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Chapter 6—Goods and Service Design
Multiple Choice Questions
1. Prior to designing and configuring a customer benefit package, a firm should understand
and develop its:
a.
detailed goods, services, and process design.
b.
process and service encounter design.
c.
strategic mission and competitive priorities.
d.
marketplace evaluation.
2. Which of the following is NOT one of the six customer attributes that impact the design and
configuration of a customer benefit package?
a.
Time
b.
Information
c.
Exchange
d.
Reliability
3. Which of the following steps is NOT the same for both goods and services?
a.
Detailed goods, services, and process design
b.
Customer benefit package design and configuration
c.
Market introduction/deployment
d.
Marketplace evaluation
4. The process by which a model (real or simulated) is constructed to test a product’s
performance under actual operating conditions is called:
a.
quality function deployment.
b.
value engineering.
c.
detailed product design.
d.
prototype testing.
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5. In the context of service-encounter design, _____ simply means giving people authority to
make decisions based on what they feel is right, to have control over their work, to take risks
and learn from mistakes, and to promote change.
a.
deployment
b.
flexibility
c.
empowerment
d.
credence
6. The fundamental planning tool used to implement quality function deployment (QFD) is the:
a.
voice of the customer.
b.
technical requirement relationship matrix.
c.
market and competitive evaluation rating matrix.
d.
House of Quality.
7. Building a House of Quality begins by identifying the:
a.
competitive evaluation.
b.
marketplace evaluation.
c.
voice of the customer.
d.
design of a customer benefit package.
8. The final step in using the House of Quality involves identifying those technical features that
meet any of the following criteria EXCEPT:
a.
the strongest relationship to customer requirements.
b.
the highest quality.
c.
poor competitive performance.
d.
strong selling points.
9. In the House of Quality, the interrelationship between any pair of technical features is
found in the:
a.
voice of the customer.
b.
relationship matrix.
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c.
roof.
d.
basement.
10. Assume the specifications for a television remote control part (in inches) are 5.00 ± 0.10,
and the Taguchi loss function is estimated to be L(x) = 5,500 (x – T)2. Determine the estimated
loss per part if the quality characteristic (i.e., actual process performance) under study takes
on a value of 4.91 inches.
a. More than $30 but less than or equal to $50
b.
More than $50 but less than or equal to $70
c.
More than $70 but less than or equal to $90
d.
More than $90
11. Assume the specifications for a part (in inches) are 5.00 ± 0.37, and the Taguchi loss
function is estimated to be L(x) = 9,300 (x – T)2. Determine the estimated loss if the quality
characteristic under study takes on a value of 5.50 inches.
a. $4,650.00
b. $3,441.00
c. $9,300.00
d. $2,325.00
12. A critical part has a manufacturing specification (in cm) of 0.325 ± 0.010. Based on historic
information, if this measurement is larger than 0.335 or smaller than 0.315 the product fails at
a cost of $120. Determine the Taguchi loss function.
a. L(x) = 1,200,000 (0.325 − 0.315)2
b. L(x) = 1,200,000 (x − 0.325)2
c. L(x) = 1,200 (x − 0.325)2
d. L(x) = 1,200 (0.325 − 0.315)2
13. A quality characteristic has a specification (in cm) of 0.40 ± 0.03. If the value of the quality
characteristic exceeds 0.40 by the tolerance of 0.030 on either side, the product will require a
$180.00 repair. What is the appropriate Taguchi loss function?
a. L(x) = 200,000 (0.43 − 0.37)2
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b. L(x) = 2,000 (0.43 − 0.37)2
c. L(x) = 200 (0.43 − 0.37)2
d. L(x) = 200,000 (x − 0.40)2
14. A quality characteristic has a manufacturing specification (in cm) of 0.20 ± 0.05. Historical
data indicate that if the quality characteristic takes on values larger than 0.25 cm or smaller
than 0.15 cm, the product fails and a cost of $75 is incurred. Based on this data, answer the
question below. The Taguchi loss function is _____.
a. L(x) = 75 (x – 0.05)2
b. L(x) = 30,000 (x – 0.20)2
c. L(x) = 30,000 (0.15 − 0.25)2
d. L(x) = 1,500 (0.15 − 0.25)2
15. A quality characteristic has a manufacturing specification (in cm) of 0.200 ± 0.05. Historical
data indicate that if the quality characteristic takes on values larger than 0.25 cm or smaller
than 0.15 cm, the product fails and a cost of $75 is incurred. Given the Taguchi loss function
that was computed and actual process performance of this quality characteristic of 0.135,
what is the economic loss per part?
a. More than $50 but less than or equal to $100
b.
c.
d.
16. In design specification terminology, permissible variation is called the:
a.
nominal.
b.
buffer.
c.
tolerance.
d.
leeway.
17. In design specification terminology, the target dimension is called the:
a.
nominal.
b.
exceptional.
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c.
bull’s-eye.
d.
tolerance.
18. In a design specification 25 ± 1.5, the value 25 is called the _____, while ± 1.5 is called the
_____.
a.
nominal; reliability
b.
average; tolerance
c.
average; nominal
d.
nominal; tolerance
19. Which of the following is NOT supported by Japan’s Genichi Taguchi?
a.
Tolerance optimization
b.
Goal-post model
c.
Quadratic loss function
d.
Monetary expression of variation
20. Taguchi’s loss function is most closely associated with:
a.
design failure-mode-and-effects analysis.
b.
reliability calculation.
c.
tolerance design.
d.
prototype testing.
21. A new and improved fertilizer was produced in a fertilizer plant, which consisted of three
stages A, B, and C. Compute the total system reliability (RS), given the individual reliabilities: A
= 0.97, B = 0.99, and C = 0.99.
a. Less than 0.70
b. More than 0.70 and less than 0.80
c. More than 0.80 and less than 0.90
d. More than 0.90
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22. In a two-component parallel system, the overall reliability is 0.9994. If the reliability of the
first component is 0.9890, determine the reliability of the second component.
a. Equal to or greater than 0.60 but less than 0.70
b. Equal to or greater than 0.70 but less than 0.80
c. Equal to or greater than 0.80 but less than 0.90
d. Greater than 0.90
23. The system reliability for a three-component series system is 0.80. If the reliabilities of two
of the components are 0.92 and 0.99, determine the reliability of the third component.
a. Less than 0.60
b. Equal to or greater than 0.60 but less than 0.70
c. Equal to or greater than 0.70 but less than 0.80
d. Equal to or greater than 0.80 but less than 0.90
24. If a redundant component is added to a system, the overall value of system reliability will:
a.
increase.
b.
decrease.
c.
stay the same.
d.
become unstable.
25. A bank provides four sequential services to its customers. Over the last quarter, the
reliability of each of these services was 92%, 97%, 95%, and 90%. What is their overall
reliability?
a.
0.9700
b.
0.9350
c.
0.7630
d.
0.7400
26. Which of the following is NOT an important element in the definition of reliability?
a.
Probability
b.
Time
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c.
Redundancy
d.
Operating conditions
27. To improve system reliability, one option is to:
a.
use better components.
b.
use more components in series.
c.
use quality function deployment.
d.
eliminate redundancy.
28. Given the diagram below, determine the system reliability if the individual component
reliabilities are: A = 0.96, B = 0.90, C = 0.98, and D = 0.94.
a. Equal to or greater than 0.92 but less than 0.94
b. Equal to or greater than 0.94 but less than 0.96
c. Equal to or greater than 0.96 but less than 0.98
d. Greater than 0.98
29.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. The reliability of the total service system is:
a. less than 0.60.
b. equal to or greater than 0.60 but less than 0.70.
c. equal to or greater than 0.70 but less than 0.80.
d. equal to or greater than 0.80 but less than 0.90.
A
B
C
D
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30. The manufacture of a product requires five sequential steps. The reliability of each of the
steps is 0.97, 0.88, 0.95, 0.92, and 0.99, respectively. What is the reliability of the
manufacturing process (system)?
a. Less than 0.60
b. Equal to or greater than 0.60 but less than 0.70
c. Equal to or greater than 0.70 but less than 0.80
d. Equal to or greater than 0.80 but less than 0.90
31. An ATM machine provides four sequential steps in processing a transaction. Over the last
quarter, the reliability of each of these steps was 0.92, 0.97, 0.95, and 0.90. What is the overall
reliability of the machine?
a. Less than 0.60
b. Equal to or greater than 0.60 but less than 0.70
c. Equal to or greater than 0.70 but less than 0.80
d. Equal to or greater than 0.80 but less than 0.90
32. A machine provides four sequential steps in processing a transaction. Over the last
quarter, the reliability of each of these steps was 0.92, 0.98, 0.95, and 0.90. The total system
reliability is:
a. less than 0.60.
b. equal to or greater than 0.60 but less than 0.70.
c. equal to or greater than 0.70 but less than 0.80.
d. equal to or greater than 0.80 but less than 0.90.
33. Given the diagram below that represents a cell phone circuit, determine the cell phone
system reliability for this part of the total operating system if the individual component
reliabilities are: A = 0.92, B = 0.90, C = 0.88, and D = 0.88.
A
B
C
D
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a. More than 0.8000 but less than or equal to 0.8500
b.
More than 0.8500 but less than or equal to 0.9000
c.
More than 0.9000 but less than or equal to 0.9500
d.
More than 0.9500
34. A system design consisting of several parallel components that function independently of
each other and where the system fails only if all the parallel components fail is an example of
_____.
a.
simplification
b.
redundancy
c.
deployment
d.
sustainability
35. If the individual reliabilities are denoted by p1, p2, . . ., pn, which of the following best
represents the system reliability Rp of an n-component parallel system?
a.
Rp = 1 – (1 + p1) (1 + p2) (1 + p3) . . . (1 + pn)
b.
Rp = 1 – (1 – p1) (1 – p2) (1 – p3) . . . (1 – pn)
c.
Rp = (p1) (p2) (p3) . . . (pn)
d.
Rp = (p1) + (p2) + (p3) + . . . (pn)
36. Which of the following is NOT correct regarding product or process simplification?
a.
Reduces flexibility
b.
Reduces opportunity for error
c.
Speeds up flow time
d.
Improves reliability
37. _____ is the explicit consideration of environmental concerns during the design of goods,
services, and processes and includes such practices as designing for recycling and disassembly.
a. Environmental analysis
b. Design failure-mode-and-effects analysis (DFMEA)
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c. Quality Function Deployment (QFD)
d. Design for Environment (DfE)
38. Which of the following is NOT a concept or dimension of the servicescape?
a. Signs, symbols, and artifacts
b. Ambient conditions
c. Transaction processing
d. Spatial layout and functionality
39. Which of the following is NOT a principal dimension of the servicescape?
a.
Ambient condition
b.
Process and job design
c.
Spatial layout and functionality
d.
Signs, symbols, and artifacts
40. 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.
41. Identify an element that is NOT a principal dimension of a servicescape.
a.
Spatial layout and functionality
b.
Signs, symbols, and artifacts
c.
Facility location
d.
Ambient conditions
42. A servicescape includes all of the following principal dimensions EXCEPT _____.
a.
ambient condition
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b.
tolerance design
c.
spatial layout and functionality
d.
signs, symbols, and artifacts
43. A(n) _____ is included in service provider publications and advertisements.
a.
artifact
b.
service-encounter design
c.
explicit service guarantee
d.
service-upset clause
44. Which of the following is NOT a principal issue in service-encounter design?
a.
Process and job design
b.
Customer-contact behavior and skills
c.
Service-provider selection, development, and empowerment
d.
Recognition and reward
45. High-customer-contact systems would most commonly be found in:
a.
distribution systems.
b.
process designs.
c.
front office operations.
d.
back office operations.
46. Which of the following is NOT an important factor in service-encounter design?
a.
Facility location
b.
Customer-contact behavior and skills
c.
Service-provider selection, development, and empowerment
d.
Service recovery and guarantees
47. Service-encounter design includes all of the following principal elements EXCEPT _____.
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a.
technology and information support systems
b.
customer-contact behavior and skills
c.
service-provider selection, development, and empowerment
d.
service recovery and guarantees
48. Which of the following is an example of high-customer-contact systems?
a.
Distribution systems
b.
Construction services
c.
Estate planning
d.
Package sorting
49. Customer contact, for the purpose of classifying a system as being high-contact or low-
contact, is measured by:
a.
the percentage of a service provider’s workday spent with customers.
b.
the percentage of time a customer must be in the system relative to the total time it takes to
provide a service.
c.
the number of service encounters occurring in a given span of time.
d.
the number of different service providers required to serve one customer.
50. A(n) _____ is a promise to reward and compensate a customer if a service upset occurs
during the service experience.
a.
service guarantee
b.
customer-contact requirement
c.
service recovery
d.
empowerment
51. Objectives of service guarantees include all of the following EXCEPT:
a.
building brand image.
b.
reducing customer risk.
c.
forcing operational improvement.
d.
allowing reduced pricing.
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52. In the context of the integrative case study of LensCrafters, which of the following
statements is TRUE?
a.
Each store has a visible low contact area.
b.
LensCrafters’ employees do not need service management skills.
c.
Each store has a totally unique servicescape and layout that varies by location.
d.
Low cost makes a long drive to LensCrafters worthwhile.
53. Identify a TRUE statement about the integrative case study of LensCrafters.
a.
LensCrafters primary product is physical goods (i.e., eyewear).
b.
Each store has a unique servicescape and layout.
c.
The manufacturing process is integrated into the service facility.
d.
Low cost makes a long drive to LensCrafters worthwhile.
54. Which of the following statements is TRUE of the LensCrafters case study?
a.
LensCrafters’s peripheral product is an eyewear.
b.
Each store has very different layout and servicescape.
c.
The fitting stations are in a high-contact area.
d.
Low cost makes a long drive to a LensCrafters store worthwhile.
True/False Questions
1. The design of a customer benefit package (CBP) focuses on the operational choices that a
firm must make in order to provide the CBP.
2. The decision of what goods and services to offer and how to position them in the
marketplace is mainly an operational decision.