the same event in the same location in previous years.
41. Forrester Research has shown that using computerized information systems can cut accounts payable
costs by 95%.
42. The goal of lean production is to use the minimum amount of resources necessary to achieve a total
bundle of satisfaction for the customer.
43. Bottlenecks in a process are responsible for slower throughput times for the entire process.
44. When a company expands resources in response to a constraint, they are using the option of increasing
efficiency.
45. Purchasing and inventory management share the same objective by contributing to profitable
operations.
MULTIPLE CHOICE
1. At the weekly managers’ meeting, Marcel is discussing how the company’s product is made and
delivered to its customers. Marcel is talking about:
a.
distribution.
b.
human resources.
c.
operations.
d.
planning.
2. The topic of discussion during the monthly senior managers’ meeting is how best to manufacture the
company’s product with existing materials, manpower, and machinery. This discussion is about:
a.
inventory management.
b.
inventory overhead.
c.
operations management.
d.
production management.
3. Martha knows that to be successful, everything her company does must create customer
a.
premiums.
b.
products.
c.
services
d.
value.
4. Which operations factor is centered around a firm’s production capacity?
a.
Flexibility
b.
Facilities and equipment
c.
Choice of a joint venture
d.
Customer demand
5. Which item is a tangible output for a bed and breakfast inn guest?
a.
Questions answered about local attractions
b.
Full breakfast in the morning
c.
Use of a Room
d.
Two of the above tangible outputs.
6. Jasper operates a machine shop. Orders from his customers are small but his machines can easily be
set up to make other items for different customers. This type of manufacturing is known as:
a.
flexible manufacturing.
b.
a job shop.
c.
project manufacturing.
d.
repetitive manufacturing.
7. Job shops are best suited for
a.
short production runs.
b.
long production runs.
c.
special-purpose equipment.
d.
standardized products.
8. Linda creates websites for her customers. Each one is designed to meet the specific needs of the
customer. This type of manufacturing is called:
a.
continuous manufacturing.
b.
flexible manufacturing.
c.
project manufacturing.
d.
repetitive manufacturing.
9. At CPL Manufacturing, the one-millionth product must be identical to the first. The work is
automated and accomplished by machines designed expressly to make these products. This type of
manufacturing is known as:
a.
continuous manufacturing.
b.
flexible manufacturing.
c.
project manufacturing.
d.
repetitive manufacturing.
10. Which aspect is the most descriptive of a product operations as opposed to a service operations?
a.
Customer interaction
b.
Created and delivered on demand
c.
Intangible aspects
d.
Repetitive operations
11. Jeanette is a CNC operator. Her orders can be either large or small. To change from one product to
another usually requires only a change in programming. This type of manufacturing is known as:
a.
continuous manufacturing.
b.
flexible manufacturing.
c.
project manufacturing.
d.
repetitive manufacturing.
12. Repetitive operations in manufacturing use
a.
general-purpose machines.
b.
job-order schedules.
c.
highly specialized equipment.
d.
short production runs.
13. One factor that differentiates the operations of a service firm from manufacturing is its
a.
operating space.
b.
ability to maintain high quality standards.
c.
inability to produce services and hold them in inventory.
d.
working hours.
14. Duff’s Buffet offers a discount for lunches on Tuesdays. Duff’s is using:
a.
capacity planning.
b.
a demand management strategy.
c.
project marketing.
d.
service inputs.
15. The inventory control method that uses a targeted service level allowing for the variability of supply
and demand is
a.
ABC method.
b.
economic order quantity.
c.
just-in-time inventory system.
d.
statistical inventory control.
16. The ABC method of inventory management is founded on the notion that
a.
some inputs are more valuable or more critical to the firm’s operations than others.
b.
inventory costs should be cut to an absolute minimum by reducing inventory on hand.
c.
a firm should know its economic order quantity at all times.
d.
the cost of placing an order is a fixed cost.
17. A Category “A” item in the ABC method of inventory management for a college bookstore would be
a.
pens.
b.
magazines.
c.
shirts.
d.
textbooks.
18. Adoption of the just-in-time inventory system requires
a.
the elimination of raw materials wherever possible.
b.
an emphasis on work in progress.
c.
a reduction in the firm’s finished goods.
d.
close cooperation with suppliers.
19. Twice a year the entire production line shuts down and a complete count is taken of every inventory
item. This inventory system is called:
a.
cycle counting.
b.
perpetual inventory.
c.
physical inventory.
d.
two-bin inventory.
20. In March, chassis prep counts its inventory. In June, the cabinet shop does the same thing. In
September, appliances counts its inventory. This inventory system is known as:
a.
cycle counting.
b.
perpetual.
c.
physical.
d.
two-bin.
21. In his retail store, Jose’s point-of-sale software relieves inventory for each item purchased. At any
time, Jose can look at the inventory records on his computer and know exactly how many of each item
are in stock. This type of inventory system is called:
a.
cycle counting.
b.
perpetual.
c.
physical.
d.
two-bin.
22. Quality is
a.
the features of a product or service that ultimately satisfy the needs of customers.
b.
defined by The American Society for Quality.
c.
an all encompassing management approach to providing excellent products and service.
d.
a cornerstone of the national ISO 9000 process.
23. If a small plumbing company is installing a TQM program, management should be aware that
a.
quality must become a very important goal of the entire business.
b.
ISO 9000 will be the controlling criterion.
c.
costs cannot be allowed to limit quality goals.
d.
acceptance sampling may be necessary.
24. A small business owner decides that her firm has a good customer focus and adequate tools and
techniques needed for a TQM program. To be assured of a strong quality program, she must also have
the proper
a.
benchmarking.
b.
marketing research.
c.
organizational culture.
d.
statistical quality control.
25. Bettina would like to improve the quality of the dining experience in her cafe. To achieve this,
Bettina’s efforts should begin with a focus on
a.
customers.
b.
employees.
c.
management.
d.
operations.
26. The basic quality tool that Kaoru Ishikawa recognized that identifies potential causes of a problem
while sorting them into categories is the
a.
check sheet.
b.
cause-and effect diagram.
c.
control chart.
d.
parento chart.
27. The traditional method of maintaining product quality has been the
a.
check sheet.
b.
control chart.
c.
inspection.
d.
histogram.
28. Rather than rely on the bartender to use the correct proportions of ingredients in mixed drinks, the
owner installed a drink-mixing machine that automatically selects and measures the ingredients into
the glass. This method is a type of:
a.
idiot-proofing.
b.
poka-yoke.
c.
kan-ban
d.
robotics.
29. Bobbi Jo pulls one part from the production line every 15 minutes and measures its dimensions against
the specifications. Bobbi Jo is using:
a.
acceptance sampling.
b.
a control chart.
c.
statistical process control.
d.
TQM.
30. A method that judges products as acceptable or unacceptable is known as
a.
poka-yoke.
b.
attribute inspection.
c.
acceptance sampling.
d.
variable inspection.
31. If a small fencing company wants to check the length of fence posts to determine if they are
acceptable, a(n) ______ should be used.
a.
poka-yoke.
b.
an attribute inspection.
c.
acceptance sampling.
d.
a variable inspection.
32. ISO 9000
a.
is more important for large global firms than small firms with domestic markets.
b.
measures how companies have improved their environmental footprint.
c.
is challenging to earn but is rewarding from a marketing viewpoint.
d.
reflects international excellence in quality management standards.
33. By conforming to ISO 9000, a small manufacturing firm could achieve improvements in
a.
sales to Wal-Mart.
b.
export sales.
c.
product design.