Chapter 13—Planning Startup Operations
TRUE/FALSE
1. Entrepreneurs need to start thinking about the cost of operations when their products and services have
become commoditized.
2. Offshore manufacturing is appropriate for all products.
3. Management processes, business processes, and support processes are the three major processes that
must be aligned in a company if quality is going to be the outcome.
4. Product-focused organizations generally are highly decentralized so that they can respond better to
market demands.
5. ISO 9000 is a series of international quality standards with a certification process.
6. PERT is an acronym for Program Establishment and Response Testing.
7. Identifying all the tasks in the production process makes it easier to determine what equipment and
supplies are needed for completing the task.
8. The best way for manufacturers to control quality is by arranging for products to be inspected at the
end of the production process.
9. The emerging players in outsourcing are Russia, Nicaragua, and Botswana.
10. Today, product/service warranties are not a competitive marketing tool.
MULTIPLE CHOICE
1. Production is managing the ____ of material and information from raw materials to finished goods.
a.
financing
b.
inventory
c.
outsourcing
d.
flow
e.
None of these choices
2. The virtual ownership model is similar to the Japanese keiretsu in the automobile industry with the
exception of ____.
a.
financing
b.
ownership
c.
outsourcing
d.
suppliers
e.
None of these choices
3. The goal in ____ is to provide the exact service the customer wants at minimal cost.
a.
logistics
b.
supply chain management
c.
outsourcing
d.
human resources
e.
purchasing
4. Any business that purchases raw materials or parts for production of goods for resale must carefully
consider the quality, quantity, and ____ of those purchases.
a.
logistics
b.
pricing
c.
outsourcing
d.
staffing
e.
timing
5. The quantity of raw materials or parts that are purchased is a function of ____, manufacturing
capability, and storage capability.
a.
logistics
b.
cost
c.
customer demand
d.
market size
e.
suppliers
6. To guard against contingencies, it is wise for a startup to use one supplier for about ____ percent of its
needs and one or more additional suppliers for the rest.
a.
50
b.
50 to 60
c.
60 to 70
d.
70 to 80
e.
80
7. Inventory is defined as the stocks of items used to support production, associated activities, and ____.
a.
logistics
b.
customer service
c.
customer demand
d.
packaging
e.
outsourcing
8. When manufacturers use ____, lead times are reduced and employees have more involvement in the
production of the entire product rather than simply one component of a product.
a.
flexible manufacturing cells
b.
production flow cells
c.
process-focused manufacturing
d.
quality control
e.
outsourcing
9. The ____ process consists of a series of inputs, such as raw materials, labor, and machinery, which are
then transformed through a series of processes into new products and services.
a.
logistics
b.
production
c.
inventory
d.
quality control
e.
outsourcing
10. In general, manufacturing and production firms are organized as ____-focused or ____-focused
organizations.
a.
product / service
b.
input / output
c.
product / process
d.
product / project
e.
insourcing / outsourcing
11. ____ organizations are common among manufacturers with capital-intensive processes and among
service companies.
a.
Service-focused
b.
Project-focused
c.
Product-focused
d.
Process-focused
e.
None of these choices
12. ____ has made it possible to error-proof processes using sensors, eliminating traditional quality checks
and guaranteeing that what is being produced meets the customer’s specifications.
a.
PERT
b.
Technology
c.
Flexible cell manufacturing
d.
Continuous improvement
e.
ISO 9000
13. The real success or failure of the quality control effort is dependent on the ____ in the process.
a.
logistics
b.
benchmarking
c.
technology element
d.
continuous improvement
e.
human element
14. ____ relies on statistical tools and specific processes to achieve the measureable goals of fewer
defects, increased productivity, reduced waste, and superior products and processes.
a.
Logistics
b.
Benchmarking
c.
Total quality improvement
d.
Six Sigma
e.
ISO 9000
15. Entrepreneurs who subscribe to ____ will probably wish to provide warranties with products and
services.
a.
continuous improvement
b.
benchmarking
c.
total quality management
d.
Six Sigma
e.
ISO 9000
16. Outsource when all efforts to boost ____ at home have been exhausted.
a.
efficiency and innovation
b.
sales and marketing
c.
quality and efficiency
d.
input and output
e.
All of these choices
17. ____ is/are used to demonstrate that a company stands behind what it produces and the work that it
does.
a.
ISO 9000
b.
Warranties
c.
Six Sigma
d.
OEM
e.
None of these choices
18. Identifying all the tasks in the production process makes it easier to determine what equipment and
____ will be needed for completing the tasks.
a.
financing
b.
employees
c.
supplies
d.
machinery
e.
None of these choices
19. Product- or project-focused organizations generally are highly ____ so that they can respond better to
market demands.
a.
functional
b.
decentralized
c.
centralized
d.
mobile
e.
None of these choices
20. Two methods traditionally used in the scheduling process are PERT Diagrams and ____.
a.
quality control processes
b.
Gantt Charts
c.
Keiretsu
d.
point-of-production links
e.
supply chain management
21. Building a complex production system while the company is in startup or later, while it is rapidly
growing, is ____.
a.
a recipe for disaster
b.
highly recommended
c.
recommended only for “born-global” companies
d.
likely to be most effective in declining markets
e.
the best way to improve quality
22. ____ is/are a strategic issue that is designed to bring about business profitability and positive cash
flow.
a.
Manufacturing
b.
Vendor selection
c.
Quality
d.
Production systems
e.
Business processes
23. The production schedule for simple projects that depicts the tasks to be performed and the time
required for each is a/an ____.
a.
just-in-time system
b.
Gantt Chart
c.
organization chart
d.
PERT diagram
e.
decision tree
24. The production scheduling method wherein scheduling is more complex and subject to the
interdependence of several activities going on either simultaneously or in sequence is a ____.
a.
Gantt Chart
b.
PERT diagram
c.
just-in-time system
d.
quality circle
e.
decision tree
25. The process of reconciling product output with the standards set for that product is ____.
a.
quality control
b.
a just-in-time system
c.
material requirement planning
d.
the economic order quantity
e.
ISO
26. In some industries, particularly labor-intensive ones, the only way to achieve competitive costs is to
manufacture in a country where ____.
a.
labor costs are level
b.
labor costs are low
c.
labor costs are high
d.
laborers are paid by the hour
e.
None of these choices
27. ____ is the management and control of the flow of goods and resources from the source of production
to the marketplace.
a.
Production
b.
Logistics
c.
Operations
d.
Manufacturing
e.
The just-in-time system
28. Which of the following is not a decision that entrepreneurs must make regarding warranties?
a.
Who executes the warranty
b.
What components of the product or aspects of service will be covered
c.
Product or process scope
d.
Customer satisfaction
e.
How to educate the public
29. One way manufacturers and producers control ____ is through a regular inspection process that takes
place during several stages of the production process.
a.
quality
b.
input
c.
output
d.
labor
e.
logistics
30. Outsourced staff typically have a high turnover rate because ____________, so it is important for the
entrepreneur to create a culture that encourages the staff to stay with the business long term.
a.
the average age is 25
b.
of communication issues
c.
there are not enough workers
d.
equipment is too expensive
e.
none of these are correct
SHORT ANSWER
1. Define operations management.
2. Briefly discuss the production process.
3. Briefly discuss the Gantt Chart.
4. Briefly discuss PERT.
5. How can entrepreneurs address the challenge of managing inventory as they move beyond startup?
ANS:
6. Why is it important to build a production system prior to launch rather than during the startup phase?
7. What decisions need to be made when considering warranting a product?
8. Briefly discuss the benefits of quality programs.
9. What questions should you ask when considering a specific vendor as a source?
10. Discuss the advantages of utilizing a single vendor.
